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

Posted on 02/04/2012 2:42:00 AM PST by 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 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.

(Excerpt) Read more at ...

TOPICS: Crime/Corruption; News/Current Events; Politics/Elections
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To: Liz; ken5050; kcvl; proxy_user; All
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:


21 posted on 02/04/2012 6:18:08 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: All
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
22 posted on 02/04/2012 6:27:10 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy

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

23 posted on 02/05/2012 1:02:35 AM PST by Liz
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