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B l o o m b e r g M a r ke t s October 2006 125 Kirk Wright’s Razzle-Dazzle Play Football players, doctors and retirees invested more than $100 million in a suburban Atlanta hedge fund, lured by the promise of fat returns. Now the money is gone. By Monée Fields-White ‚When the FBI finally caught up with hedge fund manag- claimed to make on investments that he asked to join the er Kirk Wright, he was lounging by the pool with his wife, firm as a client liaison. Atwater, who turns 40 on Oct. 28, Kilssis, at the Ritz-Carlton hotel in Miami’s South Beach brought in six other former football players, who invested a neighborhood. In his room, the Federal Bureau of Investi- total of almost $20 million. All the money is now gone, Atwa- gation agents discovered debit cards and an ID card with a ter says, shaking his head. “In my wildest dreams, I never different name—one of three aliases Wright used while in thought he was stealing the money,” says the former defen- Florida. They also found $28,000 in cash, a vestige of inves- sive back for the Denver Broncos and New York Jets. tors’ funds estimated at $185 million, according to a sworn The tale is all too familiar to the roughly 500 people who affidavit from FBI Special Agent William Cromer Jr. invested with Wright, from a Los Angeles real estate develop- Wright, 36, now faces 24 federal charges of mail and se- er to a 74-year-old retired car salesman in Las Vegas, to curities fraud, each carrying a maximum sentence of 20 Wright’s own mother, who’s not a plaintiff in the suits. Stand- years behind bars. He’s pleaded not guilty. He and the hedge ing just less than 6 feet (1.8 meters) tall and sporting a fund company he founded, Marietta, Georgia–based Inter- trimmed goatee, Harvard-educated Wright told his clients he national Management Associates LLC, also face a fraud could bring them annual returns in the region of 27 percent lawsuit by the U.S. Securities and Exchange Commission by short selling stocks. He wooed them in seminars in Las and at least three separate lawsuits from investors and for- Vegas, at the hospitality suite at Atlanta Falcons football mer business partners. games and at parties at his suburban home, which had a pool These include former pro football player Steve Atwater, and three fountains. who was so impressed with Wright and the returns he “Kirk was a polished, young black man who was trying to PHOTOGRAPH BY BITA HONARVAR/ATLANTA JOURNAL-CONSTITUTION B lo o m b e r g M a r ke t s 126 October 2006 WRIGHT’S RAZZLE-DAZZLE Associates, and they helped him tap into a network of wealthy physicians in Atlanta. In their March 31 lawsuit, the pair say they were duped and lost $1.5 million. Bond and Harper decline to comment, says Stephen LaBriola, their attorney. The two doctors haven’t been charged with any wrongdoing. T he roster of investors expand- ed as word about the fund’s suc- cess spread to include business executives, rich retirees and profession- al athletes. “People grow lax in their due diligence,” says Ivan Thornton, manag- ing partner at New York–based Fidu- ciary Management Group LLC, which manages money for athletes and enter- tainers. “Everything they read Steve Atwater about hedge funds talks about Former NFL defensive back, them making high returns, 40 and people feel like they are do something,” says Horace Noble, 74, who was the first black missing out.” ‘In my wildest station commander of the Cook County, Illinois, sheriff ’s of- Wright gained some legiti- dreams, I never fice in 1963. “So, I put some money in there to help him, and macy by having the two doctors thought he was to get a boost myself. on board, says James Ellner, an stealing the money.’ “In the end, Kirk only cared about one color—green,” adds Atlanta-based anesthesiologist Noble, who lost almost $1 million when Wright’s firm col- and IMA investor, who has lapsed. In fact, most of Wright’s clients were not black, Atwa- known Harper since 1992. “Everyone looked up to Wright as ter says. this brilliant guy,” Ellner says. “He was showy.” Federal court The SEC, in its Feb. 27 fraud lawsuit, alleges that since at records show Ellner lost about $100,000. Ellner declined to least 2003, Wright falsified statements about the amount of confirm that figure. the firm’s assets and inflated the rates of return for the seven Wright and Bond were also registered as acceptable fi- hedge funds under his management. nancial advisers by the National Football League Players Nearly all of the money invested with Wright may be lost, Association, the players’ union, Atwater says. Atwater and according to the SEC suit. William Perkins, the state and the other players sued the NFL and the players’ union on federal court–appointed receiver, has recovered $6.3 mil- June 23 for recommending unfit financial advisers. “They lion so far—including about $1 million from the sale of fumbled,” Blaine Bishop, a former Philadelphia Eagles and Wright’s home. “There was a