SEC knew Collecting $14.5 mn Hedgie Ribotsky fine Would Fail

Ribotsky a few years ago when he had hair

N.I.R. Group hedge fund founder, Corey Ribotsky, filed for personal bankruptcy leaving a whopping $36 million of debt unpaid a year after he settled with the SEC for investor fraud. Today I am reporting for Growth Capitalist that court records allude to the notion that the government knew Ribotsky wouldn’t be able to pay his multi-million dollar fine when they backed down from taking him to trial and agreed to a settlement in 2013.

Long Island-native Corey Ribotsky ran a hedge fund that mainly invested in PIPE’s for over a decade. These are private interest bearing loans made to small cap companies that turn into discounted stock warrants if the borrow can’t payback the loan in a certain amount of time. To simplify what usually happened in N.I.R. Group PIPE transactions the borrow usually doesn’t pay back the loan and the hedge fund gets cheap stock they can sell for cash on the open market which can drag down the price of a small cap stock to unsuspecting penny stock investors. Ribotsky raised hundreds of millions of dollars from upper middle class investors that he met via his charity work, a north shore country club or through introducing brokers.

I began investigating Ribotsky for investor fraud in 2008 while reporting for the New York Post. It took the SEC until September 2011 to finally sue the hedge fund manager for securities violations & investor fraud. By the time the SEC sued, investors in N.I.R.’s once $800 million hedge fund had lost their money, and Ribotsky continued to earn millions in fees managing and unwinding a fund whose valuations were allegedly inflated.

Between investigative reporters documenting Ribotsky threatening & lying to investors, along with internal whistleblowers, the government’s case against Ribotsky was built for them before they sued. Yet at the end of the day we only saw the Securities and Exchange Commission bar Ribotsky from the industry for only four years and collect zilch from him to return to investors.

It wasn’t till three years after the securities regulator sued Ribotsky for stealing millions from his investors that we learn the government is having an impossible time collecting any money to return to N.I.R. Group investors.

On November 13 2014, SEC attorney Kenneth Byrne wrote Judge Bianco the Commission had started “collection proceedings against Ribotsky that included discovery of his income and asset”. The government never got Ribotsky to admit guilt and his lawyer Doug Hirsch told the court the SEC knew before they settled the case in November 2013 that Ribotsky didn’t have anywhere near the assets or earning potential to pay the amount the SEC wanted in a fine (See Attorney Hirsch letter below). Bankruptcy records show Ribotsky stopped making mortgage payments on his $6.8 million loan to Signature Bank in September 2012, which was secured by his family home at 11 Bostwick Lane, Old Westbury, NY. The property is in a llc called ZFL and listed as an asset owned 100% by Ribotsky. Additionally, court records show $549,321.48 in town property and school taxes have not been paid on the home dating back to 2011. On July 19th 2013, months before the SEC settlement, Signature Bank started foreclosure proceedings in Nassau County court against the home. Total debt owed by ZFL to Signature bank is now $7,203,277.78. Any SEC collection efforts would be behind Signature Bank who has a secured claim on one of Ribotsky’s largest assets. A recent order by Ribotsky’s bankruptcy judge shows Signature Bank, who claims they were close to finishing the foreclosure right before Ribotsky filed bankruptcy, will be allowed to move forward with their case and collect funds from a foreclosure auction.

Ribotsky also had ownership interest in another home, 317 Bedford Ave Bellmore NY, which is also held in a LLC. Court filings show Ribotsky testified in a bankruptcy hearing he transferred 50% of his interest in 317 Bedford to Howard Tanney at no consideration. A 2004 bankruptcy exam has been ordered against Howard Tanney to prove Ribotsky did not commit fraudulent conveyance via the home interest transfer.

