Marble Ridge Founder Daniel Kamensky Sentenced Over Neiman Marcus Fraud
He admitted to the charges and was sentenced Friday.
Daniel Kamensky, who founded the Marble Ridge Hedge Fund, has been sentenced to sixth months in prison for bankruptcy fraud. The fraud was committed in relation to the bankruptcy of the upscale Neiman Marcus department store chain. Kamensky pled guilty to one count of bankruptcy fraud back in February and was formally sentenced in a Manhattan Federal court on Friday over what he did during the Neiman Marcus bankruptcy.
In addition to his prison term, Kamensky, 48, of Roslyn, New York, was sentenced to six months of supervised release on home confinement and ordered to pay a fine of $55,000.
Kamensky was charged over an attempt to bully a competitor out of making a higher bid over Neiman assets during the company’s bankruptcy. A statement from the United States Attorney’s Office in the southern district of New York specified that the hedge fund manager had been charged specifically with, “engaging in fraud and extortion to pressure a rival bidder to abandon its higher bid for assets in connection with Neiman Marcus’s bankruptcy proceedings so that Marble Ridge could obtain those assets for a lower price.”
While sentencing Mr. Kamensky Manhattan federal Judge Denise Cote said for the record that, “He betrayed his profession, his duty to others, his relationships. He broke the law.”
Before being sentenced Kamensky made a statement for the record in which he did the usual Mea culpa for a plea bargain such as this. “There is no excuse for my behavior, and I am deeply regretful and embarrassed for my conduct,” he said.
U.S. Attorney Audrey Strauss said, “Daniel Kamensky committed bankruptcy fraud – undermining the integrity of bankruptcy proceedings and violating his fiduciary responsibility – in an effort to take extra profits for himself and his hedge fund. As he himself predicted, this fraud has now landed Daniel Kamensky in prison.”
Daniel Kamensky was the principal of Marble Ridge, a hedge fund with assets under management of more than $1 billion that invested in securities in distressed situations, including bankruptcies. Prior to opening Marble Ridge, he worked for many years as a bankruptcy attorney at a well-known international law firm, and as a distressed debt investor at prominent financial institutions.
Neiman declared bankruptcy in May 2020. It came out of chapter 11 the following fall. The company was able to restructure $4 billion of debt with its creditors. At the end of March Neiman Marcus announced that the company had completed refinancing of a substantial portion of its exit facilities with an aggregate principal amount of $1.1 billion of new 7.125% senior secured notes due 2026 issued by NMG Holding Company, Inc., a Delaware corporation, and The Neiman Marcus Group LLC, a Delaware limited liability company. The transaction, initially sized at $1 billion, was increased to $1.1 billion in response to demand from institutional investors.