BY MICHAEL RAPOPORT | Institutional Investor
‘They’d Find Fraud, Fraud, Fraud.’
JULY 22, 2020
The story of Chinese fraud goes back a decade and a half, to the mid-2000s, when a wave of Chinese companies rolled onto U.S. exchanges via a backdoor maneuver known as “reverse mergers.” Chinese companies would merge with a U.S. shell company and take over its public listing, gaining access to American exchanges, trading, and investors — all without the regulatory scrutiny a traditional initial public offering would have brought.
“Until that happens, there’s Robert Seiden”
But starting around 2011, revelations spilled out about the accounting and disclosure of company after Chinese company — that they’d inflated their revenues, pretended they had businesses they didn’t, or seen their coffers looted by executives.
Some of the more eyebrow-raising schemes, according to regulators: Universal Travel gave its auditor an address for a purported hotel customer of the company’s that turned out to be a public restroom. AgFeed Industries, an animal-feed and hog-production company, inflated its revenues by claiming sales of hogs that didn’t exist, and later tried to cover up the fraud by claiming the fake hogs had died. The CEO of TV ad-network company China MediaExpress offered a $1.5 million bribe to an outside accountant helping to look into the company’s finances. (The accountant declined.)
“Some are still fighting to hold Chinese companies accountable, from Robert Seiden, a New York investigator who pursues shady Chinese companies as a court-appointed receiver empowered to seize their assets. . .“
With these revelations, many Chinese companies’ stocks plunged, leaving shareholders with huge losses. The SEC barred about 180 Chinese companies from U.S. trading and filed dozens of lawsuits against the companies, their executives, and “gatekeepers” like auditors and consultants who helped them get access to U.S markets. And for a while, relatively few Chinese companies braved U.S. markets because of concerns about fraud.
But since 2017, there have been 93 Chinese IPOs in the U.S., according to data provider Dealogic. Chinese companies have gotten savvier, Block says: They’re less prone to claiming outsize successes than they were in the past. “They know they have to look human from time to time.”
. . .
Why does this keep happening? Why do these problems recur, even after investors should be on notice that Chinese companies can be risky and difficult to hold to account?
Part of it, some observers say, is that people have short memories, are eager for easy trading gains, and keep wanting to benefit from the opportunities China presents. China and its companies know that.
“Investors forgot” and “just needed to say no,” Block says. China is “this environment where fairy tales are created because investors can’t get enough.”
Many investors have exposure in China without even knowing about it. They hold mutual funds or other investments whose managers invest in Chinese stocks. “There’s a lot of money looking for targets,” says Anne Stevenson-Yang, co-founder of J Capital Research. “A ton of money that’s flowing around, and there are people who figure out a way to harness it.”
For their part, U.S. exchanges are hungry for Chinese listings too. “The public markets are desperate for listings, and they’ll list anything,” says Steve Dickinson, an attorney who specializes in China with law firm Harris Bricken.
There’s also a cultural gap. When Westerners invest in a Chinese company, many assume it has emerged in the same kind of market environment they’re accustomed to in the U.S., that it’s been subjected to the same kind of vetting and regulatory oversight. That’s not the case.
“There’s a certain amount of self-delusion there,” says Jim Peterson, an attorney and author specializing in accounting issues.
On the other side, many Chinese companies aren’t prepared for the level of disclosure and communication with investors that’s required of them when they’re listed in the U.S. Even if they have legitimate businesses, their response when they face criticism may be to avoid dealing with it — to pull up stakes and retreat to China, leaving investors holding the bag.
. . .
It doesn’t help U.S. investors that they can’t be sure that the auditors who review the finances of Chinese companies are doing a good job. In a fraud, the auditors are often deceived along with everyone else. “It’s devastating when skepticism is supposed to be one of the key elements of [an auditor’s] performance,” Peterson says.
The problem is compounded by China’s intransigence. U.S. regulators inspect the work of any auditors who audit U.S.-traded companies. But China has refused to allow such inspections for Chinese audit firms, including affiliates of the Big Four accounting firms that audit most major companies.
China regards the sensitive financial information about its companies that their auditors handle as akin to “state secrets.” Nearly 200 Chinese and Hong Kong companies traded in the U.S., including giants like Alibaba and Baidu, are audited by these firms.
“We have no ability to verify in China and no prospects on the horizon,” said William Duhnke, chairman of the Public Company Accounting Oversight Board, the U.S. audit regulator, at the recent SEC roundtable.
And not just at Chinese companies. At nearly 100 U.S.-based multinationals that do business in China, including giants like Walmart and General Motors Co., some of the audit work is done by Chinese firms that U.S. regulators are barred from inspecting. Investors and regulators have no way of making sure that these companies’ tens of billions of dollars of Chinese business have been properly vetted to prevent errors or fraud.
U.S. regulators have tried for years to get China to change its stance on inspections, to little avail.