The government watched reporters like myself, Matt Goldstein, and Nathan Vardi for four years detail Ribotsky’s fraud via on record sources and documents, but only managed to make one criminal arrest of Ribotsky’s right hand guy Daryl Dworkin. In 2010 Dworkin quickly turned DOJ government whistleblower and plead guilty to taking bribes while working at N.I.R. group. The fund was eventually forced into an outside receiver (PwC) taking over in the Cayman Islands who was given some decent access to a document trail of fraud allegedly committed by Ribotsky.

The SEC could have at least deposed Daryl Dworkin in their case, as court filings in SEC v. Ribotsky show the DOJ’s deal with him was he had to testify for the SEC. But the government settled right before the deposition was going to happen. Dworkin’s testimony would have at least helped investors learn what he was telling the DOJ about Ribotsky’s role in the fraud, which could have aided any investor civil suits against the hedge fund manager.

At a sentencing hearing I attended for N.I.R. Group executive Daryl Dworkin on November 5 2014 the DOJ had to admit to federal Judge Dearie they didn’t charge Ribotsky with criminal fraud because they didn’t think they had enough evidence to convict him. For four years the DOJ delayed Dworkin’s sentencing while they worked him for information against Ribotsky.

A month after the Dworkin sentencing Ribotsky finally tells his version of what he did with some of the millions he took from his investors via his chapter seven federal bankruptcy filing. The December 17 2014 bankruptcy shows he’s been sued numerous times but never paid up on judgments rendered by the court. Interest and stock in financial companies Ribotsky owned were primarily transferred to another top N.I.R. Group executive Robert ‘Bobby’ Cohen. The bankruptcy court has ordered Cohen to go through a 2004 examination of some of the transferred stock. Additionally, Christopher Machton of Great Neck NY, who got a $300,000 loan from Ribotsky has been given a 2004 exam subpoena from the bankruptcy court to prove he got the funds and how they were used.

“The government is suing him and he simply moved money around so he didn’t have to pay fines”, is what one Boston-based N.I.R. Group Investor told me after he read Ribotsky’s bankruptcy documents. In fact, in 2012 Ribotsky says in court filings he still made $1.2 million. That was the year he was getting kicked out of his fund, fighting a SEC lawsuit, and investors learned via the receiver the hedge fund assets were super hard to sell and illiquid. Meaning there wasn’t a ton of hope of getting their hard earned dollars back from the hedge fund.

The case was a complete failure by Loretta Lynch’s office (the black woman Obama has put up to be the next head of the DOJ) and an abysmal victory by the SEC – who at least got Ribotsky to agree to stop committing fraud for a few years.

At Dworkin’s sentencing hearing in Brooklyn, NY I got to see how the DOJ and SEC lawyers acted in this case. I was surprised by their egos given how little they accomplished. Government lawyers told Judge Dearie they were working hard to recover money for investors but they simply haven’t been able to do it. After the hearing I cornered SEC attorney Kenneth Byrne and a little man with horn rimmed glasses who was running the DOJ case to ask them face to face how they felt about their inability to get justice for investors and collect any money. DOJ attorney Daniel A. Spector scowled at my question and instead of answering it demanded to know my name and who I report for. I said my name was Teri Buhl and you should clearly know who I report for now. (Spector’s predecessor who started the NIR Group case had interviewed me in 2009 to get help finding NIR investors Ribotsky had lied to so I know the DOJ had been reading my reporting.) Attorney Spector’s ego kicked in and gave me a smug look saying they can’t comment on the case except what I heard them say in court. Now after a case is over the DOJ can comment and usually issues a press release. But in this case the PR girl for the DOJ admitted since there was no jail time for Dworkin there wouldn’t be a public comment. Meaning they didn’t want to promote a case that got so little for investors.

As I watched the SEC attorney and the DOJ boys leave the court room and slink into the elevator I did something I rarely do when asking subjects of a story questions. I asserted my opinion. I looked them both in the eye and said, “You should be ashamed of yourself for not doing more for the defrauded investors. You had this case handed to you an a platter.”

