Bank of America, , charged that Steel Partners "pulled off a classic 'bait and switch"

Bank of America, acting as master trustee for ACF Industries' employee benefits plan, charged that Steel Partners and its manager, Warren Lichtenstein, "pulled off a classic 'bait and switch' by stripping investors of what they had purchased and replacing it with something entirely different."ACF, a manufacturer of railcars and railcar components, and, according to the documents, affiliated with billionaire investor Carl Icahn, invested $15 million in 2005 with Steel Partners Offshore Fund Ltd, which became Steel Partners II (Offshore) Ltd.Bank of America referred calls to attorney Keith Schaitkin at Icahn Associates, who referred Reuters to the court documents.Steel Partners said it does not believe the lawsuit has any merit."We intend to vigorously contest it in court in order to protect the interests of the Partnership and all of our investors," the firm said in a statement.The court documents said that while Lichtenstein had originally promised to invest in cheaply valued small companies and put no more than 25 percent of the fund's assets into illiquid investments and special situations, he acknowledged in December that things had changed.According to the lawsuit, 38 percent of Steel's investors demanded their money back late last year in the wake of heavy losses, but Steel Partners suspended redemptions.The lawsuit said that instead of selling assets to raise cash to meet clients' demands for their money, Lichtenstein planned to turn the portfolio into a public company to deal with withdrawal notices.The lawsuit said Lichtenstein spoke with Icahn on December 24 about "his plans for the Fund and how to satisfy the redemption requests."Lichtenstein told Icahn there would be advance notice of the proposed plan and meetings with investors in early January and that no action would be taken to implement the plan until February at the earliest, according to the documents.The lawsuit also claims that by December 31, the Fund had transferred all of its investments to a non-SEC reporting 'public' shell company and that all of this had been done "without the knowledge and consent of investors."