Is Biden Associated with a Hedge Fund Scandal? 20 comments
-
Font Size:
-
Print
- TweetThis
We're always happy to discover something rotten in the state of capital markets. We are even happier when others dig independently and come up with their own startling conclusions.
Last night, we were very happy. John Hempton, who writes the insightful blog Bronte Capital, has done some amazing dot connecting in what, if true, and not swept promptly under the carpet by the powers that be, could expose a hedge fund scandal that could rival the Madoff fiasco, for the simple reason that it implicates none other than Barak Obama's right hand man: Joe Biden.
The fund in question is Paradigm Capital, a fund of funds that is controlled by Hunter and James Biden, the VP's son and brother, respectively.
The full story is quite intricate but very much worth it. In putting the facts together, Hempton had a temporary brush in with "the adversary's" legal counsel, only the be vindicated when his initial subject, Ponte Negra Capital, ended up having its assets formally frozen by the SEC. But it does not end there. As Hempton lays it out best:
Firstly the [Paradigm] business was not started by the Bidens – it was purchased by them. It was started by Dr James Park. When the Bidens purchased the business they believed it to have 1.5 billion of funds under management. This little section from an affidavit signed by James Biden (the VP’s brother) is revealing. The affidavit is here.
(a). The Paradigm Hedge Funds had only between two and three hundred million dollars under management, which were leveraged to over five hundred million, not the more than $1.5 billion under management represented to us by Lotito and Fasciana.
(b) The returns on the Paradigm Hedge Funds were not as represented to us by Lotito and Fasciana; and (with editing)
(d). The primary manager of the funds, Dr. James Park, had an apparent substance abuse problem and had been an absentee manager for several years...
Now please put this in perspective. The Bidens – mostly through failure to do proper due diligence – seem to have wound up in control of a fund of hedge funds which they claim (in sworn affidavit) that
- Had less than a fifth the funds under management that they represented to their customers,
- Had misrepresented their returns and
- Had a primary manager who had “an apparent substance abuse problem”.
Now if you were told a fund manager only had a fifth the funds that he represented to the world, had misrepresented his returns and had a primary manager with a substance abuse problem what you say it is?
Whatever – it quacks.
Now this affidavit was signed 13 April 2007. I presume it is the truth otherwise James Biden is guilty of perjury.
The affidavit is signed a few months after Hunter Biden resigned as the CEO of Paradigm Global – a position he took up in late 2006.
Now I am going to give you one more detail. In 2006 Paradigm represented that they had 28 staff. They represented that they had offices in multiple cities including a largish office in New York on Fifth Avenue. I have uploaded a few of their marketing documents here and here and here.
Two hundred to three hundred million in funds under management would represent less than 5 million in revenue and probably less than 3 million after any third party costs. Most funds of funds of that period took a percentage of the performance fees – and given the performance of the funds the revenue would have been less than 1% of net funds under management however Paradigm's fee structure was somewhat higher suggesting revenue about 5 million per annum.
With 28 staff mostly in New York and (according to this marketing document) with representative offices in Los Angeles, Monte Carlo and Tokyo you can’t make this business work very well.
Of course you could make it work if all the staff members were paid well under $70 thousand dollars (which does not seem likely in finance in New York, Los Angeles, Tokyo and Monte Carlo). You could also make it work if you subsidized it.
None of this would allow the senior manager to fail to show at the office and indulge a drug habit (as sworn by James Biden).
Now go back and look at this marketing document. It contains a few staff members on the marketing side. Alla Babikova is still given as an email contact on the Paradigm website. She is also listed on this document as working for Onyx Capital. Onyx was the marketer of the allegedly fraudulent Ponta Negra hedge fund. Onyx – or at least staff that worked for Onyx – were also marketers of Stanford.
Jeffrey Schneider is the contact on this document from the allegedly fraudulent Ponta Negra fund. He was the founder of Onyx.
I see lots of possibilities: all of them reflect very poorly on the Bidens.
