New twist in Gerova short selling conspiracy case
17 February 2012 San Francisco
Image: Shutterstock
Another court decision has gone against a man involved in a convoluted tale of short selling conspiracies and fraud. The most recent case resulted in Scott Hintz being taken back to prison on 9 February for three years for violating conditions of his probation after a guilty plea to bank fraud charges in 2003. In separate proceedings, a motion to overturn the guilty plea was denied in January.
It is the latest in the unravelling saga of Bermuda-based Gerova Financial, a formerly NYSE-listed company about which Hintz is alleged to have spread false and misleading information.
The next chapter takes the form of a lawsuit filed in California State court on 22 December, 2011 by Noble Investment Fund, a shareholder of Gerova. Hintz is alleged to have attempted to extort $18 million from Gerova, threatening to publish conspiratorial stories about pervasive wrongdoing at the company if he was not provided the payoff. The lawsuit alleges over $800 million of shareholder value was destroyed as a consequence of Hintz spreading false rumours and filing "frivolous" lawsuits, which have since been dismissed.
In addition to the extortion claims, the lawsuit alleges that Hintz conspired with Keith Dalrymple, owner of Dalyrmple Finance, a consulting firm which published a negative assessment of Gerova, and other Bulgaria-based short sellers to artificially depress the publicly traded share price of Gerova though a combination of naked short selling and the dispersal of fictional information about the company and imaginary conspiracies.
According to a release from Gross Law, representing Noble in the lawsuit, the complaint describes a "veritable rogues gallery of active participants" which, aside from Scott Hintz and Keith Dalrymple, includes the latter's wife Victoria Dalrymple, a Bulgarian native, business partner and co-conspirator and Daniel Ivandjiiski, aka Tyler Durden of zerohedge.com. This cast of characters is alleged to have been embroiled in activities which resulted in huge short positions amassed in Gerova’s stock in late 2010 and early 2011, including many illegal naked positions, immediately before the company was to complete two major mergers.
Last year, a merger between Gerova, Ticonderaga Â鶹´«Ã½ and Seymour Pierce collapsed and the reinsurer proceeded to voluntarily delist its securities from NYSE after the exchange suspended trading pending additional disclosures regarding the company's operations, management restructuring and business plans.
It is the latest in the unravelling saga of Bermuda-based Gerova Financial, a formerly NYSE-listed company about which Hintz is alleged to have spread false and misleading information.
The next chapter takes the form of a lawsuit filed in California State court on 22 December, 2011 by Noble Investment Fund, a shareholder of Gerova. Hintz is alleged to have attempted to extort $18 million from Gerova, threatening to publish conspiratorial stories about pervasive wrongdoing at the company if he was not provided the payoff. The lawsuit alleges over $800 million of shareholder value was destroyed as a consequence of Hintz spreading false rumours and filing "frivolous" lawsuits, which have since been dismissed.
In addition to the extortion claims, the lawsuit alleges that Hintz conspired with Keith Dalrymple, owner of Dalyrmple Finance, a consulting firm which published a negative assessment of Gerova, and other Bulgaria-based short sellers to artificially depress the publicly traded share price of Gerova though a combination of naked short selling and the dispersal of fictional information about the company and imaginary conspiracies.
According to a release from Gross Law, representing Noble in the lawsuit, the complaint describes a "veritable rogues gallery of active participants" which, aside from Scott Hintz and Keith Dalrymple, includes the latter's wife Victoria Dalrymple, a Bulgarian native, business partner and co-conspirator and Daniel Ivandjiiski, aka Tyler Durden of zerohedge.com. This cast of characters is alleged to have been embroiled in activities which resulted in huge short positions amassed in Gerova’s stock in late 2010 and early 2011, including many illegal naked positions, immediately before the company was to complete two major mergers.
Last year, a merger between Gerova, Ticonderaga Â鶹´«Ã½ and Seymour Pierce collapsed and the reinsurer proceeded to voluntarily delist its securities from NYSE after the exchange suspended trading pending additional disclosures regarding the company's operations, management restructuring and business plans.
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