Criminal Charges Levied Against Long Island Hedge Fund's Former Analyst

July 9, 2010 - (Tip Report) New York - The Eastern New York Attorney Generals Office in Brooklyn has filed criminal charges against former NIR Group analyst, Daryl Dworkin, according to Nathan Vardi, a Forbes reporter who has followed the hedge fund's questionable past.

Vardi followed up on his earlier story Thursday, to post in Forbes' blog that evening that Dworkin is rolling over on NIR Group founder, Corey Ribotsky, whose dealings were exposed by AXcess News, Forbes and the WSJ over the course of several years of investigative journalism.

The criminal probe was first revealed by AXcess News following the WSJ story about possible civil misconduct on the part of Ribotsky's NIR Group in 'misleading investors.'

While the Eastern NY Attorney Generals office presses Dworkin, chances are he will roll over on Ribotsky, which may be the whole idea behind charging the former analyst in the first place.

The string of stories in the press on NIR Group and Ribotsky over the course of several years focused on the misleading of investors in the hedge fund, yet the real victims may lie in the public companies NIR Group had invested in. AXcess News reported that at least seven companies were suing NIR over their dealings with them in accepting investment capital. AXcess News was threatened by Ribotsky's lawyers for their story, yet the publication refused to recant that news.

Tip Report has learned that the criminal probe's focus is not on those companies losses but the losses of the wealthy individuals who were allegedly mislead by Ribotsky's hedge fund. In fact, should the Fund's assets fall into court appointed receivership, the interest will be in recouping as much of the capital for the investors in NIR Group as possible without consideration to the companies that accepted that financing - despite any wrong doing on the part of NIR Group.

One wonders if Regulators are snubbing the penny stock companies in favor of the wealthy investors. Widows and Orphans be damned! What the New York Attorney Generals office has is a case under the Rico Act if two or more of those companies [who were supposedly swindled by NIR Group when they accepted that hedge fund's financing] would only step up and file criminal complaints. A precedence for other complaints could follow and perhaps put an end to the seedy investment style seen in the unregulated world of hedge funds who invest in penny stock companies through PIPE offerings and other convertible securities instruments that give a bad rap to the hedge fund industry as a whole.