Hedge Fund Founder Hit With Multiple Federal Charges In Alleged Neiman Marcus Bankruptcy Scheme

TOPLINE

Daniel Kamensky, founder of the Marble Ridge hedge fund, was charged with fraud, extortion and obstruction of justice by New York federal prosecutors Thursday, according to a newly unsealed indictment, and could face 50 years in prison for allegedly mounting a pressure campaign against a rival fund to drop its bid for Neiman Marcus’ most valuable securities during its bankruptcy process and then trying to cover his tracks.

KEY FACTS

Crucial quote

“In a conversation with an employee of the investment bank, Kamensky went as far as to say, ‘Maybe I should go to jail.’  Today, we’ve removed the ‘maybe,’ and forced him to answer for his conduct,” FBI Assistant Director-in-Charge William Sweeney said in a statement.

Big number

$42 to $52 million. That’s how much money Neiman Marcus’ creditors said they lost by not being able to cash out their MyTheresa shares because of Marble Ridge’s actions in the bankruptcy, according to the Wall Street Journal.

Key background

Kamensky’s Thursday charges and arrest followed on the heels of Neiman Marcus suing his hedge fund August 27 over its pressure tactics, the WSJ reported. A DOJ watchdog group had found out about Kamensky’s alleged tinkering with the MyTheresa bids prior to the charges brought by the New York prosecutors. Kamensky told the government’s watchdog investigators that his actions were a “grave mistake.” Prior to the bankruptcy, Kamensky had taken legal action against the department store’s owners, Ares Management and the Canada Pension Plan Investment Board, accusing them of plundering Neiman Marcus for money when it couldn’t pay back its debts. Neiman Marcus was founded over a century ago, and grew into a nationwide luxury retailer that counted the even more upscale Bergdorf Goodman among its holdings. Neiman Marcus also became the first department store casualty of the coronavirus pandemic on May 7, when its owners filed for Chapter 11 bankruptcy. 

Further reading

Neiman Marcus Files For Bankruptcy, Felled By Store Closures And Too Much Debt (Forbes)

Neiman Marcus Sues Marble Ridge Over Alleged Bid Rigging (Wall Street Journal)