Attorney Spector’s rebuttal was silence and later in the day he refused to get his press person to answer how much Dworkin was ordered by the judge to pay in a forfeiture bond. The bond was ordered in court but the amount was not mentioned. This was public record and they had to answer my reporter question. Instead they stonewalled me and we had to wait a few days to print the news of Dworkin’s sentencing at Growth Capitalist until all the court documents from the hearing were filed online. Dworkin received NO jail time, no penalty fine for his three felony convictions, and only a forfeiture bond to give back the $400,000 he had taken in bribes to bring PIPE deals to N.I.R. Group. And to this day we don’t know if the government will even collect that from him given he can’t earn big money working on Wall Street any more and he told the court his home is in foreclosure.

For those of you familiar with Ribotsky I have uploaded a copy of his unsecured creditors. Tom Sporkin, securities attorney at Buckley Sandler who was a former SEC enforcement lawyer, told me it is very hard to get a bankruptcy court to forgive a government fine so Ribotsky will technically still be liable for the $14.5 million the SEC is supposed to extract from him. But chances of that happening are zero to none in my view. I’d expect Ribotsky to end up moving to the Cayman Islands. A place one of his former best friends told me he often took a private jet to and visited an off-shore bank; after he’s done telling an American bankruptcy court he has no money to pay $36 million back.

Ribotksy attorney Doug Hirsch letter to Judge in SEC case over lack of ability for Ribotsky to ever pay SEC fine.

Ribotsky Attorney Letter to Judge Over Nonpayment by Teri Buhl

Ribotsky List of Bankruptcy Creditors

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Corey Ribotsky Bankruptcy Creditors by Teri Buhl

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Plainfield Asset Mgt Investors Insulted by Ex- Hedgie Executive’s Cheap Cash Offer

Marc Sole former Plainfield Asset Mgt PM

A former top dog portfolio manager at hedge fund Plainfield Asset Management, Marc Sole, is using the funds of his new hedge fund to try and buy out remaining investors in the now defunct Plainfield for a discount. According to offer documents seen by this reporter Sole, who now works for $4 billion Hudson Bay Capital, offered investors in four liquidating Plainfield funds 52 cents on the dollar. The problem is investors say they never received a transparent valuation from Plainfield, or the liquidator PwC Cayman, of the remaining amount of their interest in the funds.

Plainfield made international headline news in 2008 for gating their $5 billion hedge fund and locking investors from cashing out. The fund founded by Max Holmes, who now teaches at NYU’s Stern school of business, was investigated by the SEC for inflating investors assets to receive excessive fees. The SEC cleared the fund of its investigation in June 2012, according to a letter from the SEC, but Holmes was extremely slow in winding down the fund. Plainfield 2008 Liquidating Ltd. and Plainfield 2009 Liquidating Ltd. were put into voluntary liquidation in the Cayman Islands on December 31st 2013 according to public filings at gazettes.gov.ky According to investors, the portion of assets in these funds is only a sub/residual piece of what Plainfield had originally invested in.

Plainfield was also investigated by the Manhattan D.A. for its loan to own practices with small cap companies but was never charged by the D.A. for wrong doing.

Sole started with Hudson Bay in 2011, he was one of Max Holmes right hand guys helping pick investments for the failed fund. The Hudson Bay Absolute Return Credit Opportunities Fund made the offer to Plainfield investors, who are mostly institutional money, on December 16th 2014. Investors were given only 30 days to decide if they want to take the deal. Ian Stokoe and David Walker are running the Plainfield liquidation at PwC Cayman.

Sole chose to enlist the help of Plainfield’s former General Counsel Thomas X. Fritsch who is now an attorney for white-shoe Wall St. law firm Boies, Schiller & Flexner LLP. Fritsch is known for his dirty tactics defending Plainfield after the media was questioning the ethics of the hedge fund leadership. In 2011 I published a story showing Max Holmes caught on camera encouraging his staff how to avoid possibly incriminating emails by cc’ing Fritsch on the communication to claim attorney client privilege.

Unlike investors, Sole and Fritsch who worked as senior executives at Plainfield through its hype and downfall should have some sense of what assets are being liquidating and judge what value they could fetch on the open market.

