http://bankrupt.com/CAR_Public/051201.mbx (don't know if this is the original source of this article)
snip
HENNESSEE GROUP: Clients Launch Suit Over Bayou Collapse in CT
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Disgruntled clients are claiming that hedge fund advisers
Hennessee Group and Met owner Fred Wilpon's SterlingStamos
Capital Management L.P. duped them into investing in the
scandal-scarred Bayou Management hedge fund, The New York Post
reports.
The claims, part of a class action suit filed in the United
States District Court for the District of Connecticut, argue
that Hennessee and SterlingStamos solicited capital but failed
to do basic due diligence on Bayou.
The suit concerns the recent collapse of the family of hedge
funds managed by Bayou Management LLC of Stamford, Connecticut.
It lawsuit names as defendants Bayou Super Fund, LLC, Bayou No
Leverage Fund, LLC, Bayou Affiliates Fund, LLC, Bayou Accredited
Fund, LLC, Bayou Offshore Fund, LLC, Bayou Fund, LLC, and other
Bayou-related persons and entities; Bayou's principals, Samuel
Israel, III and Daniel E. Marino; Bayou's banker, Citibank,
N.A.; and hedge fund consultants Hennessee Group LLC, its
principals E. Lee Hennessee and Charles J. Gradante, and
SterlingStamos Capital Management, L.P. The suit was filed on
behalf of persons who, during the Class Period December 31, 1996
through August 25, 2005, invested funds or maintained
investments in the Bayou Hedge Funds, and suffered damages, an
earlier Class Action Reporter story (November 24, 2005) reports.
Plaintiffs allege that the Bayou Hedge Funds have, almost since
their inception in or about 1996, essentially operated as a
massive financial sham and Ponzi scheme in which defendants
Israel, Marino and others fraudulently lured Class member
investors to invest approximately $450 million in the Bayou
Hedge Funds, and then unlawfully pilfered and squandered
hundreds of millions of those investment proceeds. Defendant
Citibank, N.A. is alleged to have facilitated the scheme by
allowing defendant Israel to transfer at least some $120 million
of the Class member fiduciary funds Bayou had under management
to one or more of his own personal bank accounts in Germany and
elsewhere. Defendants Hennessee Group LLC, its managing
principals E. Lee Hennessee and Charles J. Gradante, and
Sterling Stamos Capital Management, L.P. are alleged to have
facilitated the fraud by failing to conduct proper due diligence
of the Bayou Hedge Funds prior to recommending those investments
to investors, and by failing to properly monitor those
investments. Since the time that the truth about the Bayou fraud
began to be revealed beginning August 25, 2005, defendants
Israel and Marino have pleaded guilty to multiple criminal
charges, and the Bayou Hedge Funds have collapsed, an earlier
Class Action Reporter story (November 24, 2005) reports.
so let's look at Hennessee..
http://www.hennesseegroup.com/company/bios.html - E. Lee Hennessee and Charles J. Gradante
snip
E. Lee Hennessee, Managing Principal of the Hennessee Group LLC, focuses on manager selection and client services development. She directed the Hennessee Hedge Fund Advisory Group beginning in 1987 as a division of E.F. Hutton and continuing at Republic National Bank and Weiss, Peck and Greer.
She began her career at Thomson McKinnon Securities where she performed institutional and retail sales. Ms. Hennessee served as a finance chair for Elizabeth Dole's presidential campaign and the 2005 New York City Billy Graham Crusade. She co-founded the New York City Christian Women's Fellowship, which folded into Campus Crusade, and was a founding Angel for 100 Women in Hedge Funds. Ms. Hennessee is also a Trustee of Palm Beach Atlantic University, National Chairwoman and Founding Member of Easter Seals Florida, and was a member of the Women’s CEO Summit that met with President and Mrs. Bush as an advocate for women CEOs. Ms. Hennessee is known as an extraordinary fundraiser for charities that involve children and young people. In addition, she has been an inspirational speaker for twenty five years, encouraging women in the business to be successful and to win by not compromising their business ethics.
Ms. Hennessee is one of the most widely sourced consultants in the hedge fund industry and has published articles in Barron’s and Pensions & Investments. She is often quoted by other major financial publications, including The Wall Street Journal, and has made guest television appearances as a hedge fund expert on CNN and CNBC. In May 2007, she was selected as one of New York's 50 most powerful women.
http://www.nytimes.com/2005/08/31/business/31consult.htmlsnip
According to their Web site, the firm does not "market money managers."
"The investor is our client," it states.
But Ms. Hennessee receives lucrative fees from hedge fund managers for whom she raises money.
Often, managers pay those fees in the form of brokerage commissions, channeled through a brokerage firm with whom Hennessee has a relationship, the manager said.
This arrangement is highly unusual, and much more lucrative than the way marketers are usually compensated, competitors and fund managers said. Typically, fund marketers charge up to 20 percent of management fees and 20 percent of the fund manager's share of any profits. Some fund managers said that the way Hennessee was compensated was fraught with conflict.
Hennessee often places clients' money with hedge funds that buy stocks because those traders are more apt to generate commissions, said James R. Hedges IV, who runs LJH Global Investments, an advisory firm.
Mr. Hedges said he wondered whether Hennessee had been paid by Bayou through brokerage commissions. If so, he said, "wouldn't you know what was going on in the portfolio?"
Precisely.."wouldn't you know what was going on in the portfolio?" - applies to John Ellis.
and then
http://skimble.blogspot.com/2005/09/republican-cannibals.htmlsnip
Ms. Hennessee, a North Carolina native, said she has never encountered a fraud since founding her company in 1987 as a division of E.F. Hutton. In 1997, Hennessee struck out on its own. She and her husband are routinely quoted in media stories about hedge funds. Ms. Hennessee was also a vocal supporter of President Bush. "Help!," she wrote in an email she sent to fund managers during the previous presidential campaign, "the current administration is favorable to the hedge-fund industry and we need to do all we can to keep them in office."
During the debate over an SEC rule requiring registration by hedge funds, Mr. Gradante argued in testimony before the Senate Banking Committee that the SEC should avoid being too heavy-handed in regulating the funds because most frauds "could have been curtailed by the gatekeepers of the industry."so her husband is testifying before the Senate Banking Committee basically telling them to keep their hands off..
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