Docstoc

Sac Capital Private Placement Memorandum

Document Sample
Sac Capital Private Placement Memorandum Powered By Docstoc
					Case 1: 1 0-cv-21206-CMA                Document 1          Entered   on   FLSD Docket 04/15/2010      Page   1 of 16




                                        UNITED STATES DISTRICT COURT
                                        SOUTHERN DISTRICT OF FLORIDA


                                                    MIAMI DIVISION


                                                                      CIVIL ACTION


                                                                      CASE NO:


                                                                      JUDGE:


                                                                      MAGISTRATE:




  ENRIQUE FEFER and DALIA FEFER
  AS TRUSTEES OF THE ENRIQUE USHER
  FEFER REVOCABLE TRUST,


                       Plaintiffs
  vs.



  SAFRA NATIONAL BANK OF NEW YORK and
  SAFRA ASSET MANAGEMENT                          CORPORATION,

                       Defendants.



                                                      COMPLAINT


           Plaintiffs, Enrique Fefer and Dalia Fefer as Trustees of the Enrique Usher Fefer Revocable

  Trust,   sue   the   defendants, Safra National Bank of New York (“Safra Bank”); and Safra               Asset


  Management Corporation                 all   conducting   business   as   the “Safra   Group” (collectively the

  “Defendants”),       and allege:

           1.          This is   an   action for damages for violations ofthe Investment Advisers Act of 1940,

   15 U. S.C. Secs 80b-1 et seq. and ancillary actions for breach of fiduciary duty and unjust enrichment


  of the Defendants and receipt of wrongful             compensation and other damages.

                                                               1
Case 1:10-cv-21206-CMA            Document 1              Entered         on       FLSD Docket 04/15/2010              Page    2 of 16




           2.      The court has jurisdiction         over   this action pursuant to the Investment Advisers Act

  15 U.S.C.     80b-1 et seq. and the supplemental jurisdiction ofthis court. This Court also has                            subject

  matter jurisdiction of this action       pursuant to 28 U.S.C.                    1331, 1337 and 1367.

           3.      Venue is proper in this           district,   in   that, (1) the Defendants operated, conducted,

  engaged in, or carried on a business in its offices in Miami Dade County Florida; (2) all acts                              of the

  Defendants    were   committed      or   occurred within this district and the Plaintiffs suffered                     damages

  within this district. Florida Statutes      sec.   47.051.


           4.      Plaintiffs   are   residents of Miami Dade                  County Florida     and    are   the Trustees of the


  Enrique   Usher Fefer Revocable Trust              (the “Trust”).            All actions of the Plaintiffs’s        are   in their


  respective capacities as    Trustees.


           5.      Safra National Bank of New York is                 a   national bank with an office at 3001 Aventura


  Boulevard, Aventura, Florida 33180.

           6.      Safra Asset Management Corporation is                       a   registered   Investment Adviser under the


  Act with related persons      including     Safara National         Bank, Safra Securities Corporation and Safra

  Asset   Management Bahamas.           The said defendants conduct business                     as   the “Safra   Group”.

           7.      Safra National Bank of New York is                     an   investment adviser under the Act and is in

  the business ofproviding advice,         issuing reports and analysis regarding securities for compensation.

  Further Safara National Bank of New York exercised control                            over    what   purchases were    made    on



  behalf of the Plaintiffs.

           8.      Safra Asset Management             Corporation is an investment adviser registered under the

  Act and is in the business of providing        advice, issuing reports and analysis regarding securities for

  compensation.    Further Safara National Bank of New York exercised control                              over    what purchases



                                                                 2
Case 1:10-cv-21206-CMA             Document 1         Entered   on   FLSD Docket 04/15/2010        Page   3 of 16




  were   made   on   behalf of the Plaintiffs

          9.         Safra Asset   Management Corporation and/or Safra Asset Management Bahamas is

  the manager ofthe      following funds as disclosed in the Investment Adviser Registration: (According

  to the ADV -Uniform        Application   For Investment Adviser       Registration (OMB 3235-0049)      as   of

  December 2008


          Strategic Multi Manager Fund-Equity Hedge             Class


          Alpha Strategic Investment Fund Ltd.

          Evolving Manager Fund Ltd.

          Alpha One Titan Fund Ltd.

