Goodbye Phil, We Hardly Knew Ye (But We Sure Knew Your Wife)

Tyler Durden's picture

The one-two punch is complete: first Goldman pulls it capital, now the SEC and the US Attorney's office are investigating Harbinger. Is this the proverbial curtains call for Phil Falcone? Accusations are one thing. Accusations accompanied by major LPs pulling capital are usually the last thing.

From Bloomberg:

Harbinger Capital Partners is being investigated by the Securities and Exchange Commission and the U.S. Attorney’s office over a $113 million loan to founder Philip Falcone and possible preferential treatment of some investors, according to two people with knowledge of the probe.

Falcone, 48, took the loan from the Harbinger Capital Partners Special Situations Fund in October 2009 to pay personal taxes, Bloomberg Markets Magazine reported in September. At the time, investors were barred from exiting the fund because it had assets tied up in the bankruptcy of Lehman Brothers Holdings Inc. The New York-based firm disclosed the loan in the fund’s March 12, 2010, financial statements.

“The loan has been a topic of discussion since it was disclosed in March,” Falcone said yesterday in an e-mail. “It was documented and audited by outside accountants and legal advisers and was done in accordance with our documents. As for the preferential treatment for certain clients, that is completely and utterly untrue.”

He declined to comment on whether the SEC and the U.S. Attorney in Manhattan were investigating the firm. The probes were reported yesterday by the Wall Street Journal.

The firm’s main Harbinger Capital Partners Fund tumbled 15 percent through Oct. 15, according to investors who asked not to be named because the information is private. As of September, about 90 percent of the fund’s $3.4 billion in net assets was tied up in wireless-telecommunications investments.

Goldman Sachs

Goldman Sachs Group Inc. plans to pull $120 million from the fund, people familiar with the firm’s decision said earlier this week. Investors in Harbinger’s core fund are limited to taking out 25 percent of their redemption request per quarter, so that a full withdrawal is spread out over a year. Goldman will get back $30 million in January, and receive its final $30 million payment in January 2012.

At the end of 2008, Goldman had $1 billion invested in two Harbinger funds, according to the people, who asked not to be identified because the funds are private.

Another investor in Harbinger’s core fund, the New York State Common Retirement Fund, has asked to redeem $41 million. Dennis Tompkins , a spokesman for the state pension system, declined to comment on the reason the pension fund is withdrawing the money.

Dealbook chimes in:

Mr. Falcone said that he and his advisers had considered redeeming money from the fund, but that he was advised against doing so because it would have placed a deferred tax burden on the fund’s other investors.

He said he needed the loan to pay off a tax bill far higher than he or his tax planners had estimated.

“I typically keep all my money in the fund,” he said “I didn’t have $100 million lying around.”

That's too bad - post 18 years of no prenup, pretty soon there may be nothing lying around. Although who knows, at least Lisa now has a 'budding' business. Perhaps the joke will be on her after all...

As we presented two days ago, here are Harbinger's top stock holdings. Shorting these would seem like a very prudent idea ahead of upcoming liquidations.

And some more from the inimitable Lisa Falcone:

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sourgrapesson's picture

You were kidding right?  yeah of course you were.  These blowfish out here in So Cal are a dime a dozen and one is as phoney as the next.


Unless of course you like that sort of thing--me I'd have to double bag her...

lizzy36's picture

Lisa Falcone = future cast member of the Real Housewives of New Jersey.

Orly's picture

Lisa Falcone seems very nice.


Careless Whisper's picture

yeah but she's clueless. honey, im goin to vegas for the weekend but i'm going to donate all my winnings to the children's hospital. okaaayyyy.

she's no eva longoria, but hopefully she has a hot boi toy around.


Dapper Dan's picture

Leukemia with children?  How about brains without people.

samseau's picture

So, you're rich beyond your wildest dreams... and YOU MARRY THAT FOR 17 YEARS?

*gags* I know homeless men who can pull better

snowball777's picture

The homeless men want to know why you never called.