One institutional investor who received the Hudson Bay offer told this reporter in an email, “Needless to say as an LP I find this offer in extremely poor taste and offensive. Are Sole and Fritsch that desperate to make a buck that the only way they can do it is to use inside info to screw over LPs? Shameful.”

Fritsch and Sole did not return a request for comment at press time.
The same Plainfield investor said, “We don’t have any visibility/transparency from Plainfield to ascertain current value. Our firm wrote off significant amounts in prior years. This is a stub/residual piece. We didn’t even dignify the offer [from Hudson Bay] with a response.”

It’s unclear how many Plainfield investors took the Hudson Bay offer which expired on January 15th 2015.

Plainfield’s website says, “At the end of May 2012, Plainfield substantially completed the liquidation of the funds which it managed and deregistered, in good standing, from the S.E.C.” Legal filings in the Cayman’s obviously show there is more liquidation to be done. Why Marc Sole is now offering investors some discounted cash for the fund’s remaining investments is unclear.

Hudson Bay Offer Docs Plainfield 2008 Lidquidating LTD by Teri Buhl

Social Rejection?: Hedgie Steve Cohen Wants Out of East Hampton

Stevie Cohen Social Network

The world’s most infamous trader wants to get out of East Hampton, NY. Yesterday I reported for the New York Observer that Stevie Cohen, of SAC Capital, is trying to broker a private deal to sell a $60 million ocean front home he bought less than a year ago. His reasoning, according to a person on the deal, is East Hampton is ‘too Jewish’ and he has instructed people to start looking for another home in other Hampton enclaves.

This one real estate transaction has fueled a social media debate about what he’s really doing. Having lived and worked among Cohen-ites and his SAC Captial traders for the last decade out in Connecticut’s gold coast I don’t think his comment is a signal of anything anti-Jewish. Instead I believe it shows his social network could be failing since the hedge fund he founded plead guilty to supporting a culture of massive inside trading.

Cohen paid the highest fees to broker dealers who moved his trades for over a decade but according to people who worked with him, starting from his early days a Gruntal & Co, they hated him because of the way he did business. I’ve been told stories of dealers at Lehman leaking other funds trade volume to Cohen and Cohen even funding smaller hedge funds to use them to create liquidity when he wanted to short a stock. The years of alleged cheating to beat the markets has left sour grapes in mouth of many on Wall Street. And now that he’s shutting down his large hedge fund his volume of fee paying to The Street will shrink. This could mean people aren’t as motivated to play friendly with the Cohens in their social time.

Stevie Cohen Family photo

Before we ran the story about why he wants to sell his East Hampton home I had multiple conversations with Cohen’s outside pressman (aka his block and tackle Flack) Jonathan Gashalter about what was going to be reported and he expressed anger at the idea we’d print the ‘too Jewish’ comment. He also would not go on the record to say neither house is up for sale before he went to print. No one knows what’s really in this hedgie’s mind when he said it and I’m sure Cohen never thought it would get repeated. Stevie Cohen has gotten stories held or changed for years through Gashalter but as the market ( and my peers in the media) are apparently waking up to how he operates it was refreshing to see the New York Observer stand by the news report and my reporting.

The news on anything Cohen, or what his family, does isn’t going to stop. Nick Verbitsky, director of Frontline’s new blockbuster film ‘To Catch a Trader’, told me the FBI even admitted that have three stock trades they are still investigating that could lead to criminal charges against Cohen. It’s my understanding one of them has a whistleblower willing to flip on Cohen; which is something we have yet to see in the DOJ’s seven plus years of trying to nail Cohen for inside trading.

Even if the DOJ is never able to get a criminal charge against Stevie, how the markets and his social network respond to what ‘they think’ he’s done is much more of a barometer for how The Street will or won’t police itself.