          Premium       Strategies Fund Ltd.    SAC    CCM Prem Pref. Shares


          Premium       Strategies Fund Ltd.    SAC   Castlerigg Strategies

          Premium       Strategies Fund Ltd.    SAC- Gavea Premium Preferred Shares


          Premium       Strategies Fund Ltd.    SAC   Golden Tree Premium Preferred Shares

          Premium       Strategies Fund Ltd.      SAC    Harbinger Premium Preferred         Shares


          Premium       Strategies Fund Ltd.      SAC    Paulson Premium Preferred Shares


          Premium       Strategies Fund Ltd.    SAC   Renaissance Preferred Shares     Equity

          Premium       Strategies Fund Ltd.      SAC    RIFF Premium Preferred Shares Future


          Premium       Strategies Fund Ltd.    SAC    Short   Strategies Preferred Shares

          Premium       Strategies Fund Ltd.    SAC    TYKHE      Strategies Premium Preferred   Shares

          Premium       Strategies Fund Ltd.    SAC    Thor Premium Preferred Shares

          Premium       Strategies Fund Ltd.    SAC   WHDN Premium Preferred Shares


          Premium       Strategies Fund Ltd.    SAC   META Value



                                                         3
Case 1:10-cv-21206-CMA              Document 1          Entered         on     FLSD Docket 04/15/2010             Page 4 of      16




            10.      In   June-July of 2008,    Plaintiffs   as      Trustees of the      Enrique Usher Fefer Trust, were

  referred to Uzi Hardoon, Vice President of Safra National Bank of New York at the offices of Safra

  National Bank in Aventura Florida.           They met with Mr. Hardoon at the offices of Safra Bank in the

  Aventura, Florida office and told Mr. Hardoon that they were seeking low risk long term investments

  for the Trust.

            11.      At the    meeting,    Mr. Hardoon told the Plaintiffs that the Safra               Group    was   able to


  provide   investment adviser services         as   well   as   execute securities trades         through   Safra Securities


  Corporation,     all   acting under   the umbrella of the “Safra             Group”.      Mr. Hardoon gave Plaintiff       a



  publication     of Safra Asset      Management Corporation                 entitled     “Hedge   Funds.”     Mr. Hardoon


  emphasized       the services that the Defendants              provided       as   an   investment adviser and in the


  management of the funds described above. (Exhibit 1).

            12.      Mr.   Hardoon,   on   behalf of the Safra         Group including Safra National          Bank of New

  York and/or Safra Asset Management Corporation, discussed with Plaintiffs several funds that were


  managed by       Safra Asset    Management Corporation emphasizing                      the substantial rates of return   as



  described in the       “Hedge   Funds” publication.

            13.      The purpose of the      “Hedge    Funds” publication was to induce Plaintiffs into                relying

  on   the performance ofthe Safra Group including Safra National Bank and Safra Asset Management


  Corporation      for their   expertise   associated with       being    an   Investment Adviser      giving   effect to the


  representations made therein.

            14.      After several    meetings       and discussions with Mr.               Hardoon, Plaintiffs agreed      to


  purchase $250, 000 of shares in each of three funds managed by Safra:

           Harbinger Premium

                                                                 4
Case 1:10-cv-21206-CMA                  Document 1      Entered          on   FLSD Docket 04/15/2010            Page      5 of 16




           Paulson Premium Preferred Shares

           RIFF Premium Preferred Shares Future


  These funds    are   identified in bold in paragraph 9           as   being investments managed by         Safra.

           15.     Mr. Hardoon stated that Safra National Bank or Safra Asset Management Corporation


  were   the manager of each ofthe proposed funds and had achieved returns for 2008-2009 as follows:


  (Exhibit 1)

                                                                        2007           2008


           Harbinger Premium                                            121.05%        27.34%   through May

           Paulson Premium Preferred Shares                             118.33%        9.56%    through May

           RIFF Premium Preferred Shares Future.                         14.06%        6.26%    through May

           16.     According to “Hedge Funds” publication, Safra Asset Management’s (“SAM”)                              Multi


  Manager    funds     are   “private   investment   pools   that invest in     numerous   hedge    funds. The        rigorous

  selecting ofthese funds is made considering the 4 Cornerstones of SAM”s Investment Process”

  (Exhibit 1)

           .Strategy Allocation                    SAM considers each           manager’s strategy in order      to build a


                   diversified portfolio in each of the multi manger funds offered.


