Hedge Fund Investor Fights for Disclosure from Bankrupt SageCrest
Westerly Capital LLC, which last June sued the managers of the now bankrupt and besieged managers of the SageCrest hedge funds alleging several breaches of their duties to investors, advanced their case in court today by serving on the Defendants Interrogatories and Document Requests requiring disclosure of a wide variety of financial documents. Windmill Management, owned and operated by Philip Milton and Alan Milton, will be required to provide both their personal financial records and a complete set of financial reports covering both of their failed funds, SageCrest I and SageCrest II, plus all funds registered offshore in Bermuda. Westerly also demanded documents generated between Windmill and the accountant for SageCrest, McGladrey & Pullen, LLP along with documents produced with the funds placement agent, Boomerang Capital.
“We are representing the interests of all investors in the SageCrest funds to get the documents we need to find out where all the money went,” said Westerly attorney, Paul M. Kaplan, a partner at Arent Fox in New York, NY. “We estimate the Miltons have personally been paid over $60 million and perhaps as much as $100 million of investors’ money. They’re using the bankruptcy code as a sword and a shield against their own investors. Refusal of legitimate and constant requests for a proper accounting have prevented us from learning how they invested and used inflated valuation techniques to create the impression of success when in fact their investments have failed miserably.”
Westerly’s filing covers a broad range of documents and communications, including a record of all redemptions made by the Miltons and other principals of their capital accounts from the failed SageCrest funds. “We want to know if the Miltons got their money out first ahead of investors and before the fund began its nosedive in value,” insisted Kaplan. “This is a classic ‘what did they know and when did they know it’ situation and the Investors are owed an explanation.”
Westerly is also opposing the fund’s bankruptcy filing. “Their assets exceed their liabilities,” he added. “The Miltons don’t need the protection of a Chapter 11 reorganization filing. That is a gambit to keep control of the fund and delay disclosure of what they did with all the money,” concluded Mr. Kaplan.
Source: Westerly Capital LLC