Uncle Remus's picture

Good God! WTF was that? It definately doesn't look kosher.

ToNYC's picture


Nice thoughts, but for the children's sake, Mariah Carey's singing voice is a better investment than acting ability. In that Lanvin, Lisa Maria looks like she's giving an interview in the shower above a fancy, ruffled curtain.

Dick Darlington's picture

Looks like half of her face is paralysed when she talks. Must be worth the money.

Takingbets's picture

Yeah, do you think she'll give up the name of what plastic surgeon did that too her face???

I'd hide behind the scenes if my face looked like that. :-)

chindit13's picture

I am willing to consider that the most overpaid people on Earth are not bankers, mortgage originators and Adam Sandler, but rather plastic surgeons.  When the ultra rich, who clearly can afford the best of the best, still end up looking like Ms. Falcone, Michael Jackson and Kenny Rogers, something is horribly wrong.

A lesson to us all.

RobotTrader's picture

Biggest postion is Spectrum Brands, which trades an average of 50,000 shares per day.

Good luck with 'dat!


NumberNone's picture

What's odd is that on November 1 they had a press release stating they were trying to acquire more...or am I reading this wrong? Are these new shares reflected in the graph?

"The net proceeds from the issuance of the notes will be used for general corporate purposes, which may include acquisitions and other investments. The net proceeds will be held in a segregated escrow account until consummation of the previously announced transaction pursuant to which Harbinger Group Inc. expects to issue approximately 119.9 million shares of its common stock in exchange for approximately 27.8 million shares of Spectrum Brands Holdings, Inc. common stock. If the escrow conditions are not fulfilled by March 31, 2011, the notes will be redeemed."

ratava's picture

just noticed how most of the related companies at

say PINK, that's not a good thing is it? 

Oh regional Indian's picture

113 million to pay taxes.! My brain just froze over trying to figure out what his earnings must be, especially since he would have used every tax loophole and then some to stash away his Munnnneeeehhh!

Should anyone's time be worth that much? 

Speaks volumes for why we are where we are.

I heard a wise old lady on the radio once and she said "You can tell the state of a nation by looking at who is the highest paid in the land and how they look after their elders.

Enough said eh?


Miss Expectations's picture

While she doesn't have a film background, Falcone says she loves movies: "I was always trying to figure out the ending before the beginning and pretty much was always right."

Hubbs's picture

Don't tell me. She's the favorite to win the Nobel prize for soap opera ending predictions.

Uncle Remus's picture

Which of course can easily be parlayed into some kinda economics internship. Or something.

DarkMath's picture

Lisa Falcone fell out of the ugly tree and hit every branch.

3ringmike's picture

thats it? THATS IT? Lisa Falcone. thats what all that money got him. sure glad i went broke

Orly's picture

You boys should really be ashamed of yourselves.  So she's not the most beautiful princess on the plateau but at least she is trying to make the world a better place.

Every beauty is in the eye of the beholder and I sure hope that her husband thinks her the most lovely woman on the face of the planet!

Please be nice.  There is no reason to be otherwise.


samseau's picture

She's a golddigger who gives to the poor.  There is no beauty here

PrDtR's picture

Jesus came to save ALL mankind.. as such we have intrinsic "value" to GOD!

Get saved today!  the return of Jesus is nigh!

RockyRacoon's picture

A big tree like this one doesn't fall without doing some damage to the shrubbery.  What other smaller operators are affected?  Like GM going under, there will be "suppliers" left in the lurch.

ratava's picture

He has a big bet on the wireless spectrum licenses right? He should be OK, that is hard to short and FED will make us all richer with their blessing of inflation.

lolmaster's picture

good thing the g sachs boys got out before the federalis broke in the door

preferential treatment my a$$

ratava's picture

GS are "planning to pull" according to tfa.