                   Manager Selection           a   consistent research is made among different managers before


                   choosing one to join        SAM’s    portfolio

           .Risk              Management           SAM’s research team            analyzes   each   fund, conduce due

                   diligence and controls risk diversifying the portfolio.

           .Portfolio Review                  In order to    keep track of the major drives         of the   portfolio, it is

                   analyzed by the research team in a regular basis.

                                                               5
Case 1:10-cv-21206-CMA                Document 1            Entered   on   FLSD Docket 04/15/2010           Page      6 of 16




            (bold is in the original document)

            17.      On   July 15, 2008,       Plaintiffs   opened an   account with Safra National Bank of New


  York at the Aventura, Florida office for the purpose of investing in Safra managed accounts. On July


  15, 2008 Plaintiffs transferred $785, 000 to Safra National Bank at its office in Aventura, Florida.

            18.      In   opening      the account and         transferring      the   funds, Plaintiff relied   on   the


  representations     of Mr. Hardoon and the                “Hedge   Funds”   publication prepared by     Safra Asset


  Management, which touted histories of stable and steady returns due to the expertise of Safra Group

  Management.

            19.      On   July   16   or   July 17, 2008, Mr.   Hardoon advised Plaintiffs that Safra was unable

  to   purchase   shares of or invest in any of the funds             requested by      the Plaintiffs and which   were



  discussed by Mr. Hardoon.

            20.      Notwithstanding the discussions and assurances that investments would be made in

  Safra managed accounts,         starting July 18, 2008, Safra, without the knowledge ofthe Plaintiffs, made

  the   following purchases in the total amount of $750, 000:

            a.     $350, 000     of “FAIRFIELD GREENWICH SENTRY                         (DOMESTIC)” represented by

  Trade Confirmation Nbr. 00134 dated 7/18/08 for                    $250, 000   and Trade Confirmation Nbr. 00066

  dated 7/24/2008 for       $100, 000.      Exhibit 2.

            b.    $400, 000 of “FAIRFIELD RIFF LPS (FUTURES)” represented by Trade Confirmation

  nbr. 00133 dated 7/18/08 for $250, 000; Trade Confirmation and Cancellation nbr.0065 dated 7/24/08

  for   $150, 000 and     Trade Confirmation nbr 00205 dated 7/24/08 for               $150, 000.( Exhibit 3) (Exhibits

  2 and 3   are   collectively referred to as the “Fairfield Investments”)

            21.      For the services       provided above,     Safra was   paid a fee of $7, 500.00 and has charged


                                                                6
Case 1:10-cv-21206-CMA                  Document 1             Entered   on    FLSD Docket 04/15/2010            Page      7 of 16




  monthly service fees.

           22.       None of the Safra defendants delivered to Plaintiffs information                  or   prospectus with

  respect to any of the transactions.

           23.       Safra committed          a   classic “bait and switch”        on   the Plaintiffs. The bait     was   the


  representation that Safra was a good, reliable and successful                  fund manager which induced Plaintiffs

  to believe      they   were   purchasing     Safra    managed       funds.    The switch   came   when Safra invested

  Plaintiffs’s funds in accounts which Safra did not manage at all. The reason for this switch was that

  Safra   Group    received      substantially more       in fees from Plaintiffs investment than the Safra            Group

  would have received           as a   manager of its   own     funds from the investment of Plaintiffs’ funds.

                     INVESTMENT IN FAIRFIELD GREENWICH SENTRY


           24.       Unbeknownst to the            Plaintiffs, Fairfield Greenwich Sentry,          L.P.    was a   domestic


  unregistered fund, which according to the Private Placement Memorandum dated May 2006,:

           THE INTERESTS OF GREENWICH SENTRY L.P. ARE SPECULATIVE AND
           INVOL VE A HIGH DEGREE OF RISK. THESE SECURITIES HA VE NOT BEEN
           FILED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES AND
           EXCHANGE              COMMISSION             OR      ANY      OTHER       STATE        OR   FEDERAL
           GOVERNMENTALAGENCYORANNATIONAL SECURITIESEXCHANGENOIR
           HASANYSUCHAUTHORITYPASSED UPONTHEACCURACYORADEQUACY
           OF THIS MEMORANDUM OR TH MERITS OF AN INVESTMENT IN THE
          INTEREST OFFERED HEREBY. ANY REPRESENTA TION TO THE CONTRARY
          IS A CRIMINAL OFFENSE


