More Bad News for Ken Lipper

The fallen financier, who must repay $44 million in management fees, has been ousted as his hedge fund's liquidating trustee

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April 11, 2003 at 4:00 AM UTC

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Kenneth Lipper, an Academy Award-winning film producer and former New York City deputy mayor, can't be enjoying the limelight he's in these days. On Apr. 10, New York State Supreme Court Judge Karla Moskowitz ordered the 61-year-old money manager to return $44 million in performance fees he collected in connection with the management of his hedge fund, Lipper Convertibles LP. The fees were based on falsely inflated prices from 1995 to the end of 2001, according to court documents obtained by BusinessWeek.

Lipper allegedly lost more than $315 million of his clients' money in the fund, according to numerous investor lawsuits. His investors include a roster of the rich and famous, including actors Julia Roberts and Liam Neeson, Walt Disney CEO Michael Eisner, Senator Ernest "Fritz" Hollings (D-S.C.), Today show co-host Matt Lauer, real estate and publishing mogul Mort Zuckerman, and former Federal Reserve Chairman Paul Volcker. The fund lost some 47% of its value in 2001, as opposed to the 8% gain Lipper & Co. reported near the end of 2001, according to disclosures Lipper made in letters to investors last year.