A prominent hedge fund manager has pleaded guilty to a single count of federal bankruptcy fraud for an alleged attempt to bypass creditors on proceeds from the 2020 bankruptcy of luxury retailer Neiman Marcus.
Daniel Kamensky, 48, founder of Marble Ridge Capital, had been arrested in september by the FBI on charges of securities fraud, wire fraud, extortion and obstruction of justice.
The accusations came after an investigation into the retailer’s Chapter 11 Chapter 11 proceeding found it pressured rival financial services group Jefferies to drop offerings of securities to creditors unsecured from Neiman.
Mr. Kamensky had conducted a long-standing battle with the private equity owners of Neiman – Ares Management and CPPIB, the Canadian pension fund – over allegations the company has pulled its valuable MyTheresa online unit from creditors.
The bankruptcy court ordered an investigation into these claims, which led Ares and CPPIB to sell $ 172 million in preferred shares of MyTheresa to unsecured creditors, including Mr. Kamensky – which was seen as justification. for him and Marble Ridge.
Mr Kamenksy then sought to buy back MyTheresa’s preferred shares at a low price from other creditors who wanted to cash in immediately. Mr Kamensky, who was a member of an official unsecured creditors committee, then sought to pressure Jefferies to desist from making another bid for the securities, prosecutors said.
Mr. Kamensky sent a Bloomberg chat message to an executive at Jefferies: “DO NOT SEND AN OFFER”.
After his initial efforts to influence the bank, the executives of Jefferies recorded a conversation with Mr. Kamensky in which he appeared to admit his wrongdoing and plead for him to cover it up: “[I]If you’re gonna keep telling them what you just told me, I’m going to jail, okay? Mr Kamensky said on the tapes.
“Because they’re going to say I abused my fiduciary position, which I probably did, right?” Maybe I should go to jail. But I ask you not to put me in jail.
Weeks later, in August, a report from the U.S. Office of the Trustees revealed text messages and the recorded conversation between Mr. Kamensky and Jefferies executives.
Mr. Kamensky would later tell the US trustee overseeing the bankruptcy proceedings that he had “made a serious mistake”.
“Daniel Kamensky abused his position as a member of the Neiman Marcus bankruptcy committee to corrupt the asset distribution process and take additional profits for himself and his hedge fund,” said Audrey Strauss, the US lawyer of the Southern District of New York, in a statement. A declaration.
The guilty plea marks a remarkable fall for Mr. Kamensky, a former corporate lawyer who had carved out a successful career as a troubled debt specialist.
Mr. Kamensky had already settled the problem with the bankruptcy court by agreeing, among other things, to donate $ 100,000 to charity, not to sit on bankruptcy committees and to do community service. Marble Ridge Capital has ceased operations.
The bankruptcy fraud charge carries a maximum prison sentence of five years. As part of the plea, federal prosecutors agreed to recommend a jail term ranging from 12 to 18 months. Mr. Kamensky will be sentenced on May 7.
His lawyer, Joon Kim of Cleary Gottlieb Steen & Hamilton, said: “Mr. Kamensky admitted that what he had done was wrong. He deeply regrets his conduct on July 31, 2020 and the great pain it caused to his family, colleagues and others.
Neiman emerged from bankruptcy in September. My Therese listed its shares in January and market capitalization now exceed $ 2 billion, well ahead of valuation estimates made in the bankruptcy process.