The Founder of Camshaft Capital Fund, a small Florida-based hedge fund, faces potential imprisonment for withholding information regarding the whereabouts of $533m allegedly concealed by Indian education-tech startup Think & Learn, according to a report by Bloomberg citing a federal judge.
Lenders are seeking to recover these funds.
William C Morton, who founded Camshaft Capital Fund, risks being held in contempt of court if he fails to provide an explanation for his noncompliance with a court order. The money in question was briefly held within Morton’s hedge fund. A hearing has been scheduled later this month in Delaware, where US Bankruptcy Judge John Dorsey will determine the consequences for Morton’s defiance of a court order.
The report quotes Dorsey in referring to the federal rules that allow judges in non-criminal cases to jail people: “I want to make sure it is absolutely clear to Mr Morton that one of the possible remedies is civil confinement if he doesn’t comply.”
The report cites Morton’s criminal lawyer, Pieter Van Tol, as confirming that Morton left the country in the middle of a hearing last week, during which Dorsey warned Morton that “it would be in his best interest” to attend the Delaware proceeding.
Lenders, who are owed $1.2bn, have accused Morton of aiding Think & Learn, which was founded by Byju Raveendran, in concealing $533m. The funds in question originally belonged to bankrupt shell company Byju’s Alpha, which has ties to Think & Learn. After the loan defaulted, the lenders assumed control of Byju’s Alpha, prompting the $533m to be transferred to Morton’s hedge fund. A lawyer representing Byju’s Alpha, Benjamin Finestone, confirmed in a hearing last week that the funds were later moved to an unnamed offshore trust by Raveendran’s brother, Riju Ravindran, in arguing that Morton was not the main player in the dispute.
Finestone said: “There is obviously somebody else behind Mr Morton who is funding.”
The case in full is BYJU’s Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).
