NEW YORK (Reuters) – A founder of a New York hedge fund pleaded guilty to bankruptcy fraud on Wednesday because he pressured a rival not to bid on assets from Neiman Marcus’ creditors so he could buy them at a lower price, said the United States Department of Justice.
Daniel Kamensky, 48, from Roslyn, New York, filed his plea before U.S. District Judge Denise Cote in Manhattan.
Kamensky had served as a director at Marble Ridge Capital LP, a specialist in “distressed” investments that once had $ 1.2 billion in assets under management.
Lawyers for Kamensky did not immediately respond to requests for comment. Citing a plea deal, a Kamensky spokesperson said the defendant could face 12 to 18 months in jail under recommended federal guidelines at his May 7 sentencing.
Prosecutors said Kamensky threatened to exploit his role as co-chair of a Neiman creditors’ committee last summer to prevent an investment bank from bidding 30 cents a share for securities he wanted to buy at 20 cents a share.
Kamensky also threatened to stop doing business with the bank unless it pulled out, and after asking an employee to lie about what had happened, prosecutors said.
“You see … I can go to jail,” prosecutors Kamensky quoted to the employee. “This goes to the US attorney’s office.”
US attorney Audrey Strauss said in a statement, “His fraud has indeed come to the US attorney’s office and has now been made public in the public courtroom.”
Founded in Dallas in 1907, Neiman filed for Chapter 11 protection last May. The luxury retailer emerged four months later under new owners, including investment companies Pimco, Davidson Kempner Capital Management and Sixth Street Partners LLC.
A federal bankruptcy judge approved a settlement in December regarding Neiman’s own claims against Kamensky.
Kamensky was a partner for the hedge fund firm Paulson & Co before founding Marble Ridge in 2015.
Marble Ridge announced it would liquidate last August, after Kamensky’s behavior was scrutinized.
Reporting by Jonathan Stempel in New York; Additional reporting by Maria Chutchian and Nate Raymond; Editing by Bill Berkrot and Aurora Ellis