New York-based online funding platform Yieldstreet is pursuing huge claims against alternative financier Four Wood Capital Partners, its principal Steven Baffico and its maritime boss Andrew Simmons for allegedly helping cash buyer Tahir Lakhani defraud it in a series of ship-recycling finance deals.
TradeWinds has reported in depth on the spectacular series of defaults in 2020 by the North Star Group and other Lakhani-controlled entities and their legal aftermath. But Yieldstreet’s claims against its former maritime financial advisor and deal originator have remained unpublicised since they began in April 2020.
Yieldstreet and co-founder Michael Weisz have told the US Southern District of New York federal court they lent Lakhani some $89m on Four Wood’s advice and have principal losses of over $87m.
Sources with insight into the dispute told TradeWinds none of the Lakhani losses have been recovered so far despite Yieldstreet’s global efforts to enforce a $76.7m London High Court summary judgment.
Global Marine Transport Capital (GMTC), a Four Wood entity headed by Cyprus-based ship finance veteran Simmons, was the originator on Yieldstreet’s Lakhani fundings. Yieldstreet has accused the organisation of aiding Lakhani in fraud by “providing [Yieldstreet] with fake documents” such as sales memoranda of agreement from Lakhani’s organisation and by failing to inform Yieldstreet of the position of vessels at the time they were being scrapped.
Lawyers for Yieldstreet characterise its advisors’ action as “deceitful, roguish conduct”.
“Although paid more than $3m to protect investors, the defendants repeatedly lost track of vessels — some large as three football fields — while the Lakhanis ‘deconstructed’ the vessels and then lied about it,” Yieldstreet said.
GMTC told the court it performed its obligation to transmit position data provided by third parties.
Yieldstreet officials did not respond to a request for further comment. Four Wood declined to speak of Yieldstreet’s allegations outside the courtroom.
“While Four Wood Capital Partners has no comment at this time, we remain very confident that the matter will be resolved in our favour,” Baffico told TradeWinds.
Separately, retail investors in the deal are taking the side of Four Woods and GMTC, in a class action lawsuit alleging that Yieldstreet lost their money on the Lakhani investments by failing to listen to GMTC’s maritime finance advice.
The story has been amended to show that GMTC was not originator on all Yieldstreet’s business with Lakhani
