Ritchie, Rich No More

Date: Tuesday, June 26, 2007
Author: Lenny Broytman, Riskcenter.com

After two of its funds lost an estimated $700 million in investments on life insurance settlements, Ritchie Capital Management (RCM) is doing everything in its power to make sure that it never happens again.

According to published reports, the hedge fund firm is seeking bankruptcy protection against two Dublin-based funds as a result of the heavy losses.

The firm has been crossing their fingers, in hopes of a $17 million ABN Amro Holding NV loan they hope will do just that.

The potential loan, which is pending approval via a federal bankruptcy court, comes just as the firm is also trying to sell of their assets. By doing this, RCM hopes to maximum the company’s total worth and thus, make the ABN loan a bit more attainable.

According to libertypost.org, the $17 million loan is part of around $30 million in financing from the ABN.

With the aid of the Racketeer Influenced and Corrupt Organizations Act, RCM bought suit against Coventry First, claiming that Coventry defrauded investors as well as policy owners mainly by bid rigging.

The firm’s May 2 lawsuit also alleges that Coventry covered up many of their unlawful activity, a claim that is now under investigation.

“The debtors were informed as special-purpose vehicles to invest in life-insurance policies in the life settlement market,” said Ritchie’s Chief Restructuring Officer Fred Caruso.

"This is one of the first lawsuits in the life settlements industry to expose companies like Coventry First which defrauded both policy owners and investors to maximize its profits," the plaintiff’s legal counsel Thomas Puccio told earthtimes.org. "We intend to pursue Coventry First to the fullest extent of the law,” he added.