A hedge fund company has gone to court against a company in the secondary life market.
Ritchie Capital Management L.L.C., Geneva, Ill., has filed a complaint in the U.S. District Court in New York against Coventry First, Fort Washington, Pa., Ritchie Capital says.
Ritchie Capital has accused Coventry of fraud, breach of fiduciary duty and breach of contract in connection with allegations that Coventry misrepresented its life settlement operations in 2005, when Ritchie Capital decided to work with Coventry to invest in life insurance products.
Ritchie Capital is seeking $700 million in the complaints, and it has made its allegations under the federal Racketeer Influenced and Corrupt Organizations Act. Plaintiffs that succeed with RICO claims can collect treble damages from the defendants.
Ritchie Capital performed “due diligence” before working with Coventry, but it was disturbed later when New York regulators announced they were investigating allegations of bid-rigging and other wrongdoing at Coventry, according Thomas Puccio, a lawyer who is representing Ritchie Capital.
“Had Ritchie Capital known that Coventry engaged in these illegal practices, it would have never done business with the company,” Puccio says.
Coventry has responded with a statement of its own calling the Ritchie Capital complaint “a cheap publicity stunt.”
Ritchie Capital filed the suit to divert attention from its own problems, Coventry says.
“Coventry has not committed fraud of any kind,” the firm says, adding that it will seek an immediate dismissal of the complaint with prejudice.
“Coventry has been and continues to be in full compliance with all agreements related to the Ritchie life settlement portfolio,” the firm says.
Ritchie Capital was “well aware of the investigation by the New York attorney general” and “acknowledged in writing that its civil complaint against Coventry was not an event of default under any agreement between Coventry and Ritchie,” Coventry says.