large Tennessee Titans safety who also amount of money that traveled through these accounts over the years,” says Per- ������������� worked for IMA, said of the NFL and the union at a news conference when kins, a partner at William G. Hays & ��������������������������������� the suit was filed. Associates LLC, an Atlanta-based con- ������������������������������������� The players want to be reimbursed ���������������������������������� sulting firm that specializes in bank- for their $20 million in losses and to ruptc y administration and fraud ������������������� ����������� see the union improve its screening of investigation. “But after all of the ex- ���������� ������ fund managers. NFL spokesman Brian penses, losses and consumption ������� � ���� McCarthy says the claims are unfound- throughout that period, there was ������ � ���� ed and declined to comment further. never a significant balance.” ��������������� � ���� Dana Hammond, director of the NFL- Wright is also being sued by his two ������ � ��� PA’s financial advisers program, didn’t former partners, Nelson Keith Bond ����������� � ��� return phone calls seeking comment. and Fitz Harper Jr., both Atlanta-area ���������� � ��� Wright told his investors that he anesthesiologists. The two doctors met was achieving phenomenal returns on ANN STATES �������������������� ������ Wright in 1998 when they were running their investments by short selling a ��������������������������������������������������������������� a clinical practice, Axis Anesthesia ���������������������������� particular stock. That exposed them to B lo o m b e r g M a r ke t s 128 October 2006 WRIGHT’S RAZZLE-DAZZLE extreme risks, according to an order in February by Superior Court Judge Jackson Bedford freezing the assets of IMA and Wright. A short sale is the sale of borrowed shares that the investor is commit- ted to repurchase eventually. Investors use short sales to capitalize on an expected de- cline in the security’s price. Wright had $30.5 million in trading losses, Perkins says. The rest he likely used for personal purchases, including more than $6 million in real estate, jewelry and art, all of which is being sold. “We are going to try and retrace all of the money and recoup those Wright, left, then Cleveland Mayor Jane Campbell, and Wright’s partner Phil Davis, second from right, at the opening of their Cleveland eatery in 2003. The restaurant closed five months later. assets as much as possible,” says Mark Kaufman, partner at McKenna Long & Aldridge Taurus Fund, Growth & Income Fund and Sunset Fund—total- LLP in Atlanta, the firm representing the investors’ commit- ing less than $15 million, according to the doctors’ suit. Harper tee in IMA’s bankruptcy. and Bond invested and began referring friends and family Wright, who pleaded not guilty at his arraignment on members to Wright, their lawsuit says. July 13, is in an Atlanta jail awaiting trial. His court-ap- T pointed lawyer, Virginia Natasha Perdew-Silas, didn’t re- hey set up seminars for their doctor friends at which turn repeated calls for comment. Jacob Frenkel, the attorney Wright would court potential clients. Noble, a retired for Wright and IMA in the SEC case, says “the charges are owner of a Lincoln-Mercury dealership, went with a of such seriousness that resolution would be in the interests friend to one such seminar in Las Vegas on a September eve- of all parties.” ning in 1999. More than 25 people, mostly physicians, gath- It’s a long way from the Bronx, New York, where Kirk ered in a hotel conference room, Noble says. Wright praised Wright grew up and was a bright and polite young man, ac- the success of his company’s funds, using charts and graphs cording to a person who knew him then. He earned a bach- on a video screen. “He’s a silver-tongued devil,” Noble says. elor’s degree in political science from Binghamton In November 1999, Noble made his first investment of University, which is part of the State University of New York $140,000. He deposited an additional $336,000 during the system, in 1993. Two years later, he received a master’s de- first half of 2000 after receiving statements showing a gree in public policy from Harvard University’s Kennedy 3 percent jump each month. Wright eventually rolled all of School of Government. Noble’s money into the Platinum fund. According to the Fresh out of Harvard, Wright joined Kaiser Associates, a fund’s marketing materials, “It seeks to capitalize volumet- Washington-based corporate consulting firm, as a vice pres- rically on a few select opportunities characterized by mod- ident. A year later, while still in his mid-20s, he founded erate to high valuations, compelling business fundamentals and strong management teams.” That language should have been a red flag for investors, Wright told his investors he was Thornton says. “If you have jargon-laced speech like this, achieving phenomenal returns that usually means you’re covering something up,” he says. by short selling stock. By 2000, Wright