Hedge fund managers, the Bahamas and their mansions...

Tuesday, 7 March 2017, 2:54 pm

Why do so many of the world's most powerful hedge fund managers end up in nasty spats in the Bahamas?

For most people the Bahamas is an idyllic Caribbean island that they can only dream of visiting. But for some of the world's wealthiest hedgies that own houses on the Bahamas it would appear to be an island that eventually causes profound angst.

Take, for example, Louis Bacon. The billionaire founder of Moore Capital has been involved in a decade-long legal battle with his neighbour Peter Nygard, the Canadian fashion tycoon, that began over a shared driveway between their mega mansions. Here is a link to the latest installment of that sorry affair:

http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/louis-bacon-cant-sue-peter-nygard-in-new-york-over-bahamas-property-feud/article31352192/

And now it would appear there is a fresh dust up raging in the Bahamas between another hedge fund magnate and a local businessman.

Local newspapers report David Kosoy, founder and chief executive of the award winning Sterling Financial Group, is being sued by Dr Fabrizio Zanaboni, who runs a waste-to-energy company, over the ownership of some houses in Nassau.

According to reports, Zanaboni, through his vehicle Leo International and co-plaintiff Allure Bahamas, has in papers lodged with the Bahamas Supreme Court accused Sterling of “unjust enrichment” after it bought the condo units for an estimated third of their real value from a company which Zanaboni was already suing over the properties. Zanaboni paid more than $2m for the two units back in 2008 but before he was given the deeds the development was pronounced bust and ownership was transferred elsewhere.

He’s been fighting to recover them ever since and claims that Kosoy - who bought and restored the former Nassau home of actor Richard Harris, Kilkee House, to much local fanfare - must have known about the outstanding legal action relating to the properties. That would certainly have explained the very low price-tag. However, Sterling insists in its court defence that it had no knowledge of “any alleged interest” by Zanaboni or his companies.

This is a bit odd because the court documents relating to the case were publicly available in the Bahamas and the story had been covered by the local media in 2013 - the year before Kosoy purchased the condominium.

Also, Kosoy is reckoned to be one of the Bahamas’ best connected developers with an extensive intelligence network in the real estate business there. He even boasts as much - in the blurb accompanying Sterling's Hedge Fund of the Year award the company states that its "unique knowledge and contacts in the Caribbean allows for more thorough due diligence” (here is the link http://hedgefundawards.acquisition-intl.com/classical/2016/2/16/sterling-financial-group-inc).

In a bizarre twist, Sterling has now obtained a gagging order against Zanaboni and his associates preventing them from even talking about the dispute - although it's not clear why given most of the case has already been exposed in the local media and the order does not apply to the press or, indeed, anyone else.

When Kosoy's lawyer, Sean Morree - a partner at McKinney, Bancroft and Hughes - was contacted seeking comment, this was his response:

My clients have no intention of responding to your questions and I would ask you desist from communicating with them. We specifically reserve the right to rely on your email correspondence in support of contempt proceedings and to subpoena you, should it become necessary.

Please note that any publication by you which is inaccurate or in breach of the said Order will be deemed as libelous and my clients will proceed accordingly.

Charming!..

[Disclaimer - the information on Betaville does not consitute any form of investment recommendation and is not intended to be relied upon by readers in making, or refraining from, any investment decisions].

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