. . .
Pressing China on allowing audit inspections and cooperating more with U.S. regulators may yield progress down the road.
Until that happens, there’s Robert Seiden.
Seiden, a former New York prosecutor, has carved out an unusual legal specialty: When a U.S. court renders a judgment against a Chinese company that’s defrauded or otherwise slighted its shareholders, Seiden gets appointed by the court as a receiver, empowered to seize corporate assets for the shareholders’ benefit — something he’s done at 30 Chinese companies now.
He then takes advantage of a quirk in how many Chinese companies are structured: To get around Chinese government restrictions on foreign investment, the companies use subsidiaries outside China to hold their operating assets, often in the British Virgin Islands or the Cayman Islands.
Seiden pursues a court judgment against a company — and then he can go into China as the legal owner of its assets, not just another foreign creditor who can be shoved aside. He uses his position as leverage to force the company’s executives to sit down and discuss a settlement.
So far, his efforts have yielded $10 million for U.S. shareholders at companies like Oriental Dragon Corp., Advanced Battery Technologies, and Shengtai Pharmaceutical. Admittedly, that isn’t much given the scale of the problem, and Seiden acknowledges it’s tough going.
“We’re making a lot of progress, but it’s slow,” he says. There’s a “huge disconnect between how China works and an open system. Their system is ‘might makes right’ — if they can get away with something, they will.”
Investors in the companies Seiden represents recognize the difficulty, but they’re hopeful his strategy can help. “I think we are able to get some small portion of our money back,” says Gary Wolfson of GEP Capital Group, an investor in Oriental Dragon Corp., where Seiden recently obtained a $3 million settlement for investors.
Seiden’s combination of skills equips him well for the job. He was a prosecutor in the Manhattan district attorney’s office, and later worked in China, overseeing investigators and lawyers doing corporate due diligence. He was also a monitor for the Port Authority of New York and New Jersey, pursuing waste and fraud in the building of the Freedom Tower on the former World Trade Center site after 9/11.
Currently, he’s pursuing Link Motion, formerly known as NQ Mobile, whose co-founder allegedly diverted assets away from investors’ control. Seiden was named receiver by a U.S. federal judge in 2019; he’s seized Link Motion’s Hong Kong bank accounts, and his handpicked CEO won an arbitration proceeding in China giving him control over a key Link Motion entity.
Link Motion went dark without any sort of offer to pay the company’s public shareholders, says Wayne Baliga, a Link Motion investor. “If they could do this, any listed Chinese company could do this, and I don’t know what recourse there would be.”
Seiden knows the obstacles, but he has no intention of stopping. “I’m very persistent.”
For all the efforts by the likes of Seiden, Sherwood, and short sellers, tomorrow will look a lot like today when it comes to ensuring that Chinese companies are straight with their investors. Even if the measure to force Chinese auditor inspections becomes law, companies will have three years to comply. The puzzle box isn’t going to be solved anytime soon.
Some are suggesting ways to flag for investors when a company is using an auditor that hasn’t been inspected, to ensure they know the risks. In the absence of inspections, Block suggests making the U.S. arms of the Big Four accounting firms financially responsible for any failures of their Chinese siblings — just like parents are liable for any mischief by their kids, he says.
Chinese companies remain “very highly speculative stocks to invest in,” Nussbaum says. He suggests making it more difficult for retail investors to put their money into such risky companies. At the end of the day, though, “we’re still talking about a huge market with a very, very bright future.”
Others are more pessimistic about whether Chinese companies will get more reliable. “You hate to say just drop it all, we made a mistake, delist,” Stevenson-Yang says. “But I don’t know how to address it.”
On February 4, 2020, Cayman Islands Judge, the Honorable Margaret Ramsay-Hale ruled in favor of Robert W. Seiden, Esq., recognizing his capacity as temporary receiver over the parent company Link Motion Inc. (“LKM”), a U.S. company previously listed on the New York Stock Exchange. This ruling effectively named Robert Seiden, of New York-based Seiden Law Group LLP, the first-ever U.S. receiver over a Cayman Islands company.
The ruling can be read in full in the link below.
The Seiden Law Group is representing client Senior Health Insurance Company (“SHIP”) in a lawsuit in New York federal court against Lincoln International LLC and Lincoln Partners Advisers LLC (“Lincoln”) arising from the massive fraud involving the Platinum Partners hedge fund and its affiliate, Beechwood Re Ltd. SHIP, an insurance company, incurred massive losses of over $100 million in the fraud. SHIP’s lawsuit alleges that Lincoln, a valuation firm, aided and abetted the fraud by issuing inflated valuations.
On December 3, 2019, the Honorable Jed S. Rakoff of the United States District Court for the Southern District of New York declined to dismiss SHIP’s claims against Lincoln for aiding and abetting fraud. In his decision, Judge Rakoff held that SHIP’s complaint “adequately pleads that Lincoln’s fraudulent valuations contributed to preventing SHIP from discovering the fraud.”
