Joe Biden’s brother Jim Biden accused of fraud by Tennessee businessman
Tennessee businessman Michael Frey couldn’t believe his good fortune.
Jim Biden, the brother of former Vice President Joe Biden, had just handed him a business card and a promise to sell Frey’s rural health care plan not only to investors but also the White House.
And Michael Lewitt, a hedge fund manager whose claims of money management expertise had landed him on the pages of Forbes magazine and The New York Times, was offering to find loads of cash, too.
Stick with us, Frey says they told him, and you’ll get rich and change the state of rural health care in America.
Instead, Frey alleges in a U.S. District Court lawsuit, Jim Biden and Lewitt stole his plan and tried to drive the McMinnville, Tennessee, businessman into bankruptcy.
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“They repeatedly assured (Frey) that investment capital originating from and flowing through foreign entities was not only certain, but was imminent,” attorney Robert A. Peal wrote. “And Biden promised (Frey’s) Intensive Outpatient Model would play an integral role in health care policy at the highest levels of the United States government.
“But it was all a fraud,” Peal wrote.
Jim Biden target in lawsuit
Frey and his business partner Dr. Mohannad Azzam are suing Biden, Lewitt and Lewitt’s The Third Friday Total Return Fund hedge fund, as well as the Platinum Group USA hedge fund and its owner Amer Rustom, as well as Americore Health rural hospital operator and owner Grant White.
The lawsuit accuses the quartet of businessmen and their firms of deception and fraud and includes copies of text messages and emails as evidence. Attorney George Mesires, listed as attorney of record for all defendants, said Thursday he had no immediate comment. Rustom, White and Biden did not return phone messages Thursday.
Lewitt declined to comment.
“I have nothing to say about it,” he said.
The lawsuit was filed July 22. The defendants must file an answer by mid-August but have not yet done so.
The lawsuit takes direct aim at Biden, painting him as a con artist who uses his ties to his brother — now a Democratic candidate for president — to lure his victims. The suit portrays Lewitt as a bully who uses threats of lawsuits to keep victims at bay.
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Rural health care crisis
The way the lawsuit tells it, Frey and his wife, Natalie, a speech pathologist, had hit on a successful plan to take over failing rural hospitals and transform them into centers offering traditional hospital health care and a slew of outpatient services including addiction treatment and psychological counseling.
They founded Diverse Medical Management in McMinnville and partnered up with Alabama doctor Azzam, who contracted with nursing homes to provide medical care for seniors.
“(Diverse Medical Management’s) owners live in a rural community and witness on a near-daily basis the acute problems rural citizens face seeking treatment for opioid addiction, mental health issues, veterans’ issues, and sexual trauma,” Peal wrote.
“Rural Americans are facing a health care crisis,” the lawsuit stated. “(The Freys) developed an innovative health care delivery model, with rural hospitals and clinics at its center, that provides high-quality and affordable health care to these at-risk and frequently neglected citizens.
“The rural hospital is at the center of Plaintiffs’ business model and leverages the hospital’s scale and capabilities to improve care beyond the walls of the hospital.”
By 2017, Frey was getting offers from investors to buy into his business model. Among them were offers from White.
Frey and his attorney met White in December at White’s Americore headquarters in Florida. White already was buying up failing rural hospitals and wanted Frey and Azzam to run them using their model, the lawsuit stated.
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No deal was signed, though. A month later, White asked Frey to pitch his one-stop shopping model to hospitals in Kentucky. It was at one of those Kentucky sales pitches that Frey first met Biden.
“Biden handed Frey a business card identifying him as a principal with Americore,” the lawsuit stated.
‘Come at him very hard’
Biden introduced Frey to Lewitt, and Americore made plans to buy Frey’s firm for $7 million in May 2018. By July, though, Americore had already missed one of the installment payments. The lawsuit alleges Biden and Lewitt told Frey not to worry.
They’d get money from the Platinum Group to buy Americore instead after first forcing White out, the lawsuit says.
“If (White) doesn’t go quietly right away we will do what we have to do and we know how to do that,” Lewitt wrote in an email. “What we need from Michael is an action plan to take over operations of the hospitals from Grant (White).
“Hopefully he will see the wisdom of going gently into the good night especially when we lay out the state of play,” Lewitt’s email continued.
Frey, the lawsuit said, was a bit unnerved at Lewitt’s tone but trusted him and Biden.
“At the time, Plaintiffs were thrilled to have the full attention of investors as respected and sophisticated as Biden, Lewitt, and Rustom,” Peal wrote. “Beginning in July 2018, the Investor Defendants promised Plaintiffs that a large infusion of cash to fuel the acquisition was going to be available through the Platinum Group.”
That money didn’t come, the lawsuit says.
“What followed was a classic fraudulent bait-and-switch,” the suit alleges.
Debate analysis: Go easy on him? Sorry, Joe Biden. Not at this debate, or anytime soon.
Waiting on cash
Frey and Azzam struck a deal with Lewitt, Biden and Rustom in August 2018 that called for a $10 million infusion of cash into the pair’s business. Part of that money would be loaned by Lewitt’s hedge fund and repaid when Lewitt and Biden found investors, the lawsuit stated.