           25.       The investment program of Greenwich Sentry as stated to the public is that the fund:

           Seeks capital appreciation ofits assets by allocating to an account at Bernard Madoff
           Investment Securities, which employs an option trading strategy described as “split
           Strike Conversion”. The strategy consists of the purchase of equity shares and the
           sale of a related out of the money call option representing an amount of underlying
           shares equal to an amount of equity shares purchased, and the purchase of a related
           put option which is at or out of the money. Equity index options are also utilized in
           this    trading methodology.            Such    a   strategy involves buying       a   group of    equity

                                                                  7
Case 1:10-cv-21206-CMA                Document 1      Entered   on   FLSD Docket 04/15/2010            Page   8 of 16




              securities that together will highly correlate to the S&P 100 index. The company
              may invest some of its assets in short -term US government obligations, certificates
              of deposits, short term, high grade commercial paper and other money market
              instruments. (Exhibit 4)

              26.      Notwithstanding the description of the proposed investment scheme, which even            if


  it   was   true, the Defendants failed to advise the Plaintiffs that the funds invested would not remain

  in the invested       fund, but were immediately given to third party contrary to the Private Placement

  Memorandum.

                                           INVESTMENT IN “RIFF”


              27.      An   original investment discussed with Mr.   Hardoon and requested by the Plaintiffs

  was   “Renaissance Futures Premium”          managed by     Safra. This fund is referred to   as   “RIFF” in the


  “Hedge       Fund”   publication.

              28.       To intentionally deceive and confuse Plaintiffs, Safra invested $400, 000 ofPlaintiff’s


  funds in “Fairfield Renaissance Futures” which is also referred to          as   “RIFF” and not     managed by

  Safra.      Believing that they were    invested in the Safra   managed fund,    Plaintiffs did not make any

  immediate         objection.

              29.      The Safra managed Renaissance Futures Premium fund which states in its information

  to the     public that: (Exhibit 1)

              RIFF Futures Premium is     amodestly-leveraged, slow trading futures fund designed
              to provide substantial risk-adjusted returns, uncorrelated to U.S. and global equity
              markets and with medium to low correlation to other asset classes. It invests in
              future of bonds, yields, currencies, energies, equity indices, and physical
              commodities. RIFF utilizes proven risk, cost and trade generation models used in
              Renaissance’s Medallion Fund.        Proprietary algorithms evaluate investment
              opportunities in an effort to improve the portfolio.


              RIFF is  newly formed and therefore has no operating history. The hypothetical
                        a

              performance results shown on the fact sheet are for illustration and discussion


                                                          8
Case 1:10-cv-21206-CMA             Document 1            Entered   on   FLSD Docket 04/15/2010               Page   9 of 16




           purposes only, are based on back testing of the proprietary computer models that
           Renaissance Technologies LLC will use to manage RIFF. The hypothetical
           performance prior to October 2007 is adjusted by RIFF Futures Premium fees.

            30.    The    non   Safra   managed Fairfield       Renaissance Futures      Fund,   in its information to


  the   public distributed by Safra states: (Exhibit 5)

            Fairfield Renaissance Futures is a modestly-leveraged, slow trading futures fund
            designed to provide substantial risk-adjusted returns, uncorrelated to U. S. and global
            equity markets and with medium to low correlation to other asset classes. It invests
            in future of bonds, yields, currencies, energies, equity indices, and physical
            commodities.

            Fairfield Renaissance Futures is  newly formed and therefore has no operating
                                                   a

           history”The hypothetical performance results shown on the fact sheet are for
           illustration and discussion purposes only, are based on back      testing of the
           proprietary computer models that Renaissance Technologies LLC will use to manage
           the new fund. The hypothetical performance prior to October 2007 is adjusted by
           Fairfield Renaissance Futures. (Exhibit 4).

            31.    Either Safra copied the Fund descriptions from Fairfield,             or   vice versa.   Regardless,

  it is clear that the   publications were made to confuse         and mislead the Plaintiffs and the        public.

