Fortress Fund Review

Fortress Fund started in 1998 as a private equity firm. Wesley R. Edens, a former partner at BlackRock, Rob Kauffman, a managing director at UBS, and Randal A. Nardone, also a managing director at UBS, founded it. They began in New York City but expanded quickly. They added hedge funds, real estate investments, and debt securities. These were managed by Michael Novogratz and Pete Briger, both former partners at Goldman Sachs. You might have seen recommendations for the Fortress Fund on social media. This might make you wonder if it’s safe. Let’s take a detailed look at the Fortress Fund to see if it’s secure or a scam.

🏢 Headquarters	New York, United States
🗺️ Company Name	Fortress Investment Group LLC
💻 Regulatory Status:	No Regulation
🗺️ Type of License	No license
💰 Should I trade with it	No (We don’t recommend)
⭐ Scope of Business	Suspicious

What is Fortress Fund?

Fortress Fund is a company that manages investments. It’s based in New York City. Wes Edens, Rob Kauffman, and Randal Nardone started Fortress in 1998. They started by investing in private companies. In February 2007, Fortress became the first big investment firm in the US to be traded on the New York Stock Exchange (NYSE). In December 2017, SoftBank Group bought all of Fortress. After that, Fortress stopped being traded publicly and became a private company again.

As of June 30, 2023, Fortress manages $44.7 billion in assets for over 1,900 clients worldwide. These clients include big organizations and private investors. Fortress invests in different things like loans, real estate, and private companies. In May 2023, Mubadala Investment Co agreed to buy most of Fortress from Softbank. They didn’t say how much they paid.

Is Fortress Fund safe or a scam?

Fortress Fund isn’t a trusted broker because it isn’t regulated by a financial authority with strict rules. We suggest opening an account only with brokers overseen by a top-tier and strict regulator. However, being regulated isn’t enough to ensure your money’s safety. The regulator that oversees the broker matters a lot.

Fortress Fund Controversies

Intrawest late payment & Olympic village funds

Fortress Fund was the main lender to Millennium Development Group for building the $875 million athlete’s village for the 2010 Winter Olympics in Southeast False Creek, Vancouver, British Columbia. In September 2008, Fortress Fund faced financial problems and couldn’t provide more money to Millennium. Because of this, the City of Vancouver had to pay around $450 million to finish the project on time for the Olympics. The City asked for permission from the Province of BC to borrow more money to finish the project, and they got it. They finished building the village in November 2009.

Just before the 2010 Winter Olympics, Fortress didn’t pay back its loan for buying out Intrawest. Because of this, Intrawest had to sell some of its resorts in 2009 and 2010 to pay its debts. After the Olympics, Fortress Fund became the owner of the village.

VLSI Technology LLC & INVT SPE LLC

VLSI Technology LLC and INVT SPE LLC are companies that belong to investment funds managed by Fortress. They have filed many lawsuits against Apple, Intel, HTC, ZTE, and other telecommunications companies. In 2019, VLSI Technology LLC claimed that Intel’s SpeedStep technology, introduced in 2005, violated a patent it acquired. At the same time, VLSI also used its patents against various other Intel products and won two jury verdicts totaling over $3 billion. INVT SPE LLC was given 740 telecommunications patents originally filed by Panasonic after funds managed by Fortress Fund bought assets previously owned by Inventergy Global, Inc.

Labrador Diagnostics

Labrador Diagnostics is a company that owns patents previously held by Theranos. On March 9, 2020, a company owned by funds managed by Fortress Fund, through its non-operating subsidiary Labrador Diagnostics, claimed that BioFire’s FilmArray technology is using its patents without permission.

However, on March 3, 2020, the Wall Street Journal published an article saying that bioMérieux, another company, was working on two diagnostic tests for COVID-19. After the lawsuit was filed, BioMérieux announced that BioFire, a subsidiary, was developing tests to detect SARS-CoV-2.

Following this announcement, Labrador Diagnostics issued a statement saying it didn’t know BioFire was working on COVID-19 tests when it filed the lawsuit. Fortress Fund, the company behind Labrador, then said it would allow both BioFire and others to use its technology in COVID-19 tests without having to pay royalties.

Manwin Investment

Fortress made an investment in Manwin Company.

Fortress Fund Acquisitions

In 2006, funds managed by Fortress bought the Canadian ski resort company Intrawest. Intrawest was the biggest ski resort operator in North America. They also ran luxury adventure travel brands like Abercrombie & Kent, which was sold in August 2016.

