Fallout Continues In Westridge Capital Management Case

Paul Greenwood

Paul Greenwood

UPDATE 5:23 P.M. EST (Feb. 25, U.S.A.) The story below is from Feb. 24, the day before Greenwood and Walsh were arrested. See our Feb. 25 story to read about the arrests.

Two principals of Westridge Capital Management (WCM) are mum about the controversy swirling around the firm and affiliated companies. Neither Paul Greenwood nor Stephen Walsh are responding to media inquiries about the whereabouts of hundreds of millions of dollars entrusted to WCM by universities and public-employee retirement funds.

Greenwood has a secondary problem: He is the town supervisor of North Salem, N.Y., a Westchester County community on the Connecticut border. A local newspaper, The Journal News, has tried unsuccessfully to contact Greenwood. The paper reports that an administrative assistant for the town of North Salem relayed a message from Greenwood that he could not comment on advice of counsel.

On its website, North Salem’s did not mention the firestorm surrounding its town manager.

WCM is based in Santa Barbara, Calif.  Greenwood and Walsh control an arm of the company — WG Trading Investors — in Greenwich, Conn., according to court documents. Another arm known as Westridge Capital Management Enhanced Funds is registered in the British Virgin Islands and also was named a defendant in a lawsuit filed Friday by two Pennsylvania universities.

No attorneys have entered appearance notices for Walsh or Greenwood in a lawsuit filed in U.S. District Court for the Western District of Pennsylvania by Carnegie Mellon University and the University of Pittsburgh. The schools filed the lawsuit under emergency circumstances. They alleged that money was “converted” and that they were denied answers when they inquired about the whereabouts of their investments, which total a combined $114 million.

A federal judge placed severe restrictions on WCM’s ability to spend money as a result of the lawsuit.

Pitt directed a fresh $21.3 million to the company earlier this month, as an audit by the National Futures Association was getting under way. NFA suspended Greenwood and Walsh for stonewalling during the audit. Neither the company nor Greenwood and Walsh answered questions from the schools.

From the CMU/Pitt lawsuit filed Friday.

From the CMU/Pitt lawsuit filed Friday.

CMU, according to the lawsuit, sent an administrator to New York, New Jersey and Connecticut to make personal contact with the WCM and affiliated companies controlled by Greenwood and Walsh. The school got no answers, and joined with Pitt — which also reported stonewalling — in filing the lawsuit.

How much WCH and affiliates have under management is unclear. Documents suggest as many as 16 public pension funds have stakes in the company or affiliates.

A large fund for Pennsylvania educators recently approved up to $1 billion for investment with the firms, but the Pennsylvania School Employees Retirement System did not execute the contract, the Pittsburgh Post-Gazette reports.

Yesterday the Iowa Public Employees Retirement System (IPERS) canceled its contract with WCM and sought the return of $339 million.

Reporters in Iowa, Pennsylvania, Connecticut and New York are working on the WCM story now. It hasn’t gained national traction yet, but that may be coming. NFA’s documentation of its bid to audit Greenwood and Walsh raises troubling questions about the whereabouts of hundreds of millions of dollars, and there have been no answers so far.

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