Reply #14: A Hedge Fund Falls Off the Face of the Earth [View All]

[UpInArms]

http://www.nytimes.com/2005/08/28/business/yourmoney/28gret.html

HELLO, this is Dan Marino," says a weary, raspy voice on an answering machine. Mr. Marino, the chief financial officer of the Bayou Group, a $400 million hedge-fund and brokerage firm that is under investigation by state and federal authorities in Connecticut, sounds beleaguered. "Please leave me a message," he goes on. "I am receiving lots of phone calls. I am unable to pick up every call, so if you do call, leave a message and a number. I will get back to you."

Bayou investors are dying to know why their money has not been returned as the firm promised last month. But if they're hoping for a return call, they are out of luck. "Sorry," says a chipper female voice on the tape. "You cannot leave a message now. This mailbox is full."

<snip>

The investor who declined to be identified said that, in hindsight, he should have recognized one red flag in the fact that Bayou had two accounting firms - one to oversee the brokerage unit's books and another to vet the hedge funds' financials.

"We've seen fraud in stocks, bonds and commodities," said Ross B. Intelisano, a lawyer at Rich & Intelisano in New York who represents many Bayou investors. Referring to the hedge fund industry, he said: "What we're now seeing is an increase in what could be called hedge fund fraud. It just shows that even sophisticated investors who do their due diligence can be defrauded."

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