            32.    When     questioned whether Fairfield Investments             met the investment criteria for the


  Trust, Mr. Hardoon and the Defendants assured Plaintiffs that Safra had conducted extensive due

  diligence    on, Fairfield Greenwich        Sentry LP.(domestic)        and     Fairfield Riff LP     (Futures)   and

  continued Safra’s recommendation of the investments in the Fairfield Investments. Safra did not

  disclose to the Plaintiffs the        extraordinary    fees and volatile nature of the Fairfield Investment


  strategies   all of which   were   contrary   to the investment       goals   for the Trust. Defendants failed to

  disclose to the Plaintiffs that Fairfield Greenwich did not retain its           own   funds but turned them over

  to the Madoff Investment        Company.      At all   times, Plaintiffs relied on the representation made by

  Safra that the Defendants had conducted extensive due             diligence     of the Fairfield Investments, that




                                                            9
Case 1:10-cv-21206-CMA               Document 1         Entered   on   FLSD Docket 04/15/2010           Page    10 of 16




   the Fairfield Investments were legitimate investments in compliance with general accepted practices

   for investments and would meet the investment             goals originally described by the Plaintiffs.

             33.         A clear reading of the Private Placement Memorandum would reveal to any prudent


   investment adviser who is performing a fiduciary duty to the Plaintiffs that the Fairfield Investments

   would not meet the needs of the Plaintiffs.               Reasonable due     diligence by     Safra would have

   established that the investments            were    highly speculative    in nature and the funds         charged

   extraordinary        fees and undertook substantial risks contrary to the          specific   instructions of the

   Plaintiffs.

             34.        Defendants failed in their commitment to complete due diligence and their obligations

   as an   Investment Adviser under the Act, by merely copying and           passing along, verbally and through

   publications and documentation, the misrepresentations of others.

             35.        Due   diligence by   the Defendants would have determined that the contents of the


   performance letters from Fairfield regarding Fairfield Sentry LP were false and misleading because

   Fairfield had    no    basis to characterize the fund’s   performance since the fund, rather than following

   the split strike conversion strategy it had represented to investors (assuming the Plaintiffs would have

   made such       an   investment), was simply turning substantially all of its assets over to a Ponzi       scheme


   operator.

             36.        During September       and    October, 2008, the value of Plaintiffs’s investments

   deteriorated. However Plaintiffs          were   continually assured by Defendants     that “all   was   well” and

   Defendants continuing due diligence did not disclose any concerns regarding the investment policies.

   As of the end of November              2008, Defendants issued       a   monthly   statement to the Plaintiffs


   acknowledging a Net Asset Value            of Plaintiff’s investment to be   $675, 832.75.     On December     11,


                                                             10
Case 1:10-cv-21206-CMA               Document 1            Entered   on   FLSD Docket 04/15/2010            Page   11 of 16




   21008, Bernard Madoff             was    arrested and the entire sordid investment affair             engaged   in   by

   Greenwich Sentry came to light. On December 22, 2008 the Greenwich Sentry notified its investors

   that it was     suspending the calculation ofthe Net Asset Value and would not honor redemptions.                    As


   of the end of December 2008 the Net Asset Value of Plaintiff’s account as reflected in the                  monthly

   statements from Safra was “N/A”. Which                  according   to the   monthly   statement means “Indicates


   information is not       applicable to the specific item” i.e.      worthless.

             37.       Plaintiffs gave Defendants instruction to immediately liquidate both investments. As

   a   result, Plaintiffs received $324, 116.00 from Fairfield RIFF and no return on the Fairfield Sentry

   investment for      a   total loss of   $425, 884.00.

                                                           COUNT I
        (Violations   of Section 80b-6 of the Investment            Companies and Advisers Act and Section
                                 275.206(4)    Code of Federal      Regulations Title 17)

             38.       Plaintiffs repeat and reallege the      allegations as set forth in paragraphs 1 through 37

   as   if fully set forth herein.


             39.       This claim is asserted       against   the defendants pursuant to Section 80b-6 of the

   Investment Companies andAdvisers Act and Section 275.206(4) Code ofFederal Regulations, Title


   17.


             40.       The Defendants owed a        duty to Plaintiffs to refrain from fraudulent conduct which

   includes the      obligation to disclose material facts      whenever the failure to do       so   would operate   as a



   fraud   or   deceit upon the Plaintiffs.

