Ken Roberts, KROQ Founder, Loses The Robert Taylor Ranch Mansion -- Now The Dream Home Is On The Market
Ken Roberts, founder of KROQ and the guy who brought modern rock to L.A., has been ordered by a judge to pay a greasy Connecticut hedge fund $27.5 million. Because he can't pay, he's losing his 112-acre Brentwood estate, aka The Robert Taylor Ranch, Forbes blogger Teri Buhl reports.
It seems sometimes the rich are like us. This hedge fund got its claws into Roberts with a high-interest loan, something like our own arrangements with, say, Capital One.
The stunning estate is described by Buhl: The ranch house is 11,700 sq ft. The property also has a 3,100 sq ft guest studio and a 4,000 sq ft recreational/office complex with a casino in it. A pool, tennis court, gym, stables, and equestrian trails are spread throughout the vast canyon estate.
How could this happen? The interest on his $28 million principle payoff started at 16.5 percent but at one point in their four year legal battle it amounted to near 31 percent after late fees and a sliding default scale.
The term "hedge fund" once referred to a fund available only to qualified investors, using a strategy more complicated than "buy and hold."
The "investment strategy" of this fund, New Stream Capital, is pretty old-fashioned: Lend money at high interest rates and when the borrower can't pay, seize his house.
Earlier this year, the property was put on the market for $56 million.
But there were no serious offers. So Roberts is stuck, and is losing his spread.
The New Stream Capital fund is going through a dicey period. Tara Bryson, the sister of the founder and head of investor relations, got busted for allegedly cultivating a pot farm.
(nvestor relations at a hedge fund? Seems like a kush, er, cush job for a black sheep sister.)
That's just the start of the problems, though, Buhl reported earlier this month.
New Stream has had a string of problems since 2008. The firm loaned hundreds of millions of dollars in commercial and residential real estate deals, as well as $250 million more in life insurance contracts. As the economy went sour, so did the firm's balance sheets. New Stream's financial statements to investors show the company has not turned a profit since 2007.
In April, 2009, the firm said it would bar investors from withdrawing their money for two years, claiming the assets had become illiquid. One U.S. investor, Stratos Advisors, and at least two offshore investors have sued the firm to get their money out of the New Stream.
Last month DealFlow Media, a newsletter trade publication, reported that Gottex, a fund of funds with approximately $7.3 billion in assets, won a Bermuda court case that gave them receivership of some of the hedge fund's assets. The court ruled the fund could not bar Gottex from withdrawing their near $200 million investment because they had a secure claim against the money. In December the web site Hedge Fund Implode reported that the Connecticut office of the FBI was investigating New Stream for violations of securities laws. At the time David Bryson told Hedge Fund Implode that "we have no knowledge of the investigation." No charges have been brought against the company.
It would be just terrible terrible terrible if this company imploded.
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