CT Hedgie Greg Imbruce Charged by State for Investor Fraud

Greg Imbruce of ASYM

A New Canaan, Conn. hedge fund manager was charged for violating at least seven state securities laws this week including fraud and misleading regulators. Howard Pitkin’s team at the CT Banking commission made a bold move and issued a cease and desist order against Greg Imbruce of Stamford-based ASYM Capital in an attempt to stop him from managing his investors money. Imbruce alleged illegal actions against his own investors was first reported by me last year for finance trade publication Growth Capitalist. The middle-age hedgie, with three young children, is looking at fines of over one million dollars if the State banking regulator is able to find him guilty on all counts.

Imbruce specializes in oil and gas investments and got his start in the sector by managing money for the Madoff family. I previously reported he mislead his high net worth investors in ASYM Capital about the FINRA rule 105 violations he was sanctioned and fined for while working for Madoff Securities. Local New Canaan resident Bill Mahoney and Brad Higgins were part of the aggrieved investor group who used a top civil litigator, Jon Whitcomb, to fret out the layers of fraud Imbruce went through to deceive his investors. Whitcomb sued two years ago and, as previously reported, the CT Banking Commission started investigating earlier this year after internal whistleblowers, documents discovered from civil litigation, and my reporting came to light in the public eye.

Imbruce has since fought tooth and nail to stay managing his fund and keeping his alleged fraud from his social community in New Canaan and the Stamford Yacht Club where he is an active member and sailor. According to people familiar with his actions he even personally called the local AOL Patch reporter who wrote about the CT banking commission press release yesterday and threaten to sue if the story was not taken down. He would have no basis for a libel lawsuit since the reporter just rewrote the Banking Commission lawsuit but that didn’t stop him from threatening. I have witnessed Imbruce taking aggressive tactics to intimidate and silence internal whistleblowers and his own investors who have spoken out about his alleged fraud for over two years now.

This back-street bully who grew up in Westport, CT and attended Staples High School could be facing a ban from ever working as an investment advisor again; meaning he can’t run a hedge fund and earn fees from other peoples money. But how much of his net worth he’d have to give up because of his alledged market abuse is yet to be determined. He moved ownership of his $1.4 million New Canaan home into his wife’s name when he first got whiff of his investors planning to sue him. A move that could be considered fraudulent conveyance. The investors were able to kick him out of some aspects of managing the assets in the fund but at present Imbruce is still set to earn his carried interest if an oil and gas company the fund owns, Starboard Resources, has a liquidity event.

Jon Whitcomb of DISERIO MARTIN O’CONNOR & CASTIGLIONI LLP told this reporter,

“This is certainly a confirmation of what you’ve been reporting on and what my clients have been alleging. He can no longer claim that this is a fictionalized account manufactured by one reporter and fueled by frivolous legal tactics. My client-investors, including some New Canaan residents, deserve this vindication. Aside from the fraud charges, It speaks volumes that one of the State’s charges is for wrongful withholding of documents. My investors have been trying to get information regarding their investments for three years, to no avail, begging the question, what is he hiding?”

Imbruce attorney did not return a call for comment. This is the third attorney he’s hired to fight the CT Banking Commission allegations and the investor claims. Usually hedgies facing fines and bans from regulators settle but not Greg Imbruce he refuses to admit guilt. The CT Banking commission can not issue criminal charges but the DOJ could still bring actions against him for investor fraud because he told his investors he had his own money in the fund or for misleading the CT Banking Commission during their investigation. Since Imbruce was managing less than $100 million it is unlikely the Securities and Exchange Commission would take on a case like this.

Banking Commissioner Howard Pitkin is leading the charge in going after hedge fund fraud in CT, which domiciles a large portion of the world’s hedge funds. Unfortunately we rarely see State’s Attorney David Cohen go after Wall Street fraud although he has the power to charge criminally.

Whitcomb expects more investors to file additional civil litigation against Imbruce. Look for continued covering on this alleged fraudster at Growth Capitalist next year.

