The first post I did not make on Ponta Negra and its link to the Bidens

Note - an error in this post has been corrected - see the end note...

Being a blogger you sometimes need to hold your horses.  Lawyers do threaten.  I wrote this post.  I circulated it to a few friends but on the promise that they would not further circulate it.  

I did not post it.

I suggest you read the FIRST POST ON THE BIDEN/Ponta Negra connection before you read this.  However you should enjoy this...

It was originally titled "The Scorpion Post".  You will see why.  Some of the links in the post do not work because - under legal threat - I deleted some posts and some documents.

You will also note that since I wrote this (hitherto unpublished) post the amount of information I have linking the Bidens to various ponzis/frauds has increased.

A Scorpion Post - Chasing down a Ponzi

If you are a Republican political obsessive please read this to the end. There is a really big sting in the tail… you might like it…

This blog would – on average – have readers considerably more financially sophisticated than the average person. Indeed looking at where my emails come from its not quite a roll call of Wall Street’s finest– but the crowd is well heeled and well connected.

The fund I put up yesterday is almost certainly a Ponzi. Indeed just reading the numbers as posted I was pretty sure it was a Ponzi – and in this post Madoff/Stanford world I would have thought that most of my readers would be trained to look at results which do not in any way resemble plausible and scream Ponzi.

I did not reveal the name of the Ponzi fund in yesterday’s post but I will today. It is called Ponta Negra Fund LLC and its manager is the Ponta Negra Group.

Surprisingly about a third the emails I got and a fair few of the comments did not even raise the possibility it was a fraud.

Fraud was the first thing that I thought of – and it was the first thing I thought of when I first heard of this fund in June last year. I thought Ponzi in a pre-Madoff world. I am really startled that all my readers did not think Ponzi in a post-Madoff world.

I have two fund marketing documents, one containing results to May last year – the other containing results to February this year. I have uploaded them to Scribd – and you can find them here and here. Download them if you really want to follow the scam.

I was fairly sure it was a Ponzi before I observed the other tell-tale signs – but - for the sake of completing the experiment I will reveal them to you.

Firstly both documents are formatted in a very strange way. If you cut and paste text you get words without spaces. So a cut and past will look like this:

Aswehadanticipated,interdayvolatilitybegantospike...

Rather than just saying:

“As we had anticipated inter-day volatility…”

This format takes some doing. The spaces are formatted as pictures rather than text. The reason for doing this is that it makes the documents non-searchable and hence unable to be found using Google. I guess that indicates that they have something to hide.

Now take a look at the February document. The contact is "Jared Toren" whose phone number is 512 306 0300. The fund has an address of Level 17, 650 Fifth Avenue New York. The first problem is that the phone number for the sales contact – for a fund headquartered in New York City – is in Austin Texas. Very strange.

If you Google the phone number you get a link to Eagle Rock Capital LLC. Here is their website (click here). Because I expect the site to disappear I have taken a picture of it for posterity.

There is not much there. No contact address, nothing really except a place holder and phone number.

But Eagle Rock Capital has a history – as a personal lending company. This is an extract from the San Marcos Record – which describes the company as providing personal loans (click here). I have reproduced below:

In the earlier Ponta Negra document you find a different contact – a

Jeffry Schneider from Onyx Capital, LLC. Onyx Capital is a funny entity. It too has a website or two (click here for one).  [Editors note - this site has changed...]

The Onyx website is constructed almost entirely of pictures not text. Nothing is searchable by Google. On their home page they offend with stray apostrophes – but that would not be noticed because it is not text and so never went through a spelling checker. Here is the cover page:

And here is their contact page:

Note no physical address is given. That is very strange indeed.

Jared Toren and Jeffrey Schneider do appear together in – you guessed it – civil litigation. I have filed the complaint on Sribd (click here).

The allegation in that suit is that Jared Toren and Jeffrey Schneider worked at Hedgeco – an internet based marketer of hedge funds – and that they stole the client list. They either joined or established Onyx. [EDITORS NOTE - SEE END]

In other words Jared Toren and Jeffrey Schneider are alleged to have stolen a client list and are seemingly using that list to market a Ponzi scheme (Ponta Negra). They possibly also used it to market New World.

Ok – all of this would not have interested me. I have numerous times reported frauds like this to the SEC and even to the FBI – and I have yet to see any action. Mr Markowitz and Madoff is an experience that anyone who has dealt with the SEC has seen before.

I have simply given up

This is however a Scorpion Post. Here is the sting.

The address given in the second Ponta Negra marketing document is 17th Floor, 650 Fifth Avenue New York. I can’t find any reference to Ponta Negra there – but there is a fund-of-hedge-funds based there. It is Paradigm Global Advisors and they manage roughly 270 million dollars according to the Wall Street Journal and 500 million on some other estimates I have seen.

Now Paradigm is a name that will ring a few bells. The firm is owned by Hunter and James Biden. Hunter is Vice President Joe Biden’s son and James is the Vice President’s brother. (I told the Republican activists to read to the end…) You can see a picture of Hunter Biden with his dad at the Obama inauguration below.

Paradigm Global does not have an entirely pristine reputation. Here is a Wall Street Journal article about a fund that they co-branded with Stanford Financial (click here). I copied the picture from that WSJ article.

According to the WSJ article Paradigm claims that the Bidens never met or communicated with Mr Stanford. I believe them. They lent the name Paradigm to the Paradigm Stanford Capital Management Core Alternative Fund without ever having met the principals of Stanford. Such is the standard of due diligence on Wall Street.

I was worried at first that Ponta Negra might be a legitimate fund headquartered in another cubicle on the 17th Floor of 650 Fifth Avenue. It turns out that there are several funds also HQ'd there. Paradigm it seems does all the signage on the floor – but once you get past the couple of Paradigm people on the front desk you find several doors behind which reside several hedge funds – a hedge fund hotel if you want. Most of the offices were empty mid-morning – which was very surprising. These funds are largely marketed by Paradigm.

Still there could be a fund (Ponta Negra) independent of Paradigm on the 17th floor. There could be – they too would need to employ a Jeffrey Schneider as a marketing agent. To quote the Wall Street Journal story:

A Paradigm marketer, Jeffrey Schneider, confirmed accounts provided by others that he brought in the Stanford business. Stanford would bring clients to the fund and Paradigm would manage it, according to Mr. LoPresti. The fund is mentioned on the Web site of a Stanford entity called Stanford Trust Co. as one of its "investment management strategies."

Ok – by this point you should at least be open to the possibility that the Vice President’s son and brother employ someone who uses the good Biden name and a stolen client list to market Ponzi schemes.

There is no allegation here that the Bidens are involved. Just that their standard of due diligence is low. Very low.

Now the Biden’s hedge fund hotel contains an assortment of other colourful funds. One of them is a SIPC registered broker dealer who also manages client money. This broker dealer does not list their auditor anywhere on their website. However they report startlingly good funds management results for 2006 and 2007 though they have surprisingly failed to update their website to include 2008 results. Their website boasts that their trades will be completed with zero commissions and transaction charges allowing them to focus exclusively on the investments that best meet the needs of the clients without the concern of transaction charges and hidden revenue sharing…

Any resemblance to Bernie Madoff is purely coincidental.

EDITORS NOTE.  I originally referred to Capital Group Holdings as marketing a previous Ponzi.  It was HOLDING CAPITAL GROUP.  I sincerely apologise for the error and have deleted a section of this post.