53rd Street Ventures

53rd Street Ventures, Inc., was formed about 1976 as an investment company that took capital from shareholders and placed it in "high risk, high reward ventures." It was managed by Patricof and Company, where the Israeli-born fund manager Jonathan Ben Cnaan handled several of the firm's funds and, around 1982, made the fund's investment of 100,000 dollars in INSLAW, the software company of Bill Hamilton and Nancy Hamilton, as a "follower" investor with no negotiating role; the stake was less than one percent of the fund's portfolio and gave it about 1.2 percent of INSLAW. In 1984 management of the fund passed to Tessler and Cloherty, Inc., the firm of Daniel Tessler and his wife Patricia Cloherty, who had left Patricof and Company for the Carter administration's Small Business Administration and returned to Patricof in February 1988.¹

Tessler and Cloherty concluded that INSLAW "had serious operating difficulties," "could not meet its production obligations" and "was heavily in debt." Hamilton's affidavit in the INSLAW litigation alleged that in December 1984 Tessler tried to coerce the Hamiltons into surrendering voting control of their stock on the threat that neither 53rd Street Ventures nor Hambro, the lead investor whose partner Richard D'Amore sat on INSLAW's board, would help the company raise capital otherwise, and that Cloherty had said she "knew all about" Earl Brian's role. Tessler, Cloherty and D'Amore denied the accounts, Tessler adding that he was no relation of Allan R. Tessler of Shea & Gould, whom Hamilton had described as Brian's merger lawyer, and the special counsel Nicholas J. Bua found the allegation not credible. INSLAW filed under Chapter 11 in February 1985.¹