The Securities and Exchange Commission (SEC) filed a lawsuit in late September against an investment firm and a former business associate of President Joe Biden’s brother, James Biden.
The SEC filed a complaint in the Southern District of Florida against Third Friday Management LLC and Michael E. Lewitt, a former business associate of James Biden, NBC News first reported in early October. Lewitt and Third Friday are accused of “fraudulent conduct and gross breaches of fiduciary duties” to their fund client and its investors.
READ THE COMPLAINT:
“Lewitt, with sole authority of the Fund, also misappropriated at least $4.7 million of investor funds for his personal use, including over $900,000 to pay a personal IRS tax lien,” the complaint alleges.
The complaint alleges Lewitt failed to disclose a change in strategy for the fund around January 2018, when the fund began to make illiquid investments in contrast with its outward-facing strategy of investing in fully liquid S&P 500 index options. (RELATED: Biden Family And Its Associates Received More Than $24 Million From Foreign Business Dealings, House Memo Shows)
Lewitt also failed to disclose his financial interests in a group of companies that invested in healthcare companies with commitments to invest in a distressed company Lewitt sent 45 loans to with money from the hedge fund, the complaint alleges.
“In addition, Lewitt failed to disclose to the Fund’s investors that he had a financial interest and partnership with a group of private affiliated companies that invested in distressed health care companies which had committed to investing $30 million to the Bankrupt Entity, and that he used Fund assets to make bridge loans to the Bankrupt Entity and other healthcare companies,” the complaint reads.
One of the relevant parties in the lawsuit is Platinum Global Health Partners LLC, a firm that invested in distressed healthcare companies and was solely managed by Lewitt in the relevant time period, according to the complaint. Platinum Global Health, Lewitt, James Biden and other parties were sued by hospital corporation Diverse Medical Management in Tennessee federal court in 2019, NBC reported.
James Biden, Lewitt and others were accused of fraud by Diverse Medical Management by allegedly stealing their business model and driving the company into insolvency, according to a copy of an amended complaint obtained by Politico. Diverse Medical Management’s business model was built around saving rural hospitals from being closed down. The lawsuit accused James Biden and Lewitt of invoking his political connections to further the alleged fraud and threaten Diverse Medical Management, Politico reported in 2019.
Lewitt, Biden and their companies filed a counterclaim against Diverse Medical Management accusing the company of failing to conduct financial due diligence after receiving short term funding, according to NBC. The legal matter is paused at the time of writing due to a bankruptcy filing of a related company.
The House Oversight Committee subpoenaed James Biden’s personal and business bank records in late September as part of its investigation into his nephew, Hunter Biden’s, foreign business dealings.