Wednesday, 25 May 2016
Last updated 7 hours ago
Jan 27 2009 | 12:24pm ET
Hedge fund Elliott Management Corp. pronounced itself embarrassed and annoyed as it admitted that it had been duped by accused fraudster Marc Dreier.
Elliott told investors that bought phony promissory notes from Dreier, a prominent New York lawyer, in October, Bloomberg News reports. Dreier was arrested last month and accused of defrauding hedge funds and other investors of more than $400 million, including the scheme to sell fake notes issued by New York developer Sheldon Solow that took in two hedge funds to the tune of $100 million.
“There are many reasons why funds lose money, but being defrauded is among the most embarrassing and annoying,” New York-based Elliott said in its quarterly letter to clients. “We continue to adapt our processes to keep several steps ahead of fraudsters, and we maintain an attitude of probing skepticism. But sometimes we get hooked, as in the Dreier case.”
The $12.8 billion hedge fund’s losses in the alleged Dreier scam amount to less than 1% of its assets under management, according to Bloomberg.
Elliott’s flagship hedge fund, Elliott Associates, lost 9.2% in the fourth quarter, its worst-ever quarterly loss, leaving it down 3.1% on the year.
Dreier was arrested in Toronto in early December and charged with impersonating a lawyer for the Ontario Teachers’ Pension Plan at a meeting with Fortress Investment Group. He was arrested upon his return to the U.S. and charged with fraud. He remains in prison, so far unable to come up with $20 million to meet bail, and faces up to 20 years in prison if convicted.