Hedge funds accuse IREO of $1.5 billion fraud

Two high-profile hedge funds accused one of India’s biggest real estate developers of defrauding its foreign investors out of as much as $1.5 billion, potentially one of the largest private equity scams ever.

IREO Management engaged in a billion-dollar criminal conspiracy involving shadow companies, dumped documents and “astonishing theft”, according to Axon Capital and Christopher Hohn’s The Children’s Investment Fund Foundation(

“Someone cannot simply just take billions of dollars of our money and get away with it,” Axon’s Dinakar Singh, a former Goldman Sachs Group Inc. trader, told about 70 investors on Monday at the Westin New York Grand Central hotel. “If we do nothing, we will largely bleed dry and get nothing back.”

Singh, 48, discussed what he described as evidence of IREO’s long-running, “brazen” fraud, the latest possible example of investors getting burned speculating on developing markets. This month, Dubai-based Abraaj Group, which once managed almost $14 billion, filed for a court-supervised restructuring after investors commissioned an audit to investigate the alleged mismanagement of its health-care fund.

Axon and the Children’s Investment Fund Foundation — one of the largest philanthropies in the UK — invested about $300 million in IREO. There are several hundred other investors, including Notre Dame University and the University of Rochester, according to a person familiar with the matter, who asked not to be identified because the information is not public. Stanford University also was an investor, Barron’s reported earlier this year.

The investors allege IREO Managing Director Lalit Goyal created a web of shadow companies connected to his relatives, friends and business associates to siphon money from the fund.

The hedge funds originally estimated the alleged fraud by IREO executives at about $147 million, but upped that estimate at Monday’s meeting. Goyal did not respond to phone calls and a text message seeking comment.