For months, the lawsuit alleges, Lewitt and Biden promised investment money was just around the corner and urged Frey and Azzam to start buying up hospitals and medical care firms to beef up the purchase price. The pair also insisted Frey share details about his business model, the lawsuit alleges.
Biden invited Frey, his wife and his attorney for a visit to his home in Philadelphia in September 2018.
“At this dinner, Biden and his wife, Sara Biden, repeatedly stated that funding would be wrapped up for September 25, 2018,” the lawsuit says.
That Sept. 25 meeting, though, came and went.
“The Investor Defendants informed the plaintiffs that they did not have the money that day but reassured the plaintiffs that the investment would be finalized at a meeting as early as the next week in New York City,” the lawsuit stated. “The meeting never took place.”
Biden and Lewitt made promise after promise by text message in the weeks that followed. But, the lawsuit alleges, Biden sent one text to Frey the businessman now alleges was an unintended confession of fraud.
“Biden accidentally texted Frey in Tennessee on November 5, 2018,” the lawsuit stated.
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The text reads: “We can wrap a/c into Frey’s entity further diluting them both in the process? After we take control of both. Just a thought. We must have complete control, too many moving pieces. Jim.”
Frey asked Biden to explain. He didn’t. Instead, according to the lawsuit, he called Azzam and promised a formal contract and money if Azzam would hand over details of a “diabetes care model” the doctor had devised as part of Frey’s one-stop shopping business.
Azzam did, the lawsuit said, but the “contract and funding never followed.”
‘It’s a Middle Eastern thing’
In mid-December 2018, Lewitt told Frey that he and Biden had plans to pitch Frey’s business to the Qatar Investment Authority in Turkey.
Lewitt said he needed specifics about Frey’s business for Turkish investors.
“Just make up some numbers throw darts it doesn’t matter nobody is going to hold you to them they just have to see stuff look a certain way,” the suit quotes Lewitt writing in a text. “It’s a Middle Eastern thing.”
Frey, the lawsuit said, did not “make up some numbers” and instead sent Lewitt detailed information on his business.
Three weeks later, the lawsuit alleges, Biden told Frey in a text that he was preparing to board a plane to Turkey to make an investment pitch for Frey and his firm.
“I feel Very good,” the text read. “I will feel jubilant when it I (sic) closed. Please do not interpret this as anything but complete confidence. It is going to happen.”
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A week later, an invitation went out to the owners of Dogan Holdings, a Turkish investment group, to meet with “His Excellency Jim Biden and his wife, Her Excellency Sara Biden” and the Platinum Group. There was no mention in the agenda of Frey or Azzam, the lawsuit says.
“On January 23, Platinum Group, Rustom, and Biden submitted a White Paper to Dogan outlining ‘Platinum Group Diverse Medical Management (PGDMM)’s business model,’” the lawsuit says.
“What the investors were not told, however, was that this white paper was drafted by (Frey and Azzam) and sent to Biden, Rustom, and Sara Biden,” the lawsuit says. “Platinum Group simply replaced all references to Plaintiffs with PGDMM, a non-existent entity.
“Neither Frey nor Dr. Azzam signed the white paper,” the lawsuit continues. “Instead, it was submitted by Rustom, ‘His Excellency Jim Biden,’ and his wife, ‘Her Excellency Sara Biden.’ Plaintiffs were not aware that the Investor Defendants had substituted PGDMM’s name for Plaintiffs on the White Paper until after the fact.”
‘If you think cage fighting is tough’
Lewitt, though, assured Frey and Azzam all was well.
“Just to be clear the Turks approved the investment and we are working on the term sheet,” Lewitt wrote.
But no deal — or money — came.
“By late March to early April 2019, the Investor Defendants’ ongoing fraud had become apparent,” the lawsuit alleges.
While Biden continued to assure Frey money was on the way, Lewitt came calling for money, the lawsuit stated. He insisted Frey needed to pay back the loans from his hedge fund company — loans Lewitt had said would be repaid by investors, not Frey, the lawsuit says.
“Lewitt’s bullying went beyond the Third Friday Fund loan agreements,” the lawsuit says. “Whenever legal formalities and litigation were pressed upon him, he lashed out with threats and invective.”
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When an attorney filed notice Frey and Azzam were considering a lawsuit, Lewitt fired off a series of texts and emails, which he copied to Frey and his wife.
“I know you are putting on a show for your client but this is a friendly deal and if you want it to continue to be a friendly deal you need to adopt the proper tone and drop the nonsense,” Lewitt wrote. “We will (be) suing your clients next week both corporately and personally in view of your slanderous correspondence.”
He followed up with a text to Azzam, Frey and the two men’s wives, according to messages quoted in the lawsuit.
“Your lawyer’s letter is defamatory and as a result of that letter I am now instructing my lawyers to sue each of you and your spouses individually as well,” Lewitt wrote. “If you think cage fighting is tough wait until you get in the legal ring with me. You are picking a wrong fight with that (sic) wrong guy.”
He ended what the lawsuit describes as a tirade with threats of initiating a criminal probe against Frey and Azzam — though he didn’t say upon what basis.
“Be careful what you wish for,” Lewitt wrote. “You won’t be working with me. You and your clients will have the worst experience of their lives.”