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Sloan Financial Charges Former Employees With Fraud, Embezzlement, Conspiracy and Other Wrong Doings
- Former Employee Justin Beckett and Accomplices Face Millions of
Dollars in Financial Liabilities -
DURHAM, N.C., Feb. 26 /PRNewswire/ -- Sloan Financial Group, Inc., the parent company of a leading investment management firm, and other Plaintiffs today exposed an intricate scheme of deception, graft, fraud, and embezzlement by a former employee, Justin Beckett, and his accomplices in a complaint filed today. The scheme involved Beckett's day-to-day management and systematic looting of The New Africa Opportunity Fund ("NAOF" or "the Fund"), a $120 million private equity fund established to invest in southern African companies. NAOF has $80 million backed by the U.S. government's Overseas Private Investment Corp ("OPIC"). Additional plaintiffs are New Africa Investment Management, LLC ("NAIM"), which served as NAOF's general partner and New Africa Management, LLC, which was the Fund's manager, both of which were handled by Beckett while he managed the NAOF.
Charged in North Carolina State court in Durham with fraud, embezzlement, breach of fiduciary duty, unfair and deceptive trade practices, and conspiracy, among other improper activities, were Beckett and confederates of Beckett recruited by him to perpetrate the criminal enterprise. In addition to Beckett, the other defendants are Beckett's wife, Dorika Mamboleo, Michael Sudarkasa, Theresa Clarke, and John and Jane Does (1-10).
As a result of their misdeeds, Beckett and his co-defendants face millions of dollars of damages and penalties.
Led by Beckett, he and his co-conspirators formed Beckett's Africa team. From the spring of 1999 until discovered in the spring of 2000, Beckett and his team deceptively and systematically diverted millions of dollars from the Fund's investments to themselves. They lived lavishly, with opulent trappings, in Johannesburg, while fabricating cover-ups and fraudulent records.
In May of 2000, Sloan Financial uncovered the fraud and embezzlement of Beckett and his confederates. NAIM replaced the corrupt Beckett group with an interim management transition team that was approved by the NOAF's limited partners and ratified by OPIC. That team continued further investigations into the Beckett group's concealed racketeering. The transition team developed and implemented a plan, approved by the limited partners and acknowledged by OPIC, to protect the interest of the fund and its investors.
As pointed out in the suit, Sloan Financial is the parent company of the largest African-American owned investment management firm in the United States. Beckett had a keen interest in developing business opportunities in Africa. He convinced Sloan Financial to sponsor and to allow him to oversee a venture capital investment fund for Africa. Beckett proposed the New Africa Opportunity Fund. Beckett set up the corporate structure for managing and operating the Fund and with the approval of the limited partner investors and OPIC, Beckett placed himself in control of the Fund.
The suit describes how Beckett and his cronies ignored the specific investment guidelines established for the Fund. By ignoring the investment guidelines, Beckett had the Fund invest in start-up companies where the management was particularly susceptible to extortion and manipulation by Beckett. The complaint discloses that "Beckett's and his team's success in diverting (NAIM's) management fee to their own benefit emboldened Beckett and his team to enrich themselves improperly at the expense of the (Fund's) portfolio companies that they had induced NAOF to fund with OPIC approval." As further highlighted in the complaint, "Beckett and his team wasted corporate assets ... engaged in a pattern of excessive spending ... granted themselves excessive salaries and bonuses. In addition, "because he was a resident of South Africa and because members of the Investment Committee (with one exception) and of the Advisory Committee were residents of the United States, Beckett knew that neither body could oversee his day-to-day involvement with the management of the portfolio companies."
Among other things, according to the charges, Beckett abused his position as day-to-day manager of the Fund to coerce the management of several portfolio companies to pay him and his cronies, prohibited consulting and financing fees. Beckett and his accomplices had these payments concealed and fabricated cover-up documents. Beckett also, for example, abused his position as Fund manager to extort $1,000,000 from one portfolio company for the benefit of a personal business venture.
Maceo Sloan, Chairman and Chief Executive Officer of Sloan Financial, stated, "Any organization or enterprise can be victimized by individuals or parties intent on perpetrating fraud. We are saddened that in this situation it was by people who we had trusted. Nevertheless, paramount to our business is our reputation. After assembling and reviewing all the facts and bringing these facts to the attention of OPIC and the Fund's limited partners, we now must act. We are fully committed to taking all appropriate action to assure that our reputation and integrity are fully protected for the benefit of all who are a part of Sloan Financial -- our clients, our employees, and the communities we serve."
SOURCE Sloan Financial Group, Inc.
CO: Sloan Financial Group, Inc.
ST: North Carolina
IN: FIN
SU: LAW
02/26/2001 11:03 EST prnewswire.com |
