After Hedge Fund Folds, Ex-Portfolio Manager Sues Its Founder, Dow Kim, in Federal Court for Fraud and Negligent Misrepresentation in Inducing Him to Join the Venture

On June 30, 2010, Michael Pasternak filed suit in the U.S. District Court for the Southern District of New York against his former employer Dow Kim, founder of failed hedge fund start-up Diamond Lake Investment Group.  Pasternak accuses Kim of fraud in the inducement and negligent misrepresentation because Kim allegedly provided false information to Pasternak regarding capital commitments to the fund in order to induce Pasternak to join – commitments which never materialized due in part to the ensuing global economic crisis.  Pasternak now seeks damages of over $6 million to reflect the opportunity cost of a simultaneous job offer he declined to pursue.  His complaint provides an insider’s look at the launch of a hedge fund on the eve of the crisis.  We summarize the details of the complaint and the relief sought.

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