In a statement, the U.S. Department of Justice said, it has charged Daniel Kamensky, New York-based hedge fund Marble Ridge Capital LP’s founder, with pressuring a rival not to bid for assets related to Neiman Marcus’ bankruptcy so that he could buy them at lower price points.
Marble Ridge Capital LP specializes in purchasing “distressed” assets and then later liquidating them for a profit. The hedge fund has been charged with securities fraud, wire fraud, extortion and bribery related to bankruptcy, and obstruction of justice.
Kamensky’s bail has been set at $250,000. He appeared briefly in a Manhattan federal court. His lawyers did not immediately respond to requests for comments.
According to prosecutors, Kamensky’s initiated his scheme on July 31, on learning that an investment bank had bid around 30 cents per share for securities tied to Neiman’s bankruptcy, above the 20 cents he hoped to pay.
Kamensky, 47, of Roslyn, New York, allegedly threatened to use his role as co-chair of the retailer’s official committee of unsecured creditors to block the higher bid, and stop doing business with the bank unless it backed off.
According to prosecutors, following the bank’s withdrawal of its bid, Kamensky attempted to cover his tracks by asking an employee to tell the committee and law enforcement he suggested the bank bid only if it were serious; the employee recorded the call.
“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,” said Kamensky. “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 termed the conversations with the employee as a “terrible mistake” and “profound errors in lapses of judgment,” said prosecutors.
The U.S. Securities and Exchange Commission filed related civil charges.
As of December 31, 2019, Marble Ridge had $1.2 billion of assets under its management. It announced the liquidation on Aug. 20 after Kamensky’s conduct began falling under scrutiny.
Kamensky founded Marble Ridge in 2015 after working as a bankruptcy lawyer and a partner for Paulson & Co, a hedge fund.
Neiman filed for Chapter 11 protection in May 2020.