Wilmington, DE - May 25, 2004 - Investors
in two investment funds controlled, managed and operated
by Deutsche Bank and advised by DC Investment Partners
today announced that they have filed lawsuits in the
Superior Court of Delaware seeking damages for fraudulent
conduct that resulted in an aggregate loss of hundreds
of millions of dollars.
The suits name Deutsche Bank
and its subsidiaries Alex. Brown Management Services
and Deutsche Bank Securities as well as members of
the funds' management committee. The suits also name
sub-advisors to the funds, Tennessee-based DC Investment
Partners, and two of its managing members and part
owners.
"The suits allege that material
adverse facts about the performance, structure and financial
well-being of these two funds as well as acts of self-dealing
were concealed from these investors, many of whom are
leaders and innovators in the business community," said
Steven
E. Fineman of Lieff Cabraser Heimann & Bernstein,
LLP, counsel to the investors.
Among the plaintiff-investors
are a number of founders and CEOs of prominent private
and publicly traded companies, including Robert B.
Goergen, Chairman, President and CEO of Blyth, Inc.;
James W. Hindman, Founder of Jiffy Lube International;
Douglas G. Smith, former Chairman of Omnipoint and
one of the largest shareholders in Deutsche Telekom;
Frederick G. Smith, Vice President and Director of
Sinclair Broadcast Group; Michael J. Ross, Partner
of Schroeder Ventures; William F. Kaiser, former CFO
of Electronic Arts; Bruce E. Toll, Co-Founder of Toll
Brothers Inc.; Roger A. Strauch, former Chairman and
CEO of Ask Jeeves; Amal M. Johnson, former President
of Baan Americas; and Donald Zale, former Chairman
and CEO of Zale Corporation.
The suits allege how management
of the two funds failed to build diversified investment
portfolios, failed to implement and follow a promised
hedging strategy to limit the downside risk to the
portfolios, and failed to inform the investors of how
the failure to adequately diversify and hedge the portfolios
contributed to liquidity crises in both funds which
virtually led to their collapse. The suits further
describe management's alleged efforts to conceal from
the investors certain related-party transactions, the
withdrawal of investors from the funds, and the resignation
of the funds' lead lending bank. The suits also allege
that as the funds were failing, management ceased all
formal reporting to the investors for more than one year.
Further, the suits allege that millions of dollars in
fees were extracted from the funds as the managers worked
to conceal their missteps and flawed strategy.
Mr. Fineman
added: "The suits charge that the fund managers
were motivated to conceal their egregious mismanagement
of these assets and maintain control over them by the
prospect of garnering tens of millions of dollars in
fees and other payments. Despite their control of these
funds, Deutsche Bank and its subsidiaries took no steps
to timely communicate the true financial condition of
these funds to the investors." |
