RPT-Touradji suit says Beach, Vollero claims are lies

Thu Nov 5, 2009 8:00am EST

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(Repeats story that ran on Wednesday with no change to headline or text)

By Joseph A. Giannone

NEW YORK Nov 4 (Reuters) - Hedge fund firm Touradji Capital Management on Wednesday countersued Robert Vollero and Gentry Beach, two former employees who claim they are owed $50 million in unpaid bonuses, accusing the two men of lying about their abilities, stealing secrets and defaming the firm.

Beach sued Touradji in December last year, and was joined by Vollero in January, accusing the firm of breaking a 2005 oral agreement to pay them a percentage of profits from certain funds. Vollero and Beach, who launched their own firm this year, also accused Touradji of making threats and causing emotional distress.

Touradji Capital, the largest U.S. commodities hedge fund, was founded by Paul Touradji, one of several "Tiger Cubs" spawned from legendary investor Julian Robertson's Tiger Management fund.

A New York state court on Sept. 18 dismissed all but two complaints against Touradji: a claim for breach of contract and a claim for inflicting emotional distress.

But for the first time in nearly a year, Touradji has publicly responded to a series of allegations made by the former employees and landed a few punches of its own. Touradji seeks more than $250 million as compensation for financial and reputational damage.

The two men "were responsible for the destruction of millions of dollars of investor capital through a pattern of fraud, breaches of fiduciary duty, mismanagement and utter disregard for the interests of the investors whose capital they were obligated to protect," Touradji said in its suit.

The lawsuit and publicity surrounding Vollero and Beach's breach of contract claims have hurt Touradji's business, prompting some clients to withdraw assets and eclipsing what has otherwise been a year of strong performance.

Touradji Capital declined to comment.

Vollero Beach Capital and its lawyers could not be reached for comment. Gary Beach, Gentry Beach and Robert Vollero could not be reached for comment.

The scathing 54-page lawsuit, filed in New York state court in Manhattan, attacks the work performance and the veracity of Vollero and Beach.

In the countersuit, Touradji Capital denies that Paul Touradji ever promised a 15 percent cut of fund profits to Vollero and Beach and said no compensation agreement was ever put in writing. E-mails and other evidence, the firm said, indicate the two men received millions of dollars in compensation and never complained.

Touradji also contends that Vollero and Beach lied about their work experience, claiming to have been money managers when they held more junior roles as analysts.

Beach, the lawsuit states, also falsely claimed to be a key money manager at Touradji while he launched his own firm, when he had been demoted to analyst.

Touradji also lists a series of episodes where it said Beach and Vollero failed in their roles as fund managers and on some occasions generated disastrous losses.

In 2006, for example, Touradji said the two managed a small-cap stock fund that suffered large losses because most of the assets were highly illiquid. In another case, Beach led a private equity business that generated a more than $100 million writedown on one disastrous energy bet.

The suit also said Beach was not telling the truth when he filed a police report complaining Touradji made threats and accused his employer of vowing to "ruin" Beach's marriage. Touradji's suit said Beach had an extramarital affair with a student in Argentina.

Moreover, the firm said Beach and Vollero were not forced out but were in fact secretly preparing to launch their own firm while still on the payroll. Vollero, who remained at Touradji for three months after Beach left, allegedly collected proprietary information for their new firm, the suit said.

Touradji also accuses Gentry Beach's father, Gary Beach, of mismanaging an oil and gas venture controlled by Touradji. Touradji's suit says that the day before Gentry Beach left the firm, the elder Beach stole $500,000 in cash from the venture.

Gary Beach is currently suing Touradji Capital in a Texas state court alleging he, too, is owed millions in unpaid compensation by Touradji.

The Touradji suit denies claims that it contributed to the failure of Amaranth Group, a struggling hedge fund firm that in September 2006 approached Touradji Capital to buy a base metals portfolio.

Touradji Capital complained that Gentry Beach falsely accused the firm of using inside information to trade against Amaranth and accelerating its collapse. These claims of the firm breaking its word spread at a time when Vollero and Beach worked to launch their new firm, the suit said.

Touradji denied abusing the portfolio information and complained that Vollero and Beach defamed the firm. Amaranth recently filed preliminary legal action against Touradji Capital.

The case is Gentry Beach and Robert Vollero vs Touradji Capital Management LP and Paul Touradji, New York Civil Supreme Court #603611/2008.

(Reporting by Joseph A. Giannone; Editing by Phil Berlowitz)

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