October 04, 2002
According to an October 4, 2002 Star-Ledger article entitled “Judge Rules Against Money Manager” by Star-Ledger staff writer Margaret McHugh, “When money manager Alfred Eckert III exhausted all his appeals of a judge’s 1998 order to pay his former business partner $4 million plus interest for abandonment of his responsibilities, Eckert paid up - without ever opening his wallet.
‘Not a penny came from Fred Eckert,’ said Joseph Buckley, the attorney representing Eckert’s former partner, Mikael Salovaara.
Instead, Eckert used $2 million from financial entities he controlled but co-owned with Salovaara, and another $2.7 million from one of the investment funds that was harmed when Eckert became manager of a competing fund in December 1993, Buckley said. He also had one of the businesses he controlled but co-owned with Salovaara pay his $2 million legal bill.
‘We thought it was outrageous he was trying to pay the judgment with other people’s money,’ said Buckley, who went to court on Salovaara’s behalf to challenge the legality of Eckert’s actions.
Last week, Superior Court Judge Kenneth MacKenzie, sitting in Morristown, ruled that Eckert had no right to take money from companies he co-owned with Salovaara to pay off his former partner.
‘It appears unjust, inequitable and illogical to allow Eckert to recoup the amounts he owes Salovaara for his breach. Salovaara gains nothing if the amount awarded him by this court is paid out of funds from the SSP partnerships,’ which they co-own, MacKenzie wrote in a Sept. 24 decision.
Eckert had argued that he was indemnified through his partnership agreements, but MacKenzie said the agreements didn't protect him because he had breached his duty.”
The article continues, “…investors of the Greycliff Leveraged Fund, one of six investment funds that Eckert and Salovaara founded after leaving Goldman Sachs & Co. in 1991 and starting Greycliff Partners Ltd.
They raised and managed what were known as the South Street Funds, which invested in the debt of unhealthy companies, promising investors high rates of return. They relocated from Manhattan to Morristown in the summer of 1993.”
“Buckley said the first funds they created earned a return of 25 percent, but that the second group, including Greycliff Leveraged Fund, just broke even.
Attorney Michael Donovan, who represents seven investment groups in Greycliff Leveraged Fund, did not return phone calls seeking comment.”