If reports are accurate, influence peddling may be something of a family cottage industry. Biden and his business partners however insist that their business dealings have been widely misrepresented in the media. While Congress continues to look at the Hunter Biden contract and his effort to sell his name to foreign companies, the brother of Joe Biden is facing the same allegations in an expanding controversy over his selling of his connection to the former vice president. James Biden was anything but subtle in his pitching his connections to his brother. Update: after initially posting this blog, I heard from Michael Lewitt, friend and partner of “Jim” Biden, who offered some useful (and not widely known) details on the loan controversy in this litigation. I have offered their side of this litigation below, which makes some good points. It also gives a perspective of a core player who has found himself at the center of a swirling controversy during a vicious presidential election cycle.
While it has received little attention in the media, James Biden has leveraged his connection with his brother for years in open pitches for contracts with major business like Americore (which is now in bankruptcy and the subject of a FBI investigation that is not contacted to Biden). Biden arranged for Americore founder Grant White to meet his brother.
Former Americore executive Tom Pritchard and others allege that Biden promised a large investment from Middle Eastern backers while he openly referenced his access to his brother and his family name. Biden is facing a wide array of litigation over allegedly fraudulent activities as well as a personal loan acquired through Americore before it went into bankruptcy.
The effort of Hunter and James Biden to peddle access and influence with Joe Biden could become an even greater issue in the 2020 election. Joe Biden has bizarrely continued to claim that “no one has suggested that my son did anything wrong.” He seems to be drawing a distinction between what is criminal and what is not — as if the criminal code is the only measure of wrongdoing or unethical conduct. Now a pattern exists of not just his son cashing in on his influence but his brother. That is wrong regardless of whether it is criminal. The expanding litigation surrounding James Biden could force a broader debate about that distinction.
For decades, I have written against this form of corruption as family members receive windfall contracts as a way of circumventing bribery laws. This remains the preferred avenue of the Washington ruling class to cash in on their positions. When confronted, they then (as did Biden) object that critics are attacking their family or their children. For that reason, little has been done to crackdown on such deals. For some in the media, there is a tendency to look the other way when they support the candidate or oppose the other party. The fact is that it is all corruption and influence peddling and it is all perfectly legal . . . and perfectly wrong.
Update: Michael Lewitt was Biden’s partner on the deals that are the subject of the Tennessee litigation. He wrote me a detailed explanation of the loan and objected to the coverage by Politico and Fox as unfair and incomplete. He offered some details that I have not previously seen in coverage:
The Tennessee lawsuit is based on our failed efforts to invest in a company called Diverse Medical Management, Inc. (DMM) in Tennessee. My hedge fund, Third Friday Total Return Fund, L.P., loaned DMM ~$760,000 which was intended as a bridge loan to a final deal. DMM was unable to meet payroll and other obligations but had a promising business model and I agreed to make the loan to support the business pending completion of due diligence, arrangement of financing and documentation. Unfortunately, DMM didn’t make it through due diligence. It was unable to provide accurate and complete financial data and failed to disclose that it made an acquisition of another healthcare company that quintupled its payroll during our negotiations (the deal was scheduled to close after the expected closing of our deal with them). We also learned some troubling information about the principals that prevented us from moving forward. We were willing to write-off the loan but the principals refused to even speak to us and demanded we fund their new higher payroll and then sued us despite lacking a signed agreement. They then hired a law firm in Tennessee that filed an inflammatory lawsuit filled with slanderous allegations about Jim, myself and our other partner and contacted the press in violation of a local court rule in the Eastern District of Tennessee Federal Court to put pressure on us and especially Jim during the election. The lawyer continued to violate this local rule to the point that I recently filed an ethics complaint with the Tennessee Bar Association. I can assure you that the lawsuit is meritless (claiming detrimental reliance on oral promises) and would never have been filed but for Jim’s involvement. Further, neither Jim nor any of the other individual defendants acted in his individual capacity and suing us personally was highly improper. Jim never engaged in any influence peddling.
He also added details on Americore and supported Biden’s claims that he never played a substantive role in management — a point the Politico seems to question.
As for Americore, Jim never played any management or operational role at the company. He introduced me to the former CEO, Grant White, who was removed as CEO on 2/19/19 at the demand of the U.S. Bankruptcy Trustee and my fund and other creditors. Jim’s involvement ended in early 2018. Tom Pritchard, who was quoted, was a gopher for Mr. White and is, to put it politely, unreliable. My fund loaned Americore around $19 mm, so Mr. Pritchard’s comment that Jim’s introduction was “smoke and mirrors” is demonstrably false. The bankruptcy filing was made by Mr. White to try to save his job – he was already under investigation by federal and state regulators and I was working with these regulators to remove him in my capacity as senior lender and major shareholder. Mr. White and his lawyer lacked the requisite shareholder authority under Delaware law to make the bankruptcy filing and never completed the required financial filings even after requesting multiple extensions. The company was not and is not insolvent and has more than enough receivables from Medicare, Medicaid and HMOs to repay all secured and unsecured creditors and pay its bills. A recent Ombudsman Report stated that the two operating hospitals are serving their patients and have sufficient medicines and supplies. Jim had absolutely nothing to do with any of the problems at the company, which were entirely the fault of Mr. White, and the news reports suggesting otherwise are just nonsense. Jim never engaged in any influence peddling at the company and did nothing more than make an introduction to help the company raise capital to buy rural hospitals and St. Alexius Hospital in a tough urban neighborhood in St. Louis. He should be applauded, not criticized, for what he did here.
While I continue to view Biden’s leveraging of his name as a serious problem in our system, Michael Lewitt offered this defense of his partner and friend:
Further, Jim Biden is not Hunter Biden. Hunter has his own set of issues. As someone who has dealt with friends with family members who suffered from addiction, maybe I am more sensitive than most people to what the Vice President has dealt with as Hunter’s son. I don’t condone the appearance of impropriety in Ukraine but knowing what I know about the Trump’s, this is a case of the kettle calling the pot black. If Trump thinks it is a good strategy to try to argue that he is less corrupt than Joe Biden, someone is giving him bad advice or, more likely, he is giving himself bad advice. Families should be off limit anyway, especially when a family member suffers from addiction like Hunter does.
Finally, on a personal note, Lewitt offered an insight from a lifelong Republican who suddenly found himself the subject of exposes on Fox News and other outlets:
You know that Trump is trying to turn this stuff into the 2020 version of Hillary’s emails. I voted for Trump in 2016 and am a Republican. I like his policies more than Democratic policies. But I find the politics of personal assassinations abhorrent. I don’t enjoy seeing myself on Fox News or reading my news in the paper and I have often been in the financial press because I write a widely read Wall Street newsletter and have written two books on the markets. The negative reports don’t bother me – what bothers me is when people just make stuff up or don’t even bother to do five minutes of independent research to see if something is true or not.
I appreciate Michael Lewitt being so direct on this issues. I asked him to allow me to post his views because they have been largely missing in any coverage. I particularly think the discussion of the loan and management questions are highly relevant to the public’s understanding of the controversy.