had moved to Atlanta, where Harper and Bond were based. The city at the time was a boomtown. From 1990 to 2000, its population grew by 1.15 million International Management Associates in the basement of his to 4.1 million, according to the Metro Atlanta Chamber home in Manassas, Virginia, 32 miles southwest of Washing- of Commerce. Almost two-thirds of that growth was due RODNEY L. BROWN ton. Wright shared the home with his first wife, Kasandra to newcomers. Pantoja, with whom he had four sons. Wright, who worked from the ground floor of a glass office By the time he met Harper and Bond in 1998, Wright had a tower in suburban Marietta, 13 miles north of Atlanta, adopt- small group of investors in his three hedge funds—the ed a high-profile lifestyle. He rented corporate suites at B l o o m b e r g M a r ke t s October 2006 129 Atlanta Hawks basketball and Falcon football games, bring- ing along potential clients. He also bought a vintage 1967 BMW 2000CS, a 2000 Jaguar Coupe XK8 and a gray 2003 Aston Martin two-door coupe. Wright moved into a four-bedroom, three-bath, stucco and brick home at the end of a cul-de-sac in Marietta. Then he doubled the size of the house, adding a vaulted marble- floor family and entertainment room, with a curved-glass staircase and cathedral-like window that overlooked the pool and backyard fountains. “He often said it was his dream home,” says former neighbor Evelyn Kernachan, who has lived in the quiet Turtle Lake Court neighborhood for 27 years. “He was engaging and personable, but at times he could be inconsiderate of his neighbors.” She says the vehicles of construction workers blocked her mailbox and driveway. Harper and Bond official- ly joined IMA in November 2000, while still practicing medicine on a par t-time basis. Harper—who had no background in finance— became chief financial offi- cer, while Bond became the chief operating officer. Dur- ing the next four years, the doctors helped Wright open offices in Las Vegas, New York and Los Angeles, where they hired Thomas Birk, who previously worked in the marketing department of Lehman Brothers Holdings Inc., as managing director. Wright began investing in other business ventures out- side of IMA , including a Southern-style restaurant in Cleveland, that later failed. In partnership with GTO Development LLC, a Santa Mon- ica, California–based real estate developer, he entered into a deal to develop condominiums in Los Angeles and Lake Arrowhead, California. GTO’s principal, Roger O’Neal, also invested in IMA. He says he wanted to withdraw money from his IMA accounts to fund the projects. Wright discouraged him from doing so and told O’Neal that IMA would put up $6 million toward the ERIK S. LESSER/BLOOMBERG NEWS(4) condominiums. “Kirk said he wanted to diversify some of his high-net-worth clients,” O’Neal says. The properties have been seized by Perkins, the liquidator. “It was just a scam,” says O’Neal, who lost $13.5 million. “He wanted to invest my own money in my own company. Not only Wright’s home in Marietta, Georgia, with three fountains and a cathedral-style window, sold for $1 million at auction in July. B lo o m b e r g M a r ke t s 130 October 2006 WRIGHT’S RAZZLE-DAZZLE statement for the first month showed a 9.39 percent gain, or $140,000. The jump seemed so unreal to him that he called Bond to make sure the numbers were correct. Atwater’s bal- ance continued to grow, by 4.6 percent in September, 4.4 percent in October, 7.3 percent in November and 2.5 percent in December. Atwater began telling his football buddies about IMA, in- cluding Bishop, 36, with whom Atwater competed in the 1995 and ’96 Pro Bowls, the NFL’s Roger O’Neal all-star games. Atwater also spoke to Real estate developer, Ray Crockett, 39, who’d played with 49 Atwater in the Denver Broncos back- ‘It was just a scam. field for four years, winning the He wanted to invest Super Bowl in ’98. Bishop, who in- my own money in vested in late 2004, and Crockett, my own company. who invested in January ’05, de- Not only did I get clined to comment. victimized person- In December 2004, Atwater met ally, now I’m be- Kirk Wright for the first time, when coming a victim in Wright invited Atwater’s family to my business.’ his hospitality suite during a Falcons game. Atwater recalls Wright mak- ing his way around the room, shak- ing hands and chatting with each guest. Wright talked to Atwater about IMA’s future and said that he was thinking did I get victimized personally, now I’m becoming a victim in about buying an NBA basketball team. “The first impression my business.” I got from him was that he was a really sharp guy,” Atwater says. “He really put on a good show that day.” D uring this time, Harper and Bond repeatedly asked In early 2005, Atwater approached Bond about working Wright to let them see the brokerage statements at the firm. Atwater, who owned some commercial properties showing how IMA was investing its money, accord- in Southern California, told Bond he wanted to help other ing to their lawsuit, filed on March 31, in Superior Court in players with their post-career investments. Fulton County, Georgia. At the start of 2004, Harper and Bond liked the idea, and in March, Atwater joined as a Bond began pushing Wright to start a new company that would offer more transparency, according to their lawsuit. The new firm, called IMA Adviso- ry Group, hired Lehman Brothers as Horace Noble its prime broker and a certified pub- Retired car dealer, lic accountant, Kenneth Turchin, to 74 manage the company’s books. Wright ‘He’s a silver- was the principal trader. tongued devil.’ It was in May 2004 that Atwater, who holds a bachelor’s degree in fi- nance and banking from the University of Arkansas, heard about IMA from one of its clients at a conference for entre- preneurs in San Antonio, he says. The investor gave the foot- ball player Bond’s number. Atwater invited Bond to his JOE TORENO (TOP), MOJGAN AZIMI Duluth, Georgia, home, which is located in the Sugarloaf Country Club community, and they played a round of golf and talked about money. “I didn’t hit the ball that good but we did hit it off pretty good,” Atwater says. Atwater trolled through information about the funds. He noted that Wright was registered with the players’ union. “We felt comfortable,” Atwater says. At the start of August, Atwater invested $1.5 million. His B lo o m b e r g M a r ke t s 132 October 2006 WRIGHT’S RAZZLE-DAZZLE his client available for comment. Shortly after that, the football players called a personal foul. Atwa- ter says Wright, Bond and Harper stopped coming to the office. Rod Smith also spotted errors in the bal- ances on his account statements. Atwater and Bishop wanted more information about the funds and asked to see the broker statements. Wright refused, claiming they were proprietary information. “I assumed that once I got my license that it wouldn’t be Calvin Paris an issue, but I was wrong,” says Retired businessman, Atwater, who became a li- 75 censed investment adviser in ‘Kirk is worse than July 2005. greed. He took Regulators also began ask- people’s money ing questions. In September, that didn’t belong the SEC and the New York State client liaison at IMA Advisory Group. Bishop followed in to him.’ attorney general’s office request- May 2005. In a shared office, the two former football play- ed the company submit account ers spent several months studying to become registered statements for review, the doctors say in their lawsuit. Wright investment advisers. seemed concerned by the requests, and stood before the staff Over the summer, the pair recruited more former NFL and warned that they all must cooperate with the SEC, Atwa- players as investors. They added Terrell Davis, who turns 34 on ter recalls. “This just seemed strange because I kept thinking, Oct. 18, a former Denver Broncos all-star running back; Al ‘I don’t have any part in the documentation,’” Atwater says. Smith, 42, a former Houston Oilers all-pro linebacker; and “This was all Kirk.” Clyde Simmons, 42, a former defensive end for five teams, W including the Philadelphia Eagles. The only active NFL player illiam Hicks, SEC Atlanta district trial counsel, to invest was Rod Smith, 36, a Broncos wide receiver. wouldn’t comment on how long the agency has Later that summer, Turchin began asking questions about been investigating the hedge fund. Brad Maione, IMA’s books. In an Aug. 23 e-mail message to Harper, a copy a spokesman for the New York attorney general’s office, de- of which is included in the SEC court case, the accountant clined to comment. said there were inconsistencies in the brokerage statements In October, Atwater and Bishop met with Wright, Bond, produced by Lehman Brothers and Bisys Group Inc., a Rose- Harper and Birk, who had come from the Los Angeles of- land, New Jersey–based company that executed and admin- fice. They talked about the status of the SEC review, and istered trades for Wright, and those sent to investors. Wright came with a copy of statements for four TD Ameri- For example, Turchin wrote, Lehman and Bisys reported trade Holding Corp. accounts, showing a total balance of a 24 percent loss for two funds during the period ended on about $155 million. Atwater says seeing the statements alle- viated his doubts. And on Oct. 22, Atwater and Bishop attended Wright’s At Wright’s second wedding, the wedding to Kilssis Delos Collado, whom Wright had met bride flashed an engagement ring in 2002 when she was a part-time hostess at Georgia worth more than $50,000. Brown’s restaurant in Washington. Wright’s four sons from his first marriage were in the wedding, held at St. Luke’s Episcopal Church in Atlanta. The bride flashed an engagement ring worth March 31, 2005. IMA told investors the same two funds more than $50,000, according to Perkins, the liquidator. gained more than 6 percent in the period. The reception was held in the backyard of Wright’s home, “There is no validation of fund performance for IMA and where the