The complete text of Judge Rakoff’s decision is available below:
EXCERPT FROM Strategies for Asset Recovery from Mainland China
BY HENRY W. LONGLEY | TEMPLE INT’L & COMP. L.J.
A. Sino Clean Energy, Inc. v. Seiden—Corporate Governance Strategy in Action
In May 2014, a Nevada state court appointed Robert Seiden, Esquire,(171) the receiver of Sino Clean Energy, Inc. (Sino), after a group of U.S. investors requested the appointment when Sino went dark and caused economic losses.(172) Sino is a Chinese Reverse Merger holding firm incorporated in Nevada with subsidiaries in Mainland China that produce coal-water slurry.(173) The Sino bankruptcy case synthesizes the corporate governance strategy in the Chinese Reverse Merger context and shows some of the more creative techniques a receiver can employ when former firm insiders meddle with the recovery process.
In May 2015, the receiver filed criminal charges with H.K. police alleging that Sino’s chairman, Baowen Ren, fraudulently backdated a transfer of shares in Sino’s H.K. subsidiary to a British Virgin Islands firm that Ren controlled—pilfering Sino and its shareholders—without the receiver’s permission or knowledge.(174) Despite attempts by the receiver’s agents to resolve issues with Ren, Ren refused to settle or comply with the court’s receivership orders.(175)
In 2014, the court-appointed receiver installed a new board of directors at the Sino holding firm in Nevada.(176) Soon after, however, former board members, acting by and through Ren, filed a Chapter 11 petition for bankruptcy on behalf of the firm.(177) The receiver, Seiden, moved to dismiss, and the bankruptcy court granted the motion—a decision the former Sino directors later appealed.(178) In the Chinese Reverse Merger context, in addition to establishing board control over the U.S.- based holding firm, controlling the board of the operating firm in China allows the receiver to go into Mainland China as the legal owner of operating assets “standing in the shoes of the company.”(179) Accordingly, before January 2015, the Nevada court-appointed receiver reported removal and replacement of the board of directors of Sino’s operating firm in Mainland China with an American chairman.(180)
In February 2016, a Nevada district court judge overseeing the same action held Ren in criminal contempt for repeatedly violating its receivership orders.(181) In addition to an outstanding civil per diem penalty of $500 ordered in June 2015, the court ordered a bench warrant to imprison Ren for his contempt.(182) The court ordered Ren to be jailed until he transferred Sino’s official corporate seal, known as a “chop,”(183) to the receiver.(184) The court also held Ren’s illegal transfer of Sino’s assets to be invalid.(185) The receiver stated that the bench warrant would be sent to Interpol in Beijing, along with a request for assistance from Chinese authorities to arrest Ren.(186)
Meanwhile, the ongoing bankruptcy case against Sino also affected its existing contractual liability. The appointment of a receiver can change who possesses control over a firm, but it does not affect the corporate existence of a firm, which means the firm continues to be liable for its existing contracts after the appointment of a receiver.(187) According to the January 2015 report, the receiver communicated with Sino’s suppliers, business partners, and its customers around the globe, contacted Sino’s Chinese banks to change signatories and gain control over accounts, put in place an interim management team to run day-to-day operations, and selected an independent auditor to advise on the economic state of Sino and its subsidiaries.(188)
In Sino Clean Energy, Inc. v. Seiden, former directors of Sino appealed the dismissal of their 2015 bankruptcy petition—arguing that federal bankruptcy law preempts a receiver appointed under state law from barring a corporation from filing for bankruptcy.(189) In January 2017, the Court affirmed the bankruptcy court’s dismissal because appellants did not have authority to file for bankruptcy on behalf of Sino at the time of the petition. (190)
The court found the appellants’ argument unpersuasive because the receiver removed appellants in 2014—installing a new board of directors more than a year before appellants filed their bankruptcy petition in 2015.(191) The court’s order did not affect a corporation’s right to file for bankruptcy but prevented a former board of directors from filing by holding that only a corporation’s current board of directors can file for bankruptcy.(192) The district court’s decision demonstrates that a courtappointed receiver is unequivocally empowered to reconstruct the board of directors of a Chinese Reverse Merger holding firm based in the United States. Moreover, the Sino Clean Energy, Inc. saga shows that a court-appointed receiver with control of a Chinese Reverse Merger corporate structure can capably affect its Mainland China-based management at the operating business level as well.(193)
171. THE SEIDEN GROUP, supra note 134 (detailing that Seiden has vast experience with integrity monitoring and has been appointed receiver over twenty times in the United States); see also Stevenson & Goldstein, supra note 33 (“Robert W. Seiden is a Wall Street bounty hunter. He tracks down executives of Chinese companies that listed on stock exchanges in the United States and then blew up.”).
