Hedge-fund founder Dan Kamensky was sentenced to six months in prison for bankruptcy fraud over his attempt to quash a rival bid for shares of a Neiman Marcus Group Ltd. business that he wanted to buy himself, WSJ Pro Bankruptcy reported. The sentence, handed down in a federal courtroom in New York, falls short of the 12- to 18-month prison term sought by prosecutors but exceeds the punishment sought by Kamensky’s lawyers, who asked that he only be put on probation and be required to do community service. The founder of hedge-fund firm Marble Ridge Capital LP, Kamensky admitted to prosecutors that last year he tried to sideline a competitor’s bid for shares of Mytheresa, a thriving e-commerce business formerly owned by Neiman Marcus, which was at the time in bankruptcy. His actions amounted to a criminal violation of bankruptcy law because, as a member of an official creditors committee in the Neiman Marcus chapter 11 case, he had an obligation to look out for all of the company’s creditors, not just his firm’s own financial interests. The bankruptcy-fraud charge he pleaded guilty to in February carried a maximum five-year prison sentence. In addition to the six-month prison term, Kamensky was sentenced Friday to six months of supervised release under home detention. During Friday’s court hearing, Judge Denise Cote described Kamensky as a “good man, but one who lost his moorings” under pressure. “He came undone,” the judge said. “He tried to control what he could not control.” Kamensky’s arrest came after he waged a legal battle for more than two years against Neiman Marcus and its private-equity backers over Mytheresa, a fast-growing online subsidiary. He took issue with a spinoff transaction that he said deprived Neiman’s creditors of its crown jewel, while rewarding the retail chain’s owners. (Subscription required.)
