A fund of hedge funds run by Vice President Biden’s son and brother — Hunter Biden and James Biden — was marketed exclusively by Allen Stanford’s companies, reports the Wall Street Journal.
From the paper:
The $50 million fund was jointly branded between the Bidens’ Paradigm Global Advisors LLC and a Stanford Financial Group entity and was known as the Paradigm Stanford Capital Management Core Alternative Fund. Stanford-related companies marketed the fund to investors and also invested about $2.7 million of their own money in the fund, according to a lawyer for Paradigm. Paradigm Global Advisors is owned through a holding company by the vice president’s son, Hunter, and Joe Biden’s brother, James.
The fund has offered to turn over the $2.7 million investment it received from Mr. Stanford’s firm in 2007 to a court-appointed receiver in the SEC’s civil fraud case involving Mr. Stanford, according to Paradigm’s attorney, Marc X. LoPresti. The fund terminated its relationship with Mr. Stanford’s companies after the SEC filed civil charges against them last week, Mr. LoPresti said.
Paradigm’s lawyer told the Journal that the Bidens never met or communicated with Mr. Stanford. “There is no connection between the Bidens and Allen Stanford or Stanford period, full stop,” he said. “There never was any meeting between any member of the Biden family, no phone calls, zero correspondence.”
Stanford was charged last week by the SEC with orchestrating an $8 billion investment scam. He has cultivated ties to a slew of Washington lawmakers.
A Paradigm marketer, Jeffrey Schneider, told the Journal he brought in the Stanford business.
According to Paradigm’s lawyer, companies owned by Stanford put up $2.7 million in seed money and marketed the fund. SEC records show the fund, launched in June 2007, had 104 investors with assets of $49.8 million, as of November 2008.
It’s hard to know what to make of this for now. But there seems to be more information yet to come out about the fee structure of the arrangement.
The paper reports:
Under an agreement, Stanford was entitled to share in a portion of the fund’s management and performance fees, Mr. LoPresti [Paradigm’s lawyer] said. “That’s all I’m going to say on the fee side of things,” he said.
Just what the White House needs.