Manager of Dade hedge fund that he started with UM professors admits to $1.3 million fraud
criminal side of David Coggins’ Coral Gables Asset Management fraud didn’t take long. Indicted on Dec. 29, Coggins pleaded guilty this month to securities fraud.
Sentencing for the 42year-old is scheduled for May 14 in Miami federal court.
The civil side to the Coral Gables Asset Management mess is a little more complicated.
Some investors still want a financial piece of Coggins, as well as the men with whom he started the hedge fund: University of Miami Herbert Business School finance professor Alok Kumar and former University of Miami and current Cornell University assistant professor of fiThe nance Jawal Addoum. All three are defendants in a Miami-Dade County civil suit.
Two federal civil suits, one by Portuguese investor Nuno Alpendre and another by California investor Steven Smith, name Coggins as the lone defendant.
In September, the Securities and Exchange Commission gained a judgment against Coggins that requires he, Coral Gables
Asset Management and related companies “pay disgorgement of ill-gotten gains” with interest.
State records say Coggins, Kumar and Addoum founded Coral Gables Asset Management (CGAM) in 2014. It was based out of Kumar’s Pinecrest home.
“Together they marketed the Fund to friends and business associates as an algorithmic trading strategy,”
says Coggins’ factual proffer statement, the admission of facts with a guilty plea.
Kumar and Addoum left in 2016 (more on that later). Coggins continued to manage CGAM and its related companies, such as Coral Gables Asset Holdings.
Coggins’ factual proffer focuses on his scamming of “Investor A,” mostly through emailed lies.
Cross referencing the factual proffer with the civil suits identifies “Investor A” as Alpendre.
By December 2019, when Alpendre emailed CGAM at the email address on the website, the company was a fraud down to the name — it was in Miami and had never been in Coral Gables and Coggins was managing its assets into his pocket.
Coggins began his relationship by lying to Alpendre, saying he was with “Investor Relations” for CGAM. Perhaps, that could be scored as technically true — Coggins was CGAM’s only employee. He told Alpendre that CGAM had more than $100 million in assets under management. CGAM never had more than $2 million.
He showed Alpendre that Hedge Fund Data Service A awarded Coral Gables Asset Holdings its “#1 Top Performing Hedge Fund Equity Market Neutral – Past Three Years.” Coggins didn’t say he knew that award was Garbage Out based on the Garbage In of bad financial data that he had fed Hedge Fund Data Service.
In February, he emailed Alpendre a faux 2018 audit report for CGAM by fabricating an audit report and opinion letter on the letterhead for an imaginary audit firm. The faux audit said CGAM had $52,904,796 in total assets at the end of 2018. It actually had $1.4 million.
Alpendre invested $200,000 by wire transfer on Feb. 7. When he asked for the investment back in June, Coggins went dark on Alpendre while spending Alpendre’s cash.
“From on or about September 2016 through on or about December 2020, Coggins misappropriated investor funds for his personal purposes and concealed from investors the Fund’s performance losses and his misappropriation of Fund assets to avoid detection and further his unjust enrichment,” Coggins’ admission states.
“Specifically, Coggins did not tell the investors that the net asset value of the Fund was nearly zero in 2020. The loss to investors who were unable to recover their investments as a result of the scheme is $1,305,000.”
WHAT DID THEY KNOW AND WHEN DID THEY KNOW IT?
The investors in the Miami-Dade civil lawsuit — Ted Christakos; Targeted Investments, Christakos’ company with Mario Facella; and Robert Schwarz, a trustee for the Helen H. Kleban Irrevocable Trust — feel as seduced by Kumar and Addoum as Coggins.
The professors brought heavyweight credentials. Kumar was the UM business school’s Finance Department chair. Addoum was a UM assistant professor of finance. With CGAM, Kumar would be the chief investment officer (a role that he still listed on his UM online bio as of Monday night).
Kumar’s CGAM biography, which appeared on the website, said, “He heads the research and investment team of the partnership and assists in all portfolio management and research functions.”
Addoum’s CGAM biography said he would handle “the implementation of all trading strategies, daily operations, fund rebalancing, risk management and investor relations” as well as “help oversee the direction of the fund’s strategy and investment philosophy.”
Coggins’ CGAM biography says he would be the chief operating officer and chief financial officer, but didn’t break down what that would mean.
The lawsuit says Kumar, Addoum and Coggins “utilized various representations in a way to make it seem to investors ... that the University of Miami was involved with and provided the support and research for the creation of the unique, behavorial-based systematic market neutral long-short ‘Hedge Fund’ with uniquely created strategic quantitative analysis, trading systemic strategies, consulting, portfolio management and risk management.”
Coggins’ fraud began in September 2016 (if not before) and Kumar and Addoum left CGAM late in 2016. The lawsuit says they violated their fiduciary duty to the investors by tiptoeing away from the company on the down low.
“In fact, plaintiffs did not learn that Kumar and Addoum had left the fund until Aug. 7, 2019,” the suit claims. “In the minimum, Kumar and Addoum had the fiduciary duty to place plaintiffs on notice of the fraudulent acts of Coggins, to have advised plaintiffs that they had received their investments out of the ‘Hedge Fund’ and that they had allegedly removed themselves from their positions as founders, managers, officers, principals and/or partners.”
The Miami Herald emailed Kumar, Addoum and their attorneys but had yet to receive responses.
High drama alert at Miami International Airport over the weekend.
DJ Drama was on a flight from Miami to Houston for a preGrammy gig Saturday morning when trouble began over the societal issue du jour: mask wearing.
In a series of videos posted to his Instagram, the mega-producer shows what went down in real time on the United flight. He starts by filming a male flight attendant standing over him, telling him to turn his phone off. Drama says no.
Then the attendant reminds the entertainer he must wear his mask. “Do you have any medical issues? You’re going to keep it on the whole flight?”
Drama replies that he will comply.
“So, you’re good?” “Yes, sir.”
But then after consulting a female attendant off camera, the same United employee tells the mixtape king to “step off the plane, please.”
Over the intercom, the female attendant tells passengers, “Is anybody else going to wear their mask incorrectly? I do need it to cover both your mouth and your nose. This is United policy, thank you.”
Soon a bunch of police officers are on the scene, as the DJ calmly tells them he was told he could stay on the plane if he wore a mask.
The officers look over his ID as he continues to calmly relay that he was told he could stay on board. He also mentions that this footage is going out to millions of people on social media.
Cops at last tell Drama (real name: Tyree Simmons) that the plane’s captain has the final say and that the music promoter has to disembark.
The Atlanta resident, 42, is escorted off the aircraft by officers, who tell him this type of thing happens all the time and he won’t be arrested.
In a later clip, Drama shows his 1.1 million followers the real reason he thinks he was asked to exit — because he was filming a woman ousted earlier and was told to stop filming by staff.
The music man eventually got to his destination on another airline, Delta, and gave the carrier a shout-out from the festive Texas gig.
A United Airlines spokesman confirmed to the Miami Herald what happened: “On Saturday, United flight 2017 from Miami to Houston returned to the gate to remove three customers — two for causing a disruptive incident and one for not complying with flight attendant instructions,” according to Monday’s statement. “Soon after, the flight departed for Houston.”