The Clintons' mighty morphin' Seattle-based hedge fund

The controversial former Seattle investment firm Quellos Group makes an appearance in the just-released Clinton tax returns. The Washington Post reports that the Clinton’s tax filing for 2006 discloses “an interest of an undisclosed size” by the Clintons in Quellos Alpha Engine, an investment fund headquartered in the Cayman Islands. Alpha Engine was one of a number of funds-of-funds — a bunch of separate hedge funds bundled into a single mutual fund — run by Quellos Group.

In that same year, Quellos was called before a U.S. Senate subcommittee [86K PDF] investigating abusive tax shelters. The committee’s report charged Quellos with shortchanging the Treasury by engaging in fake transactions using offshore shell companies to generate billions of dollars in capital losses.

At the time, Quellos chief executive Jeffrey Greenstein called the Senate findings “unfair, one-sided and inaccurate.” Greenstein, a University of Washington graduate, co-founded Quellos in 1994 after working for Merrill Lynch, Oppenheimer & Co. and the Chicago Board Options Exchange.

“There is no indication that the Clintons benefitted from the transactions criticized in the (Senate) report,” today’s Post story said.

Founded in 1994 as Quadra Capital Management, the firm changed its name to Quellos in 2000. Its early client list included World Bank President James Wolfensohn, Costco founder and chairman Jeffrey Brotman, and Robert Wood Johnson IV, owner of the New York Jets.

Quellos’ largest client for its tax shelter services was Haim Saban, a billionaire Hollywood television executive and producer of the Mighty Morphin Power Rangers show. Saban is a major fundraiser for Sen. Hillary Clinton.

Quellos closed its doors in 2007 after being purchased by BlackRock, a New York-based risk management firm.