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The Mitzvah Factory

Imagine you and your younger brother are poor Jewish kids in mid-1950s Hungary. Unlike so many, you managed to avoid the Holocaust only to be swept up in a bitter revolt against the cruel Soviet occupation government.

Update: Mr. Neuger and Mr. Fitzmaurice decide to pursue other opportunities

Editor's note: A previous version of the story described Ron Blaylock as not investing in EcoAlpha. That is incorrect--he invested approximately $1 million. SIRF regrets the error. EcoAlpha Asset Management, a hedge fund that sought to capitalize on what it touted as the looming global natural resource scarcity, closed its doors last month. Southern Investigative Reporting Foundation readers will recall the fund from this January story that looked at the lack of disclosure surrounding the founder's backgrounds, particularly of Neuger, who was the driving force behind AIG's disastrous foray into securities lending, a gambit that required nearly $44 billion in emergency federal assistance. Continue Reading →

Insys Therapeutics and The New “Killing It”

Clarification: The paragraph discussing Jeff Pearlman, Insys's New York regional sales manager, was updated to note that he was the sales and marketing chief of an aquarium company and not an installer. Moreover, he worked at a pair of medical  technology companies and didn't just broker tickets. On the evening of July 1, 2014 Carolyn “Suzy” Markland, a 58-year old Jacksonville, Florida resident suffering from a degenerative disc disease, took her prescribed medicine—a 400 microgram dose of a Fentanyl spray called Subsys— and went straight to bed. Despite regular pain, Subsys was not an everyday drug for Markland.  She had had the prescription filled for several months but almost never took the stuff; her longtime family doctor and pharmacist had expressed plenty of no holds barred skepticism to her about it. On the three occasions she took Subsys, her family noticed that its sedative and respiratory effects were noticeably sharper than those of another strong painkiller she took, Exalgo. Continue Reading →

Irreproducible Results, Inc.

Editor's note: SIRF did not calculate the size of the Longwood fund (and its three partners) in OvaScience, nor its value, using the most recent documents. It is approximately 19.5 percent of the 27.12 millions shares outstanding, worth just over $185.2 million. The 7 women in the Toronto test were clinically pregnant but have not delivered children. We regret the errors. Additionally, a reference to the company's cash position was reflected to include the announced proceeds from a January equity offering. Continue Reading →

@Undisclosedbackstory: The Hidden History of Social Media’s Financial Gurus (A Truly Occasional Series)

At any given moment, Joe Donahue, a cornerstone of the popular StockTwits investing community, and a veteran of a quarter century of trading, may be making another intraday call on a stock for his community of subscribers who pay him nearly $800 a year for his trading system. Financial social media, where a few minutes to sign up for an account is the only investment needed, allows participation in a community as active and diverse as the markets themselves. But it begs a question: Who, exactly, is giving all of this opinion and the analysis? Far Off, Unpleasant Things

Joseph William Donahue, one of the cornerstone bloggers of—and an investor in—the popular Stocktwits investor community, is a 25-year veteran of trading. He’s done a little bit of everything including founding a pair of hedge funds: one fund that he said reached $500 million in assets and a second fund with former Major League Baseball pitcher Todd Stottlemyre. Continue Reading →

Who Owns Our Water?

Photo credit: Rohan Ayinde Smith

Editor's Note: This story is the result of a collaboration between SIRF and the University of North Carolina's School of Journalism and Mass Communications Fall 2014 Advanced Reporting Seminar. By: Claire Williams, Max Miceli, Corinne Jurney, David R. Pingree, Mary Helen Moore, Brian Freskos, Kate Grise, Sarah Headley, Bradley Saacks and Jenny Surane. North Carolina is fighting a bruising legal battle against Alcoa over the aluminum giant’s claim to a strip of the Yadkin River that it has long used to generate electricity. At the center of the dispute are a patchwork of federal and state laws that created a quid pro quo between the two: Alcoa could operate dams to make the electricity as long as whatever they did was “in the public interest.”

