Hedge Funds

Ex-hedge fund chief on suing the government: 'I don't think they want the truth to come out'

Level Global fights back in FBI battle

David Ganek's lawsuit against federal authorities alleging improper conduct that led to the shuttering of his $4 billion New York hedge fund is inching closer to a long-sought conclusion.

After Ganek and his legal team prevailed against a motion to dismiss, the government appealed.

The Level Global Investors founder told CNBC on Tuesday he's awaiting a hearing in the 2nd Circuit Court of Appeals next month.

"The case has ripened in a way that arguably was unexpected," Ganek told "Squawk Box."

"Two years ago ... most people would've said we had very little chance of surviving what was ultimately their filing of a motion to dismiss it," he added.

In February 2015, Ganek filed a complaint in U.S. District Court for the Southern District Court of New York against U.S. Attorney Preet Bharara — often referred to as the "sheriff of Wall Street" — and federal authorities involved in an FBI raid of Level Global in November 2010 and the related investigation.

Shortly after the raid, massive investor redemptions forced the closure of Level Global.

Ganek, who was ultimately never charged, wants to clear his name.

With celebrity attorney Barry Scheck and former federal Judge Nancy Gertner in his corner, Ganek argues in the case that the affidavit in support of putting Ganek on the search warrant contained "false statements" that Ganek knew about alleged insider trading at his firm. The complaint accuses Bharara and the other defendants of violating Ganke's constitutional right not to be deprived of property or reputation.

"I don't think they want the truth to come out," Ganek told CNBC. "And I think they are ... taking the legal limits to suppress the truth."

"If that office can be exposed for what I believe are serious problems and ethical issues, I think that actually has an ultimately powerful effect on the whole system," he said.

But in such a fight, Ganek said, "You need resources, you need facts and you need will."

In November 2010, in addition to Level Global, Diamondback Capital Management of Stamford, Connecticut and Loch Capital Management of Boston were also raided.

"On that day, the government raided three businesses [that] in aggregate had $10 billion of institutional assets under management. All three of the businesses were ultimately shuttered, and the requiem to that is there were zero convictions," after an appeals court in 2014 overturned the convictions of a Level Global partner and a Diamondback trader, Ganek said.

No charges were ever filed against Loch or any of its employees.

Bharara's office declined to comment.