172. Sino Clean Energy Inc. v. Seiden, 565 B.R. 677, 679–80 (D. Nev. 2017); BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm, CARIBBEAN NEWS NOW! (June 26, 2015), https://www.caribbeannewsnow.com/2015/06/26/bvishell-company-allegedly-used-to-steal-us-and-chinese-shareholder-interests-in-energy-firm/.
173. Sino Clean Energy Inc., 565 B.R. at 679–80; Sino Clean Energy, Inc. Prospectus, NASDAQ (Dec. 21, 2010), https://www.nasdaq.com/markets/spos/filing.ashx?filingid=7820499; see BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm, supra note 172 (describing the corporate structure of Sino Clean Energy); see also Markus Aarnio, Sino Clean Energy Poised to Double Production Capacity in 2012, SEEKING ALPHA (Jan. 15, 2012, 7:45 AM), https://seekingalpha.com/article/319701-sino-clean-energy-poised-to-doubleproduction-capacity-in-2012 (describing Sino Clean Energy as the fifth largest producer of coalwater slurry fuel by sales in China).
174. BVI Shell Company Allegedly Used to Steal US and Chinese Shareholder Interests in Energy Firm, supra note 172.
176. Written Consent, supra note 168.
177. Sino Clean Energy Inc., 565 B.R. at 680.
179. Michael Rapoport, Court Appointee Chases (and Finds) Investor Cash that Vanished in China, WALL ST. J. (June 21, 2015, 4:28 PM), https://www.wsj.com/articles/court-appointeechases-and-finds-investor-cash-that-vanished-in-china-1434918506.
180. U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq “SCEI”) Taking Control of Chinese Company, PR NEWSWIRE (Jan. 25, 2015), https://www.prnewswire.com/newsreleases/us-court-appointed-receiver-for-sino-clean-energy-inc-nasdaq-scei-taking-control-ofchinese-company-300018796.html.
181. U.S. Court Orders China Businessman Jailed for Defying Court-Appointed Receiver and Judge’s Order to Cede Control of the Company to the Receiver, PR NEWSWIRE (Feb. 29, 2016), https://www.prnewswire.com/news-releases/us-court-orders-china-businessman-jailed-fordefying-court-appointed-receiver-and-judges-order-to-cede-control-of-the-company-to-thereceiver-300228158.html.
183. Dezan Shira & Assocs., Company Chops in China: What are They and How to Use Them, CHINA BRIEFING (May 10, 2017), http://www.china-briefing.com/news/2017/05/10/use-ofcompany-chops-in-china.html (explaining that “the chop” is mandatory to do business in Mainland China and functions as the company’s official signature).
184. U.S. Court Orders China Businessman Jailed for Defying Court-Appointed Receiver and Judge’s Order to Cede Control of the Company to the Receiver, supra note 181.
187. British Virgin Islands—Restructuring and Insolvency, OGIER (Nov. 4, 2013), www.ogier.com/publications/british-virgin-islands-restructuring-and-insolvency.
188. U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq “SCEI”) Taking Control of Chinese Company, supra note 180.
189. Sino Clean Energy Inc. v. Seiden, 565 B.R. 677, 679 (D. Nev. 2017).
190. See id. at 681, 683 (finding that Nevada law gives a corporation’s current board of directors exclusive power to file for bankruptcy); see also Richard Levin, Recent Developments in Bankruptcy Law, JENNER & BLOCK ¶ 4.1.a (July 2017), https://jenner.com/system/assets/assets/10294/original/Recent%20Developments%20in%20Bankr uptcy%20Law%20-%20July%202017.pdf (“State law here authorizes the current directors to authorize a filing.”).
191. Sino Clean Energy, 565 B.R. at 681.
192. Id. at 677; Levin, supra note 190.
193. See generally U.S. Court-appointed Receiver for Sino Clean Energy Inc. (Nasdaq “SCEI”) Taking Control of Chinese Company, supra note 180.
A Wine Ponzi Scheme Targeted New York’s Most Powerful Enophiles, Clients Allege
BY MITCH FRANK | Wine Spectator
Omar Khan organized dinners with top chefs and rare vintage wines. Now several clients allege that he’s a fraud who took their money
Sep 9, 2019:
For wine lovers and executives, the dinners were sorely tempting: dishes cooked by some of the world’s top chefs (Daniel Boulud, Tom Colicchio, Daniel Humm), paired with some of the rarest wines in the world (Domaine de la Romanée-Conti, Cheval-Blanc, Dom Pérignon) and featuring business-savvy speakers. Since 2013, the International Business & Wine Society (IB&WS) has offered members monthly dinners paired with lectures and chats with leading business minds.
Was it all an elaborate Ponzi scheme? The organization’s founder, Omar Khan, stands accused of taking money from investors and wine retailers to make the dinners happen and pocketing it instead.
