This post is the author’s reaction to the 11th update, which I cannot re-produce here, and is mainly written for fellow MPF investors who were also sent this update.
While the overall status of the Managed Performance Fund is indeed bleak, no doubt, the main source of any optimism about recovery action has been — for several months now — recovery through litigation. Prospects for recovery through selling off any land or for “normal business” stuff (which comprises the first half of the update) just hasn’t been on the table since the fund went into administration. Our money went “poof” on that moment, probably even before then. So let’s just accept that, if we haven’t already. Perhaps the one thing is that what money they are able to recover from the business side of things is paying for part of Korda Mentha’s costs.
What remains to be seen, however, is how well we’ll do in court. On that score, it seems — at least, this is my takeaway from it — is that it sounds like there is reason for some guarded optimism. Now, we’re probably wishing and hoping that Drake’s finances will allow some recovery, but that’s just not going to happen. The way I read it, is that have tracked down how and when Drake squirrelled away money, which means it’s gone, but it also means they have a strong criminal court case against him. Remember, the action of pushing money in the lead up to the failure is indication that this fraud was intentional, a vital and difficult aspect to prove in court. That they seem to have that should be reason for us to smile.
Where the money will be, though, is in discovering that this fund was clearly a scandal, that there were clearly multiple red flags, and everyone who was involved in the selling and confirming this fund are to blame. It’s those guys that have money from which can be recovered. They also have lots of lawyers, hence it will take years for this whole thing to play out.
There were other hints and suggestions that KM have convinced themselves of the extent of the fraudulent activity as well, which should also be indication, or at least, that I’m taking this as indication, that it might be “straightforward” to prove in court (or, at least as straightforward as this comes).
In other words, this author is choosing to believe the fact that KM isn’t saying “we’ve investigated things and we are unable to come to any definitive conclusions” to mean that there are still a lot of legs left in this saga.