Amaranth Advisors the collapsing $9.5 billion Greenwich, Conn., hedge fund - also was a high roller in the crime-infested penny stock market, dumping millions into risky microcap companies and so-called blind pool offerings. In December of last year, Amaranth lent $5 million to a Chinese fertilizer company, Bodisen Biotech, being promoted to investors by a broker named Benjamin Wei, who left the securities industry after being fined and suspended for allegedly conducting side business with his firm’s clients secretly. Last April, Amaranth converted the loan into 133,333 shares of stock at $7.50 per share and Bodisen filed the necessary paperwork to register and sell the block on Amaranth’s behalf. Yet as of last month, no sale had occurred and the shares apparently continue to sit in Amaranth’s portfolio. Until late May, Amaranth was also a controlling 5.6 percent shareholder in an affiliated Bodisen company called China Natural Gas Inc., which trades at about $3 per share on the Over The Counter market. The Chinese company began life as a Canadian penny stock called Bullet Environmental Systems, headed by a man named Ross Wilmot, a longtime investment world associate of a notorious one-time European boiler room operator named Altaf Nazerali. Recent SEC filings show that Amaranth is also a big-time player in the speculative world of blind pool investing. In blind pools, investors buy shares in a startup company that uses the proceeds to invest in something attractive if an opportunity presents itself. At least one of these blind pools - Argyle Security Acquisition Corp. - has recently been delisted by Nasdaq and now trades on the OTC market. SEC filings indicate that Amaranth owned 9.4 percent of its stock until at least last June.

Source New York Post