The Roslyn founder and manager of a Manhattan-based hedge fund has pleaded guilty to bankruptcy fraud, according to officials.
Daniel Kamensky, the head of Marble Ridge Capital, pleaded guilty Tuesday to one count of bankruptcy fraud in U.S. District Court in Manhattan in connection with the bankruptcy of the Neiman Marcus luxury department store chain, according to Audrey Strauss, the United States Attorney for the Southern District.
The hedge fund managed more than $1 billion invested in distressed business situations, including bankruptcies, officials said.
"Daniel Kamensky abused his position as a committee member in the Neiman Marcus Bankruptcy to corrupt the process for distributing assets and to take profits for himself and his hedge fund, " Strauss said in a statement.
Mr. Kamensky’s attorney, Joon H. Kim of Cleary Gottlieb Steen and Hamilton in Manhattan, stated: "Mr. Kamensky has admitted what he did was wrong. He deeply regrets his conduct on July 31, 2020 and the great pain it has caused his family, colleagues and others."
Strauss noted that in a recorded conversation with an unnamed bank employee, Kamensky "predicted" his fate, saying: "Do you understand I can go to jail?….this is going to the U.S. Attorney’s office."
In the scheme, Kamensky found out that an unnamed investment bank planned to bid thirty to forty cents per share for some of the securities involved in the bankruptcy, officials said. This was "substantially" higher than Kamensky’s bid, officials said.
The bank did business with Kamensky’s firm, and he told the bank employee that if the bank went forward with its lower bid, Kamensky would no longer do any business with it, officials said.
The bank decided not to bid, as a result, officials said.
When the situation was questioned, Kamensky told the bank official to say that he only said that the bank should bid "if it was serious."
Eventually, Kamensky admitted officials that his calls to the bank employee were "a terrible mistake" and involved "profound errors in lapses of judgment."
As part of a plea deal, federal prosecutors recommended a prison sentence of between 12 to 18 months but a judge could sentence Kamensky to up to a maximum of five years in prison.