Tuesday, April 28, 2009

Biden Son and Brother Near Epicenter of Two Ponzi Schemes

It's now public, Francesco Rusciano of Ponta Negra has formally had his assets frozen by a Federal Judge at the request of the SEC.

"Rusciano went to great lengths to deceive investors, and the SEC is committed to ensuring that money managers who provide inaccurate information to investors and fail to uphold their fiduciary duties are held responsible for their misconduct," said Rose Romero, Director of the SEC's Fort Worth Regional Office.

Back in March, as a blind item, I reported that this was likely to come down:

Very Suspicious Trading...

...coming out of a New York based hedge fund. They report no monthly losses in two years of currency trading. Such perfecto trading has not been seen since Hillary Clinton did it in cattle futures.

They appear to have offices, or at least a mailing address, on Fifth Avenue in a building once owned by the Shah of Iran's Pahlavi Foundation. Notorious tenants have included: Marc Rich and Ivan Boesky, though there is zero indication that they have any involvement in what appears to be a Ponzi Scheme.

This one is about to break wide open.
What I didn't know at the time was that the vice-president's son and brother are playing cameo roles in this saga.

John Hempton of Bronte Capital is doing the leg work on this one:

The address given in the second Ponta Negra marketing document is 17th Floor, 650 Fifth Avenue New York. I can’t find any reference to Ponta Negra there – but there is a fund-of-hedge-funds based there. It is Paradigm Global Advisors and they manage roughly 270 million dollars according to the Wall Street Journal and 500 million on some other estimates I have seen.

Now Paradigm is a name that will ring a few bells. The firm is owned by Hunter and
James Biden. Hunter is Vice President Joe Biden’s son and James is the Vice President’s brother...

Paradigm Global does not have an entirely pristine reputation. Here is a Wall Street Journal article about a fund that they co-branded with Stanford Financial (click here).

I copied the picture from that WSJ article.

According to the WSJ article Paradigm claims that the Bidens never met or communicated with Mr Stanford. I believe them. They lent the name Paradigm to
the Paradigm Stanford Capital Management Core Alternative Fund without ever having met the principals of Stanford. Such is the standard of due diligence on Wall Street.

I was worried at first that Ponta Negra might be a legitimate fund headquartered in another cubicle on the 17th Floor of 650 Fifth Avenue. It turns out that there are several funds also HQ'd there. Paradigm it seems does all the signage on the floor – but once you get past the couple of Paradigm people on the front desk you find several doors behind which reside several hedge funds – a hedge fund hotel if you want. Most of the offices were empty mid-morning – which was very surprising. These funds are largely marketed by Paradigm.

Still there could be a fund (Ponta Negra) independent of Paradigm on the 17th floor. There could be – they too would need to employ a Jeffrey Schneider as a marketing agent. To quote the Wall Street Journal story:

A Paradigm marketer, Jeffrey Schneider, confirmed accounts provided by others that he brought in the Stanford business. Stanford would bring clients to the fund and Paradigm would manage it, according to Mr. LoPresti. The fund is mentioned on the Web site of a Stanford entity called Stanford Trust Co. as one of its "investment management strategies."

Ok – by this point you should at least be open to the possibility that the Vice President’s son and brother employ someone who uses the good Biden name
and a stolen client list to market Ponzi schemes.

There is no allegation here that the Bidens are involved. Just that their standard of due diligence is low. Very low.

The Stanford that Hempton is referring to is this one.

As I have said many times, the bad guys always try to get near centers of power. Joe Biden was a very powerful Senator when Stanford and Rusciano sought to do business with his son and brother.

It appears that the most likely explanation for the Bidens' possible involvement with two bad guys is that they are clueless about finance, probably set the business up, in part, to trade off of the Senator's power, and never had a clue as to the types of bad guys that would circle around to give the appearance of being close to such power.

1 comment:

  1. Joe Biden needs to take a mental health leave from his office and take Hunter and James with him.
    Bu Bye