Cayman Islands records show hedge funds Alan Grayson said he closed are still active
Democratic U.S. Senate candidate Alan Grayson said more than two months ago that he had closed down his Cayman Islands-based hedge funds that helped prompt ethics complaints against the populist congressman from Orlando.
Grayson declined to provide documentation to the Tampa Bay Times when asked for it in early October, just as he did with The Hill newspaper several weeks ago: “Feel free to check with Cayman Islands authorities, if you regard that as relevant or useful,” Grayson spokesman Ken Scudder told The Hill.
So we did.
Grayson’s Cayman-based investment companies remained open as of Wednesday afternoon, according to official records provided to the Tampa Bay Times by the Cayman Islands Government General Registry. The inter-connected investment vehicles Grayson set up in the Caymans — the Grayson Fund (Cayman), Ltd.; The Grayson Master Fund (Cayman) LP, and the Sybilline Fund General Partner LLC — are still listed as active.
Scudder said Thursday those records are wrong, and he forwarded an Oct. 14 letter from the Cayman Islands Monetary Authority, which oversees financial services on the territory, confirming that one of Grayson’s Cayman funds, Grayson Fund (Cayman), Ltd, was dissolved.
The Grayson Master Fund (Cayman) LP. remains listed as “currently licensed or registered” by the Monetary Authority, however.
Scudder said he could not address the status of that fund or why the Caymans National Registry shows three of Grayson’s investment company as active. Registry records notes that companies it lists as "active" are not necessarily in good standing.
Grayson, 57, has railed against tax dodgers even as he set up his own hedge funds in a notorious tax haven. Since the Tampa Bay Times first revealed in May that he had created offshore investment accounts, the congressman has repeatedly denied what public records on those funds appear to show:
• No money was ever invested in a Cayman Islands account, Grayson has said, although his own Securities and Exchange Commission filings in 2014 stated that Cayman Islands-incorporated Grayson Master Fund (Cayman) LP had more than $13.2 million in assets under management.
• He has never received “one penny of compensation,” for managing the fund, Grayson says, despite filing documents with the SEC this year stating that “ongoing” management fees and incentive payments are being paid to the fund manager. Grayson runs the fund management company.
• His fund has the standard structure — with a 2 percent annual management fee and also a 20 percent “incentive allocation” — to ensure hedge fund managers pay a lower tax rate than most Americans. Grayson, who has supported ending that so-called “carried interest” tax break, says he never benefitted from it.
Grayson founded a telecom company in the 1990s and later worked as a lawyer specializing in whistle-blower cases. He is worth as much as $105 million, according to his hand-written financial disclosure reports, and in 2011 — after losing a congressional seat and running for a new district — he created the hedge funds.
The assorted hedge funds are interconnected, the the most recent records for the Delaware-based entity indicate it has about $16-million invested, making it a small partnerships in the world of hedge funds.
After critics filed the still-pending ethics complaint, accusing the congressman of improperly using his name on an investment partnership, he removed “Grayson” from the title of the funds. He now calls them the Sibylline Funds although the Cayman Islands records show Grayson’s name on his funds there.
Grayson has declined to say why he went with “Sibylline,” which usually refers to oracles and female prophets from classical antiquity.
He has also declined to identify any partners or investors in his fund or release tax documents relating to them.
His main rival for the Democratic Senate nomination is U.S. Rep. Patrick Murphy of Jupiter, but Grayson’s campaign appears to have hit a rocky patch. Three top staffers, including his campaign manager, deputy campaign manager and campaign spokesman, this week confirmed they have quit the campaign or are about to depart.
Grayson shrugged that off in a radio interview with Tampa’s WMNF on Thursday.
“The media dramatizes everything. Things are going quite well actually,” he said of the staff departures. “What happened is they took three independent incidents that happened over the course of several months and they conflated it. Doesn’t matter at all.”
Times research John Martin contributed to this report