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Monday, April 21, 2014

The Black Book of Tom Steyer -- Allegations of fraud plague hedge fund of Democratic super-donor -- By Lachlan Markay, The Washington Free Beacon

Tom Steyer believes in American democracy… for now (AP)The former hedge fund of one of the Democratic Party’s most important donors was allegedly involved in a scheme to defraud foreign investors out of tens of millions of dollars, according to documents filed in a Texas court.

Farallon Capital Partners L.P., a fund run by Farallon Capital Management, the multibillion-dollar hedge fund founded by Democratic donor Tom Steyer, became a limited partner in a project to build a large shopping mall near Seattle, Wash., in the mid-1990s after it guaranteed a line of credit for the project.

According to the Texas case, Farallon and other parties involved in the deal allegedly operated “in conjunction with” foreign-owned corporations in Texas “to defraud a group of over three-hundred German investors out of approximately sixty-million dollars.”

A “Ponzi scheme” in which the companies planning to build what was to be called the Washington Supermall “transfer[red] millions of dollars in funds through ‘loans’ and ‘advances’ to other unrelated entities,” the plaintiffs alleged.

“At the end of the scheme,” the plaintiffs say, “after the money-drained Supermall project was sold in January of 1998, the remaining funds were distributed to the entities that had assisted the [foreign-owned] entities in their scheme, including … Farallon Partners, in improper preferential distributions that ultimately left the German investors with nothing to show for their $60 million investment.”

The case, which was dismissed on jurisdictional grounds—the court agreed with Farallon that it didn’t operate in Texas and hence could not be sued there—is being re-examined by the Republican politicians and activists scrutinizing the record of the billionaire and controversial environmentalist, who has pledged $100 million to help Democrats in this year’s midterm elections.

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