Holding Investors Hostage
A rap mogul sued a Dallas-based hedge fund firm for damages as a result of a loan guarantee made by the fund. The dispute arises from a $52 million dollar loan the rapper and several associates obtained in relation to a boutique hotel they planned to build in Manhattan. That loan, which went into default in August, is currently held by the hedge fund firm. According to the suit filed in federal court in New York, the rapper and his associates claim that the hedge firm and its bank are attempting to recover funds from them in excess of what they originally agreed to allocate to the project. The plaintiffs seek verification from the court that they have met their obligations, as well as an additional $3.7 million in interest.
In 2009, this hedge fund firm was accused of "holding investors hostage" and refusing to return capital invested in the fund to continue to generate fees.