Stanford moneyman knew it was fraud (Biden family connected to $7B offshore Ponzi)

Thanks Liz, kcvl, proxy_user.

With $250M (average of $200M-$300M) of actual cash, $1.5B under management would represent 6:1 leverage, which is somewhat high for a conservative fund FoF, but not too bad compared with more aggressive hedge funds. Keep in mind that regular returns on investments, in absence of leverage, are quite small - it's usually the leverage that gives the typical outperformance needed to attract the capital to hedge funds.

If Park had deleveraged the fund down to $500M under management (i.e., to leverage of 2:1 ratio) just before or while in process of selling the fund to Biden's son and brother (who wanted to get out of lobbying business before Joe started to run for President) then both the size of the fund and the [deleveraged] returns of the fund at that point would be much smaller than he had previously advertized.

It does seem that the numnber of employees at the time of actual sale has been downsized as well (from 28, including international offices, to 6-10 with no offshore branches), so the Bidens bought into a smaller fund than originally expected, but that is simply a matter of price and due diligence...

It doesn't quite seem eveident from the facts stated that there was a fraudulent sale or misrepresentation on the part of James Park (e.g., Bidens could easily lever up from 2x to 6x to get the [potentially higher] returns). It's also possible that Bidens wanted or could only afford to buy a smaller fund , and asked Park to downsize the firm before buying it.

Claiming that Parks was an addict or absentee is non-sequitur, I don't think they had a "moral clause" in their purchase or his consulting agreement, and even if... so what?

It's obvious that Bidens want to blame Parks for their lack of DD and/or future dealings with several unsavory firms and individuals (Ponta Negra, Portus Alternative Asset Management, Onyx Capital / Jeff Schneider, Stanford etc.) at least two of which were engaged in Ponzi scheme and boiler room operations.

It seems that Bidens were, at a minimum, extremely sloppy with their due diligence (DD) or/and happily dealing with unsavory businesses on regular basis, not at all worried about "sweating the small stuff".

John Hempton of Bronte Capital (Australian-US capital management firm) wrote, on his blog in May of 2009, a long exposé of Paradigm HoHF, which gives a lot more details about Paradigm's tales of woe, and was trying, as he might, to exonerate Bidens' involvement, but leaves most questions about Hunter's and his uncle's "careers" at Paradigm Global unanswered:

From

< snip > ..... Jeff Schneider has a past which would raise eyebrows in most people doing a due diligence. He was "allowed to resign" from Merrill Lynch after allegedly being party to fraud by foreigners. In that case he denies guilt. He was sacked from CIBC, fined and given a 90 day industry suspension for allegedly defrauding CIBC's bonus system. In that case he neither accepted nor denied guilt but accepted the fines. You can find the details in his FINRA broker registration statement.
Anyway Jeff Schneider was a full time employee of Paradigm Global from 2004 to 2007 or 2008 (his FINRA regulatory records say Feb 2008 but Felix Salmon gives a different date). After that he worked for other firms, notably Puritan Securities. He also set up Onyx — but his FINRA record states that was working at Onyx only from March 2009 though other records suggest he established Onyx much earlier. I have an email from Ponta Negra dated June 2008 giving Schneider an email at Onyx. The FINRA CV (compiled by Schneider) is thus false.
The decision to allow Schneider to cease being a full time employee but to maintain an office within Paradigm Global's office and to continue to state in some marketing documents that he is an employee was made when the Bidens controlled Paradigm.
Felix Salmon is characteristically blunt about Onyx and Schneider. He describes it as the hedge fund equivalent of a chop shop.
That said — it was probably Onyx that turned Ponta Negra into investigators. Because Onyx is largely based in Austin Texas the Texas division of the SEC is taking the Ponta Negra case.
Onyx distributed other dodgy product — most notably the head of investor relations at Onyx (Justin Hare) was also a full time sales employee of Stanford. ..... < snip >
..... Financial institutions are fundamentally based on trust. If people do not trust you then you do not have a business. The Stanford relationship was the second time that Paradigm had lent its name to a large-scale ponzi (the first being Portus). Remember that Paradigm — being a fund of funds — is meant to be an expert in due diligence. And they failed. Badly. ..... < snip >

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