“Jim’s job,” one of his former business partners told author Ben Schreckinger of President Biden’s younger brother Jim, “is to ensure the lifestyle is good for the family.” Son Hunter Biden later joined that pursuit, as Schreckinger reveals in his new book, “The Bidens: Inside the First Family’s Fifty-Year Rise to Power.” In this exclusive excerpt, Schreckinger reveals how Jim and Hunter opened doors and profited using Joe Biden’s name and influence.
In January 2006, Hunter Biden was a lobbyist for William Oldaker, who had served as a campaign counsel and treasurer to Joe Biden.
Jim Biden, Joe’s younger brother, called his friend Anthony Lotito for a favor. Hunter needed a new job.
Joe was getting ready to run for the Democratic presidential nomination, and his son’s work for a Washington lobbying firm would be a problem.
At least that was what Lotito later alleged in court filings. Jim and Hunter denied that a call like that ever took place. One way or another, the three of them decided in early 2006 to get into the hedge-fund business.
Owning a hedge fund in New York in the years before the financial crisis was like being a sea captain in 18th-century Nantucket. It was the thing to do.
They set their eyes on Paradigm Global Advisors, founded by James Park, who was married to the daughter of religious leader Sun Myung Moon.
Paradigm’s success was helped by the fact that the firm’s labor costs were low. Many of its employees were Moonies who accepted rock-bottom salaries in exchange for the honor of working in close proximity to Moon’s son-in-law.
About half of its investors were Moonies as well, according to a former executive.
Financial success could not solve Park’s personal problems, however. He developed an addiction to cocaine. As his drug use began to complicate his management of Paradigm, Park went looking for a buyer. Lotito connected him with the Bidens.
Jim and Hunter offered to buy the firm out for $21 million. For financing, they leaned on family allies.
Larry Rasky, a lobbyist and longtime political adviser to Joe, was going to pitch in a million dollars in financing, though it is not clear if he ever did. The law firm SimmonsCooper, donors to Joe and business partners to Beau, did provide a million dollars in financing.
Hunter would have his new job, CEO of Paradigm, with a starting salary of $1.2 million. His experience in the financial sector amounted to a few years on the payroll of a credit-card issuer.
The former chief compliance officer of Paradigm Global Advisors says he will never forget the day in the summer of 2006 the Bidens showed up at his Midtown Manhattan offices to take control of the business.
The executive recalled that Jim and Hunter showed up with Beau and a couple of large men. The new owners ordered him to fire the firm’s president, Stephane Farouze. The large men showed Farouze out of the building.
At the time, Jim and Anthony Lotito co-owned Americore International Security, a company that employed private security guards. The company also employed a “director of cabaret security,” who oversaw the protection of nightlife establishments. The chief compliance officer recounted his experience with the Bidens on the condition that his name not appear in print.
He cited a fear of retaliation, saying he did not want large men like the ones who came to his office to come knocking on his door.
Jim had a plan. “Don’t worry about investors,” he told the executive that day. “We’ve got people all around the world who want to invest in Joe Biden.”
In case the chief compliance officer did not get the picture, Jim painted it more vividly for him: “We’ve got investors lined up in a line of 747s filled with cash ready to invest in this company.”
Beau was then in the middle of his first attorney general’s race. His face turned red with anger, the executive recalled. “This is not why we are making this investment,” Beau told his uncle. “This can never leave this room. And if you ever say it again, I will have nothing to do with this.”
Farouze did not respond to my attempts to contact him. A lawyer for Jim and Hunter said no episode like the one described by their former chief compliance officer ever occurred.
But some things are beyond dispute: While Beau followed in Joe’s footsteps, Hunter took after his uncle Jim, becoming a Biden family breadwinner.
Hunter and Jim did seek to enlist the family’s political allies as investors in Paradigm. Under their ownership, the firm became entangled in legal disputes and financial scandals before quietly winding down. And during their time at the helm of the firm, the Bidens were learning to tap the global demand for business partnerships with the relatives of a powerful American official.
When Jim and Hunter took over Paradigm, Joe was the ranking member on the Senate Foreign Relations Committee. A few months later, when Democrats took the Senate, Joe became the committee’s chairman.