ToNYC's picture


If GS's prop desk didn't buy puts or CDSs on Harbinger's book and most leveraged positions BE fore it trumpeted its withdrawal, they fired those guys and buried the shovel.

ihedgemyhedges's picture

Watching that video of her makes me glad I'm poor............I married a nice woman who can cook in the kitchen AND in bed.  And I didn't have to a lawyer for a prenup or a fashion designer consultant to dress the biyatch............

Silverhog's picture

Lisa don't look so hot these last few years. I know we all get older, but she looks and acts like her Lexapro wore out.

chistletoe's picture

maybe somebody slicker than me

can point out to j6p that if'n they do this,

then what's to stop them from ex post facto arrestin' anyone what's gotta gun?

seadragonconquerer's picture

The gun. The trigger on the gun. The bullet in the gun. The firing pin that strikes the bullet in the gun.

doolittlegeorge's picture

GM's gonna be big--just not for you and me.  As for Ms. Falcone I will say this:  she acknowledged the dress designer and that's all right by me.  it was a spectacular dress--i'm not sure i would wear it out for THAT occasion--still..."you Americans...alvays overdvessing for the vrong occasions..." is as Hollywood as it gets.

ToNYC's picture


Five figure dresses for double digit IQs keeps the boat moving forward in many fine homes...meanwhile its just a couple of handfuls of ripe Pantone fresh colored ruffles glued to her chest.

Downtoolong's picture

Behind every great fortune there’s a crime, and apparently Goldman Sachs too. It’s amazing how often these three things are found together in nature; like protons, neutrons, and electrons, and we all know what happens when they split up.

ToNYC's picture


Many great fortunes, one great crime of CONfidence .

At the end what happens is you get the best politicians they can buy that you can believe in.

It won't change, until you do.

doolittlegeorge's picture

isn't she suppose to ask "honey, how does this dress look on me?"

and don't we as men respond with, "not nearly as good as it'll look..."

cry with me people. WEEP with me!

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NewsReader's picture

Noticed one of Harbinger's investments is AMEI.  Harbinger is the key backer, providing line of credit to AMEI...and largest shareholder.  Story below dated Aug. 25, 2010 - looks like an interesting company.  Phil Edmonds has a fascinating business history as well due to his close ties to the Mugabe regime. 


African Medical Says Chief Excutive Solanki Has Been Charged With Theft and Fraud

African Medical Investments (LON:AMEI) confirmed this morning that criminal charges for fraud and theft have been brought in South Africa against former chief executive Vivek Solanki and manager Wessel Roets.

Fraud and theft charges have also been laid in Zimbabwe against Zarina Dudhia, a Solanki-appointed manager in Harare.

It follows an investigation by forensic auditors, prompted by the discovery of administrative anomalies last month.

Today the group revealed a loss from “financial irregularities” of US$1.04 million.

The company’s full-year operating losses were US$16.15 million, of which US$9.06 million related to impairments resulting from the alleged fraud.

The probe so far has focused African Medical’s operations at the Johannesburg International Airport Clinic and Harare Trauma Centre and capital project payments administered out of the Johannesburg shared services office.  

The evidence appears to uncover:

•    Understatement of revenue
•    Excessive profits taken by an intermediary supplier
•    Supply of goods and services for personal use charged to the company
•    Supplier payments to employees
•    Payroll irregularities
•    Falsification of supplier invoices

Chairman Phil Edmonds said the company is actively looking for Solanki’s replacement after the former chief executive’s resignation last month. African Medical is currently being run by finance director Brett Winstone.
Edmonds said the discovery of the financial irregularities had come as a “huge shock”, which had been “highly distractive“. 

“We have had to implement an immediate strategic review in order to ensure that we have the right foundation in which to properly manage African Medical's strategy,” he added. 

“Indeed, I would suggest that we have had to take a step back to ensure we are correctly positioned to generate the returns expected by our investors.”

African Medical Investments provides healthcare through private boutique hospitals, well woman clinics and trauma centres. Its target markets are the emerging middle classes and expatriate communities.

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