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International Management Associates

Fraudster Kirk Wright Checks Out

Toomre Capital Markets LLC ("TCM") has previously written about the hedge fund con artist Kirk S. Wright and his now-defunct Atlanta-based hedge fund management firm International Management Associates. (Interested readers might want to review the TCM posts entitled Update on Kirk Wright and IMA hedge fund fraud scandal or Kirk Wright, IMA Hedge Fund Manager, Arrested in Miami Beach.)

According to The International Herald Tribune, on Wednesday May 21st 2008, this con artist was convicted in Atlanta Federal court of many fraud counts that effectively would lead to spending the rest of his life in Federal prison upon sentencing. From the article,

According to authorities, Wright and his company collected more than $150 million spread across thousands of client accounts since 1997 and used false statements and documents to mislead some of them to believe the value of those investments was increasing. Much of that money is missing.

Prosecutors said Wright had been lying to his investors since at least 2001 about their investments' performance and the balances in their accounts. He reported substantial investment gains almost every month; the evidence revealed that he lost almost every dollar invested in the market, prosecutors said.

They said he diverted millions of dollars of investor's money for personal expenses, including cash for himself and family members, jewelry, house renovations, a $500,000 wedding, up to six luxury vehicles, and multiple pieces of real estate, mainly in Atlanta and California….

According to the U.S. Attorney's Office in Atlanta, Wright could receive a maximum sentence of 710 years in prison, a fine of up to $16 million and be ordered to pay restitution to the victims. He already has been hit with a $20 million judgment as part of a civil suit filed by the Securities and Exchange Commission. Sentencing is set for Aug. 26.

Krik S. Wright Order To Pay ~$20 Million in S.E.C. Lawsuit

On February 12th 2007, Bloomberg is reporting that the former head of hedge fund International Management Associates, Kirk S. Wright, has been ordered to pay almost $20 million in a lawsuit brought by the U.S. Securities and Exchange Commission. As reflected in this SEC statement, a U.S. District Court judge in Atlanta has ordered Wright to forfeit $19.8 million and pay a $120,000 fine. "The SEC, in the suit filed last year, alleged that Wright falsified statements about the amount of his firm's assets and inflated the rates of return for the seven hedge funds under his management. Clients, including some NFL players, also sued Wright last year after they couldn't retrieve money from their accounts."

Kirk Wright, IMA Hedge Fund Manager, Arrested in Miami Beach

The Wall Street Journal reports on Wednesday, May 17 2006 that Kirk S. Wright, the former head of International Management Associates, a hedge fund which appears to be missing more than $100 million in investor funds, was arrested in Miami Beach after being on the lam for more than six weeks. The story states:

Kirk S. Wright, founder and CEO of International Management Associates LLC, was apprehended at a Miami hotel after authorities received "numerous leads from across the country," said Stephen Emmett, a spokesman in the FBI's Atlanta office. Mr. Wright, 35 years old, was charged with criminal mail fraud in Atlanta in late March. Mr. Wright's investors, including several former professional football players, invested more than $110 million in the firm's funds since Mr. Wright started the firm in 1996. To date, authorities and creditors have located less than $200,000.

A Feb. 17 story in The Wall Street Journal detailed several investors' inability to withdraw their money from the firm's funds. State and federal regulators subsequently stepped up investigations into the firm. According to one person familiar with Mr. Wright's arrest Wednesday, he was apprehended with more than $28,000 in cash, and a Mercedes vehicle. Mr. Emmett, the FBI spokesman, said he wasn't immediately able to confirm these details. At the time of his arrest, Mr. Wright's wife was also present, according to people familiar with the matter.

Feds Charge Kirk Wright in International Management Associates Case

Late on Wednesday March 29, 2006, MarketWatch published another story about Kirk Wright and his failed International Management Associates hedge fund management firm. In this story, it is revealed that the Department of Justice unsealed a March 10 criminal complaint against Wright. This now means that his arrest is being sought by both the State of Georgia and the Federal Bureau of Investigation. "The complaint alleges a fraud involving $150 million to $180 million in missing investor assets managed by Wright's funds, International Management Associates and International Management Associates Advisory Group, said U.S. Attorney David Nahmias in a statement." The federal complaint charges mail fraud, executed by mailing a set of false asset statements to IMA investor Stephen Atwater. The charge carries a maximum sentence of 20 years in prison and a fine of up to $250,000 on conviction.

