Marble Ridge Capital founder Daniel Kamensky, 47, was arrested on Wednesday
A hedge fund founder has been arrested on charges that he defrauded creditors of the luxury department store chain Neiman Marcus by pressuring an investment bank not to bid against his hedge fund in buying securities from the creditors.
Marble Ridge Capital founder Daniel Kamensky, 47, was charged in a criminal complaint in Manhattan federal court, where he was due to make an initial appearance Wednesday.
Acting Manhattan U.S. Attorney Audrey Strauss said in a release that Kamensky, of Roslyn, New York, broke the law when he tried to coerce a competitor to withdraw a bid that was higher than his hedge fund wanted to offer for assets of the bankruptcy estate.
William F. Sweeney, head of New York’s FBI office, said Kamensky violated his duty on the Official Committee of Unsecured Creditors in the Neiman Marcus bankruptcy by blocking the sale of securities to an investment bank so his fund could pursue them ‘at a significantly lower price.’
The hedge fund founder is accused of defrauding creditors of the luxury department store chain Neiman Marcus by pressuring an investment bank not to bid against his hedge fund in buying securities from the creditors. A closed Neiman Marcus is seen in May in Chicago
Prosecutors say that Kamensky used the threat of pulling Marble Ridge Capital’s business with the investment bank to force them to drop their higher bid for the securities.
According to the indictment, after the bank withdrew its bid, Kamensky tried to cover his tracks by asking an employee there in a recorded call to tell the committee and law enforcement he suggested the bank bid only if it were serious.
‘Do you understand … I can go to jail,’ Kamensky was quoted as saying.
‘I honestly … don’t want anything to do with this,’ the employee responded.
‘My position … is going to be look, this was a huge misunderstanding,’ Kamensky said. ‘They’re going to say that I abused my position as a fiduciary, which I probably did, right?’
In a voluntary interview taken later under oath, Kamensky called his conversations with the employee a ‘terrible mistake’ and ‘profound errors in lapses of judgment,’ prosecutors said.
‘In a conversation with an employee of the investment bank, Kamensky went as far as to say, `Maybe I should go to jail.´ Today, we’ve removed the `maybe,´ and forced him to answer for his conduct,’ Sweeney said.
An aerial view from a drone shows the parking lot is nearly empty outside of a Neiman Marcus store that has been shuttered in May at Oak Brook Center shopping mall in Illinois
Kamensky was charged with fraud in the offer or sale of securities, wire fraud, extortion and bribery in connection with a bankruptcy obstruction of justice.
The phone at Marble Ridge Capital in Manhattan went unanswered Thursday. A spokesperson declined comment on behalf of Kamensky and his firm, which has over $1 billion in assets.
After the events that began in late July, prosecutors said in their release, the hedge fund resigned from the committee of creditors and has advised investors that it will begin winding down operations and returning investor capital.
Before starting his hedge fund, Kamensky worked for many years as a bankruptcy attorney at a well-known international law firm and as a distressed debt investor at prominent financial institutions, authorities said.
Kamenshky, a resident of Roslyn, New York, faces up to 20 years in prison if convicted on all charges.
Neiman Marcus, the iconic luxury department store chain founded in 1907, filed for bankruptcy in May. It was one of the many casualties of the collapse of brick-and-mortar retail that was accelerated by the coronavirus pandemic.
Retailers that have sought bankruptcy protection in 2020
Following is a list of retailers that have sought bankruptcy protect in 2020.
Le Tote Inc. (Lord & Taylor), Aug. 3
Tailored Brands Inc. (Men’s Wearhouse; Jos. A. Bank), Aug. 2
Ascena Retail Group Inc. (Ann Taylor; Lane Bryant) – July 23
Occasion Brands LLC – July 22
The Paper Store Inc. – July 14
RTW Retailwinds Inc. ( New York & Co.) – July 13
Muji U.S.A. Ltd. – July 10
Brooks Brothers Group Inc. – July 8
Sur La Table Inc. July 8
Lucky Brand LLC – July 3
Old Time Pottery Inc. – June 28
BHS Foodservice Solutions – June 26
GNC Holdings Inc. – June 23
Fairn & Swanson Inc. – June 2
Liftopia Inc. – June 2
Libbey Glass Inc. – June 1
Tuesday Morning Corp. – May 27
Centric Brands Inc. – May 18
J.C. Penney Co. Inc. – May 15
Stage Stores Inc. – May 10
Neiman Marcus Group Ltd. LLC – May 7
John Varvatos Enterprises Inc. – May 6
CD II Fashions LLC – May 4
Chinos Holdings Inc. – May 4
J.Hilburn Inc. – April 30
Rubie´s Costume Co. Inc. – April 30
RTS USA Corp. – April 29
N B L Textiles Inc. – April 24
Castella Imports Inc. – April 13
True Religion Apparel Inc. – April 13
Donghia Inc. – March 30
CHIEF Corp. – March 20
Paddle8 Inc. – March 16
Generation Zero Group Inc. – March 13
Modell´s Sporting Goods Inc. – March 11
Bluestem Brands Inc. – March 9
Art Van Furniture Inc. – March 8
Pier 1 Imports Inc. – Feb. 17
The Worth Collection Ltd. – Feb. 14
Must Cure Obesity Co. – Jan. 31
SFP Franchise Corp. – Jan. 23
Armadio Inc. – Jan. 15