Last week, 13 disgruntled clients filed a suit against Khan in New York state court, alleging fraud, misrepresentation, unjust enrichment and five other counts. They claim he owes them more than $8.3 million. Several other lawsuits are pending against Khan, the IB&WS and his other company, Sensei International, including one from a Burgundy hotelier and another from a wine retailer in Putnam County, New York.
“I was a prosecutor for 11 years and have been a lawyer for 30 years and I’ve never seen such a brazen example of a con man taking advantage of decent hardworking people,” Robert Seiden of the Seiden Law Group, which is representing the 13 clients in the suit filed on Sept. 3, told Wine Spectator. “This guy is like a micro-Madoff. He engaged in a multi-year scheme to defraud people in return for entry into the global wine world.”
Seiden’s clients include several high-powered names in finance: Robert Van Brugge, CEO and chairman of Sanford C. Bernstein; Kresimir Penavic of hedge fund Renaissance Capital; Peter Slagowitz, CEO of Spurs Capital; Lorine Schaefer, vice president at Morgan Stanley; as well as Robert Gelfond, director of the Cato Institute, a conservative think tank. Charles Curtis, former head of wine for Christie’s in both Asia and the Americas, is also a plaintiff. According to the suit, Khan hired him as a consultant, then never paid him. (Curtis deferred to Seiden for comment.)
Khan could also be staring down more serious trouble. New York prosecutors are investigating his actions, according to two sources with knowledge of the case. The district attorney’s office is looking into whether Khan altered an email from Philippe Sereys de Rothschild, co-owner of Bordeaux’s Château Mouton-Rothschild, in order to convince an investor that he had partnered with the first-growth on a series of dinners. If true, that would suggest Khan knew he was committing fraud.
Khan told Wine Spectator, “I deny any wrongdoing and refuse to comment due to pending litigation.”
Power players and power wines
According to a bio on the Sensei International website, Khan is an international business consultant and the author of several books on using language to persuade people. Khan is “one of the pioneers of Neuro-linguistic programming,” the site claims. It also says he was born in Egypt, the son of Pakistani diplomats, and attended Oxford University.
Khan began holding his wine dinners in New York in late 2013. According to media reports at the time, his goal was to combine business forums with wine passion, inviting top executives to hear speakers, enjoy good food and rare wines. A typical dinner featured David Bouley and Anita Lo preparing six courses for guests at Bouley Test Kitchen, while Château Palmer’s Thomas Duroux personally served several vintages of the Bordeaux and the CEO of CHC Helicopter gave a talk. Members at that time paid $5,000 a year, as well several hundred dollars for each dinner.
According to the lawsuit, Khan asked some regular attendees to partner with him on upcoming dinners. For example, Schaefer of Morgan Stanley was introduced to Khan in 2018 by a sommelier, according to the lawsuit. He asked if she was interested in investing $36,050 in an event at Craft in New York for an estimated profit of $13,500 to be split equally. In March 2019, Khan hosted the event but never sent Schaefer any money, the suit alleges.
One plaintiff, Penavic, invested millions of dollars in IB&WS over the course of several years for various dinners in New York, London, Hong Kong and other cities, the suit alleges. Khan also approached him about investing in collaborations with Mouton-Rothschild. After months of asking for updates and being told that his share of profits was held up by French agencies or the IRS, Penavic began approaching other clients about suing. (Sereys de Rothschild did not respond to a request for comment.)
More than one allegation
Penavic and his fellow plaintiffs’ suit is not the only legal jeopardy Khan faces, however. In January, Napa Valley winery Sinegal Estate owner (and former Costco CEO) David Sinegal sued Khan over $75,000 he invested in a dinner offering 23 vintages of Pétrus. According to the complaint, Sinegal suspected something was wrong when Khan wouldn’t allow him to inspect the bottles’ provenance. The dinner was eventually cancelled. The suit was settled in June for $125,000.
In December, Jean-Claude Bernard, the owner of one of Burgundy’s best-known hotels, Hotel Le Cep in Beaune, filed suit against Khan. According to his complaint, he met Khan at a Paris dinner featuring a vertical of DRC that the IB&WS organized. Khan and Bernard hit it off and decided to organize several dinners in Beaune, Paris and London. Some happened, some did not. Bernard invested a total of $472,500 and has not received a dime back, the lawsuit claims.
And in April, the owner of Cellaraiders, a rare wine store in Brewster, N.Y., filed a suit. According to Ben Wallace’s complaint, he and Khan partnered on a series of wine dinners in 2018, with Cellaraiders investing more than $250,000 as well as supplying more than $36,000 worth of rare wines. Khan sent Wallace several checks, all of which bounced.
As of now, the three active cases are moving through New York state court. Seiden says in the days since he filed his clients’ complaint, several other Khan clients have contacted him with their own allegations.
For now, the IB&WS website is down, offering only an error message. But under contact info, the site simply states, “We do not offer refunds.”
