As those of you who keep close tabs on the trials and travails of La Familia Falcone know, one of the biggest mistakes Phil made in the last several years was the time he borrowed $113 million from a gated investor fund to cover personal taxes, for which he had failed to set aside enough cash. Falcone learned the hard way that clients don’t take kindly to these sorts of things– even if you pay them back, with interest– and that the Securities and Exchange Commission doesn’t either. Point taken, all that jazz. In retrospect, it might even make sense to Phil re: why people got upset. Having said that, there is no way he, or anyone for that matter, could have predicted anyone would get their panties in a twist over this:

An investor has accused the hedge fund billionaire Philip A. Falcone of using his publicly listed company “to bail himself out” after a reaching an $18 million settlement with the Securities and Exchange Commission. In the weeks after the S.E.C. settlement last August, Mr. Falcone’s hedge fund Harbinger Capital Partners was confronted with a flurry of requests from investors to return their money, according to a complaint filed by a Harbinger Group shareholder, Haverhill Retirement System. In a desperate attempt to find capital to replace the money flowing out, according to the lawsuit, Mr. Falcone sold some shares in Harbinger Group, where he is chief executive. He later sold additional shares and added two seats to the board of directors, eventually securing a $400 million investment by the Leucadia National Corporation, the suit contends. By doing so, “Falcone effectively used Company assets to bail himself out of a personal financial crisis,” the complaint said.

Falcone Accused of Using Company Assets in Cash Crunch [Dealbook]

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Comments (9)

  1. Posted by guest | March 28, 2014 at 1:47 PM

    Rule #1- One must not borrow funds from a gated investor to pay off personal taxes.

  2. Posted by guesst | March 28, 2014 at 2:11 PM

    That tie is tied way too short.

  3. Posted by guest | March 28, 2014 at 2:23 PM

    go on…

  4. Posted by Ted E. | March 28, 2014 at 2:27 PM

    Not if you're going for the chubby, but funny guy look

  5. Posted by Guest | March 28, 2014 at 2:30 PM

    Never bite the pig that feeds you, Phil.

    -Wilbur

  6. Posted by saberron1 | March 30, 2014 at 4:53 PM

    What's $113,000,000 between friends? Besides, they all got paid back with interest after he was caught. (jk)

  7. Posted by TheodoreBallgamePhD | March 31, 2014 at 1:32 PM

    Nobody ever reads the LPA….

  8. Posted by bail bondsman | April 1, 2014 at 2:50 PM

    If the charges against you are dismissed then the state government may allow you to expunge without any fees. Tennessee is known for the stringent expungement rules. It is difficult to expunge illegal trace in Tennessee than any other state or city in the country.

  9. Posted by Khayembii | April 3, 2014 at 6:54 PM