Binghamton University Graduate Kirk Wright in Hiding

The Press & Sun-Bulletin of Greater Binghamton New York has published a story entitled BU graduate in hiding after taking money and running that has further information on Kirk Wright and his International Management Associates hedge fund. The article written by Jeff Platsky starts:

Here's a Binghamton University alumnus who won't be listed with Tony Kornheiser, Paul Reiser, Billy Baldwin or Camille Paglia as distinguished graduates. You won't read about him in the university's Alumni News or its weekly newspaper. But you can read about him on the front page of last Thursday's Wall Street Journal. And you can be sure the university won't ask for publication rights to the story. That's because this graduate is accused of bilking investors of up to $185 million in an Atlanta-based hedge fund.

Most Unique Daily Visitors Yet to Website – Thank you!

Today, March 9th 2006, has been the busiest day ever here at the Toomre Capital Markets website with slightly more than half of all unique visitors looking for information on some variation of Kirk S. Wright, International Management Associates, Kasandra Pantoja (Wright’s former wife), Nelson Keith Bond or Fritz N. Harper. This alleged hedge fund fraud has stirred up quite some curiosity and from the number of unique visitors one might well think that there are more than 500 investors in the IMA hedge funds.

The other top five inquiries of the day appear to be:
2. GLG Partners and/or Phillipe Jabre
3. Warren Buffet’s Annual Investor Letter
4. Jack Meyer and Convexity Capital Management
5. The 3 Ms of Risk Management – Monitor, Measure and Manage

One of Toomre Capital Markets LLC objectives in devoting such time to creating original content for this website is to build a community of people interested in Enterprise Risk Management topics. Hence, we strongly urge the reader to register and add comments to these postings.

WSJ: Troubles at Atlanta Hedge Fund Snare Doctors, Football Players

The Wall Street Journal on March 9, 2006 has published a long front page article on Kirk Wright and his International Management Associates hedge fund entitled Troubles at Atlanta Hedge Fund Snare Doctors, Football Players written by Ian McDonald and Valerie Baurlein. This premium content article on the Wall Street Journal web site contains many details and is well worth reading completely to gain a better understanding of what happened at IMA. One interesting section of this story reads as follows:

Period of Expansion

Between 2000 and 2004, the firm opened offices in Las Vegas, Los Angeles and New York, and began drawing substantial money from outside of Atlanta. In 2004, it hired Thomas H. Birk, a Los Angeles-based salesman who previously raised money for several major brokerage firms. Mr. Birk, who is white, would troll Western golf courses talking up Mr. Wright's investment record, according to clients who invested through him. Mr. Birk eventually raised more than $10 million, his lawyer says.

In early 2004, Drs. Bond and Harper started a new unit of the firm, through which Mr. Wright was to manage two new funds, according to a sworn statement by Dr. Harper in the SEC litigation. In mid-2004, Dr. Bond persuaded Mr. Atwater, the former Denver Bronco, and Mr. Bishop, the former Tennessee Titan, to invest, the two investors say in affidavits. Mr. Atwater became an employee of the firm, and together with Mr. Bishop, brought in several other football players, including Mr. Davis, the former star Bronco running back, and Mr. Smith, a current wide receiver. The players and their friends invested some $15 million, according to a lawsuit they later filed against the firm and its principals.

Messrs. Atwater and Bishop chose to invest in a so-called House Account, for which Mr. Wright provided no prospectus, both men said in affidavits. Mr. Wright told Mr. Bishop the account could post returns as high as 10% in as little as a month, Mr. Bishop said. In his affidavit, Mr. Atwater said he became uncomfortable with the firm's promises, and with the fact that "Mr. Wright was in the office far less often than I would expect." Mr. Frenkel, Mr. Wright's lawyer, has said that Mr. Wright often managed money while outside the office.

Drs. Bond and Harper had hired an accountant, Kenneth Turchin, for the new unit. On Aug. 23 of last year, Mr. Turchin informed Dr. Harper by email that the firm appeared to have violated various securities and tax laws. He wrote that two new International Management funds hadn't done any trading since May and had posted losses, but had reported gains to investors. The email was attached to Dr. Harper's sworn statement in the SEC case. "I can't comment on the allegations in that email," Mr. Wright said in a recent interview.

On Sept. 20, Dr. Harper forwarded the email to C. Gladwyn Goins, a former lawyer for the SEC who until January served as International Management's lawyer. That same month, the SEC received a tip and began an inquiry, according to one person close to the investigation. Mr. Goins didn't return calls seeking comment, and the SEC's lead investigator declined to comment.

