Daniel Kamensky, the hedge fund manager at the centre of the Neiman Marcus bankruptcy, has been arrested and charged with fraud, extortion and obstruction of justice for allegedly attempting to subvert a rival’s bid for one of the retailer’s most valuable assets.
The Marble Ridge founder faces a potential prison term if convicted. Two of the charges carry maximum sentences of 20 years.
The charges brought by Manhattan federal prosecutors, together with a separate civil lawsuit filed against Mr Kamensky by the US Securities and Exchange Commission on Thursday, stem from text messages and conversations between the hedge fund manager and investment bankers at Jefferies at the end of July, including one conversation in which Mr Kamensky is alleged to have attempted a cover-up.
“In a conversation with an employee of the investment bank, Kamensky went as far as to say, ‘Maybe I should go to jail’,” FBI assistant director-in-charge William Sweeney said on Thursday. “Today, we’ve removed the ‘maybe,’ and forced him to answer for his conduct.”
Mr Kamensky declined through a spokesperson to comment.
Prosecutors alleged that Mr Kamensky breached his legal duties as co-chair of Neiman’s unsecured creditors committee, which prevented him from profiting at the expense of similarly situated investors, when he tried to stop Jefferies from putting in a bid for shares in Neiman’s profitable online subsidiary MyTheresa.
Mr Kamensky, who began his career as a bankruptcy lawyer, had waged a years-long campaign to hold Neiman’s private equity owners accountable for what he alleged was a fraudulent attempt to move MyTheresa out of creditors’ reach. The owners, Ares and CPPIB, ultimately settled the allegations, allocating preferred stock in MyTheresa to unsecured creditors, including Marble Ridge.
Other recipients of the preferred stock included Estee Lauder, Chanel and other trade vendors who had little inclination to hold on to illiquid securities. Mr Kamensky wanted Marble Ridge to buy their holdings at a discount.
When Jefferies entered the bidding on behalf of another client who wanted to buy the MyTheresa shares, Mr Kamensky became “highly agitated,” and told the investment bank to stand down, prosecutors said.
“DO NOT SEND IN A BID,” Mr Kamensky wrote to one of the bankers, after learning that Jefferies planned to offer up to $0.40 on the dollar for securities that Mr Kamensky sought to acquire for as little as half that price.
The bank initially acquiesced, calling Mr Kamensky “a good relationship”, but the alleged scheme began to unravel when its executives simultaneously informed the creditors committee what had happened, prosecutors said.
When word of Mr Kamensky’s actions began to spread, the hedge fund manager “attempt[ed] to cover up the fraud”, prosecutors said.
As the conversation with Jefferies continued, Mr Kamensky appeared to reckon with how other creditors might react, prosecutors said. “They’re going to report this to the US Attorney’s Office, okay?,” he said. “The US Attorney is going to investigate this.”
Mr Kamensky admitted in a sworn interview with a US bankruptcy trustee that the phone call was one of the worst mistakes of his life and last month Marble Ridge told investors it would shut down.
Mr Kamensky could also face separate sanctions from the bankruptcy court. A judge is expected to approve Neiman’s restructuring on Friday.