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

NY POST ^ | 2/3/12 | MITCHELL J. SHIELDS

[Liz]

HOUSTON — It was a deceptive fax sent from a fake office that led R. Allen Stanford’s former finance chief to conclude that his high-flying billionaire boss was a fraud. Stanford's moneyman told a federal jury that in 1991 Stanford asked him to fly to London to fax a document from a 10-foot square cubicle to a potential client........to hide the fact that the company purportedly insuring CDs deposited in Stanford’s Antigua bank was a purely paper creation. Asked by prosecutors why he stayed in his job, Davis answered, “because I was greedy” and had earned some $14 million with Stanford.

[Liz]

"Hi there, Americans. Obama put me in charge of the trillion dollar stimulus. My son and brother are gonna help me disperse the money. "

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Offshore Fraudster had links to offshore fund run by VP Biden's relatives
Reuters on Yahoo | 2/23/09 | BY Ajay Kamalakaran

(Reuters) – A fund of offshore hedge funds run by two members of VP Joe Biden's family was marketed exclusively by offshore firms controlled by Texas financier Allen Stanford, charged by regulators with an $8 billion fraud, the Wall Street Journal said.

The Bidens $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and the offshore Stanford Financial Group entity headquartered in Antigua, and was known as the Paradigm Stanford Capital Management Core Alternative Fund, the paper said. Stanford-related offshore companies marketed the Biden fund to investors and also invested about $2.7 million of their own money in the fund, the paper said, citing a lawyer for Paradigm.

Paradigm Global Advisors is owned through a holding company by the vice president Biden's son, Hunter, and Joe Biden's brother, James, according to the WSJ. Paradigm's attorney, Marc LoPresti, who represents Hunter Biden and James Biden, as well as Paradigm, told the paper he did not know which Stanford entity invested the roughly $2.7 million. (Excerpt) Read more at news.yahoo.com ...

NOTE A lawyer for Hunter Biden and James Biden told reporters the Bidens NEVER met or communicated with Stanford. (/snicker)

[kcvl]

Firstly the 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.

http://brontecapital.blogspot.com/2009/04/economics-of-paradigm-global-alleged.html

[proxy_user]

This is typical of what someone running a long-term fraud would do when things begin to unravel. There are basically 3 choices:

1. Shut everything down and flee with as much money as possible.

2. Sell the business to someone who is a real crook, who is willing to risk a long jail sentence to do the final looting.

3. Sell the business to a naive sucker, who will be left holding the bag.

Dr Park appears to have chosen option 3.

[Liz]

Golly——what a ringing defense of the Bidens——and on FR, no less.....never thought I’d see the day............

Course, all of that is true-—and it sure looks good in print.......and in court.

But, let’s keep in mind, so often, businesses are bought, and conducted, for less than obvious reasons.

[ab01]

And so begins the effort to remove Biden from the ticket in 2012.

[Liz]

Nice deconstruction——but WRT to 3.——I dont think the Bidens are that naive.

The business apparently gave them what apppeared to the outside world to be a legit structure——but with crucial offshore connections——probably the only reason they signed on to buy.

[Liz]

Yeah, he’ll probably go-—but not before handing over the list of numbered accounts offshore.

[proxy_user]

I am a big fan of books on business frauds, it’s fascinating reading. They are all similar, and they all end up coming apart.

As for the Bidens, I based my estimate of their probable astuteness on the intelligence revealed in our present VP’s pronouncements.

[jersey117]

That’s exactly what is going on. Time to put Hillary on the ticket.

[bitterohiogunclinger]

“Dr Park appears to have chosen option 3.”

I would conclude that it's more likely option 2 slightly modified. There is no risk of jail when it involves an DemonRAT Senator. Won't even be an investigation. It never happened and the MSM will carry that banner for them.

[Liz]

I based my estimate of the Bidens probable astuteness on the intelligence level revealed by our present VP......

As Confuscious say...."tis far better to play-act an imbecilic idiot than to admit to committing criminal acts."

[kcvl]

I am not defending the Bidens. I posted the article that someone wrote who said James Biden is guilty of perjury.

I ddn’t write it... Follow the link provided...

[Liz]

Best to post a disclaimer upfront-—and to highlight the part(s) you want FReepers to take note of.

[ken5050]

Maybe this explains why Hunter Biden declined to run for the senate in 2010...

[Liz]

WHERE'S THE MONEY COMING FROM? Novelist Dean Koontz estimates some $80 billion went missing from the US Treasury since Ohaha took office.

The Ohahas reportedly spend thousands of their personal funds for luxury items like $45,000 bracelets, endless high-end designer clothing, posh vacation home rentals, spending like multi-millionaires... Where do they get all that money?

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Candidate Barack Obama told us on the campaign trail: " The problem is, that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents, # 43 added $4 trillion by his lonesome so that now we have over $9 trillion of debt that we are going to have to pay back, $30,000 for every man woman and child. That’s irresponsible. It’s unpatriotic."

REALITY CHECK Obama presided over the biggest political heist in US history. The Obamanations (insiders and politicians) sucked up trillions under the guise of inheriting the "Bush financial crisis."

THIS MADE ME LAUGH OUT LOUD Obama insider Rahm Emanuel "suddenly" discovered he wanted to be Chicago's mayor---the little turn went before the mics and announced his campaign "raised $10 million in just a few weeks." Rahm also controlled the US Treasury as Ohaha's COS.

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What the so-called "collapse" of the banking system wrought under Obama:

FOURTEEN TRILLION DOLLARS Behind The Real Size of the Bailout; A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street SOURCE motherjones.com
Mon Dec. 21, 2009 12:23 PM PST

The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets.

To get a sense of the size of the real $14 trillion bailout, see our chart at web site. Below, a guide to the pieces of the puzzle:

Treasury Department bailout programs (Remember that Obama's Treasury Dept was controlled by his then-COS Rahm Emanuel---a G/S lobbyist in the WH)

Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the

Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].

Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].

TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid.

Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets."

GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion ---SNIP---.

LONG READ---go to web site to read more and checkout the shocking financial charts.

SOURCE http://motherjones.com/politics/2009/12/behind-real-size-bailout

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Did any of those offshore Antigua accounts get billion dollar deposits via EFT's?

[lonestar]

Golly——what a ringing defense of the Bidens——and on FR, no less.....never thought I’d see the day............

Huh?

[Liz]

Mmmmmm.....you got that right....Hunter woud have had to undergo rigorous financial scrutiny if he ran.

[mo]

“And so begins the effort to remove Biden from the ticket in 2012.”

BINGO!!!!

BTW..any takers as to how long Bain Capital stays solvent in the absence of a Romney Presidency? and how many “big” Republican names it takes down as it goes under?

[kcvl]

Best to read before you accuse people...

[Liz]

We can’t read your mind or ascertain your intentions on the i-net.....yoiu have to tell us.

Also, reading a post like mine with tongue in cheek is a good thing.

[CutePuppy]

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 >

[CutePuppy]

The link to the Bronte Capital blog:
Paradigm Global, the Bidens and allegedly fraudulent hedge funds — a summary - BC blog, by John Hempton, 2009 May 04

[Liz]

Thanks for the link——web site does a great deconstruction......like getting an advanced degree in financial analysis without opening a book.