In October, Dr. Harper, the salesman Mr. Birk, and the two former players, Messrs. Atwater and Bishop, met with Mr. Wright. Mr. Wright showed them a handful of account statements from Ameritrade, an online brokerage service owned by TD Ameritrade Holding Corp., which listed total assets of roughly $155 million, but he wouldn't let anyone touch them, according to Mr. Harper's declaration. Mr. Atwater was concerned by Mr. Wright's "evasive and ambiguous" answers, according to his affidavit. The statements with the Ameritrade logo were fake, according to a sworn statement by an SEC investigator. Mr. Wright declines to comment on allegations contained in the suit.

Toomre Capital Markets would like to ask why a month elapsed between when the new accountant, Kenneth Turchin, raised the flag about possible violations of various securities and tax laws and when that information was forwarded to IMA’s counsel on September 20th, 2005. Clearly, the internal controls at International Management Associates failed, but why was not more action immediately taken when someone saw that there was no trading, the accounts declined in value and yet the fund investors were given reports of positive returns?

Kirk Wright and International Management Associates due in Federal Court 3-08-2006

Kirk Wright and his hedge fund firm, International Management Associates, have been sued in Georgia state court by some current and former professional football players in mid February 2006 when their money was not returned as requested. According to this Associated Press story, “listed as plaintiffs in the state lawsuit are Terrell Davis, Steve Atwater, Rod Smith, Ray Crockett, Blaine Bishop, Al Smith - all current or former Denver Broncos - and Clyde Simmons, a former longtime player for the Philadelphia Eagles. Their attorney, Mark Trigg, has not returned messages left at his Atlanta office.”

The U.S. Securities and Exchange Commission then filed a lawsuit February 27th against Wright and his firm, alleging five counts of fraud. The first hearing on the federal case is set for Wednesday, March 3rd. However, before answers can be found about what happened to hundreds of millions of dollars poured into the Atlanta hedge fund group, Kirk Wright must be located first. Based on the large number of first-time visitors to the Toomre Capital Markets site looking for information on Kirk Wright or IMA, there is strong interest in locating this fugitive. However, not even Wright’s attorney, Jacob Frenkel, would say whether his client will make an appearance. Mr. Frenkel also would not comment on how recently he had spoken with his client, who is now considered a fugitive. However, he did say, "Various counsel have communicated with the government on his behalf since the allegations arose.” The article continues with:

Rocky Mountain News: Troubles Escalate for Kirk Wright of IMA

The Rocky Mountain News has more news about Kirk Wright and International Management Associates on March 4, 2006 in an article written by James Paton entitled Fund Chief's Troubles Escalate. According new court papers referenced in this article, Kirk Wright, the Harvard-educated hedge fund manager who was the head of International Management Associates, the hedge fund firm accused of swindling hundreds of investors, including three former Denver Broncos player and one of the team’s active wide receivers, Rod Smith, has also stiffed his ex-wife to the tune of approximately $1 million. Kirk Wright supposedly never paid the sum he owed his former wife, Kasandra Pantoja, as part of their divorce settlement from when they officially split up in April 2005. Also as part of the divorce decree, Wright separately was obligated to pay $20,500 a month for child support and alimony to support his ex-wife and their four children, the court documents state. While in previous months he had paid ahead of time, he typically was short $500 per month accord to the court records. Then,

On Feb. 20, an apparent child-support and alimony payment was made in odd fashion. A "mysterious" package stuffed with $30,000 in cash was dropped off at the front door of his ex-wife's grandfather, her lawyer said. Wright phoned former wife Kasandra Pantoja that day to say he wanted to "keep his end of the bargain," according to the documents, added to the file in the Securities and Exchange Commission's case against the hedge fund.

Her lawyer, Donald Weissman, opened the envelope. "We had no way of knowing what was in it," he said. "We had read the stories and knew that his hedge fund business had largely collapsed." Weissman wrote in a letter to Judge Jackson Bedford of Fulton County Superior Court in Georgia that he believed it was his "duty" to report the details. Wright, who received degrees from the State University of New York at Binghamton and from Harvard University, started the firm in 1996, according to his online bio. He also previously had been vice president of the global consulting practice at Kaiser Associates, according to the Web site. The hedge fund manager said he had a net worth of more than $10 million at the time of the divorce settlement last year, Weissman said.

