RD Legal Capital hedge fund told investors it would responsibly diversify its clients money among many law suits recoveries. In fact, according to the SEC, the fund placed a huge bet on one of the oldest terror factories in the world – Iran.
The fraud wasn’t in the bet itself; according to SEC, the fund allegedly used an accounting strategy that allowed it to reap profits off the bet even if it was unclear as to whether investors would benefit.
According to the Wall Street Journal:
RD Legal Capital LLC marketed its funds as a steady way to profit from safe legal settlements, but instead “invested the funds’ money however they saw fit,” the SEC said Thursday.
The SEC also alleges that RD Legal and founder Roni Dersovitz repeatedly misled investors about how much they had bet on the outcome of a judgment against Iran for sponsoring a terrorist attack that killed Americans…
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Mr. Dersovitz also made misrepresentations to his investors about the concentration of the Iran bet, the SEC said in its order initiating the case before its in-house court. At one point, he said the firm’s maximum exposure to the case was $12.5 million; in actuality, it had more than $100 million tied to the litigation, the complaint alleged…
This case against the hedge fund is expected to go on trial before an in-house SEC judge. RD Legal has 20 days to respond.
