The trustee overseeing the bankruptcy of the investment firm once led by the flashy money manager Alphonse Fletcher Jr. has reached a $4.25 million settlement with Skadden, Arps, Slate, Meagher & Flom.
A court-appointed trustee claimed that Skadden, which represented the hedge fund Fletcher Asset Management, failed to “adequately†protect the firm’s funds and their investors.
The firm, which once reported 300 percent returns, also stands accused of defrauding three Louisiana pension funds out of more than $100 million in a separate civil suit.
While Skadden called the trustee’s findings “devoid of merit†in the court filing, both parties agreed to the settlement in order to avoid the headache of a lawsuit. Skadden made it clear, however, that it could have defended itself had such a suit been filed.
The agreement, which must still be approved by a federal bankruptcy judge, would be the first professional settlement in the bankruptcy case.
A spokeswoman for Skadden did not immediately respond to a request for comment.
Mr. Fletcher, known as Buddy, founded Fletcher Asset Manager in the early 1990s and soon became known for his parties, lavish lifestyle and generous pledges to charity.
Mr. Fletcher, who is named in the civil suit in Louisiana, bought four units in the Dakota, the storied New York apartment building known for housing New York’s artistic elite. He gained national attention for suing the Dakota in 2011 for discrimination, claiming that the board denied his request to purchase a fifth unit because he is black.
The board responded to Mr. Fletcher’s accusations by pointing to his fund’s “apparent lack of profitability.†That case is still pending.
