Due diligence and operational risk in hedge funds» Hedge fund operational due diligence

Hedge Fund Executive’s “Assistant” Accused of Stealing HF Manager’s Credit Cards for Personal Purchases

HedgeFundOperationalDueDiligence.com — Tue, 06 Mar 2012 21:36:41 +0000

According to a recent article in the New York Post, famous hedge fund manager Todd Meister has accused his personal assistant, Russia native, Renata Shamrakova of opening up credit cards in his name and charging almost $1 million to it within a ten month period. Questions are being raised as to whether or not Shamrakova had a romantic relationship with Meister. If she is found guilty, Shamrakova could serve up to a year in prison for her felony offense. Shamrakova is also charged with tampering and obstruction of evidence.

Defense lawyer, Marc Agnifilo, believes that Meister allowed her to use the credit cards to purchase endless amounts of jewelry, clothes and trips.

Meister, who is known for his partying and fleeting marriage to Paris Hilton’s sister Nicky, denies participating in any romantic relationship with Shamrakova. The prosecution claims that Shamrakova sold a large amount of the jewelry that was purchased with Meister’s credit card on her business website.

Whether or not Meister and Shamakova were lovers, the situation highlights the importance of evaluating and monitoring reputational risk during the operational due diligence process. By performing operational due diligence, you can dive deeper on issues such as this that may affect the operational and reputational components of a fund.

Meister is a Harvard graduate who used to manage $2 billion in assets at his hedge fund, Priderock.

Shamrakova is being held on $450,000 bail.

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Corgentum Consulting releases their February Edition of Due Diligence News

HedgeFundOperationalDueDiligence.com — Thu, 23 Feb 2012 19:27:41 +0000

Corgentum Consulting has released their February issue of Due Diligence News. Due Diligence News covers the most recent articles on hedge fund operational due diligence, fraud and insider trading.

It also includes industry events and links to hedge fund operational due diligence blogs. Due Diligence News is where you can go for the latest in operational due diligence.

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Corgentum Consulting to Moderate Real Estate Private Equity Panel at Miami Conference

HedgeFundOperationalDueDiligence.com — Thu, 23 Feb 2012 19:22:20 +0000

Corgentum’s Jason Scharfman will moderate the Real Estate Private Equity panel at Opal’s Real Estate Investors Summit in Miami, Florida. The conference will be from April 25-27th.

Scharfman’s panel, Real Estate Private Equity, will cover the importance of operational due diligence for real estate and private equity funds. It will also tie into his upcoming book, Private Equity Operational Due Diligence.

This panel will also cover aspects of due diligence related to hedge funds investing as well. To sign up for the conference, click here

Also, look for updates on Jason Scharfman’s book release on April 10th.

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NJ Hedge Fund Under FBI Investigation After Partner and Investors’ Money Becomes MIA

HedgeFundOperationalDueDiligence.com — Fri, 27 Jan 2012 20:05:20 +0000

According to FINalternatives, Osiris Fund, a New Jersey based hedge fund, is under investigation after one of its’ partners, Peter Zuck fled with investor’s money. Osiris was unlike typical hedge funds in that it allowed investors to invest only a $150,000 minimum into the fund, as opposed to the standard $1 million.

Michael Spak, one of the three partners in the fund, reported Zuck to the FBI. He said that the situation was currently under investigation. Osiris was started in 2009 and Spak told FINalternatives, “The fund is a ‘hedged’ fund in the truest sense of the word. Our team’s objective is to immunize the volatility of the portfolio which in turn allows us to produce better than average returns consistently.”

Interestingly enough, according to Bloomberg data, the fund ranked third out of 3,527 top performing global hedge funds in April 2010. Since the start of the investigation, no money has been recovered and Zuck is nowhere to be found.

It was announced that Zuck was arrested in 1995 and spent over a year in jail for “misconduct by a corporate official.” Hedge fund operational due diligence would have revealed these public records as well as identified any other questionable aspects of the fund to investors. Investors should be wary of investing in a fund without performing any bit of ops dd because fraud is much more common than we think…

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