July 14, 2006
More Swag Goes On the Block
An earlier post (here) discussed the July 15 auction of the property of former Patterson-UTI CFO Jody Nelson to recover some of the $77 million he embezzled from the company. Some of the property of Kirk Wright, founder and former CEO of hedge fund firm Investment Management Associates (IMA), will go on the block on July 28 as part of the firm's bankruptcy. Wright disappeared in early 2006 amid accusations from the firm's clients, which included a number of former NFL players, that their assets had disappeared from the firm's funds. Wright was found in a hotel in Miami in May, and remains in jail while the government appeals an order granting him bail. A grand jury issued a superseding indictment on June 28 charging Wright with 24 counts of mail and securities fraud, on top of a single mail fraud count charged in a May 25 indictment, related to the disappearance of virtually all the money invested in the firm, which the government alleges had effectively devolved into a ponzi scheme (see U.S. Attorney's Office press release here). Wright supplied investors with reports indicating the funds had over $180 million in assets, but when the government finally seized its accounts there was less than $500,000 there.
The upcoming auction (property description here) involves a 9600 square foot home in East Cobb, Georgia, a luxury loft near the Georgia Aquarium, all the equipment and furnishings from IMA's offices in East Cobb, and three cars from Wright's collection, described as follows: "The Aston Martin is a gray 12 cylinder 2003 Vanquish 2 door coupe with blue interior and only 4,266 miles. The Bentley is a blue 12 cylinder 2005 Continental 2 door coupe with tan interior and only 7,890 miles. The BMW is a classic silver 1967 2000CS in excellent condition, with 98,000 miles." Unfortunately for the victims of IMA's collapse, even if these items fetch top dollar -- which is unlikely in a fire-sale situation -- that will be a drop in the bucket compared to the losses the investors have suffered. The NFL players have sued the league and the players union for certifying IMA and Wright as part of its Financial Advisors Program, a seal of approval that does not appear to have included much protection; they are seekig to recover the $20 million they invested in the firm's hedge funds (see Atlanta Journal-Constitution story here). (ph)
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