What is going on with Ponta Negra?

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A friend passed me a URL now which led me to a few posts over at Bronte Capital and at Felix Salmon’s blog at Reuters about a firm connected to the Biden family called Ponta Negra. T here may be a connection here to the alleged Stanford fraud.

I have done and probably will not do any sleuthing on this matter. However, I am providing this sequence of posts if any of you would like to do. The case seems likely to garner a bit of press.

First, here is a snippet of what John Hempton had to say in his first post over at Bronte Capital:

I wrote a post about Ponta Negra – a hedge fund that I thought was more likely than not to be fraudulent.  I did not name Ponta Negra in the post but I put two of their marketing documents on the web and some people found them.
I withdrew that post after threats from lawyers.  I also removed the documents from the web.
I have reposted the two marketing documents I have from Ponta Negra here and here and the first threat from the lawyer here.
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This post is called, “Fraudulent hedge fund associated with the Vice President’s family harasses blogger.” Interesting for sure. But, this story continues in a second post at Hempton’s site.

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This blog would – on average – have readers considerably more financially sophisticated than the average person. Indeed looking at where my emails come from its not quite a roll call of Wall Street’s finest– but the crowd is well heeled and well connected.

The fund I put up yesterday is almost certainly a Ponzi. Indeed just reading the numbers as posted I was pretty sure it was a Ponzi – and in this post Madoff/Stanford world I would have thought that most of my readers would be trained to look at results which do not in any way resemble plausible and scream Ponzi.

I did not reveal the name of the Ponzi fund in yesterday’s post but I will today. It is called Ponta Negra Fund LLC and its manager is the Ponta Negra Group.

Surprisingly about a third the emails I got and a fair few of the comments did not even raise the possibility it was a fraud.

Fraud was the first thing that I thought of – and it was the first thing I thought of when I first heard of this fund in June last year. I thought Ponzi in a pre-Madoff world. I am really startled that all my readers did not think Ponzi in a post-Madoff world.

I have two fund marketing documents, one containing results to May last year – the other containing results to February this year. I have uploaded them to Scribd – and you can find them here and here. Download them if you really want to follow the scam.

I was fairly sure it was a Ponzi before I observed the other tell-tale signs – but – for the sake of completing the experiment I will reveal them to you.

I’ll let you go to this second post called, “The first post I did not make on Ponta Negra and its link to the Bidens” but suffice it to say the tell-tale signs of a storefront with nothing behind it are all over the place here. Very suspicious.

The last post, “Another post I did not make” has this to say about another firm in this nexus.

It’s a “picture of text”, not “actual text” which means that it is not findable by Google – nor will it be archived in the Google cache. So when removed it will disappear forever from Onyx’s site but will be stored for posterity here. It is strange to construct a website of entirely pictures rather than searchable text – but that is the way that Onyx seems always to operate.

The current “picture” says that they are updating their personal contact details. At the moment the website contains no phone numbers, no address and no way of contacting Onyx.

I find all of this very odd as did John obviously. Felix finishes this off with the following post:

Here is a blog entry I wrote on March 18 but never published. John Hempton was chasing a Ponzi scheme called Ponta Negra, but the fund’s lawyers forced him to take down his entries and I thought it was worth doing some real reporting before flying into the teeth of those selfsame lawyers. I talked to the marketer for Ponta Negra, Jared Toren, who promised to fly up to New York from Texas to show me the fund’s audited accounts.

That meeting never happened: a couple of hours before it was due to take place, I got a voicemail from Toren saying that he couldn’t meet me after all. I was annoyed, and kept on meaning to follow up, but what with the new job and everything I never quite got around to it. Thankfully, however, the SEC was paying attention as well, and now the fund has been busted.

Hempton is now, naturally, all over the story — and he is pushing hard what seems to me to be a rather tenuous connection to the Biden family. But he does get credit for seeing this thing and calling it, long before the SEC indictment came down. I can only hope that more Ponzis will be uncovered this way — and that bloggers and journalists, including myself, will be less cowed by legal threats than they were this time around.

Update: Maybe the Biden connection isn’t as tenuous as I thought, I’m still looking into that.

Watch for these names in the news: Ponta Negra, Onyx Capital, Eagle Rock Capital and Paradigm Global. I have a sense someone is going to figure out what is fiction and what is fact very soon.

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