             41.       The Defendants unlawful       course   of conduct pursuant to which they individually and


   collectively, knowingly         or   recklessly engaged     in acts,   practices,   and   course   of business which


   operated as a fraud and deceit upon the Plaintiffs, and made various deceptive and untrue statements

                                                               11
Case 1:10-cv-21206-CMA                 Document 1       Entered     on    FLSD Docket 04/15/2010                 Page   12 of 16




   of material facts and omitted to state material facts necessary in order to make the statements made,

   in   light of the circumstances under which they were made, not misleading Plaintiffs including:

             a.          the   negligent representation that Defendants exercised reasonable due diligence to

   determine whether the          proposed investments meet the investment criteria of the Plaintiffs

             b.          failure to advise Plaintiffs of conflict   or   potential conflicts   of interest,     including the

   amount of compensation Defendants would have received from the issuer of the                         security they were

   recommending and the            share of any   compensation to be paid to Mr.        Hardoon.

             c.          by providing little or none of the services that were represented in the “Hedge Fund”

   publication delivered to Plaintiffs.

             d.          failing to advise Plaintiffs that they were invested in accounts that were not managed

   by Safra..

             42.         Defendants,    in furtherance of said     scheme, plan and unlawful            course   of conduct,


   knowingly issued, caused to be issued, or participate in the preparation, issuance and distribution of

   deceptive       and   materially   false and   misleading   statements described above to              Plaintiffs, all   in


   violation of Title 15 U.S.C. sec.80b-6 and Code of Federal                   Regulation Title   17   sec   275.206(4)-1


                                                        COUNT II
                     Rescission under Investment Advisers                Act,   15 U.S.C.   §80b-1    et seq.


             43.         Plaintiffs repeat and reallege the   allegations as set forth in paragraphs 1 through 42

   as   if fully set forth herein


             44.         Defendants, Safra National Bank of           New York and Safra Asset                  Management

   Corporation acted as an "investment adviser" to Plaintiffs pursuant to the Investment Advisers Act.

             45.         15 U.S.C.    §80b-6(2) prohibited,   defendants Safra National Bank of New York and

   Safra Asset      Management Corporation           as an   investment adviser to          "engage   in any     transaction,

                                                              12
Case 1:10-cv-21206-CMA                   Document 1               Entered    on   FLSD Docket 04/15/2010                Page   13 of 16




   practice,       or course   of business which operates             as a   fraud   or   deceit upon any client   or   prospective

   client."

              46.       Defendants, breached their duties to Plaintiffs by engaging in a course of conduct in

   which they recklessly engaged in transactions, practices and a course ofbusiness that allowed a fraud

   to be   perpetrated on Plaintiffs.

              47.       Defendants, breached their duties by:

              a.        misrepresenting to Plaintiffs that the Defendants conducted extensive due diligence

   of the Fairfield Investments and that                 an     investment in the Fairfield Investments would generate

   consistent returns with low            volatility;

              b.        failing to perform adequate due diligence, or to follow their own internal due diligence

   protocols, before investing Plaintiffs funds in Fairfield Investments;

              c.        publishing      and     releasing   materials to Plaintiffs that contained false and             misleading

   information ofthe care taken by Defendants with respect to Plaintiffs funds, about the manner in whichthese

   assets were being      invested, and ofthe value ofthese assets;

              d.        investing Plaintiffs funds in Fairfield Investments with inadequate diligence or monitoring;

              e.        failing to monitor Plaintiffs investments in Fairfield Investments on a continuous basis to

   any reasonable       degree, or to comply with their own internal protocols for monitoring the funds;

              f.        failing to take adequate steps to confirm the account statements of Fairfield Investments

   related transactions,       as   well as periodic performance representations ofFairfield Investments.;


              g.        failing to properly process           the   redemption    and return of Plaintiffs funds after    expressly

   acknowledging Plaintiffs direction and agreeing to obtain redemption of the investments; and

              h.        profiting at the expense of Plaintiffs by collecting up front and periodic investment fees.

              48        Defendants       are   liable for all   damages sustained by Plaintiffs, as a direct participant in the

                                                                       13
Case 1:10-cv-21206-CMA                 Document 1              Entered     on   FLSD Docket 04/15/2010           Page    14 of 16




   wrongs listed above and to enrich themselves at Plaintiffs expense.

           49.        The aforementioned conduct by defendants was so reckless as to constitute a deceit or fraud


   upon Plaintiffs.

           50.        Plaintiffs have been        damaged as     a   result of defendants breach of their duties under the

   Investment Advisers Act.


