In Hedge Fund Manager's Last Hours of Freedom, An Attempt at One Last Victim

In Hedge Fund Manager’s Last Hours of Freedom, an Attempt at One Last Victim

It was too bad he didn’t have the money, Mr. Scott continues, because he’d just charged someone $350,000 to help him successfully raise $45 million for another company — only he didn’t say the company’s name or who was involved, let alone how he’d accomplished such a feat.

But on Monday, June 3, Mr. Scott changed his tone and proposed an in-person meeting. His promise, according to Mr. Bailey? “I’m going to help you find your balls today.”

That was just one of several awkward interactions to come.

“Does your mother make iced tea?” he asked, according to Mr. Bailey.

Mr. Bailey says Mr. Scott, ratcheting up the appearance of power and status arrived around 1 p.m. on Monday, pulling up in a brand new Lexus GS driven by a European chauffeur. Once inside, he schmoozed and attempted to woo he, his mother, grandmother and aunt with bar-napkin investment diagrams, disjointed financial jargon, big promises and compliments. He articulated talking points on Mr. Bailey’s startup.

“I don’t like equity investments,” he said. “I prefer loans. This is why they pay me the big bucks.”

They stayed for 30 minutes. They eventually left.

“I told him I’d exhausted everything,” Mr. Bailey said, regretting past investments — some personally sourced — that went sour.

Mr. Bailey promised he’d talk things over with his fiancee, whose resolve remained the same.

“You’re killing me,” he remembers Mr. Scott saying when advised of his fiancee’s refusal. “He kept saying, ‘I’m only charging you 5,000 because I’m really adamant about helping my community. I really want to help you.’”

“Continue to try to call your fiancee for the $5,000,” pressed Mr. Scott, according to Mr. Bailey.

That’s when things took a bizarre turn.

Mr. Scott ordered both his driver and Mr. Bailey out of the car so that he could take what he said was an important phone call. According to Mr. Bailey, the driver began telling him that his boss must really like him. “He sat in your house … he doesn’t sit in anyone’s house,” Mr. Bailey recalled the driver saying. The unidentified driver, according to Mr. Bailey, told him that Mr. Scott had helped him grow his car service business from one car to a fleet of eight. “I thought, ‘Wow, that’s amazing,’” Mr. Bailey recalls. “This guy really does care about his community.’”

Mr. Scott also began inserting a compelling personal narrative to boot. He told Mr. Bailey he’s been poor, had three children, but that his wife’s family “invested 30 million into his hedge fund, and then that first years he said he made a 32 percent return on their investment.

“If I had to take my last, you should be able to take your last and put it back into the business,” he recalls him saying.

He was sold. It was enough for Mr. Bailey, who says he asked his advisory board to look into Mr. Scott’s background; the $20,000 was going to be used so that Mr. Scott’s company could restructure the startup from an LLC to a corporation. Surely, $5,000, Mr. Scott assured him, was enough.

That evening, Mr. Scott secured a loan from investors and a few close advisers who he said vetted Mr. Scott’s background. Only, by Tuesday morning, calls from Mr. Bailey to Mr. Scott went straight to voicemail. Texts went unanswered. And finally, a Google search revealed that he’d been arrested for fraud and brought before a judge in Brooklyn Federal Court. He appeared before a judge and was ordered remanded without bail.

“I was in shock,” Mr. Bailey said, who fired off an angry text message.

Mr. Bailey says he’s relieved he seems to have dodged a major bullet.

“I probably would have never seen my daughter again,” he said, relieved he hadn’t let his fiancee down. “She was happy that we didn’t do it. She just said, ‘Sometimes when I say no it’s for a good reason.'”

All the while, Mr. Scott said the transaction needed to happen sooner than later.

After all, he had a big meeting for them set up for Tuesday morning.