Level Global's Ganek Loses Bid To Hold Feds Responsible For Fund's Closure

Oct 17 2017 | 10:20pm ET

Former Level Global co-founder David Ganek’s long-shot attempt to hold federal prosecutors and FBI agents liable for the fall of his company was dismissed Tuesday by the U.S. Circuit Court of Appeals Court in New York.

Ganek’s claim essentially said the FBI fabricated evidence in order to obtain a search warrant for a 2010 raid of $4 billion Level Global as part of a wide-ranging insider trading investigation. He sued then-U.S. attorney Preet Bharara and more than a dozen Justice Department officials and FBI agents in 2015.

The government succeeded in getting some of the lawsuit dismissed last year, although the lower court declined to toss out Ganek’s allegations that his constitutional rights to due process and freedom from unreasonable search were violated.

Today’s Appeals Court ruling dismissed the remainder of Ganek’s claims, saying that even if the FBI relied on a false statement by a Level Global employee as the basis for its warrant request, it still had probable cause for the search. It also found Bharara and the others named in the complaint had “qualified immunity” from Ganek’s action. 

Level Global folded in February 2011 amid overwhelming redemptions sparked by negative publicity surrounding the raid, according to Ganek. He was never charged with any wrongdoing, while the convictions of other Level Global executives such as analyst Sam Adonadakis and co-founder Anthony Chiasson were reversed following the December 2014 Newman ruling that significantly raised the bar for insider trader prosecutions. 

“This is a dangerous day for private citizens and a great day for ambitious, attention-seeking prosecutors who are now being rewarded with total immunity even when they lie and leak,” Ganek said in a statement. He now manages internal capital at a firm called Apocalypse 22 LLC, according to Bloomberg. 

The case is Ganek v. Leibowitz, 16-1463, U.S. 2nd Circuit Court of Appeals. 


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

CAIS: How Technology is Disrupting the Alternative Investment Industry

Nov 7 2017 | 5:35pm ET

If there’s one thing that alternative investment professionals can agree on, it...