           51.        As   a   result, Plaintiffs are entitled to rescission of any investment adviser agreements with

   the Defendants and to          recover   all   principal,    fees and commissions      paid    in connection to Plaintiffs


   investments in the Fairfield Investments.

                                                               COUNT III
                                                   (Breach of Fiduciary Duty)

           52.        Plaintiffs repeat and reallege the allegations as set forth in paragraphs 1           through 51   as   if


   fully set forth herein.

           53         Plaintiffs entrusted their funds to the             Defendants, which owed fiduciaryduties ofutmost

   good faith, loyalty and due care to Plaintiffs based on their relationship.

           54.        As investment management advisers, the Defendants knew                 or   should have known how to


   perform their duties including, but not limited to, the monitoring ofthe safety and performance ofPlaintiffs

   funds in a prudent and professional            manner.



           55.        Defendants breached their fiduciary duties to Plaintiffs and acted in reckless disregard of

   those duties   by:

           a.         misrepresentingto Plaintiffs that Defendants conducted extensive due diligence onthe Fairfield

   Investments and that the investments would generate consistent returns with low volatility and would meet the


   investment goals;

           b.         failing to exercise generally the degree of prudence, caution and good business practices that


                                                                     14
Case 1:10-cv-21206-CMA                 Document 1           Entered   on   FLSD Docket 04/15/2010            Page   15 of 16




   would be expected of reasonable investment professionals            overseeing client funds;

             c.        publishing      and    releasing   materials to Plaintiffs that contained false and   misleading

   information of the care taken by Defendants with respect to Plaintiffs            funds, about the manner in which

   these assets     were   being invested, and of the value of the assets;

              d.       failing to act with reasonable care in ascertaining that the information set forth in the

   “Hedge     Fund” publication and other written materials           provided to Plaintiffs was   accurate and did not


   contain false and misleading statements           or   omissions of material facts;

              e.       failing to take reasonable steps to oversee that the investment ofthe assets of Plaintiffs

   were   made and maintained in a prudent and professional manner;

              f.       failing to investigate or perform due diligence or review as to the actual relationship with

   Fairfield Investments and the underlying basis for the investments and performance;


              g.       failing to perform reasonable and adequate due diligence in the selection of, and continuing

   selection of the Fairfield Investments;

              h.       allowing investments ofPlaintiffs funds in funds that were not managedby Safra contrary

   to the   representations made to Plaintiffs.

              i.       failing to take reasonable steps to preserve the value ofPlaintiffs’        investments.

              56.      As    a   direct and   proximate   result of the Defendants' breaches of their   fiduciary duties,

   Plaintiffs have suffered damages and are entitled to recovery ofsuch damages from the Defendants, jointly

   and severally, in an amount to be proven at trial, but believed to be in excess of        $425, 884.00, plus interest,

   fees, penalties and other costs, as well as a return of all fees paid to the Defendants.

              Wherefore, Plaintiffs demands judgment against Defendants including:

              1.       Rescission ofall contractual relationships between Plaintiffs and Defendants and return of



                                                                 15
Case 1:10-cv-21206-CMA           Document 1        Entered   on   FLSD Docket 04/15/2010             Page   16 of 16




                  all   principal as well as fees paid by Plaintiffs to Defendant.

         2.       Damages in the amount of the investments made by the Defendants which has not been

                  returned to the Plaintiffs.

         3.       Costs and disbursements of this action


         4.       Reasonable     Attorneys fees.

         5.       Such other and further relief as this Court may deem      fair, just and proper.

         Dated:   April 14, 2010


                                             s/Bennett G. Feldman
                                             BENNETT G. FELDMAN (Fla. Bar No.024106)
                                             Email address: benfeld@bellsouth.net
                                             2655 Lejeune Road
                                             Suite 514
                                             Coral Gables, Fla. 33134
                                             Tel. 305 445-9909
                                             Fax 305 461-5088
                                             Attorney for Plaintiffs




                                                        16
Case 1:10-cv-21206-CMA Document 1-1   Entered on FLSD Docket 04/15/2010 Page 1 of 1
      Case 1:10-cv-21206-CMA                            Document 1-2     Entered     on   FLSD Docket 04/15/2010              Page        1 of 2

AO 440   (Rev. 12/09)   Summons in   a   Civil Action



                                             UNITED STATES DISTRICT COURT
                                                                         for the

                                                                       District of




                                Plaintiff
                                     v.                                              Civil Action No.