Hedgie Investors file Securities Violations Complaint against Greg Imbruce with Texas Regulators

Greg Imbruce of ASYM

New Canaan hedge fund manager Greg Imbruce is back in the hot the seat. I reported for Growth Capitalist that high net worth investors from Connecticut and Texas filed an explosive amended complaint that says Imbruce took his largest investors’ money and represented to his other limited partners that it constituted his own personal investment. A former staffer for Imbruce’s ASYM funds, as well as a multitude of other limited partners, all swore in signed statements to the Connecticut Banking Commission that Imbruce lied to them about having ‘skin in the game’ when he was soliciting investments into his funds. This is similar behavior to how we saw the SEC come down on two other local CT hedge funds Aladdin Capital and New Stream.

In recent months Imbruce investors voted him out as general partner in a move to eliminate him profiting from the possible sale or IPO of an oil gas portfolio company the funds own called Starboard Resources. Starboard filed SEC documents this month that show it intends to go public. A transaction Imbruce could profit handsomely from if he did not have issues with looming securities violations in the state of Connecticut and Texas. Either state could issue cease and desist order. But Imbruce isn’t taking this sitting down and refuses to go, claiming as General Partner (with funds he allegedly didn’t actually invest) he gets to vote along side his limited partners on his ousting as the hedge fund manager. Investors are now basically dependent on the old laws the Connecticut Banking Commission had, before the implementation of Dodd Frank, to help them ban Imbruce as an investment advisor and take away his ability to earn performance fees.

A letter seen by Growth Capitalist shows how the Connecticut Banking commission, under Howard Pitkin’s reign, is responding to funds with smaller amounts of assets under management. Imbruce had asked to be exempt and not fined for failing to file with the state that he is conducting business in as an investment advisor. But the Banking Commission denied his request and issued an opinion that he DID have to register with the state. They also warned him regardless of if he registered with them or not they could still come after him for fraud. The banking commission doesn’t have the ability to charge Imbruce criminally but does refer financial fraud cases to the Justice Department. If Justice got involved they could charge Imbruce with wire fraud for his alleged false statements made in marketing materials sent to investors in other states. I previously reported on the Banking Commission investigation into Imbruce for Growth Capitalist in March.

Now I’ve learned his investors in Texas filed a complaint with the Texas Banking Commission on June 16th and the Texas regulators have responded they are looking at the complaint. Still, the investor fraud lawsuit against Imbruce has been going on for one year now with slow progress made on getting him to settle or leave the fund. Investors did force him off the board of Starboard and took away his control of the company. Also 87.5% of investors in all three funds Imbruce runs finally voted to remove him as the hedge fund manager. They replaced him with Charles Henry III who is not taking fees to run the fund and is also a limited partner. Henry is there to basically collect votes now.

Imbruce tried a tricky legal tactic this January when he offered his investors rescission and restitution of their full investment into the fund plus 6% interest. This means he planed to give them back their full investment if they stopped suing him. Imbruce hoped if the investors did not respond within 30 days to the rescission deal they could not have sued him in CT state court for securities fraud. But the lawsuit shows investors learned Imbruce didn’t have the millions he promised to pay back in a bank account. In Texas this false promise, which reads like writing a bad check to get a deal done, can be a civil fraud charge.

Texas Securities Act section 33H (1) says

The offer shall include financial and other information material to the offeree’s decision whether to accept the offer, and shall not contain an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.

If the investors can prove in court Imbruce didn’t have the cash he made in the rescission offer that’s clearly an untrue statement that would violate the law and might have criminal repercussion.

Imbruce also operates Glenrose Holdings, another investment advisor firm that he refuses to register with the state of Connecticut. That business has recently done deals with investors in a small penny stock called American Petro Hunter. Before he did energy deals for the Madoff family fund (which earned him a FINRA violation) he was analyst on the energy research desk for Jefferies.

