09/28/2008 05:12 am ET | Updated May 25, 2011

Russian Roulette: Hedge Fund Falls Victim To Fraud Ring

Hedge funds have reputations for being shrouded in mystery, but a London-based fund that specializes in investing in Russia finds itself at the center of a story that's a downright thriller.

Hermitage Capital Management, a $3 billion fund that also invests in emerging markets, recently put out an investor letter that reads more like a spy novel than an update to investors about performance.

Indeed, the note describes police raids, fake companies and at least one murderer all connected to a twisted and complex fraud scheme hatched by thieves who stole millions from the Russian government.

Hermitage's July 23 letter, which was obtained by The Post, states that while thieves targeting the firm failed to get their hands on its assets, they succeeded in stealing millions from the Russian government by posing as Hermitage officials.

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