newlyweds shared the traditional first dance on a IMAAG funds,” Turchin wrote. “The portfolio manager is the platform that stretched across the pool, says Calvin Paris, 75, JOHN ABBOTT only person authorized to trade the funds and is the only per- an IMA investor who attended. Guests feasted on a seafood son receiving broker statements.” The portfolio manager was buffet that included shrimp and lobster and on a dessert Kirk Wright. Turchin’s lawyer, Jason Brown, declined to make buffet. Bartenders served champagne from three bars B lo o m b e r g M a r ke t s 134 October 2006 WRIGHT’S RAZZLE-DAZZLE sculpted from ice. “It was ostentatious to a fault,” Paris says. the funds wouldn’t be available for 14 days, so he went there “I can’t understand how anybody can do that, knowing full to ask about the long wait and retrieve a copy of the check. well they are not only deceiving themselves but their inves- To his surprise, the check had been drawn not from IMA tors and family.” accounts but from one held by a business partnership Wright “Kirk is worse than greed,” Paris adds. “He took people’s had with Willie Clay, a former safety for several teams, in- money that didn’t belong to him.” cluding the New England Patriots. Clay’s signature was forged on the front of the check and Atwater’s signature was A twater, who says he didn’t know about the Turchin e- forged on the back, the players’ lawsuit says. “When I saw the mail, began to get uneasy again. He says Bond began check, I was sick,” Atwater says. The check bounced, he says. avoiding meeting with him. On Dec. 5, Atwater, Bish- Clay didn’t return phone calls. op and the other NFL players requested their money back. Atwater began calling the other football players. Now, he Wright, Harper and Bond tried to convince them to do oth- says, he has little hope they’ll find any large sum. The SEC erwise, telling them of future goals of growing into a $300 lawsuit says IMA’s Ameritrade accounts, which Wright told million company, Atwater says. Atwater had held $155 million, in reality held less than On Dec. 27, Atwater says, the players received letters stat- $150,000. “None of us were thinking it would happen this ing they would get their funds in less than 21 days. By Jan. way,” Atwater says. 23, they hadn’t received any money. Wright had long before At Wright’s home in Marietta shortly after his arrest, little stopped showing up at the office, and now he didn’t return was left of the grand life he once led. Clothes were strewn across phone calls. Atwater and Bishop drove to Turtle Lake Court the bedroom floor, furniture was slashed and a coffee table’s and stopped at Wright’s house. They spoke with Kilssis, who glass top had been shattered, scattering diamond-shaped shards said she didn’t know where he was. across the marble floor.„ On the morning of Jan. 26, Atwater, who’d been checking MONÉE FIELDS-WHITE is a senior writer at Bloomberg News in New York. With the balance of his bank account compulsively, saw something additional reporting by LAURENCE VIELE DAVIDSON in Atlanta. new: a deposit in the amount of $3.2 million. The bank said email@example.com B LO O M B E R G T O O L S Tracking IMA’s Implosion You can use the Bloomberg Law Search (BBLS) function to You can also see dockets for the bankruptcy filings of see court filings relating to the collapse of hedge fund IMA and its funds. Click on the Previous Screen button on company International Management Associates. Type the red tool bar to return to the list of search results. Scroll BBLS <Go>, and click on United States under the Sources up through the list, and click on International Management tab. Click on All United States to select it and move it to Associates, LLC, Docket No. 06-62966 for the docket for the right under Selections. Tab in to the E NTER TERMS field, IMA’s bankruptcy filing. The firm’s Chapter 11 petition filed and enter INTERNATIONAL MANAGEMENT ASSOCIATES. by its court-appointed receiver lists the 30 largest unse- Next, under Date Range, click on the arrow to the right of cured creditors of the firm. Each of these creditors had Within, and select Last Year. Click on the Search button. more than $1 million invested with IMA. To see the Securities and Exchange Commission’s com- To use BBLS to see the U.S. Court of Appeals for the Dis- plaint alleging that Kirk Wright and IMA ran a fraudulent trict of Columbia opinion striking down the SEC’s hedge fund investment scheme, scroll down through the list of results registration rule, type BBLS DD X2QHBQNB5G0 <Go>. and click on Securities and Exchange Commission v. Wright JON ASMUNDSSON et al, Docket No. 06-cv- 00438. The SEC has filed suits in several courts; this case was filed in the U.S. District Court for the Northern District of Atlan- ta. Scroll down to the Dock- et Proceedings section, and click on the underlined 1 under the Req # heading to see a copy of the complaint. For the Bloomberg Law main men u, type BL AW <Go>.
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