U.S. hedge fund operator Och-Ziff Capital Management Group has lost about $77 million in an apparent fraud that has already fleeced millions of dollars from Japanese and foreign investors, including investment bank Lehman Brothers Inc., a person familiar with the situation said.
An Asia-based arm of the U.S. money manager lent the funds to a hospital rehabilitation project it believed to be affiliated with Japanese trading giant Marubeni Corp., according to a person familiar with the situation. The deal, which provided temporary loans to hospitals buying sophisticated medical equipment, started in November 2007, the person said. Och-Ziff acknowledged the fund had made the loans. The company said the loans have been written off and were already reflected in an Och-Ziff results statement that was released earlier this month.
The hedge fund’s participation in the financing scheme is the latest development in what might be one of the most brazen frauds in recent corporate history. The scam appears to have involved Marubeni employees who used the company’s offices, computer system and letterhead to raise money for a project to upgrade Japanese hospitals. The money was supposed to have been used to provide bridge loans, or temporary financing, to the hospitals so they could buy equipment through a Marubeni subagent.