—With reporting by Suzanne Mustacich, Bruce Sanderson and Augustus Weed. This story is developing. Check back for updates. [Click button below]
DA’s office probing wine consultant accused of scamming Wall Street elite
BY KEVIN DUGAN | New York Post
A wine-loving business consultant accused of bilking Wall Street highfliers out of millions is being probed by the Manhattan District Attorney’s Office, The Post has learned.
Prosecutors in the DA’s Major Economic Crimes bureau have met with multiple alleged victims of Omar Khan over allegations that he swindled Wall Street bigwigs and other wealthy New Yorkers out of millions for wine events that never happened, sources said.
Specifically, the top prosecutor is looking at claims that Khan once doctored an e-mail from the office of Philippe Rothschild, the owner of the upscale Chateau Mouton winery, to falsely showcase his ties to the esteemed winery — and dupe people into investing with him, according to two people familiar with the DA’s questioning.
Khan is known in New York business circles for hosting rarified dinners where expensive wines — some worth more than $30,000 — are served to about a dozen guests, usually wealthy and important people.
Guests who have attended Khan’s events include Pierre Lurton, the director of Chateau Cheval Blanc, a high-end wine estate owned by luxury brand LVMH; Sir Ivor Martin Crewe, the master of University College at Oxford, and retired real estate developer Daniel Rose, known for building Pentagon City in Arlington, Va., according to sources and social media.
As The Post exclusively reported last week, a group of high-profile Wall Streeters, including Sanford C. Bernstein CEO Robert van Brugge, are suing Khan in Manhattan state court, claiming he conned them into investing into fake wine events.
The group is seeking more than $8 million plus interest — the bulk of which came from ex-Renaissance Technologies researcher Kresimir Penavic, who invested close to $5 million with Khan through 27 events from 2015 to 2018.
Three other suits have accused Khan, head of Park Avenue consulting firm Sensei International, of similar allegations. He has denied the allegations in the suits, and has settled one from 2015.
The probe from Vance’s office, however, shows an escalation in potential woes for Khan.
“It’s not civil, it’s criminal,” one person familiar with the investigation told The Post.
Of interest to the prosecutors on the case, which is being run by Assistant DA Lisa White, is the allegation in the latest lawsuit by the group of Wall Streeters that Khan “manufactured” an e-mail from Rothschild’s office because, if true, it would suggest he knowingly defrauded investors, the people said.
Khan said he wasn’t aware of any investigation and declined to comment further.
But in a 20-minute interview with The Post on Sept. 4, Khan blamed “cash-flow issues” that stemmed from clients who failed to pay him.
“There’s no e-mail from Philippe Rothschild himself that had anything to do with anything here,” Khan said after calling a Post reporter’s cell phone.
Later, Khan suggested he never had any specific dealing with the Rothschild winery — and never claimed otherwise.
“I shared what I thought some of [Rothschild’s] possible interests would be, and that may have been construed or interpreted as whatever. I’m not saying I misunderstood [the Rothschilds] or they even made any explicit suggestions. They did not.”
He went on to insist that there was nothing in writing to show otherwise — before realizing there might, in fact, be written evidence.
“Certainly, there were not, yeah, there was nothing written to that effect that I’m aware of. I could be wrong. I could be wrong,” he said.
After The Post published the story about his alleged wine scheme. Khan sent a text saying the story could hurt his ability to make amends with investors.
“I didn’t mention that unfortunately your running the story as we’ve started settling as best we can, will make it so much harder,” he wrote.
“I can but ask you give that some thought. If we made no progress, it would still be a story later. Right now, everyone stands to lose,” he wrote.
A spokesman for the DA’s office declined to comment.
High-profile Wall Streeters hit by ‘Ponzi-like’ wine scam: lawsuit
BY KEVIN DUGAN | New York Post
A New York business consultant known for throwing lavish wine parties at five-star eateries like Daniel has bilked a cadre of Wall Street bigwigs out of millions, according to a shocking new lawsuit.
Omar Khan, who runs the Sensei International consulting firm on Park Avenue, used his fancy Rolodex to stage wine-fueled shindigs that lured more than a dozen captains of industry into a “Ponzi-like scheme,” according to the lawsuit filed in New York State Supreme Court on Wednesday.
The suit claims Khan met many of his alleged victims at his own parties, which “centered around vintage wines and expensive cuisine.” Khan then used his well-heeled connections — as well as claimed ties to famous names like Philippe Rothschild of the Mouton winery — to convince his alleged victims to invest in his growing events business, the suit said.
In addition to Robert Van Brugge, CEO and chairman of Sanford C. Bernstein, victims include Kresimir Penavic, a former senior research scientist at Renaissance Capital, the $110 billion hedge fund founded by James Simons; Robert Gelfond, director at the Cato Institute; Peter Slagowitz, CEO of Spurs Capital; and Lorine Schaefer, a vice president at Morgan Stanley, court documents say.
