How Many Yachts Can John Devaney Water-Ski Behind?

He could not have been more mistaken, a fact borne out by the recent action in the ABX, which has been teetering around record lows. One senior asset-backed trader noted that Devaney was not alone in his thinking. Leverage was being offered freely to investors, which made it possible to ratchet up the return on winning investments -- and the losses on losers -- by 10 or 20 times.

United has claimed that the fund will remain open and that it has ample liquidity, but the offloading of Devaney's personal assets sends a different message.

Devaney has about $100 million of his family's own money tied up in the funds, according to published reports. Smoothing out this situation is on the forefront of his mind as well as his wealthy clients.

The ostentatious trader, known for throwing rock-star parties and hiring bands such as the Counting Crows and comedians like Jay Leno to entertain clients and friends, cut his teeth at small brokerage firm Capital International Securities Group. He has had big-league aspirations, both political and professional. Devaney helped to make a bit of a name for himself by trading in esoteric asset-backed securities and generating big returns based of the collapse of Long Term Capital Management. He formed United Capital in 1999 and has built his net worth up to around $250 million, according to II.

Devaney has contributed big sums of money to the Republican party and once invited Senate majority leader Bill Frist on his yacht. By winning a charity auction, the United Capital chief also had an opportunity to get an audience with Omaha investment guru Warren Buffett -- a man whose success he'd like to emulate.

The troubles with Horizon might hinder Devaney's plans, but Wall Street money managers have come back from worse.

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