Positive carry. Borrow as much as you can at 5% buy bonds paying 6.5%. Works until it doesn't. Finance 101 would suggest that they check if 1.5% was enough of a spread to comensate for the risk - which it wasn't.
The primary skill of the new Ivy League ex IB HF Manager seems to be fund raising i.e. marketing not trading. If you were inventing gains and then people ask for their money back it gets kind of tricky coz the money is not really there, you know, like a Ponzi scheme. Seems that is what is happening. Used to be called "cheating" now it is probably called "entitlement".
Came from the bond sales dept, this guy, according to that article. So you're right, marketing was this guy's strength. His investors got what they paid for, in terms of investment skill.