SEC Sues Hedge Fund Firm International Management Associates

The Rocky Mountain News has more information on International Management Associates in its February 28, 2006 edition in a story entitled SEC sues hedge fund firm. The first portion of this news story reads:

The hedge fund firm that managed money for three former Denver Broncos players and wide receiver Rod Smith hid massive losses from clients in a fraudulent investment scheme, according to the Securities and Exchange Commission. Atlanta-based International Management Associates and Chief Executive Kirk Wright raised as much as $185 million from up to 500 investors, but almost all the money has disappeared, the SEC claimed in a lawsuit filed Monday.

In a letter sent to one investor, International Management said its Taurus Fund, one of several hedge funds it offered, had gained 20 percent in 2005, the SEC found. Unfortunately for the investors, Wright grossly inflated his returns and gave "blatantly false information" about the value of the assets in the hedge funds, the SEC said. There is now less than $500,000 in Ameritrade accounts, the lawsuit contends. And the SEC said some "critical" records could not be found at the International Management offices.

The Atlanta Constitution Journal also has information on the SEC’s entry into the International Management Associates fraud case in a story entitled SEC enters hedge fund case. This story details how five counts of fraud have been alleged against Kirk Wright and International Management Associates (“IMA”), how jurisdiction of the case has been transferred to federal courts from Georgia state courts and how some assets of the two other principals, Nelson Keith Bond and Fitz Harper, both local anesthesiologists, have been released from freeze. The two men contended they were victimized investors and volunteered to cooperate with investigators.

Given that International Management Associates supposedly registered with the SEC last month under the new hedge fund investment advisor rules and reported no problems, it is now highly likely that the public will shortly will be learning of more charges against Kirk Wright and his International Management Associates hedge fund firm. The really interesting question is what other people knew of this alleged fraud, when they knew of it and what, if anything, they did upon learning the news. Toomre Capital Markets LLC finds it hard to believe that a $185 million fraud against more than 500 investors could be perpetuated by just one person. And how the heck does one lose $185 million, even if one massively shorts the stock of Time Warner?

Toomre Capital Markets LLC has also posted on this fraud by Kirk Wright and International Management Associates in posts here, here and here. Thoughts and comments are welcome.

International Management Associates Seems to be Missing Money and Its CEO

The Wall Street Journal is reporting in an article entitled Hedge Fund Seems to Be Missing Investment Money and Its CEO that Kirk S. Wright, founder and CEO of Atlanta-based International Management Associates LLC, seems to be missing and only about $150,000 of the supposed $150 million in hedge fund assets have been located in the last week. A warrant was issued for Mr. Kirk Wright’s arrest on Friday, February 24, 2006 who earlier in the week postponed a visit to the SEC's Atlanta office to answer questions last week, saying he needed time to hire local counsel. The article also has further information on two other principals of the International Management Associates firm:

Late last week, the firm's other two principals, Nelson Keith Bond and Fitz N. Harper Jr. -- anesthesiologists employed by International Management since 2000 -- filed court papers denying wrongdoing and seeking access to some of their assets in order to feed their families. In the court papers, Drs. Bond and Harper say prior to leaving the company in recent weeks they were International Management's "principal" and "chief compliance officer," respectively. They have varying titles on the company's Web site and registration documents filed with different states.

In their court documents, Drs. Bond and Harper both said they are cooperating with investigations by the Federal Bureau of Investigation, the U.S. Attorney's office for the Northern District of Georgia, and the SEC. The probes into International Management and its five hedge funds come just as the SEC is requiring such funds -- lightly-regulated investment vehicles for wealthy investors -- to register with regulators for the first time.

Toomre Capital Markets LLC has previously posted on this fraud by Kirk Wright and International Management Associates here, here and here. Thoughts and comments are welcome.

International Management Associates Hedge Fund in Fraud Trouble?

The Wall Street Journal has been reporting for the last several days about yet another hedge fund that has been accused of fraud. In this instance, International Management Associates and its principals Chief Executive Kirk S. Wright, Chief Operating Officer Nelson Keith Bond and Chief Financial Officer Fitz N. Harper, have had their assets frozen after being sued in Georgia state court before Fulton County Superior Court Judge T. Jackson Bedford, who is handling the case. The WSJ story entitled Federal Regulators Hunt for Assets Of Hedge Fund Accused of Fraud by Ian McDonald and Valerie Bauerlein has more details. The Institutional Investor story on this alleged hedge fund fraud can be found here.