The public interest in this case was Alcoa’s aluminum manufacturing operations in rural Stanly County that employed thousands over the decades. That smelter is now gone. Continue Reading →

The Past Imperfect: Mr. Neuger and Mr. Fitzmaurice Would Like Your Money, Again

The website of a new Minneapolis venture, EcoAlpha Asset Management, strikes a different chord for a hedge fund, holding itself out to the deep-pocketed as not just a way to maybe beat the market, but as a vehicle to economically engage with the vexing questions of access to natural resources, population growth, wealth creation and renewable energy. Its pitch to investors is simplicity itself: as countries around the world pour countless billions of dollars into solving these problems, EcoAlpha will (presumably) benefit mightily from owning the shares of companies and the physical assets that address these issues. Like many a nascent fund—EcoAlpha launched in early October—its investment team is heavily credentialed, with ample experience and prestige schooling. But the brief biographical sketches of  its co-founders, Win Neuger and Matthew Fitzmaurice, are most compelling for what is left out. Neuger, as chief of AIG Global Investment Corp., engineered and oversaw perhaps the most economically destructive episode of the entire global financial crisis: AIG’s securities lending portfolio's headlong foray into mortgage-and asset-backed securities between 2005-2007, which ultimately forced the Federal Reserve to engineer a nearly $44 billion rescue. Continue Reading →

Update: Michael Karfunkel’s Bridge To Nowhere

It’s not everyday that someone makes a $373 million grant of shares in a company he co-founded, but on November 12 that’s exactly what the foundation of a fellow named Michael Karfunkel did when it gave his son-in-law’s foundation over 7.21 million AmTrust Financial Services shares. But the seemingly innocuous grant disclosed on Friday afternoon, November 20, after the close of trading, becomes a lot more interesting when you understand that Barry Zyskind, the man who founded and manages the Teferes Foundation (the recipient of the shares) is the chief executive of AmTrust. As Southern Investigative Reporting Foundation readers will recall from our August investigation, the 71-year old Michael Karfunkel is one-half of a fraternal duo (his brother George is six years younger) that founded AmTrust, a high-flying insurance company. What our investigation uncovered was that the two brothers' foundations—while certainly active grant-makers to synagogues and institutions connected to Brooklyn’s Haredi Judaism community—benefited mightily from using their foundations to maintain family control of AmTrust. With that in mind, SIRF took a hard look at the deal and it appears that charity is the last reason this was done. Continue Reading →

A Reckoning for the Hedge Fund King of Akron, Ohio

Anthony Davian, a once-prolific presence on social media who held himself out as a iconoclastic hedge fund manager prior to his August 2013 indictment on a series of fraud charges, was sentenced several hours ago in a Cleveland courtroom to four years and nine months in federal prison. Federal Judge Patricia Gaughan of Ohio's Northern District court also ordered Davian to make restitution of approximately $1.8 million to his defrauded investors and serve three years of probation after his release. Should Davian waive his right to appeal, he is slated to report to prison in late December or early January, pending his recovery from a recent foot surgery. According to a pre-sentencing guideline federal prosecutors filed on November 18th, they sought a 60 month sentence (and full restitution) for Davian based on an investigation they claimed showed Davian had never sought to manage money, but only to raise investor capital to fund personal and business expenses, including paying off an office lease and attorney fees. A once forceful presence on what is now known broadly as "Finance Twitter," Davian's signature remark was "Ching!" Continue Reading →

The Invention of Professor Dr. Anthony Nobles

Reader, let’s not mince any words about Dr. Anthony Nobles, a 50-year old inventor, teacher, community leader, entrepreneur and soon-to-be space tourist: his life is vastly better than yours. Hailing from Michigan, Nobles didn’t start with much but using his pair of Biomedical Engineering doctorates he developed a patented heart suture technology that he claims has saved thousands of lives; it certainly saved his bank account, because he has been able to buy residences in Steamboat Springs and a seaside boro of Orange County's Huntington Beach. How many Biomedical Engineering doctorates do you have, reader? None? SIRF thought so. Continue Reading →

The Life Fantastic: Michael Saylor’s All Expense Paid World

You may not remember where you were on March 20, 2000, but it’s a very safe bet that a man named Michael Saylor does. More than 14 years later, and it’s likely still fresh in his mind because it’s not every day that one incurs what is the greatest single-day hit to personal wealth in capital market history. That day, as the CEO and majority shareholder of software company MicroStrategy Inc., whose clients now include Facebook and Starbucks, Saylor lost $6.1 billion of his reported $15 billion fortune. Saylor’s historic loss was a result of MicroStrategy’s price per share freefalling $140 in a single day after the price fell to $86.75 from the previous day’s close of $226.75. The stock price's sharp decline was the result of a major restatement of MicroStrategy’s earnings. Continue Reading →