Allied Capital

  • 21 Dec 2010 at 3:07 PM

Heads Up Play With David Einhorn

By Bess Levin

If you’re going to commit financial fraud, you probably don’t want to find yourself sitting at a table across from David Einhorn, who will know what you’re up to and share it with the world. Similarly, if you’ve never played poker and have only ever had a 15 minute tutorial on the game, you probably should avoid playing with the Greenlight Capital founder, whose vastly superior skills will demonstrate just how much you suck. As I like to live on the edge, yesterday in an undisclosed location, I choose not to heed the wisdom of the latter. Over several hands, Einhorn and I discussed the new edition of his 2008 book, “Fooling Some Of The People, All Of The Time.”

The latest version includes an epilogue, and concludes the story of Allied and Einhorn’s years of trying to get other people to listen when he said something was up. As we now know, Allied’s shares collapsed, Greenlight collected $35 million, and the hedge fund made another big (and correct) call on a bank called Lehman Brothers, whose failure was, according to Einhorn, “the Allied story all over again,” just on a bigger scale, with more resounding consequences. Even after the last crisis, which should have been a wake-up call, Einhorn doesn’t think we’ve changed much and if anything, the reforms passed only “encourage poor behavior and will likely foster an even bigger crisis.” He and I chatted about that exciting event, Quantitative Easing, Steve Eisman’s illicit pleasure of choice and more, plus poker tips for people who really, really need them.**

BL: You mentioned an unexpected and tremendous response from readers of the book the first time around. What’s the craziest piece of fan mail you’ve gotten- has anyone sent you their undergarments in the mail?
DE: [laughs] No, do you think they should?
BL: Sure.
DE: You’re hysterical.
BL: I mean, people do that. Musicians, rock stars get sent that sort of stuff. You’re like a rock star…of investing.
DE: Well, the thing is, my following [for the most part] is with 20 to 35 year old men. So, you know. I definitely don’t want their undergarments. Continue reading »

  • 07 May 2010 at 3:03 PM

Former Einhorn Target Settles Fraud Charges

By Zachery Kouwe

A small business lender once targeted by David Einhorn agreed today to settle fraud charges by the Justice Department for $26.3 million. The settlement, from Ciena Capital (once part of Allied Capital Corp.,) also resolves a whistleblower lawsuit by Einhorn’s Greenlight Capital.

Greenlight, and co-plaintiff James Brickman, will receive $4.3 million as part of the settlement. The feds charged Ciena with defrauding the Small Business Administration when they sought payments on federally-backed loans they made and serviced. The loans, which eventually defaulted, violated SBA rules and underwriting standards. Continue reading »

  • 24 Mar 2010 at 5:03 PM

Report: The Securities And Exchange Commission May Have Messed Up Again

By Bess Levin

The SEC fucks up a lot. A whole lot. This is more or less a given. David Einhorn has been saying this for eons– from personal experience, having dealt with the brain trust in the case of Allied Capital–, as has Bernie Madoff who, from the jail cell in which he rots, made no bones about the fact that he was eternally grateful that the regulator operated at the intelligence level wherein it wouldn’t know not to stick its (collective) dick in a pencil sharpener. Still, for those of you who need just a little more proof, SEC inspector general David Kotz is happy to add some color.

About two miles separate the Securities and Exchange Commission’s headquarters in Washington from the offices of Allied Capital, a District-based private-equity company. But over the course of an 18-month government probe into whether Allied Capital overstated the value of its holdings, nobody from the regulator ever visited the firm to ask questions, according to a new, internal SEC review that raises questions about the agency’s oversight of the financial industry.

Continue reading »