A outstanding hedge fund supervisor has pleaded responsible to a single rely of federal chapter fraud over an alleged try and short-change collectors out of proceeds from the 2020 chapter of luxurious retailer Neiman Marcus.
Daniel Kamensky, 48, founding father of Marble Ridge Capital, had been arrested in September by the FBI on costs of securities fraud, wire fraud, extortion and obstruction of justice.
The fees got here after an investigation into the retailer’s Chapter 11 proceedings discovered that he had pressured a rival monetary providers group, Jefferies, to again off bidding for securities meant for Neiman’s unsecured collectors.
Mr Kamensky had waged a longstanding battle with Neiman’s non-public fairness house owners — Ares Administration and CPPIB, the Canadian pension fund — over allegations that the corporate had stripped its invaluable MyTheresa on-line unit away from collectors.
The chapter court docket ordered an investigation into these claims, which resulted in Ares and CPPIB ceding $172m in MyTheresa most well-liked inventory to unsecured collectors, together with Mr Kamensky — which was seen as a vindication for him and Marble Ridge.
Mr Kamenksy then sought to purchase up MyTheresa most well-liked inventory cheaply from different collectors who wished to money out instantly. Mr Kamensky, who was a member of an official committee of unsecured collectors, then sought to strain Jefferies to again off from making one other bid for the securities, prosecutors mentioned.
Mr Kamensky despatched a Bloomberg chat message to a Jefferies government, “DO NOT SEND IN A BID”.
Following his preliminary effort to affect the financial institution, Jefferies executives recorded a conversation with Mr Kamensky through which he appeared to acknowledge his wrongdoing and plead for them to cowl it up: “[I]f you’re going to proceed to inform them what you simply informed me, I’m going to jail, okay?” Mr Kamensky mentioned on the recordings.
“As a result of they’re going to say that I abused my place as a fiduciary, which I in all probability did, proper? Perhaps I ought to go to jail. However I’m asking you to not put me in jail.”
Weeks later in August, a report from the US trustees workplace revealed textual content messages and the recorded dialog between Mr Kamensky and the Jefferies executives.
Mr Kamensky would later inform the US trustee overseeing the chapter proceedings that he had “made a grave mistake”.
“Daniel Kamensky abused his place as a committee member within the Neiman Marcus chapter to deprave the method for distributing property and take additional earnings for himself and his hedge fund,” Audrey Strauss, the US lawyer for the southern district of New York, mentioned in an announcement.
The responsible plea punctuates a exceptional fall for Mr Kamensky, a former company lawyer who had carved out a profitable profession as a distressed debt specialist.
Mr Kamensky had beforehand settled with the chapter court docket agreeing to, amongst different issues, donate $100,000 to charity, not serve on any chapter committees and carry out group service. Marble Ridge Capital wound down its operations.
The chapter fraud cost carries a most jail sentence of 5 years. As part of the plea, federal prosecutors agreed to suggest a jail sentence between 12 to 18 months. Mr Kamensky will likely be sentenced on Might 7.
His lawyer, Joon Kim of Cleary Gottlieb Steen & Hamilton, acknowledged: “Mr Kamensky has admitted what he did was incorrect. He deeply regrets his conduct on July 31, 2020, and the good ache it has brought about his household, colleagues and others.”
Neiman emerged from chapter in September. MyTheresa listed its shares in January and its market capitalisation now exceeds $2bn, nicely forward of valuation estimates made within the chapter course of.