BSD
Veteren member
- Messages
- 3,819
- Likes
- 988
LOL !
"RUSSIAN ROULETTE
HERMITAGE CAPITAL'S FUND FALLS VICTIM TO FRAUD RING
NEW YORK POST
By KAJA WHITEHOUSE
August 28, 2008
Hedge funds have reputations for being shrouded in mystery, but a London-based fund that specializes in investing in Russia finds itself at the center of a story that's a downright thriller.
Hermitage Capital Management, a $3 billion fund that also invests in emerging markets, recently put out an investor letter that reads more like a spy novel than an update to investors about performance.
Indeed, the note describes police raids, fake companies and at least one murderer all connected to a twisted and complex fraud scheme hatched by thieves who stole millions from the Russian government.
Hermitage's July 23 letter, which was obtained by The Post, states that while thieves targeting the firm failed to get their hands on its assets, they succeeded in stealing millions from the Russian government by posing as Hermitage officials.
And earlier this month, the fund put out a press release saying officers from the Russian Interior Ministry had raided Moscow law firms hired by Hermitage to help end the fraud.
While it may sound like a tall tale, the person doing the telling is Hermitage founder William Browder, a respected financier who's known for making a mint by helping stamp out fraud in Russian companies until he was kicked out of the country in 2005 after having stepped on too many toes.
And backing his claims is London bank HSBC, which has filed criminal complaints in Russia as Hermitage's trustee.
"I've never seen anything like this in my life," Browder told The Post.
It started last summer when officials from the Russian Interior Ministry raided Hermitage's Moscow office - and the office of its attorney - on the grounds that it was a tax investigation.
Within months, Browder discovered the documents seized had been used to engineer a complex scheme to gain control of Hermitage's assets.
In short, the thieves used the documents to transfer three of Hermitage's holding companies to their control. For example, they replaced HSBC as trustee with a company that was traced back to a 41-year-old convicted murderer from a provincial Russian city.
They then concocted fake lawsuits to obtain a bogus $376 million court judgment against the Hermitage companies. That move armed the crooks with subpoena powers to search Hermitage's many bank accounts in an effort to grab assets in order to satisfy the court judgment, Hermitage said.
That tactic failed to produce the booty they were expecting because Hermitage unwittingly relocated its assets after Browder got bounced from Russia.
With Plan A dead, the thieves engineered an even more brazen scheme to use stolen Hermitage companies to defraud the Russian government.
By obtaining additional judgments against the holding companies, the hoaxers technically wiped away Hermitage's 2006 profits and were able to claim a tax refund in Russia in the amount of $230 million.
Despite the recent setback, Browder said "I think it's in everyone's interest that this thing is prosecuted and the culprits punished.""
LINK:
RUSSIAN ROULETTE - New York Post
"RUSSIAN ROULETTE
HERMITAGE CAPITAL'S FUND FALLS VICTIM TO FRAUD RING
NEW YORK POST
By KAJA WHITEHOUSE
August 28, 2008
Hedge funds have reputations for being shrouded in mystery, but a London-based fund that specializes in investing in Russia finds itself at the center of a story that's a downright thriller.
Hermitage Capital Management, a $3 billion fund that also invests in emerging markets, recently put out an investor letter that reads more like a spy novel than an update to investors about performance.
Indeed, the note describes police raids, fake companies and at least one murderer all connected to a twisted and complex fraud scheme hatched by thieves who stole millions from the Russian government.
Hermitage's July 23 letter, which was obtained by The Post, states that while thieves targeting the firm failed to get their hands on its assets, they succeeded in stealing millions from the Russian government by posing as Hermitage officials.
And earlier this month, the fund put out a press release saying officers from the Russian Interior Ministry had raided Moscow law firms hired by Hermitage to help end the fraud.
While it may sound like a tall tale, the person doing the telling is Hermitage founder William Browder, a respected financier who's known for making a mint by helping stamp out fraud in Russian companies until he was kicked out of the country in 2005 after having stepped on too many toes.
And backing his claims is London bank HSBC, which has filed criminal complaints in Russia as Hermitage's trustee.
"I've never seen anything like this in my life," Browder told The Post.
It started last summer when officials from the Russian Interior Ministry raided Hermitage's Moscow office - and the office of its attorney - on the grounds that it was a tax investigation.
Within months, Browder discovered the documents seized had been used to engineer a complex scheme to gain control of Hermitage's assets.
In short, the thieves used the documents to transfer three of Hermitage's holding companies to their control. For example, they replaced HSBC as trustee with a company that was traced back to a 41-year-old convicted murderer from a provincial Russian city.
They then concocted fake lawsuits to obtain a bogus $376 million court judgment against the Hermitage companies. That move armed the crooks with subpoena powers to search Hermitage's many bank accounts in an effort to grab assets in order to satisfy the court judgment, Hermitage said.
That tactic failed to produce the booty they were expecting because Hermitage unwittingly relocated its assets after Browder got bounced from Russia.
With Plan A dead, the thieves engineered an even more brazen scheme to use stolen Hermitage companies to defraud the Russian government.
By obtaining additional judgments against the holding companies, the hoaxers technically wiped away Hermitage's 2006 profits and were able to claim a tax refund in Russia in the amount of $230 million.
Despite the recent setback, Browder said "I think it's in everyone's interest that this thing is prosecuted and the culprits punished.""
LINK:
RUSSIAN ROULETTE - New York Post
