BREAKING NEWS: Another Major Probe Imminent Amid Extraordinary Assertion That Fund Managers Took Hundreds Of Millions Of Higher-Education Client Dollars And Left IOUs
UPDATE 10:55 P.M. EST (Feb. 22, U.S.A.) We’ve added to the bottom of this post some information about Westridge Capital’s website, which appears to consist of a single page and is amateur by any modern standard. We’ve also associated a second domain to the company. It, too, appears to consist of a single page — a page that appears to be just a holding page from the company’s hosting provider.
We’ve also added some links to public employee retirement funds that list Westridge Capital Management in their financial reports.
Here, below, our earlier post . . .
It could be the maximum case of brains getting drained by fraudulent investment advisers.
Two universities in Pennsylvania known for producing top thinkers in computer science and medicine fear they have lost at least $114 million in an investment swindle and have filed an emergency lawsuit to recover the money.
Because the investment fund in question has as many as 16 participants, including university foundations and retirement and pension plans — and perhaps $1.8 billion or more under management — the losses could be enormous.
Carnegie Mellon University and the University of Pittsburgh seek the immediate return of money they invested with Westridge Capital Management (WCM) of Santa Barbara, Calif. Also named in the complaint are company principals and various affiliates, including WG Trading Investors LP of Greenwich, Conn.
The universites said they contacted the Securities and Exchange Commission and the Commodity Futures Trading Commission this week and requested an emergency investigation. Attorneys for the universities filed a lawsuit in U.S. District Court for the Western District of Pennsylvania.
In an extraordinary assertion made after a panicked trip Monday by a university administrator to New York, New Jersey and Connecticut to speak with WCM executives, CMU and Pitt said the money might have been “converted” and IOUs left in its place.
“The Defendants named herein have converted investor funds to their own use,” the universities charged.
Lawsuit claims managers left IOUs for hundreds of millions of dollars.
Two of WCM’s principals — Paul Greenwood and Stephen Walsh — were suspended by the National Futures Association (NFA) last week in a little-publicized emergency action.
The universities, in their lawsuit, said “personal promissory notes” for “hundreds of millions of dollars” from Greenwood and Walsh made payable to WG Trading Investors were uncovered in an NFA audit last week.
Greenwood and Walsh control WG Trading Investors, also known as WGTI.
NFA said Greenwood and Walsh stonewalled and refused to participate in the audit in any material way. One of the excuses Walsh used, despite the obvious importance of the audit, was that he “would be in a meeting all day” and unavailable to speak with NFA, the universities said in the lawsuit.
Greenwood and Walsh are sole proprietor Commodity Pool Operator (CPO) Members of NFA in Greenwich, NFA said.
“Additionally,” NFA said, “Greenwood and Walsh have failed and refused to respond to NFA’s inquiries regarding numerous promissory notes totaling hundreds of millions of dollars executed by them individually in favor of an investment vehicle to which two NFA listed commodity pools have loaned a total of over half a billion dollars.”
Read the CMU/Pitt lawsuit against Westridge Capital Management, WG Trading Co. Limited Partnership,Westridge Capital Management Enhanced Funds Inc., WG Trading Investors LP, Paul Greenwood, Stephen Walsh, Jack Eldred Reynolds, James Carder and Deborah Duffy.
Read about NFA’s emergency suspension of Greenwood and Walsh.
Updates: We typed Westridge Capital Management’s street address as listed in the lawsuit into Google. Several businesses are listed at the same address — 222 E Carrillo St, Santa Barbara, Calif. 93101. The busineses list “suite” numbers. Westridge Capital’s suite number is 300.
Westridge Capital’s URL is:
Its site basically is a blue page that lists only Westridge Capital’s name, Santa Barbara street address, phone and fax numbers, and an email address. There is no content on the landing page beyond that.
We associated a second domain using registration data for the westridgecap.com domain. Here is the second domain:
The wgtrading.com domain resolves to a holding page that says:
“Welcome wgi6 to Your New Virtual Private Server !
“We would like to welcome you to your new Virtual Private Server. We are committed to bringing you the best service and finest Internet hosting solutions available. To help you get acquainted with your Virtual Private Server we have prepared “Getting Started” pages on our Web site. We encourage you to visit these pages and add them to your list of bookmarks.
“Best wishes in using your new Virtual Private Server!”
The wgtrading.com domain has been registered since July 12, 2000, when Bill Clinton was president. Meanwhile, the westridgecap.com domain has been registered since Oct. 22, 2003.
Update: Here is a pdf from the Iowa Public Employees Retirement System that references WCM.
Here is one from the Commonwealth of Pennsylvania Public School Employees Retirement System.
Here is one from the North Dakota Retirement and Investment Office.
Patrick,
How in the WORLD would funds from such prestigious institutions ever get invested into a company with an even-worse-than-amateur web site? Perhaps they are one of those secret, ya-gotta-know-somebody private equity firms (like Madoff) that intentionally hide in the shadows (those shadows also provide cover for the scams). Have they never heard of Vanguard, Fidelity, State Street, and a host of others? Apparently, neither has the Iowa Public Employees Retirement System, also investors in WCM.
Hi Entertained,
This is just downright odd.
http://www.psers.state.pa.us/org/board/resolutions/2008/fin_wilshire_rec.pdf
It looks as though the Commonwealth of Pennsylvania Public School Employees’ Retirement System approved up to $1 billion to be directed at WCM in September.
There still basically is no national play on this story. The CMU/Pitt lawsuit is another document that requires readers to suspend their disbelief, but CMU basically sent an administrator right to WCM’s doors and the administrator was turned away.
Patrick
Patrick,
RE: The websites of the two firms…..
One nail in the coffin of Steven Glass, the reporter for The New Republic caught fabricating news reports, was the low quality website he claimed belonged to a high-tech Silicon Valley company. The reporters for Forbes Magazine’s on-line edition were very suspicious of the low quality site, especially since it was operated through America On-line, which at the time required an AOL account before it could be viewed. Glass, of course, had quickly thrown the site together when the Forbes reporters were closing in. I’d hate to be in shoes of fund managers who might have seen a red flag or two in the websites of these two companies, if they’d just googled them.
Hi Marci,
Westridge Capital Management doesn’t seem to have much of a web presence at all, given the purported size of funds under management. And it also seems to be a bit of a maze.
The westridgecap.com domain cited in the post above uses an address in New York, but the info on the landing page for the domain uses the Santa Barbara address.
What struck me out of the gate was the lack of an obvious “go-to” page and a seeming absence of online biographies for the company.
Regards,
Patrick
Hi, Patrick!!
Check out the Board members of CMU & Pitt and your jaw will possibly drop further (CEO/PNC Corp., etc.). It’s inexcusable that Universities of such prestige did not properly oversee and protect endowment assets (basic “due diligence”). Their pathetic website, their supposed investments in commodities via an office in the Virgin Islands, and last but not least, 2-3 people managing $3 billion. And, the relationship has been going on since 2002.PATHETIC!PATHETIC!PATHETIC! Someone should loose their job!!! Carter, in Pittsburgh
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