- They were and remain controllers of a fund of funds which they allege misrepresented its returns and yet which they kept operational.
- They were and remain controllers of a fund of funds which houses an alleged fraud in its offices (Ponta Negra).
- They were and remain controllers of a fund of funds which employed a marketing organisation (Onyx) which was associated with distributing alleged frauds (Ponta Negra and Stanford).
- They were and remain controllers of a fund that claimed to have 28 staff many of whom are difficult to trace and where the revenue to fund those staff did not obviously exist. This suggests that either the staff were not paid, did not exist or (more sinisterly) they were paid by stealing from the small amount of funds under management. You could only steal the client money if the asset custody safeguards were not robust. There is an audit statement on the SEC files qualified as to the robustness of these protections – however there is no evidence that the lack of robustness was exploited.
All of this was done from the 17th Floor of 650 Fifth Avenue New York. There are a few other things housed on that floor and you need to walk past Paradigm’s desk to get to them.
There is much more to this story, and for the whole sequence please go here, here, here, here and here, in that order. Makes for one hell of a late night thriller, and if the author is correct, Vice President Biden, by implication, could soon find himself in the shoes of Walter Noel of Fairfield Greenwich.
Regardless, it is only a matter of time before Joe Biden ends up on the list of people in which the president has 100% confidence.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 20 comments:
If this were the ex VP, we'd be reading about this on the front page of the NYT.
i thought all the tax cheats were really innocent. i thought it was innocent mistakes, or oversights or they just forgot. i was just relieved to know the irs was so understanding and lenient.
maybe they should go back and read the fate of musolini(sp?).
Must not care I suppose.
Where are all the "investigative" reporters?
If the testimony is true it demonstrates a colossal lack of due diligence. Almost seems like they hired someone to perform due diligence who was in on the scam or the testimony is a crock.
You cannot always blame the father for and adult son's indiscretions.
eye-on-washington.blog...
Bill Clinton funneled money through Hillary at Rose Law.
Reagan gave million dollar speaches in Japan after he left office.
W got a sweetheart deal on the Texas Rangers.
Obama got a huge book deal when nobody had ever heard of him.
I'm sure that "everyguy Joe" earned that giant compound in Delaware from honest public servant money. He wouldn't use his son and brother. Would he?
Maybe that will happen, but I doubt it.
So, those politicos make out O.K. It takes a special kind of personality to lead the free world- something akin to an egomaniacal sociopath probably. Those guys aren't in it for money alone- more for the power!
On Apr 30 12:20 PM conceptwizard wrote:
> If you have to be corrupt to be a political or financial player,
> doesn't that mean that we promote a corrupt system. And if the Political/
> Financial system is corrupt how then can we have faith and confidence
> in our leadership and in our investment markets. I mean who would
> want a job for the meager salaries they are paid if their isn't another
> shadow or spin-off revenue stream attached. I mean $250000 for a
> president less for a vice-president, it can't all be about the glory
> or doing well for mankind. Why would you do that? Obama said it himself
> yesterday at the town hall meeting " We have to make it atractive
> financially to make people want to be teachers". Refering to bringing
> in the best and the brightest., would this not be expected as a high
> ranking official? Why be a President for $250,000 per year if you
> can be a CEO for 25 million. Does not make sense.
On Apr 30 09:56 AM user369285 wrote:
> If true, there won't be any "transparency" here. It will be waffled
> and wiggled out of by a big spin.
> Where are all the "investigative" reporters?
I bought my house at the top of the market in 2005. It was a bad investment decision. When I realized I overpaid, I didn't immediately burn the house down. That doesn't make my mother or my sister a crook.
As I always said during the Monica thing - "if this is the worst you can find on the guy then he must be pretty clean for a politician"
Joe Biden was busy at the time being a senator and a presidential candidate; he's not responsible for tracking his brother's business in any case.
When W. was running for/sitting as president, was it relevant that his brother Neil was implicated in the S&L scandal?
