the audit

Roddy Boyd exposes a hedge-fund fraud

A scam for the social-media age
July 18, 2013

Roddy Boyd has the business read of the week with his dynamite investigation into Anthony Davian, the social-media loving hedge-fund manager of Akron.

Supposed hedge-fund manager, that is—Boyd’s piece exposes him as a fraud.

Anthony Davian claimed to manage $200 million through Davian Capital and also claimed his newsletter, the Davian Letter, took in hundreds of thousands of dollars a year. Both claims were false. Davian apparently managed no more than a couple million bucks and the newsletter made a max of $30,000, Boyd reports.

Investors don’t seem to have lodged any complaints after hearing Davian’s extraordinary assertions; instead they appear to have swooned over the massive returns Davian alleged to have realized. (The initial years of a money manager’s career are often closely scrutinized by prospective investors who watch for how market volatility is handled–but that does not appear to have been the case for Davian.) No one asked why a money manager capable of earning returns in the 40 percent to 50 percent range (during one of the most volatile stretches of stock market history) would have troubled himself with a newsletter business peddling daily stock tips to subscribers for $1,200 a year.

It’s a helluva story, deeply reported. We’ve got a self-promoting phony, gullible investors, a CFO prohibited from seeing the fund’s bank statements, Jimmy Carter’s son, employees wearing wires, the federales swooping in, and an apparent suicide attempt by Davian.

One of financial journalism’s weak spots is its coverage of small-time operators. Not coincidentally, that’s where the fraud runs rampant. The economics of financial news don’t allow The Wall Street Journal to have a reporter covering some penny stock.

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The scary thing is there are a lot Anthony Davian types out there and not enough reporters like Boyd trying to find them out.

What makes this piece even more interesting is that Boyd, a former investigative reporter at Fortune and the New York Post, is running his own shop. He’s started up the Southern Investigative Reporting Foundation as a nonprofit (with an illustrious board) to do the kind of muckraking financial stories that are few and far between.

Boyd doesn’t just focus on smaller shops. Check out his complex unwinding of Brookfield Asset Management from March.

Nonprofit journalism needs funders, as we’re well aware at CJR, and the kind of work Boyd is doing is expensive and time-consuming. Kick him some coin if you’ve got some to spare.

These kind of efforts are worth supporting, to say the least.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.