September 03, 2005

Bayou funds investors may find some of their dues back

Investors of the now defunct Connecticut-based Bayou Management hedge funds heaved a slight sigh of relief when they realized that they can expect some of their own money back. The Arizona’s Attorney General's office disclosed that in May this year, it seized $101 million in funds, which seemed to have been deposited into a Wachovia bank account controlled by Majestic Capital Management. Mr. Karl Johnson, a principal at Majestic, has filed a claim on the money, indicating in court papers that the money came from the now absconding Bayou founder Mr. Sam Israel III. Assistant Attorney General Ms. Cameron Holmes told Bloomberg News that a representative of Wachovia bank in Arizona being suspicious of a series of unusual transactions notified state authorities. The notification stated that the funds were transferred between accounts in Germany, Hong Kong, London and the USA, and therefore Arizona seized these funds. The $440 million Bayou fund has given a deadline to its investors that it would return their money by August 15 this year, after and announcement in its newsletter that the fund was not in the pink of its health, in July this year. However, when the deadline passed there were some angry investors knocked on the doors just to realize the vanishing act of Mr. Israel. Although, the customers have to be cautious about the fact that there would be more hands claiming the booty than which is actually found. USAToday Reports:

"This appears to be a good step," says Ron Geffner, a former Securities and Exchange Commission lawyer, now at Sadis & Goldberg, who represents an investor. "It would be premature to celebrate before investors are able to identify the total sum of assets."

Read More: Money seized from Bayou Management hedge funds

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