Dan Kamensky, Marble Ridge Founder, Arrested And Charged With Fraud, Extortion, And Obstruction Of Justice In Connection With Neiman Marcus Bankruptcy

Words by Romana Hai

Dan Kamensky, Marble Ridge Founder, Arrested And Charged With Fraud, Extortion, And Obstruction Of Justice In Connection With Neiman Marcus Bankruptcy
Dan Kamensky, Marble Ridge Founder, Arrested And Charged With Fraud, Extortion, And Obstruction Of Justice In Connection With Neiman Marcus Bankruptcy

The U.S. Department of Justice (DoJ) has arrested the founder of hedge fund Marble Ridge Capital, Daniel Kamensky and charged him on counts of fraud, extortion, and obstruction of justice in connection with the bankruptcy proceedings of retailer Neiman Marcus

According to the preliminary report submitted as part of the bankruptcy proceedings by the U.S. Department of Justice’s Office of the United States Trustee, Kamensky, a member of the Neiman Marcus unsecured creditors’ committee, allegedly tried to prevent a rival bid for Neiman Marcus’s MyTheresa eCommerce platform to go through so that Marble Ridge could buy the business at a lower asking price.

But there’s more.

Kamensky then went as far as trying to coerce the rival bidder into covering up the maneuver. 

“As alleged, Daniel Kamensky disregarded his fiduciary responsibility to unsecured creditors of Neiman Marcus — and broke the law — when he attempted to coerce a competitor to withdraw a higher bid for assets of the bankruptcy estate,” said acting Manhattan U.S. Attorney Audrey Strauss. “As further alleged, acknowledging the illegality of his actions, Kamensky then attempted to obstruct an investigation by trying to persuade the competitor to change his account of the coercion, telling the competitor that otherwise ‘this is going to the U.S. Attorney’s Office.’  As today’s charges show, Kamensky was right about that.”

Strauss’s statement references a phone call that Kamensky made to the rival bidder, Jefferies, of which Kamensky was also a client. The call came after Kamensky had sent a text message to a Jefferies employee stating the following:

“DO NOT SEND IN A BID.”

Jefferies was not named in the complaint made on Thursday but is referenced as the “Investment Bank.”

According to court documents, after Kamensky found out that the Jefferies employee had informed others about the message, Kamensky then called the employee and said the following:

“[I]f you’re going to continue to tell them what you just told me, I’m going to jail, OK? Because they’re going to say that I abused my position as a fiduciary, which I probably did, right? Maybe I should go to jail.”

“Today, we’ve removed the ‘maybe,’ and forced him to answer for his conduct,” said FBI assistant director-in-charge William Sweeney. 

The Securities and Exchange Commission filed civil charges on Thursday. At this time, Marble Ridge has declined to comment regarding the matter.

According to the complaint, Kamensky admits to using his role as official co-chair of the committee to prevent Jefferies from acquiring the [MyTheresa] securities. Kamensky also states the since Marble Ridge has been a good partner to the investment bank, Jefferies should not move forward with a bid and if they did “Marble Ridge would cease doing business with the investment bank.”

Kamensky admitted that the calls made to the Jefferies employee was a “terrible mistake” and are considered to be “profound errors in lapses of judgment [that] violated the personal and professional belief I tried my best to live by,” in a later interview with the Office of the United States Trustee.

Prior to starting Marble Ridge in 2015 and managing more than $1 billion in funds, Dan Kamensky was a former partner at hedge fund Paulson & Co. 

At this point, Kamensky has been charged with:

  • one count of fraud in the offer or sale of securities,
  • one count of wire fraud,
  • one count of extortion and bribery in connection with a bankruptcy,
  • and one count of obstruction of justice.

Each of the mentioned charges carries maximum sentences ranging anywhere from five to 20 years in prison.  

Following the news of Kamensky’s actions last month, Marble Ridge notified investors in a letter of its plans to wind down. “After much consideration, and in light of the operating environment, we have made the difficult decision to commence an orderly wind-down of the Marble Ridge funds,” said Marble Ridge. “Marble Ridge will manage the liquidation in the best interests of our investors and with the objective of protecting and enhancing the value of the funds’ assets.”

Since then, Neiman Marcus has filed a temporary restraining order to block Marble Ridge from winding down its operations at least until the fund pays the retailer what its owned in alleged damages, which equates to $55 million.

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