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Biden Clan Tied To Hedge Fund Suit
While Senator Biden shares center stage at the DNC, his family is in court battling over hedge fund dealings gone awry.
August 26, 2008
In what appears to be a case of, ‘He said, he said,’ the brother and son of Senator Joe Biden of Delaware, the vice presidential choice for US presidential candidate Barack Obama, are caught up in lawsuits tied to their hedge fund dealings, according to a recent story in the Washington Post.
Senator Biden himself blamed a lack of transparency in the hedge fund and private equity pockets of the economy for sending the credit markets reeling in an interview with George Stephanopoulos last year. "They are the ones that are causing this thing to go under. And there's no...accountability. We don't know how deep this problem is. It's almost as deep in terms of dollars, not liability, as the savings and loan crisis," said Senator Biden on a special edition of "This Week With George Stephanopoulos" last August 19th.
Hunter and James Biden, the son and brother of the Senator, respectively, have been accused of fraudulent behavior with regards to a hedge fund the pair operated with another partner. The case has been unfolding before the New York State Supreme Court since 2007, while a second lawsuit was filed in June of this year.
Anthony Lotito, the former partner of the fund, which is dubbed Paradigm Companies, filed the first of the lawsuits and is accusing the Biden’s of swindling him out of millions of dollars and his share of the company in a corrupt deal.
The deal in question is tied to a company called LLB Holdings USA, which was created by Lotito and the Bidens and in which the partners paid some $21.3 million for a controlling interest in Paradigm. Lotito claims that there was a subsequent “secret” deal in which the Bidens, after they bought out his interest in Paradigm for an alleged low rate and at his concession, created yet another company.
The Biden’s maintain instead they were the victims of fraud by Lotito, whom they claim misrepresented his credentials in the hedge-fund industry. According to reports, Lotito lied about being a fully licensed, and accredited securities professional. They also blame Lotito for their part in hiring of a lawyer with a history of felony convictions.
The earlier lawsuit filed by Lotito alleges that Hunter Biden was hired as Paradigm’s president in 2006 solely to keep him away from lobbying activities, which allegedly the Senator feared would have interfered with his forthcoming presidential bid, according to the Washington Post story.
In the second lawsuit filed in June, Stephane Farouze is suing the Biden pair for $10 million for allegedly promising to buy him out of the hedge fund but failing to do so. Farouze currently runs fund derivatives structuring and origination at
Deutsche Bank.
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