They are suing for $8.3 million, plus interest, although the bulk of the losses allegedly belong to Penavic, who invested close to $5 million with Khan through 27 events from 2015 to 2018.
“He was larger than life,” Penavic said of Khan, who scored glowing write-ups about his “elite supper club” in Forbes and Bloomberg.
“Not only by his volume, by his voice, the way he talked,” Penavic said in an interview with The Post. “He liked to position himself as in the know and bask in the limelight.”
Penavic’s suit is the latest in a string of civil suits making similar claims filed against Khan since 2015.
According to a lawsuit filed in December by Jean-Claude Bernard, the owner of a hotel in Beaune, France, Khan allegedly failed to pay out the profits at an exclusive dinner where sommeliers uncorked 36 different bottles of wine during an evening for a group of guests at the Four Seasons Hotel George V in Paris.
Those included rarities like a Mandive Vigo from 1814 and a $5,000 Domaine de la Romanee Conti Montrachet from 1973.
“Those are exactly the same wines that were supposed to be served at a dinner in Paris that I was supposed to attend — that he canceled!” Penavic fumed.
Khan has denied Bernard’s allegations and is seeking to dismiss the case. Bernard didn’t return a request for comment.
In January, Napa Valley winery owner David Sinegal sued Khan over a $75,000 investment for 23 bottles of Chateau Petrus bottled from 1923 to 2005 — a series of extremely rare and expensive vintages, according to San Francisco federal court papers.
Sinegal realized something was amiss when Khan wouldn’t allow him to inspect the bottles’ authenticity — and the dinner ultimately never happened. The suit was settled in June with Khan paying $125,000 to Sinegal, who declined to comment.
Khan, who lives in a Midtown Manhattan high-rise, denied the allegations to The Post and blamed “cash-flow issues” from clients that hadn’t paid him.
“This is because of a cash issue, which then led to people not being able to have the dinners done and their wines received. That’s terrible. We’ve addressed it, we will address it,” he said.
“To call that a Ponzi scheme, that would suggest that no dinners were done, that’s absurd,” Khan added.
Khan’s wife, Leslie Khan, who is named as a defendant in the most recent suit, didn’t return a request for comment.
Not much is known about Khan before he started his vintner venture, the International Business and Wine Society, in 2013. He claims to have been born in Egypt — the son of a diplomat to Pakistan — and to have attended Oxford University and Stanford Law School before becoming a business consultant.
Khan says he’s “one of the pioneers of neuro-linguistic programming,” which can allegedly train people to influence others using language, according to his Sensei bio. He also has written several books, including the self-published “Synergy: Channeling the Energies of Transformation,” which he weirdly brags was “acknowledged by one eminent reviewer as ‘a blow for civilization.’”
It’s unclear where the investors’ money went. Khan claims it all went to wine and dinners, while the latest lawsuit claims he spent it on himself.
“This guy needs to be stopped, Penavic said. “Right now as we speak, he is probably scheming and organizing a dinner.”
The hedge funder says Khan first dazzled him in February 2015 at a private dinner at Daniel, the Michelin-starred eatery owned by Daniel Boulud that offers a seven-course tasting menu for $250.
One of the main draws of the dinner was Anne-Claude Leflaive, who then presided over one of the most exclusive wine estates in Burgundy — about two months before she died from cancer, Penavic said.
“It was very, very kind of her to come all the way from France,” Penavic said.
The dinners were usually attended by about 10 other wine enthusiasts, and talk usually stuck to the spirits, Penavic said. Among the bottles opened were a 1945 Mouton Rothschild, a vintage that can sell for as much as $33,000 a bottle.
At a May 2017 dinner at The NoMad, a swanky Manhattan restaurant, Khan dazzled Pierre Lurton, the director of Chateau Cheval Blanc, a high-end wine estate owned by luxury brand LVMH, said Penavic, who was in attendance.
The dinner was such a success, Lurton invited Khan and his guests to his Bordeaux chateau soon after for wine and dinner — an invitation they accepted, Penavic added. Lurton didn’t return a request for comment.
“A person so well-connected and capable of doing things like that, you don’t think twice,” Penavic said.
Sir Ivor Martin Crewe, the master of University College at Oxford, lectured at one of Khan’s events in 2018, according to the International Business and Wine Society’s Instagram page. Oxford did not return a request for comment.
Khan partly relied on his ties to retired real estate developer Daniel Rose, known for building Pentagon City in Arlington, Va., to build credibility, Penavic’s lawsuit said.
Rose declined to comment, but the lawsuit says the retired real estate developer “confirmed that he is a close family friend of Khan but denies having ever invested with Khan or having ever made any financial dealings with Khan.”