In November 2006, RailAmerica said a fund managed by Fortress would buy the company for $16.35 per share, which was 32% more than its value. The deal finished in February 2007. Later, Fortress sold RailAmerica through an initial public offering in October 2009.

In May 2007, Florida East Coast Industries (FECI), the parent of Florida East Coast Railway (FEC), announced that a fund managed by Fortress would buy FECI for $3.5 billion. The Surface Transportation Board approved this in September 2007. Even though RailAmerica operated FEC for a while, they never merged. After the RailAmerica IPO, Fortress kept FEC. Florida East Coast Railway was sold to a Mexican transportation company, GMéxico Transportes S.A. de C.V. (GMXT), which is part of Grupo Mexico, in 2017.

In June 2007, Fortress announced that it would team up with Centerbridge Partners to buy Penn National Gaming, which runs casinos and horse racing spots, for $6.1 billion. Shareholders of Penn National would get $67 in cash for each share they owned. In July 2008, Fortress decided not to go through with the deal because of the uncertain economy at the time.

As per the end of the deal, Penn National got $1.475 billion. This included a breakup fee of $225 million and a $1.25 billion loan without interest from Fortress, Centerbridge, Wachovia, and Deutsche Bank. As part of the deal, Wesley Edens, co-chairman of Fortress, joined Penn National’s board.

Fortress has made some of its companies public, like Aircastle Ltd., Brookdale Senior Living Inc., GAGFAH, and RailAmerica, Inc.

Fortress admitted to losing $125 million by buying fraudulent promissory notes from Marc Dreier, who was running a Ponzi scheme. Fortress sued the law firm Dechert to try to get back the money they lost. The lawsuit was filed in a New York state court, claiming Dechert gave out a “false” legal opinion letter that Dreier used to scam Fortress.

Fortress’s private equity investment portfolio includes these companies: Aircastle Limited, Alea Group Holdings (Bermuda) Ltd., AMRESCO, Boxclever, Capstead Mortgage Corporation, CW Financial Services, Eurocastle Investment Limited, Flagler, Florida East Coast Railway, GAGFAH, GateHouse Media, Inc., Global Signal, Inc., Green Tree Servicing LLC, Holiday Retirement, Intrawest, Italfondiario, Kramer Junction, Mapeley Limited, MBS Holdings, MS Hub, Nationstar Mortgage LLC, Penn National Gaming, Inc., Prime Retail, RailAmerica, RESG, Seacastle Inc., Simon Storage, Springleaf Financial, Umami Burger, and IPCom GmbH & Co. KG.

In January 2014, Fortress won the bid for the Montreal, Maine, and Atlantic Railway, which went bankrupt after a train accident in Lac-Mégantic, Quebec, in July 2013. The accident, where a train carrying crude oil derailed and caused significant damage and 47 deaths, led to the bankruptcy of the railway line.

John E. Giles of Great Lakes Partners estimated in March 2014 that it would cost $10–$20 million over three years to repair the line. Currently, it’s not safe to transport oil or other dangerous goods on it due to its poor condition. Fortress rebranded the railway as the Central Maine and Quebec Railway. The sale was finalized in May 2014 for $15.85 million.

In October 2014, it was reported by the Birmingham Business Journal that Fortress bought the Inverness Corners retail center. Fortress Fund is also the parent company of Mystays hotels and resorts in Japan.

In April 2024, Fortress bought the UK discount retailer Poundstretcher, along with its sister discount chain Bargain Buys, which has 60 stores. This acquisition added to Fortress’s other UK businesses, Majestic Wine and Punch Pubs.

Conclusion

In conclusion, the Fortress Fund isn’t regulated by a financial authority, so it’s not a safe choice. The controversies around Fortress, like the Intrawest Olympic Village and patent lawsuits, make people worry about how it operates. Although it has made successful investments like Intrawest and RailAmerica, it has also lost a lot of money, like with Marc Dreier’s Ponzi scheme. Fortress keeps growing with recent acquisitions like Poundstretcher, but because it’s not regulated and has had problems in the past, it’s smart to be careful when thinking about investing in it.

FAQs

What is the Fortress Fund?

Fortress Fund is a company in New York City that manages money for people who want to invest.

Is Fortress Fund safe, legit, or a scam?

No, the Fortress Fund is not safe and trustworthy. It’s a scam because it’s not regulated by a financial authority that has strict rules.

What companies has the Fortress Fund invested in?

Fortress Fund has invested in companies like Intrawest, RailAmerica, and Florida East Coast Industries.

What companies has Fortress Fund recently bought?

Fortress Fund recently bought the UK discount retailer Poundstretcher and its sister chain Bargain Buys in April 2024.