                               Defendant

                                                           SUMMONS IN A CIVIL ACTION


To: (Defendant’s    name    and address)




           A lawsuit has been filed             against you.

        Within 21 days after service of this summons on you (not counting the day you received it)      or 60 days if you

are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.
P. 12 (a)(2) or (3)   you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of
the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,
whose name and address are:




       If you fail to respond, judgment by default will be entered                   against you for the relief demanded in the complaint.
You also must file your answer or motion with the court.




                                                                                        CLERK OF COURT



Date:
                                                                                                   Signature of Clerk or Deputy   Clerk
    Case 1:10-cv-21206-CMA                             Document 1-2                  Entered         on   FLSD Docket 04/15/2010                        Page   2 of 2

AO 440   (Rev. 12/09)   Summons in   a   Civil Action (Page   2)

Civil Action No.


                                                                      PROOF OF SERVICE

                        (This   section should not be filed with the court unless                         required by Fed. R.            Civ. P.   4(l))

            This   summons       for (name of individual and title, ifany)

was   received by        me on   (date).


            0 I personally served the               summons on        the individual at (place)

                                                                                                          on   (date);                                  or



            0 I left the       summons        at the individual’s residence             or   usual   place   of abode with (name)

                                                                               a   person of suitable age and discretion who resides there,
            on   (date), and mailed                                        a   copy to the individual’s last known                 address;        or



            0 I served the       summons on            (name ofindividual                                                                                       who is

             designated by law to accept service                   of process      on   behalf of (name oforganization)

                                                                                                          on   (date);                                  or



            Cl I returned the        summons         unexecuted because;                                                                                           or



            Cl Other (specify):




            My fees      are                                  for travel and                              for   services, for a total of


            I declare under penalty of perjury that this information is true.




Date:
                                                                                                                  Server’s   signature



                                                                                                                Printed name and title




                                                                                                                  Server’s address


Additional information           regarding attempted service, etc:
      Case 1:10-cv-21206-CMA                            Document 1-3     Entered     on   FLSD Docket 04/15/2010              Page        1 of 2

AO 440   (Rev. 12/09)   Summons in   a   Civil Action



                                             UNITED STATES DISTRICT COURT
                                                                         for the

                                                                       District of




                                Plaintiff
                                     v.                                              Civil Action No.




                               Defendant

                                                           SUMMONS IN A CIVIL ACTION


To: (Defendant’s    name    and address)




           A lawsuit has been filed             against you.

        Within 21 days after service of this summons on you (not counting the day you received it)      or 60 days if you

are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.
P. 12 (a)(2) or (3)   you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of
the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,
whose name and address are:




       If you fail to respond, judgment by default will be entered                   against you for the relief demanded in the complaint.
You also must file your answer or motion with the court.




                                                                                        CLERK OF COURT



Date:
                                                                                                   Signature of Clerk or Deputy   Clerk
    Case 1:10-cv-21206-CMA                             Document 1-3                  Entered         on   FLSD Docket 04/15/2010                        Page   2 of 2

AO 440   (Rev. 12/09)   Summons in   a   Civil Action (Page   2)

Civil Action No.


                                                                      PROOF OF SERVICE

                        (This   section should not be filed with the court unless                         required by Fed. R.            Civ. P.   4(l))

            This   summons       for (name of individual and title, ifany)

was   received by        me on   (date).


            0 I personally served the               summons on        the individual at (place)

                                                                                                          on   (date);                                  or



            0 I left the       summons        at the individual’s residence             or   usual   place   of abode with (name)

                                                                               a   person of suitable age and discretion who resides there,
            on   (date), and mailed                                        a   copy to the individual’s last known                 address;        or



            0 I served the       summons on            (name ofindividual                                                                                       who is

             designated by law to accept service                   of process      on   behalf of (name oforganization)

                                                                                                          on   (date);                                  or



            Cl I returned the        summons         unexecuted because;                                                                                           or



            Cl Other (specify):




            My fees      are                                  for travel and                              for   services, for a total of


            I declare under penalty of perjury that this information is true.




Date:
                                                                                                                  Server’s   signature



                                                                                                                Printed name and title




                                                                                                                  Server’s address


Additional information           regarding attempted service, etc:

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:38
posted:7/22/2011
language:English
pages:21
Description: Sac Capital Private Placement Memorandum document sample