Imbruce hired a former enforcement lawyer with the banking commission Rick Slavin to defend him against the Banking Commission investigation and his investors fraud suit. Attorney Slavin of Cohen & Wolf told me, “Mr. Imbruce has only acted in the best interests of all limited partners while achieving significant returns for his investors. Mr. Imbruce has done nothing wrong. Under the circumstances he will respond more completely at the appropriate time.”

Imbruce hasn’t actually paid his investors any returns in recent years or shown them his books even though investors made multiple request. The next step will be for the investors to file a books and records request in Delaware Chancery Court. A move we saw as very fruitful for another New Canaan investor Peter Deutsch. As I previously reported Deutsche was able to get the courts to give his attorney power to do a Marshall raid on the home of a China stock executive involved in ZST Digital. Deutsche as a result got records showing all kinds of fraud and is near a mega million case settlement with the China company.

Imbruce, who is an avid sailor and member of Stamford Yacht Club, recently bought a $2 million home at 92 Turtleback Road in New Canaan. Around the time he learned his investors were going to sue him town records show he transferred the home into his wife Alana’s name for $1 dollar. That transfer is also now part of the investor fraud suit against him with a claim of fraudulent conveyance of assets.

The investor’s attorney (another New Canaan resident) Jonathan Whitcomb would not comment on his clients litigation.

CT Banking Commission Investigation Letter to Greg Imbruce by Teri Buhl

Hedgie Greg Imbruce under Investigation by CT Banking Commision

Arrested New Stream Executive Bart Gutekunst

A New Canaan, Conn. man who owns a hedge fund called ASYM Energy is being investigated by Connecticut regulators. I reported at Growth Capitalist yesterday, Greg Imbruce allegedly offered a New Stream Capital founder a kickback if he sold oil and gas assets to Imbruce at a discounted price while New Stream was in bankruptcy. The deal involved a SPAC sponsored by Greg Sachs of Sachs Capital Group that was never finalized. Imbruce is currently facing an investor fraud suit filed by high-finance men who live in New Canaan and Texas. The Connecticut Banking Commission is also investigating Imbruce for misleading his investors about the lack of his own money invested in the fund and other possible violations.

I previously reported at Growth Capitalist on the New Stream founders arrest for 19 counts of Securities and Wire fraud. Bart Gutekunst, of Weston Conn. was the New Stream executive named in the report for being offered a kickback. Gutekunst, through his attorney, denied being offered a kickback but Imbruce was mum about it. Imbruce attorney Rick Slavin, of Cohen and Wolf, even admitted to the Banking Commission investigation when I interviewed him last week and said “How can you report that it’s confidential”. Welcome to the world of whistleblowers Slavin.

I wrote at Growth Capitalist:

According to a person who worked at ASYM, Imbruce offered Bart Gutekunst, co-founder of New Stream, a kickback of around $1 million if he got the price lowered. Accepting a kickback for a lower price for the oil and gas assets could have been a breach of fiduciary duty since Gutekunst was in charge of getting the best price possible for creditors of his hedge fund’s bankruptcy.

There is a lot great detail in the Growth Capitalist story describing how Imbruce appears to attempt to inflate assets that would have rolled into the SPAC to make it look like a higher valuation to the investing public. There are a bunch of well known hedge funds invested in the SPAC like Bulldog Investors, AQR and Pine River Capital. Luckily the hedge fund running the SPAC shied away from Imbruce after the initial due diligence inspection. They found his FINRA violations while working for Madoff Energy that he apparently never likes to tell anyone about.

I’ve reported on Imbruce troubles with lawsuits before here. He is an active sailor on the Connecticut Sound race scene and a member of the Stamford Yacht Club.

Arrested New Stream Executive Bart Gutekunst

Arrested New Stream Executive Bart Gutekunst


Greg Imbruce of ASYM

Greg Imbruce of ASYM

Editor’s Note: You can see some of the deal docs on the busted SPAC deal by Imbruce and New Stream here and here.

