Oct 5 (Reuters) – Lynn Tilton, a New York financier accused by the U.S. Securities and Exchange Commission of defrauding clients, was sued on Monday by two of her investors, who claimed her mismanagement and misrepresentations caused them to lose more than $45 million.
Germany’s Norddeutsche Landesbank Girozentrale and its Hannover Funding Co affiliate said Tilton and her firm Patriarch Partners LLC tricked them into investing $135 million in their Zohar collateralized loan obligation funds, and concealing their intent to manage the funds “for their own benefit and profit.”
“We deny these baseless allegations in the strongest possible terms and we intend to vigorously defend ourselves in court,” said a spokesman for Patriarch Partners.
A lawyer for Tilton did not immediately respond to requests for comment.
The plaintiffs had indicated in a May 15 filing with the New York state supreme court in Manhattan that they intended to sue, but did not file their formal complaint until Monday.
Tilton and Patriarch have been accused by the SEC of hiding the poor performance of assets underlying the Zohar funds, for which they raised more than $2.5 billion and allegedly collected nearly $200 million of improper fees.
The defendants have denied wrongdoing. Tilton is known as the “Diva of Distressed” for her efforts to turn around troubled companies.
The case is Norddeutsche Landesbank Girozentrale et al v. Tilton et al, New York State Supreme Court, New York County, No. 651695/2015.