Fund Manager ‘Unworthy of Belief’ Is Ordered to Pay $7 Million
(Bloomberg) -- A private-equity fund manager whose testimony a New York judge deemed “unworthy of belief” was found liable for misappropriating millions of dollars from unsuspecting investors.
Laurence G. Allen, the chief executive officer of Nyppex Holdings LLC in Rye Brook, New York, and various corporate entities he controls were ordered Thursday by State Supreme Court Justice Barry Ostrager in Manhattan to pay almost $7 million in relief and work with a receiver to liquidate assets.
The finding is a win for New York Attorney General Letitia James, who in 2019 sued Allen and accused him of engaging in securities fraud and misappropriating investments from clients between 2008 to 2018. She claims Allen used his ACP Partners X fund to funnel client money into a failing broker dealer he controlled.
The company will immediately appeal the decision, which “opens the flood gates” for lawsuits filed by investors long after their initial investment, said Jeremy Kim, general counsel for ACP Investment Group LLC.
“This will have a reverberating impact on New York’s finance industry as it will chase not just private equity funds, but investment houses out of New York,” Kim said in a statement.
Ostrager said Allen’s testimony during a trial wasn’t believable and that his other witnesses were “incompetent to offer the testimony they offered.”
“This decision shows that corporate greed never pays,” James said in a statement Friday. “For years, Laurence Allen bilked investors out of millions of dollars and used this investment fund like his private piggy bank.”
©2021 Bloomberg L.P.