Hedge fund ordered to pay bonuses

A judge sided with the hedge fund's ex-manager over a former Vikings co-owner.

By Thomas Lee, Star Tribune

August 15, 2007 — A Hennepin County district judge has ruled that a hedge fund operated by former Vikings co-owner Jim Jundt and his son Marcus must pay the fund's former star manager nearly $2 million in unpaid bonuses.

Last week, Judge Gary Larson ordered Jundt Associates Inc. to pay Paul Bottum $1.83 million plus interest after concluding that Jim and Marcus Jundt reneged on promises to pay Bottum bonuses related to the hedge's performance in 2000 and 2003.

The Jundts, who were not defendants in the lawsuit, had denied making those promises. Jim Jundt did not return a phone call seeking comment. Neither Marcus Jundt nor Bill Pentelovitch, who represented Jundt Associates, could be reached for comment. The case was unusual in that Bottum possessed no written documents to prove his claim. The Jundts have a history of making only oral promises, said Andrew Parker, a partner with Minneapolis-based Parker Rosen who represented Bottum.

Bottum was a top portfolio manager at Southways Partners, a hedge fund founded by Jim Jundt and later run by Marcus Jundt. Bottum says that Jim Jundt promised him a $1 million bonus every time the fund beat the S&P 500, which it did in 2000 and 2003. But the firm only paid Bottum $175,000, the lawsuit said.

Jim and Marcus Jundt repeatedly told Bottum the firm could not pay the bonuses because Marcus was divorcing his wife, Charlene. The Jundts feared that she would claim a percentage of any liquid assets that the firm possessed, according to court documents. In the end, the suit pitted Bottum's word against that of Marcus and Jim Jundt, a respected money manager and top GOP donor who last year hosted a fundraiser for Michele Bachmann attended by President Bush.

In his ruling, Larson found Bottum a "more credible and candid as a witness than the Jundts," citing Jim Jundt's "evasive" testimony.

"That James Jundt ... purports to remember certain events in great detail, while disavowing even the most basic knowledge of the operation of the firm he founded and operated for nearly 20 years, casting doubt on his credibility," Larson wrote.

The judge said Marcus Jundt also "exhibited credibility issues," partly because of Jundt's behavior in his divorce proceedings. In that case, Marcus Jundt documented to his bank a net worth of $25.7 million but later told the court his net worth was only $1.6 million.

"Bottum feels as though he is really vindicated," Parker said. "He earned [the bonuses]. He made the Jundts a lot of money."

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