Khan appears to have fabricated other connections, the lawsuit says, including to Rothschild, whose Bordeaux winery was started in 1853 by Baron Nathaniel de Rothschild. In one alleged scheme, Khan claimed Rothschild’s winery wanted Khan’s help opening a New York wine club. But his only evidence — an email coming from Rothschild’s office — appears to have been “manufactured,” the lawsuit said.
Rothschild did not return a request for comment.
Penavic ultimately paid Khan $4.9 million in principal investments, and is owed another $1.9 million in interest and unpaid profits, according to the suit.
Van Brugge claims that Khan owes him $235,750 of principal and profit he was owed, according to the suit. Miriam Tai, a VP at Franklin Templeton, claims Khan never returned $312,625 in principal and profit.
The other defendants who joined Penavic declined to comment through their lawyer, Rob Seiden.
“There’s no question this guy was a con man,” said Seiden of the Seiden Law Group. “He may have started out legitimately as a business, but eventually he got to a point where I guess he got greedy. From my standpoint, this guy needs to get brought to justice.”
The New York Post: Hedgie plundered own fund to avoid giving $90M bonus to employees: suit
BY CARLTON ENGLISH | The New York Post
A vengeful hedge fund manager looted his own fund to avoid paying two former employees their bonuses, according to new bombshell complaint.
Paul Touradji has been moving hundreds of millions of dollars out of his eponymous fund to keep it out of the hands of two former staffers who have been after him for $46 million in back pay, according to a complaint filed in New York State Court earlier this month.
The two stiffed employees, Gentry Beach and Robert Vollero, got their day in court in May — and were awarded $91 million, or $46 million plus interest, after a two-week trial.
Only now, there’s no money left in the hedge fund to pay them — thanks to Touradji, they claim.
Touradji Capital Management, which was worth $1 billion in 2005 when Beach and Vollero joined the firm, now has a mere $14,500 in assets, the lawsuit says.
“Post-judgments discovery has uncovered [Touradji’s] ill-conceived attempts to loot TCM of hundreds of millions … to avoid paying plaintiffs,” court papers say.
The men say Touradji’s transfers included a payment of $192 million to himself on Nov. 20, 2017, just months before Beach and Vollero’s trial was originally set to kick off on January 2018. The trial date was later delayed — but not before Touradji made another $7.7 million transfer to his sister, Pegah, on Dec. 20, 2017, court documents say.
Touradji received a total of $314.8 million in transfers between 2012 and 2018, the lawsuit said. Pegah Touradji received a total of $13 million in transfers between 2012 and 2017, it is alleged.
Paul Touradji, who was listed by Forbes as one of the highest-earning hedge fund managers of 2009, also waived fees owed to the fund, further ensuring its insolvency, plaintiffs allege.
Beach and Vollero joined Touradji’s firm in 2005, but say years passed without their being paid their promised compensation.
As The Post previously reported, the jury was told that Beach complained to Touradji in September 2008 — and immediately felt the wrath of his boss.
“I will not pay you, I will not pay you a dime, you know, and before this is done and over, your wife will be here in this office, here on her knees, begging for mercy,” Touradji ranted, according a Touradji Capital analyst who was called to the witness stand in May.
Touradji slammed his door so hard during the alleged tirade that pictures in a neighboring office fell off the walls, the witness testified.
Beach, who resigned the next day, claimed his boss wanted him “killed” and told cops he was “in fear of his safety,” according to a police report filed at the time.
The two men are asking the court to order that the transfers be deemed fraudulent and that the men be paid their money — plus attorneys fees and any added interest.
Last week, Judge Andrea Masley issued a temporary restraining order that blocks Touradji from “transferring or dissipating” his assets until a hearing held on Sept. 12.
“Justice wheels turn slowly but if you’re relentless, it pays off,” Robert Seiden, one of the lawyers representing Vollero and Beach, told The Post.
An lawyer for Touradji declined to comment.
NEW YORK, June 17, 2019 /PRNewswire/ — A shareholder of Global Cord Blood Corporation (NYSE: CO) (the “Company” or “Global Cord”) has hired The Seiden Group, a law firm headquartered in New York, as shareholder counsel to communicate minority shareholder interests to the Independent Directors and help effect necessary changes for the benefit of the Company and its shareholders, including minority shareholders in the United States. The Seiden Group has vast experience in shareholder rights matters and global asset recovery, particularly in China.
The Seiden Group issued a letter today to the Independent Directors of Global Cord on behalf of the shareholder making certain requests relating to a potential merger with a Singaporean company and explaining why the deal would harm investors. Cordlife Group Limited (SGX: CLGL), a Singaporean company is proposing to bring Global Cord to the Singaporean markets, removing it from the US capital markets in a share swap transaction, leaving the US shareholders with an investment that may be more difficult to value, trade and liquidate. The removal of Global Cord from the US markets would also leave the shareholders with no protection from the NYSE, the SEC or the Cayman laws.
Information concerning the shareholder interests can be found at the website www.chinacordfairness.com.