The Securities and Change Fee is investigating a private-equity agency backed by a number of ultrarich U.S. households after receiving complaints that its proprietor was utilizing investor funds to cowl private bills, paperwork present.
The agency, One Thousand & One Voices Administration, and a unit that manages one in all its funds acquired subpoenas three months in the past from the SEC’s Division of Enforcement in search of a spread of supplies, in keeping with paperwork seen by The Wall Road Journal.
The Denver-area private-equity agency is owned and run by
Hendrik Jordaan,
a South African-born lawyer. The agency bought its begin eight years in the past with a fund to put money into sub-Saharan Africa backed by brewing scion
John Okay. Coors
and different rich households.
The SEC investigation adopted complaints to regulators that Mr. Jordaan was utilizing seed cash for a brand new fund to cowl private bills and was charging fund buyers for lavish journey prices, together with for his spouse, amongst different issues, in keeping with the paperwork.
In an announcement, a spokesman for Mr. Jordaan’s agency stated it’s absolutely cooperating with the SEC investigation. “An ongoing unbiased forensic accounting examination has discovered no indicia of fraud or intentional misconduct thus far,” the spokesman stated.
The SEC declined to remark.
The skin auditor for the funds, BDO LLP, has instructed the agency that it received’t audit its 2021 monetary statements. It couldn’t be realized why the auditor made that call, and BDO declined to remark.
Brewing scion John Okay. Coors is among the many rich buyers within the 1K1V fund.
Photograph:
John Okay. Coors
The agency spokesman stated it’s within the course of of selecting a brand new auditor and BDO has offered no indication that earlier monetary statements contained materials misstatements.
He added: “The Africa fund’s investments have resulted within the creation or upkeep of hundreds of jobs in Africa, and supported the monetary well-being of tens of hundreds of Africans.”
Mr. Jordaan, 50 years outdated, got here to the U.S. as an undergraduate on a tennis scholarship at Southern Methodist College and stayed on to get his regulation diploma there. He labored as a lawyer, finally changing into a companion at regulation agency Morrison & Foerster LLP in Denver, the place he was co-chair of the agency’s international private-equity follow.
He left the regulation agency in 2013 to start out One Thousand & One Voices, often known as 1K1V. He and Mr. Coors, whose great-grandfather based the brewer that’s now a part of
Molson Coors Beverage Co.
TAP.A 6.19%
, pitched the Africa fund as distinctive as a result of its wealthy-family backers may lend their enterprise experience to African entrepreneurs and can be affected person sufficient to let their investments mature for a decade or longer earlier than anticipating returns.
Different buyers within the Africa fund have included members of the Belk household, the founders of the eponymous department-store chain, and the Leprino household of Denver-based mozzarella-cheese big Leprino Meals Co., in keeping with fund supplies seen by the Journal.
A consultant for Mr. Coors declined to remark and the opposite two households couldn’t be reached.
In a number of cases through the years, together with a radio interview and a speech in 2016, Mr. Jordaan has described the Africa fund as a $300 million automobile. It solely raised $121 million, in keeping with securities filings. The spokesman for Mr. Jordaan stated the fund’s advertising and marketing supplies made clear the focused quantity of $300 million won’t be achieved.
Mr. Jordaan just lately started elevating one other fund, the Households-Backing-Households Credit score Fund, geared toward tapping its rich buyers to assist family-run companies within the U.S. with loans and experience. Its supervisor is the entity that acquired a subpoena along with 1K1V.
A household that based retailer Pastime Foyer is amongst three anchor buyers within the Households-Backing-Households Credit score Fund.
Photograph:
John Marshall Mantel/Zuma Press
In April, the credit score fund stated in a securities submitting that it had raised $110 million and was concentrating on a complete of $500 million. The fund has three anchor buyers together with the Inexperienced household, founders of Pastime Foyer Shops Inc., and the Sturm household of Denver, which made its cash by telecommunications and banking, in keeping with the paperwork.
Representatives for the 2 households couldn’t be reached.
The third anchor investor is
Charles Widger,
who in 2020 bought Brinker Capital, the Philadelphia-area investment-management firm he spent many years constructing. Mr. Widger additionally agreed to take a position $5 million immediately in Mr. Jordaan’s agency, as seed capital to assist get the credit score fund off the bottom, in keeping with the paperwork.
The complaints to the SEC contend that Mr. Jordaan used a piece of the cash from Mr. Widger to fund his personal way of life, together with $600,000 for clothes, footwear and equipment; $100,000 for holidays; $60,000 for house lease; and $400,000 to cowl Inner Income Service payments, in keeping with the paperwork. Among the cash was spent through company bank cards issued to each Mr. Jordaan and his spouse, the complaints contend.
Mr. Widger declined to remark.
Securities attorneys not concerned within the probe stated Mr. Jordaan, as sole proprietor of the agency’s administration firm by which Mr. Widger’s capital flowed, is free to do no matter he desires with the corporate’s cash. The SEC could be , nevertheless, in whether or not the spending was according to the phrases of his settlement with Mr. Widger, the attorneys stated.
The spokesman for Mr. Jordaan stated the agency believes the seed capital was “dealt with in accordance with the relevant agreements.”
The complaints to the SEC stated that Mr. Jordaan’s spouse, Jessica Jordaan, accompanies him on all in a single day journeys, together with enterprise journey. The prices for Ms. Jordaan accompanying her husband on enterprise journeys sometimes had been charged to fund buyers, the complaints stated.
The agency spokesman stated Ms. Jordaan usually participates in occasions with household buyers and enterprise homeowners, “in help of the funds.” He stated Ms. Jordaan had no remark and she or he didn’t reply to messages.
“There are numerous private-equity companies serving household workplaces and plenty of others who purchase family-owned companies and I’ve by no means heard of family-member journey being billed to funds,” stated Igor Rozenblit, former co-head of the SEC’s private-funds unit who now advises fund managers at Iron Street Companions. He added that the SEC usually considers exaggeration of fund property a cloth misstatement as a result of it might be seen as priming the pump for potential future fundraising.
Write to Mark Maremont at mark.maremont@wsj.com, Miriam Gottfried at Miriam.Gottfried@wsj.com and Emily Glazer at emily.glazer@wsj.com
Copyright ©2021 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
