Numbers Don’t Add Up, Investor’s Heir Says

PALM BEACH (CN) - A South Florida fund manager claimed he couldn't pay the heir of a late investor $900,000 because the money was lost in the collapse of MF Global, but the numbers don't add up, the heir claims in court.

Alan Gebroe sued Timothy R. Clancy, ABD E&W Fund, and ABD Capital Management, in Palm Beach County Court.

Gebroe claims his late father, Melvin, invested a total of $900,000 with the defendants between April 2007 and February 2010.

The money was invested in an entity called the Analytical Based Decisions Energy & Weather Fund, a portfolio consisting mainly of exchange-traded derivatives using energy and weather commodities as underlying assets, according to the complaint.

While Melvin Gebroe was investing in the fund, Clancy opened an account with MF Global, which bought and sold futures and options for its client. Through MF Global, the fund traded U.K. natural gas futures on the International Petroleum Exchange, Alan Gebroe says in the complaint.

In October 2011, MF Global became insolvent and filed for bankruptcy. Clancy filed multiple claims with the bankruptcy trustee, citing losses of $340,282, according to the complaint.

In September 2012, Gebroe, as trustee of his father's estate, received a letter from Clancy, informing him that the ABD Energy 7 Weather Fund in which his father had invested had entered "unchartered [sic] territories."

"Specifically, the letter stated that 'do [sic] to the negligent handling of our client segregated funds by MF Global we find ourselves in unprecedented times,'" Gebroe says in the complaint.

He claims the letter outlined the "diligent steps" Clancy had taken to protect his clients in from the MF Global disaster, and assured Gebroe and Clancy's other investors, "[w]e understand your frustrations, but I believe we have repercussions affecting not only our monies but our livelihoods as well."

Clancy said that his fund's claim against MF Global had been delayed as a result of the Commodity Futures Trading Commission's decision to sequester the funds of all U.S. commodities customers who had been trading on foreign exchanges, according to the complaint.

Finally, Clancy told his investors he was considering assigning the fund's claims to a third party in the hope of recovering some of their investment, Gebroe claims.

In April this year, the MF Global bankruptcy trustee filed an omnibus objection in Manhattan federal bankruptcy court, seeing to disallow and expunge duplicative claims, as well as those assigned to a third party. The court granted the trustee's motion on May 17, 2013, Gebroe says in the complaint.

The complaint states: Gebroe says, "Clancy intentionally misrepresented material facts in the letter dated Sept. 1, 2012 by representing, inter alia, that the Fund was still pursuing its claim, that the Fund's efforts in pursuing its claim had been halted due to the CTFC's sequestration of certain monies, that MF Global's collapse was the cause of the loss of the entire Fund, and that the Fund was in negotiations with third parties to sell the Fund's claim.

"In fact, Clancy had already disposed of the Fund's claim against MF Global to Claims Management in or about December 2011 for an undisclosed amount, the CFTC's sequestration of certain monies therefore had no effect on the Fund or its investors, and only a small portion of the Fund's monies were in its customer account at MF Global at the time of MF Global's collapse."

Gebroe claims that due to Clancy's misrepresentations, he delayed his attempts to locate and/or recover the money his father had invested in the fund, resulting in additional damages.

He seeks $900,000 and damages for civil theft, securities fraud, conversion and trespass to chattels.

Gebroe is represented by Adam Beighley with Beighley, Myrick & Udell of Boca Raton.

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