Hedge Fund Manager Arrested For Fraud & Extortion After Admitting To Witness "Maybe I Should Go To Jail"
After being forced to close his fund, Marble Ridge Capital, after a Jeffries trader and former Navy SEAL reported his dubious conduct to Jeffries General Counsel, who informed the authorities, prompting the trader to record some seriously incriminating and embarrassing phone calls, It looks like Daniel Kamensky is finally in custody.
Prosecutors in New York announced Thursday afternoon that Kamensky had been arrested and charged with securities fraud, obstruction of justice and extortion for allegedly trying to rig a bidding process involving bankrupt Neiman Marcus as Marble Ridge bid to supply the floundering retailer with a high interest loan.
The news was expected. Just last week, in a Houston courtroom, lawyers for Neiman Marcus pressed a judge to order Marble Ridge to pay out more than $50 million into an escrow account so that Neiman could collect the money promised from the firm before Marble Ridge dissolves.
More than a week ago, we reported the salacious story of Kamensky's downfall. Joe Femenia, the head of distressed-debt trading at Jefferies Financial Group, is the man who, per court filings, taped conversations that brought down Kamensky and his hedge fund down. The proverbial crap hit the fan after Kamensky urged Femenia to not submit a bid for part of the bankrupt retailer, nicknamed "Needless Markups".
Legal filings show Kamensky telling Femenia to "Stand DOWN". Probably not a bright thing to say to a Navy SEAL…
When Kamensky realized that he had made a "grave mistake", and tried to fix things, he only made things worse for himself.
By the time Kamensky urged Femenia, on a second phone call, to "treat the conversation off the books" and to "change his recollection" of how their first call went, Fermenia was recording.
In one, Kamensky pleaded: “[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. But I’m asking you not to put me in jail."
That's not a great look.
The charges were brought by Audrey Strauss, the acting head of the Southern District of New York.
https://www.zerohedge.com/markets/hedge-fund-manager-arrested-fraud-extortion-after-admitting-witness-maybe-i-should-go-jail