The United States was near the height of its global power and prestige. Few people had more say over the running of this globe-spanning empire than Joe did.
At Paradigm, Hunter and his uncle found themselves in over their heads. Before the deal was completed, they realized that Paradigm had only a fraction of the assets under management that it purported to possess, making it far less valuable than they initially believed.
They also discovered that the lawyer they had brought on, at Lotito’s urging, to advise them on the acquisition, John Fasciana, had been convicted the year before on a dozen counts of mail and wire fraud. Jim and Hunter backed out of the deal.
The botched acquisition attempt cost them north of a million dollars. To pay back SimmonsCooper, they took out a loan from the lobbyist William Oldaker, Hunter’s old boss.
Nephew and uncle still wanted Paradigm, but for a reduced price. They decided to ditch Lotito and make Park a new offer, an $8 million IOU.
Park accepted. Given their lack of relevant experience, Jim and Hunter realized they needed Park’s help to keep the business afloat, so he stayed on.
The chief compliance officer said the collaboration was complicated by the fact that Park and Hunter were avid users of cocaine, both during work and after hours.
The executive said Hunter once offered him the drug, but he declined. “I figured that wasn’t right for a compliance officer to be doing drugs,” he said.
The executive also said that after work, Park and Hunter would sometimes go to a nearby hotel to do coke and party. He would get notifications that cash had been withdrawn from a company account from an ATM on the route between the two.
The Bidens, though, needed Park to be at the top of his game. Jim talked Park into checking into a rehab center in Florida.
Even so, Paradigm turned out to be an albatross. In January 2007, Lotito sued Jim and Hunter, saying they had improperly gone behind his back to acquire the firm.
Lotito also claimed his former business partners wielded their family’s clout as a cudgel.
“The Bidens refused to pay the bill, repeatedly citing their political connections and family status as a basis for disclaiming the obligation,” his complaint alleged. “The Bidens threatened to use their alleged connections with a former United States Senator to retaliate against counsel for insisting that his bill be paid, claiming that the former senator was prepared to use his influence with a federal judge to disadvantage counsel in a proceeding then pending before that court.”
Nephew and uncle denied Lotito’s claims, and the case eventually settled, but more problems lay ahead.
The Lotito suit came just as Joe was preparing to announce his second White House bid. At the same time, Hunter and Jim were bringing on Chuck Provini, a veteran of the investment industry, as the firm’s new president.
Provini told me Jim and Hunter recruited him in part for political reasons. They wanted a non-Biden face atop the troubled firm.
“Joe Biden needs to distance himself from this,” they told him, “Would you consider the job?”
Jim and Hunter assured Provini that Joe’s labor connections would help them land investments from union pension funds. “I was told because of his relationships with the unions that they felt as though it would be favorably looked upon to invest in the fund,” Provini told me.
But Provini said that during his tenure, Paradigm was not able to land union pension investments. It did not help that Jim and Hunter were industry novices. “They knew nothing about the hedge-fund business,” he said. (Provini later sued Paradigm in federal court in New Jersey, alleging it stiffed him out of salary he was owed. The case was settled.)
The chief compliance officer said his new bosses understood political relationships better than they understood the mechanics of hedge funds.
He recalled one week where a succession of firefighters paraded into the office over the course of a few days and asked to speak with him. They would offer explanations like, “We’re friends of Joe, and we want to invest in the fund.”
The men would drop off modest personal checks. A few thousand dollars here. A few thousand dollars there.
The executive learned that there was a firefighters’ convention in town, and Jim had been working the room. “Jim told people they could invest in our hedge fund and that would help Joe,” the executive recalled.
Because of legal restrictions on who can invest in hedge funds, and because Paradigm, like most similar firms, insisted that clients fork over minimum investments in the tens or hundreds of thousands of dollars, there was nothing he could do with the checks.
A lawyer for Jim and Hunter said no incident like this ever occurred.
Unable to attract big-time union money, Paradigm’s executives searched in vain to find an overseas bank or other foreign buyer to take the business off their hands, including in the banking haven of Switzerland. They struck out.
Excerpted from “The Bidens: Inside the First Family’s Fifty-Year Rise to Power” ©2021 Ben Schreckinger and reprinted by permission from Twelve Books/Hachette Book Group.