SEC Fines SAC’s Steve Cohen Millions but is Afraid to Say his Name

Stevie laughing with wife Alex at the SEC

SAC Capital run by Greenwich hedge fund manager Stevie Cohen agreed to settle insider trading violations with the Securities and Exchange Commission yesterday for $614 million. The regulator amended its complaint from November 2012 when it sued a SAC trader Matthew Martoma for making triple digit millions off inside info on two drug stocks. Martoma who worked at a division of SAC Capital called CR Intrinsic was as arrested by the Justice Dept and faces years in jail. I talked about the new information in the SEC complaint with RT’s most popular TV host Max Keiser yesterday on a radio program. It’s a short fun 3 minute listen that you see here.

What I found most appalling about this settlement is the SEC lays out dates, times, and conversations that Stevie Cohen has with his employee about the inside information and then he trades on it to avoid millions in losses. Except the SEC won’t even directly name him in the lawsuit. Yep- they just call him portfolio manager A and add in one line at the beginning of the complaint that portfolio manager A is the founder and owner of SAC Capital. Who we all know is Steve Cohen of Greenwich, Conn.

Stevie laughing with wife Alex at the SEC

Stevie laughing with wife Alex at the SEC

The settlement has a ton of penalty fees in it and the SEC is flying their press flag touting it’s their largest insider trading settlement ever. But what kind of impact does this have on other participants in the market if they think you can just pay your way out of insider trading. Unlike Diamondback and Level Global, funds seeded by Stevie Cohen, who had to shut down from the stain of guilty inside traders at their firms; SAC Capital is business as usual. Cohen didn’t loose his securities license and he can afford the fine considering is net worth is now up to $9-10bn. His firm also doesn’t admit any GUILT.

It’s one of the biggest slaps in main street’s face because it shows if you’re the world’s most famous trader, and have enough money, you can just pay the government to allow you to inside trade.

Now the Justice Department has a bulls eye on Stevie Cohen and has tried to build a case to arrest him since 2006 and could still make an arrest. I mean the SEC’s case only flat out tells them how Stevie did the inside trade. But with the statute of limitations in these cases they only have till June this year to make a charge. Right now it’s looking like Stevie just bought himself a get-out-of-jail pass and he’ll be collecting more millions as he rounds GO.

New Stream Hedge Fund Executives Charged with Criminal Fraud

Today at 1pm in Hartford, Conn. federal court executives of Ridgefield-based hedge fund New Stream Capital were indicted on 19 counts of conspiracy, securities fraud and wire fraud. Tom Carson, DOJ pressman, confirmed the arrest of David A. Bryson and his co-founder Bart Gutekunst along with his CFO Richard Pereira last week. The case has been unsealed today. I first reported in 2009 the hedge fund was being investigated for investor fraud by the FBI at Hedge Fund Implode and continued to report on the fund’s bankruptcy and investor lawsuits for DealFlow Media and Forbes over the last two years.

The federal documents unsealed today also mentions a co-conspirator #2 labeled as a marketing and client relations person. This would be David’s sister, Tara Bryson, who I first reported was arrested for growing a pot farm in her Newtown, CT mansion with her boyfriend at Forbes. Tara Bryson went on to run a goat cheese farm and sell at local farmer markets in Fairfield County which include New Canaan. She was not charged with her brother today but did settle with the SEC in their civil suit against the fund for overvaluing assets and reaping millions in fees.

Also not in handcuffs today was Perry Gillies, the former GE executive and chief operations guy New Stream brought in to help communicate with investors and manage staff.

David and Bart used their homes as collateral for the $5 million bond. Rich, the CFO, only had to post a $300,000 bond. David’s wife Kristin Bryson was in court with him and does external public relations for IBM. The $3 million Bryson home in Ridgefield is up for sale – they bought it while David was running New Steam in 2006. All three plead not guilty and went home to their families in Ridgefield and Weston. The New Stream executives are facing over 100 years in jail if convicted on just five of the 18 counts of securities and wire fraud.

I’ve reported more on the history of New Stream, the names of funds that invested in New Stream, and how the investors led lawsuits built the government’s case for them at Growth Capitalist.
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