The Securities and Exchange Commission is investigating a private equity firm backed by several ultra-rich American families after receiving complaints that its owner was using investor funds to cover personal expenses, documents show.
One Thousand & One Voices Management and a unit that manages one of its funds received subpoenas three months ago from the SEC’s Division of Enforcement seeking a range of documents, according to documents. consulted by the Wall Street Journal.
The Denver-area private equity firm is owned and directed by Hendrik Jordaan, a lawyer born in South Africa. The business started eight years ago with a fund to invest in sub-Saharan Africa backed by brewer scion John K. Coors and other wealthy families.
The SEC investigation followed complaints to regulators that Mr Jordaan was using seed money for a new fund to cover personal expenses and was charging investors with the funds lavish travel expenses, including for his wife, among others, according to the documents.
In a statement, a spokesman for Mr. Jordaan’s cabinet said he is fully cooperating with the SEC investigation. “An ongoing independent forensic audit has found no evidence of fraud or intentional misconduct to date,” the spokesperson said.
The SEC declined to comment.
The funds’ external auditor, BDO LLP, told the company it will not audit its 2021 financials. It was not known why the auditor made the decision, and BDO declined to comment.
The firm’s spokesperson said it was in the process of choosing a new auditor and BDO provided no indication that previous financial statements contained material inaccuracies.
He added: âThe Africa Fund’s investments have created or maintained thousands of jobs in Africa and have supported the financial well-being of tens of thousands of Africans.
Mr Jordaan, 50, came to the United States as an undergraduate student on a tennis scholarship at Southern Methodist University and stayed there to earn his law degree. He worked as an attorney, before becoming a partner at Morrison & Foerster LLP in Denver, where he was co-chair of the firm’s global private equity practice.
He left the law firm in 2013 to found One Thousand & One Voices, also known as 1K1V. Him and Mr. Coors, whose great-grandfather founded the brewer that is now part of Molson Coors Beverage Co.
, presented the Africa fund as unique because its wealthy family funders could bring business expertise to African entrepreneurs and would be patient enough to let their investments mature for a decade or more before waiting for returns.
Other investors in the Africa fund included members of the Belk family, the founders of the eponymous department store chain, and the Leprino family of Denver-based mozzarella and cheese giant Leprino Foods Co., according to fund documents. consulted by the Journal.
A representative for Mr Coors declined to comment and the other two families could not be reached.
On several occasions over the years, including a radio interview and a speech in 2016, Mr. Jordaan has described the Africa Fund as a $ 300 million vehicle. He only raised $ 121 million, according to securities records. Mr Jordaan’s spokesperson said the fund’s marketing materials made it clear that the target amount of $ 300 million may not be reached.
Mr. Jordaan recently began raising another fund, the Families-Backing-Families Credit Fund, aimed at appealing to his wealthy investors to help family businesses in the United States with loans and expertise. Its manager is the entity that received an assignment in addition to 1K1V.
In April, the credit fund said in a securities deposit that it had raised $ 110 million and was aiming for a total of $ 500 million. The fund has three key investors, including the Green family, founders of Hobby Lobby Stores Inc., and the Sturm family of Denver, who made their money through telecommunications and banking, according to the documents.
Representatives of the two families could not be reached.
The third flagship investor is Charles Widger, who in 2020 sold Brinker Capital, the Philadelphia-area investment management firm he spent decades building. Mr Widger also agreed to invest $ 5 million directly in Mr Jordaan’s business, as seed capital to help launch the loan fund, according to the documents.
The complaints to the SEC claim that Mr. Jordaan used some of Mr. Widger’s money to finance his own lifestyle, including $ 600,000 for clothing, shoes and accessories; $ 100,000 for vacation; $ 60,000 for the rent of the house; and $ 400,000 to cover Internal Revenue Service bills, according to the documents. Some of the money was spent through corporate credit cards issued to both Mr Jordaan and his wife, according to the complaints.
Mr. Widger declined to comment.
Securities lawyers not involved in the investigation said Mr. Jordaan, as the sole owner of the management company of the business through which Mr. Widger’s capital has passed, is free to do whatever he wants with the company’s money. The SEC, however, might be interested in whether the spending was in line with the terms of its deal with Mr Widger, lawyers said.
Mr Jordaan’s spokesperson said the company believed the seed capital had been “managed in accordance with applicable agreements”.
Complaints to the SEC indicated that Mr. Jordaan’s wife, Jessica Jordaan, accompanied him on all of his overnight trips, including business trips. Fees for Ms Jordaan accompanying her husband on business trips were typically charged to fund investors, according to the complaints.
The cabinet spokesperson said Ms. Jordaan often attended events with family investors and business owners, “in support of the funds.” He said Ms Jordaan made no comments and did not respond to messages.
âThere are many private equity firms that serve family offices and many more that buy family businesses and I have never heard of trips from family members billed to funds,â said Igor Rozenblit, former SEC co-head of private funds. who now advises the fund managers of Iron Road Partners. He added that the SEC often views the exaggeration of fund assets as a material misstatement, as it could be seen as priming the pump for potential future fundraising.
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