Everest founder withdrew $16m with weeks to go

Accounts from the Everest Babcock & Brown Income Fund show Mr Reid cut his stake in the investment fund from 18.5 million units to 2.1 million units last financial year, before the fund froze redemptions in October.

The transaction is set to anger the largely Sydney-based investors who were enticed into Everest's array of now imploding funds.

Everest and Mr Reid are already being sued by the largest investor in the income fund, Joe Ross, a Sydney anaesthetist who invested $50 million.

The 71-year-old Dr Ross claims he was misled by Mr Reid because he only agreed to put a second $25 million tranche into the income fund when he was promised he would be readily able to redeem his units.

Last financial year, when Everest chief executive Mr Reid made his withdrawal, a further $45 million was injected into the fund by other investors, including Dr Ross.

Mr Reid failed to return phone calls yesterday and his office failed to provide an explanation for the reduction in his stake.

Everest, which was formerly backed by the collapsed Babcock & Brown, froze redemptions from the income fund before deciding to wind itself down in January.

It has so far returned 53? for every dollar invested and has promised another 24? in the next two years.

"In light of the market environment and the desire of a majority of the fund's investors to realise liquidity in their investment, the responsible entity of the fund decided that it was in the best interests of all investors to suspend redemptions payments and terminate the fund to enable it to be wound up in an orderly manner," the fund stated in its full-year accounts.

But this has not shielded the many investors who took out margin loans to buy into the fund.

In another point set to inflame investors, several Everest funds invested straight into vehicles managed by its sponsor, Babcock & Brown. The income fund, which lost $20.6 million last financial year, wrote down 75 per cent of its investments in three Babcock-aligned vehicles in the period. This included the $2 million hit taken on the residential mortgage-backed securities provider Seiza, the $7 million hit on rail lessor BBRX One and a $4.1 million write-down on Babcock & Brown Infrastructure Port Acquisitions.

The concerns over the income fund have been echoed in some of Everest's other funds, including its Absolute Return Fund.

Several investors who have contacted BusinessDay, who are still stuck in Everest funds, have expressed concerns over redemptions made from funds before they hit trouble.

Mr Reid has also faced criticism over the $320,250 in bonuses he bagged on top of his $500,000 base salary last year despite Everest's $306 million loss.