R. Hunter Biden, a Washington lobbyist, accused a former business partner of lying about his professional credentials and finances after they agreed to buy a hedge fund investment firm in 2006, according to a complaint in New York state court.
Biden, son of Sen. Joseph R. Biden Jr. (D-Del.), and James Biden, the senator's brother, countersued Anthony Lotito Jr. on Feb. 13, saying he hid debts and falsely claimed he held securities licenses to lure them as partners in the planned $21.3 million acquisition. Lotito also persuaded the Bidens to hire a lawyer who had been convicted of fraud, according to the complaint.
"Had James and Hunter Biden known the truth about Anthony Lotito, they never would have gone into business with him," says the complaint, which accuses Lotito of fraud and seeks at least $10 million.
Lotito, 49, sued the Bidens on Jan. 5, claiming that they illegally excluded him from a takeover of New York-based Paradigm Cos. while negotiating a better deal for themselves. The Bidens now control Paradigm. The dispute highlights Hunter Biden's unusual dual roles as lobbyist and investment executive at a time when hedge funds face greater regulatory scrutiny.
Hunter Biden, 37, stepped down last month from daily oversight of Paradigm Global Advisors, a unit of Paradigm, which has about $500 million in client money invested in hedge funds. Biden became chairman of the firm, founded in 1991. He remains a lobbyist with Oldaker, Biden & Belair of the District, where he is partner and founder. James Biden, 57, is not involved in Paradigm's management.
Last year, the Bidens agreed to a partnership with Lotito that would pay him $25,000 a month to find investors for the Paradigm buyout, with an Oct. 31 deadline to close the transaction. Lotito "failed to secure even one investor" and all agreed in September to end the partnership, LBB Holdings USA, according to the Bidens' complaint.
They also claim that Lotito "fraudulently induced them" to hire John Fasciana, a New York lawyer, to represent the partnership in negotiations with Paradigm. Fasciana had been convicted in July 2005 on federal charges of conspiracy and wire and mail fraud related to a scheme to steal millions of dollars from Electronic Data Systems of Plano, Tex., the world's second-largest computer-services company. Fasciana was sentenced in November to four years in prison. He has appealed.
Separately, Fasciana sued the Bidens and Lotito in August, seeking $198,000 in legal fees he says they owe him. The Bidens denied the claim in November and countersued Fasciana, saying he overbilled and defrauded them by hiding his conviction.
In his lawsuit, Lotito is seeking at least $100 million on claims of fraud and breach of fiduciary duty. He says the Bidens lied to him while agreeing Aug. 11 to take over Paradigm for an $8.1 million promissory note, or guarantee of payment.
Lotito says the Bidens, as his partners in LBB, were obligated to inform him of their competing bid for Paradigm. Instead, Lotito claims, they told him that the firm had "substantial liabilities" and little chance of success.
Lotito claims that he introduced Hunter Biden to Paradigm executives in January 2006 to help Biden find work outside of lobbying. According to Lotito's complaint, Sen. Biden said he was concerned that Hunter Biden's lobbying might affect his planned presidential campaign.
"It is apparent that Mr. Lotito is only invoking Senator Biden's name to garner media attention," Alan Hoffman, the senator's chief of staff, said in an e-mail yesterday. The senator is not a defendant in Lotito's complaint.