Controversial Private Credit Lender Winding Down Two Funds

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Fairbridge Asset Management, a private credit lender accused of running a mob-like playbook on one of its debtors, is winding down two of its funds.

Founder John Lettera and other company executives told investors that it would close Fairbridge Partners LP and Fairbridge Partners Cayman LP, Crain’s reported. The investor letter cited real estate losses, driven by rising interest rates.

The combined fund has roughly $400 million in assets, but clients have been looking to withdraw about a quarter of the fund’s value. The two funds lost roughly 4 percent of their value in September, absorbing $11 million in writedowns and $7 million in other losses.

One particular problem area for the company was New Jersey multifamily developer Charles Florio, the firm said in the letter. Florio landed $134 million for a handful of projects, but failed to refinance one of the largest planned developments, and failed to complete several.

Florio has an oral agreement in place for more financing, according to Fairbridge, but nothing in writing. He’s a controversial figure himself, playing a role in a probe that resulted in the indictment of former Paterson Mayor Joey Torres, who served time in prison after pleading guilty to a corruption charge in 2017.

Florio did not respond to a request for comment from the publication.

One person doing a victory lap over the wind-down of the two funds is Bronx developer James McManus, a former associate of the Lucchese crime family.

In May, McManus filed a $75 million federal lawsuit against Fairbridge, alleging a racketeering and fraud scheme to illegally seize his development site. The dispute centers on a $2.1 million loan for an affordable housing project, which McManus claims Fairbridge secured, then withheld capital, manufactured a default and used aggressive tactics — including extorting a $1 million payment — before moving to foreclose.

Fairbridge disputed the allegations as “utterly spurious,” maintaining that McManus defaulted in 2023. That lawsuit is pending; McManus claims to have been contacted by Securities and Exchange Commission attorneys, though the agency declined to comment.

“I’ve heard from lots of investors who have seen the action I’ve taken against Fairbridge,” McManus said in response to the Fairbridge fund letter. “That’s the lighthouse.”

— Holden Walter-Warner