Bermuda-based fund promoter Robert Hager killed himself three days before a court hearing related to his efforts to empty a bank account in the name of his employer, a court heard.

Mr. Hager, the president of Founding Partners Capital (Bermuda) Ltd., died in the King Edward VII Memorial Hospital after taking a quantity of pills on May 26 this year, as reported two days later in The Royal Gazette.

Bermuda Supreme Court documents show that Mr. Hager attempted to take out $145,000 from his firm's operating account at Butterfield Bank in Hamilton - virtually the entire balance - on April 28 this year.

The bank refused to comply, on the grounds that the funds were covered by a US freeze order, relating to the group's head William Gunlicks, and its investment manager Founding Partners Capital Management Company, based in Naples, Florida.

Eight days before Mr. Hager's unsuccessful attempt to withdraw the money, US financial regulator the Securities and Exchange Commission had obtained the emergency asset freeze and the appointment of a liquidator for Founding Partners from a US court. The SEC had accused the firm of defrauding investors by misrepresenting the nature of around $550 million in investments.

The court documents, highlighted yesterday by the OffshoreAlert online newsletter, show that Mr. Hagar had been seeking a $150,000 severance payment that he believed he was entitled to from Founding Partners.

Mr. Hagar, a Briton and long-time resident of the Island, had attracted around 50 investors in Bermuda to the fund. He had given up his apartment at St. James Court, Flatts, after not being paid by his employer for around two months before his death, according to Chris Mason, a friend of the late fund promoter.

Speaking with this newspaper after Mr. Hager's death, Mr. Mason added that his friend had felt "really bad" about what happened to investors.

Ther matter came to court on May 7 when Founding Partners Capital (Bermuda) Ltd. sued Butterfield Bank to "unfreeze" the Bermuda account Bermuda Supreme Court. The company sought an ex parte order requiring the bank to release funds "for the limited purpose of allowing the Company to pay its local trade debts and employee salaries and remissions", according to a court filing.

The ruling shows that the matter of whether or not Mr. Hager had withheld material information in an affidavit that was submitted to the court in support of the application.

In his affidavit, Mr Hager said: "It is certainly not my desire to have unfettered access to the Account. In the circumstances, however, I see it as imperative that limited ability to access the funds in the Account be granted so that local employees and trade creditors can be paid."

On the basis of the affidavit, Puisne Judge Geoffrey Bell issued an order against the bank on May 8 to allow the company to "discharge the indebtedness" referred to by Mr. Hager. However, Butterfield refused to comply, stating its opinion that the Bermuda funds were included in the asset freeze order issued in Florida.

On May 13, the bank's general counsel, Tonya Marshall, informed the court for the first time that, on April 28, Hager had tried to move $145,000 from the group's corporate account to his personal account at the bank by way of a cheque. Ms Marshall suggested that Mr. Hager's failure to disclose this in his affidavit was a material omission.

In a second affadavit, filed on May 15, Mr. Hager claimed that, following the SEC's action in Florida, he had assumed that his employment with the group had been terminated and had determined that he was entitled to $145,000 as a "severance payment".

Mr. Hager had, in fact, been seeking $150,000 but reduced the amount to $145,000 because the Bermuda company's account at Butterfield Bank did not contain $150,000, the court heard.

On May 27, the court was notified by Founding Partners' attorneys, Marshall Diel & Myers, that Mr. Hager had "committed suicide the previous day". Despite this, a hearing on whether to unfreeze the Butterfield account went ahead on May 29, leading to Judge Bell ruling in favour of the bank and awarding it costs.

In his written ruling on June 2, the judge stated that "Mr. Hager's affidavit was seriously inadequate" and "did not comply with the duty owed by the Company to make full and frank disclosure of all material facts".

He added: "I should make it clear at this point that the issue is not whether Mr. Hager was entitled to the sum of $150,000 by way of a severance payment; the issue is whether the fact of his attempted withdrawal of virtually the entirety of the funds in the Company's account was a matter which should have been brought to the attention of the Court at the time of the original application as being material.

"In my view the answer to that question is clearly yes; the matters in question are plainly material. It is not only that Mr. Hager had sought to remove virtually all the funds from the Company's account, although I do think that that alone is material.

"What is more critical to my mind is that Mr. Hager had said in his affidavit, 'It is certainly not my desire to have unfettered access to the Account', when that was exactly what his intention had been just a few days previously.

"Even if he had changed his mind, it was incumbent upon him to set out the true position in full. It also seems to me that the timeline is such that Mr. Hager must have had concerns that the effect of the SEC action in the United States was such that the Company's account in Bermuda would likely itself be the subject of some action.

"Yet his affidavit referred to the actions of the SEC within the United States as if they were nothing whatsoever to do with Bermuda. It seems to me that Mr. Hager's haste in presenting the substantial cheque in his favour is inconsistent with his position that the SEC action within the United States did not or would not affect the Company in Bermuda."

The judge also indicated he believed that Mr. Hager had misled the court by claiming that Founding Partners required funds to pay what he referred to in his affidavit as "employees" when, in reality, Mr. Hager was the sole employee.

The SEC stated in a press release on April 23 that Mr. Gunlicks and Founding Partners "misrepresented to investors that their primary fund loaned money to two companies that purchased primarily short-term, highly liquid account receivables that fully secured the loans.

"The companies instead purchased account receivables that were longer-term, less liquid, and much riskier in nature. The complaint also alleges that Gunlicks and Founding Partners solicited new investors for their primary fund without disclosing that the fund was facing significant redemption requests.

"The SEC also charged Gunlicks and Founding Partners with misusing fund assets to pay personnel expenses, and misrepresenting that its funds had audited financial statements for 2007 when they did not."

Under a settlement, Founding Partners Capital Management Company agreed to a censure, to disgorge $182,244 to the SEC, pay $100,000 to the US Treasury, and to "send a copy of this Order and a cover letter in a form acceptable to the staff of the Commission by certified mail, return receipt requested to all current and prospective clients as well as any investors and any potential investors in any Founding Partners-advised hedge funds for a period of one year after the date of the Order".

The company and Gunlicks also agreed to cease and desist from future violations of the Securities Act.

Founding Partners Capital (Bermuda) Ltd. was incorporated in Bermuda as Stewards & Partners Ltd. on December 20, 1999. According to a court filing in Florida, the company paid Mr. Hager compensation of $275,000 in 2006 and $325,000 in 2007.