Promise of 8% Return Becomes Offer of 16% Loan for Ponzi Victims.
About 10,000 investors -- many of them retirees -- were swindled out of $1.2 billion they had sunk into a now-bankrupt real-estate developer that federal regulators say was a Ponzi scheme.
Some of the victims are of modest means for whom the losses represented a big blow. And so after the developer -- a Los Angeles-based firm called Woodbridge Group of Cos. -- blocked investors from selling their claims, the judge overseeing the case allowed them to borrow against what they stand to recoup after the assets are liquidated.
A couple of weeks ago, a little-known hedge fund by the name of Axar Capital Management was chosen to exclusively grant the loans after discussions with bigger rivals like Och-Ziff Capital Management and Apollo Global Management. The rate: 16 percent.
No one is accusing Axar, which is backed by billionaires Louis Moore Bacon and Julian Robertson, of wrongdoing.
Read the full story in Bloomberg here.