I don't assume that Joe is completely "clean"--what politician ever is?-- but this is too tangential to stick.
the hearings were over clinton giving supercomputer tech (icbm tageting ability) to a hostile govt. in exchange for illegal campaign donations. harold ickes must have had dirt on thompson because when bubba was cornered thompson allowed ickes to slip by. then the whole thing was diverted to recreation in the oval office. it was a sham/scam as usual.
sadly the u.s. public has the attention span of a retared gnat and in the freakshow over monica everyone lost site of the treason.
i'm just glad that we established perjury is o.k.. i mean i guess if the leader of the free world gets to do it, it isn't a crime anymore?
iran-contra deserves a closer look also. at the time we were using iran against iraq. that one is debatable. there were many odd moves in the geo-chess game with russia.
however, one should not be held accountable for crimes of a relative unless involved in some way.
On Apr 30 02:47 PM stockferret wrote:
> Really? Thats it? Not exactly Iran-Contra.
>
> I bought my house at the top of the market in 2005. It was a bad
> investment decision. When I realized I overpaid, I didn't immediately
> burn the house down. That doesn't make my mother or my sister a crook.
>
>
> As I always said during the Monica thing - "if this is the worst
> you can find on the guy then he must be pretty clean for a politician"
You endlessly point the finger at "Corruption" with its ubiquitous capital "C" but that word and state has been around a long time. Kind of like "Conspiracy". There's nothing new in pointing out that political figures and/or their minions and relatives are corrupt. They have to be. They opted for public office instead of filthy lucre. So they're corrupt? That's news? How else do you think they make up the difference in raw cash? As servitors of the hand that rocks the capital, they're often at the mercy of a short-lived spiel in office to make what they can when they can.
I've read a few of your articles and I think you're interesting, but baby, baby, do you have one big-a$$ chip on your shoulder.
Listen Tyler, if we had real levels of corruption here that were visible to the naked analytic eye, we'd all be rich as monkeys in spades. That's because corruption is predictable. If we could accurately plot the moves of corrupt government, we'd never put a foot wrong. If there was really a "conspiracy" that we could unveil, we wouldn't talk about it, we'd get rich off of our insights. It's the moral fellows you have to watch out for. They're the wild card that causes all the chaos in a pretty neat algorithm.
Now tell me, do your insights make you richer every day or do you languish in the state of finger-pointing just for the sake of finger-pointing?
I don't care for Obama. But then I don't care for Clinton, Biden, George 1 and 2, Cheney or Reagan. All I care about is using the predictable machinery of greedy men for gain, so if your dirt-digging helps you feather your nest or mine... cool!
Don't you want to be fantastically rich?
Okay. Maybe not (sigh). Maybe you're so fantastically rich that you siphon yachts out of a trust fund and luxuriate in bouts of dyspepsia and maudlin existentialism (double sigh). But corruption lives and waves its rotten flag at every level of society. That's what makes society predictable. So predict something based on your insights and show me the way to the money.
Man, if you can do that, I swear I'll be your slave forever. (Not that you'd want me: I'm lazy and sloppy).
Enough with the corruption.
Geez, one would think you don't like raw capitalism....
You have this one choice:
Use corruption or let corruption use you.
On Apr 30 03:30 PM fireball wrote:
> stockferret
> the hearings were over clinton giving supercomputer tech (icbm tageting
> ability) to a hostile govt. in exchange for illegal campaign donations.
> harold ickes must have had dirt on thompson because when bubba was
> cornered thompson allowed ickes to slip by. then the whole thing
> was diverted to recreation in the oval office. it was a sham/scam
> as usual.
> sadly the u.s. public has the attention span of a retared gnat and
> in the freakshow over monica everyone lost site of the treason.<br/>i'm
> just glad that we established perjury is o.k.. i mean i guess if
> the leader of the free world gets to do it, it isn't a crime anymore?
>
> iran-contra deserves a closer look also. at the time we were using
> iran against iraq. that one is debatable. there were many odd moves
> in the geo-chess game with russia.
> however, one should not be held accountable for crimes of a relative
> unless involved in some way.