In spite of having just sold a house for almost $80 million, former hedge fund manager Phil Falcone is apparently hard up for money. This is to an extent understandable, as piano-playing pigs don’t just feed themselves, and also the $70 million in settlements Falcone has reached in the last couple of years stemming from his inability to correctly pay his taxes, to say nothing of other potentially pricey litigation. So Falcone sold a couple of paintings to raise some cash, since he no longer has a hedge fund to borrow money from with which to cover said taxes.

The thing is, though, he’d already used the Warhol and some other stuff to raise some quick cash, specifically by putting it and them up as collateral for a loan from Melody Business Finance. This, as you might imagine, is vexing to Melody, but Falcone is allegedly arguing that he doesn’t have to make good on those loans or pony up the collateral because he’s got the aforementioned bigger fish to fry.

Melody said Falcone has cited obligations to other creditors, including New York’s attorney general and New York City, for his inability to repay the loans or turn over the collateral, which also includes millions of dollars in jewelry….

Alex Spiro, a partner at Quinn Emanuel Urquhart & Sullivan representing Falcone, said in an statement: “This is a personal dispute without merit. We will fight this.”

According to court papers, the pledged collateral also included works by Edgar Degas, Claude Monet, Pablo Picasso and Camille Pissarro, as well as several Warhols.

Lawsuit in NY says ex-hedge fund manager Falcone reneged on loans, wrongly sold a Warhol [Reuters]

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Phil Falcone Reveals Genius New Plan (Update)

LightSquared is a wireless venture that seeks to create “convenient connectivity for all." But those of you who've been keeping up know that to one man, it's so much more. That man, of course, being hedge fund manager Phil Falcone. LightSquared is his dream. His baby. His world. His everything. And, because he has poured his heart, soul, and firm's money into LightSquared, it is also the thing that stands to make or break Harbinger Capital. Success will mean billions for Falcone and his investors. Failure will mean Wilbur Falcone selling her eggs to a barren couple willing to pay top dollar for the DNA of a blue-eyed classically trained singer with an IQ of 150 and legs like Tina Turner. Unfortunately, things have not been going so well for LightSquared. The yachting community worries that GPS interference caused by LS will result in boats getting lost at sea. The National Oceanic and Atmospheric Administration says LightSquared“may degrade precision services that track hurricanes, guide farmers and help build flood defenses.” The FAA put out a study that estimates LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” The only person defending the thing (besides Phil) is Karl Rove. Meanwhile, the SEC wants to see Falcone banned from the industry, Bloomberg News has put a reporter on the "Phil Falcone Pit Stains" beat, and his investors, for the most part, despise him for petty reasons that no rational adults would ever get upset about, like borrowing $113 million from a gated fund in order to pay personal taxes and tying up much of their capital in a side project building walkie-talkies that might not pan out on account of the growing opinion that it might kill a few people. At this time, a lesser man might decide to cut his losses and/or look within and say "Maybe my investors aren't the problem, maybe I'm the problem." Phil Falcone is no such man. He's figured out a few things and what they boil down to is that his impatient, pissy investors are what is standing in the way of LightSquared soaring, which it will, when it is ready. And if those pricks won't agree to stick around for an investment time horizon of inifinty, he'll find people who will. Harbinger Capital Partners' Philip Falcone, speaking at the SALT hedge-fund conference Wednesday in Las Vegas, hinted at an initial public offering, CNBC's Kate Kelly reported. "Harbinger is actually considering getting more permanent capital," Falcone said, according to Kelly, who said it suggests a potential IPO. "I'm moving toward a more permanent capital vehicle. We need to focus more on control," Falcone said, according to Kelly. No one said going from not having the cash to cover taxes to $25 billion was going to be easy. Harbinger's Falcone hints at potential IPO -CNBC [MarketWatch] Update: Falcone claims to have no idea what CNBC is talking about (asking Fox Business, "What the fuck would I IPO?")

Phil Falcone Will Borrow Hundreds Of Millions Of Dollars From Any Gated Investor Fund He Pleases

Phil Falcone, as some of you may know, has made some mistakes in the last couple years. Pouring his investors' money into a wireless start-up that may or may not ever get off the ground. Offering those who wanted out illiquid LightSquared equity instead of cash. Not getting his wife a driver for party-time.  If you're wondering why we haven't mentioned the time he borrowed $113 million from a gated fund in order to pay personal taxes, which he had not set aside enough money to cover, it's because Phil doesn't count it as a mistake, regardless of what you, or the SEC, or anyone else says. Hedge-fund manager Philip Falcone and his firm, Harbinger Capital Partners LLC, formally signaled their intent to seek the dismissal of fraud charges filed against them earlier this year by securities regulators, according to people familiar with the case. In June, the Securities and Exchange Commission filed civil charges accusing Mr. Falcone of putting his own interests, including maintaining a "lavish lifestyle," ahead of those of Harbinger's investors. The agency accused Mr. Falcone, Harbinger and Harbinger's former operating chief, Peter Jenson, of misleading investors and an outside law firm when Mr. Falcone took out a $113.2 million loan in 2009 from a Harbinger fund to pay his personal taxes, even as other investors in the fund were prevented from pulling their money. Lawyers for Mr. Falcone and Harbinger sent a letter to Judge Paul Crotty of U.S. District Court in Manhattan Friday, the deadline for responding to the SEC's complaint, saying they intended to seek dismissal, the people said. The letter also summarized arguments for the dismissal. Mr. Jenson also filed a letter Friday through his lawyers saying he intended to seek dismissal of the complaint. Representatives of Mr. Falcone and Harbinger have said before they planned to fight the allegations. In negotiations with securities regulators leading up to the charges, they had argued that Mr. Falcone and Harbinger were simply following sound advice from their legal counsel. Which, for those who missed it, was: “[L]ending money to principals is not part of the fund’s investment program” and "a loan . . . will never be a good idea" and "[We are] unequivocally against the loan idea for a number of reasons." Falcone To Seek Case's Dismissal [WSJ] Earlier: Phil Falcone’s Alleged Piggish Behavior Made Him Some Enemies