Hedge Fund Founder Guilty Of Bankruptcy Fraud

: Chris Lee Law Firm

  Filed under: News

Until last week, the term “hedge fund” was used primarily by WallStreet traders and financial gurus. After the GameStop Hedge Fund fiasco last week, more people than ever are paying closer attention to the role these accredited investors play in trading and the stock market contribution to the economy. However, not all spotlight results in the type of fame many desire. For one hedge fund founder, his 15 minutes of fame comes as the result of his role in attempting to defraud the bankruptcy system.

Daniel Kamensky, the founder of the New York-based hedge fund Marble Ridge Capital, pled guilty this week to one count of bankruptcy fraud. Kamensky admitted to his involvement with a scheme designed to bully other investors out of the bid for the assets of Neiman Marcus’ bankruptcy. His efforts were enacted to make way for his firm to acquire the assets for a lower price. Facing charges and a possible prison sentence of up to five years, Kamensky’s actions come at an even greater surprise as a former bankruptcy attorney who, should have known better than to willingly commit bankruptcy fraud, knew the risk and consequences of his actions.

Fraud Facts

Not only should Kamensky have known better than to risk his career, and possibly freedom, over such actions; the fact remains that bankruptcy fraud is not uncommon. Most people who find themselves on the wrong end of bankruptcy fraud may land there by mistake. A few common mistakes people often make when considering or filing for bankruptcy that could raise flags of possible fraud are:

  • Taking out new credit right before a bankruptcy filing
  • Taking out credit under false pretenses before, during, or after a bankruptcy filing
  • Transferring or selling assets right before a bankruptcy filing
  • Falsifying documents or misreporting your financial details

It is best to avoid these, and other,  mistakes at all costs. The bankruptcy process is a legal proceeding that requires a significant level of detail and scrutiny. Therefore, filing for bankruptcy should be done under the guidance of a Dallas bankruptcy lawyer.


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