Philip Falcone Sued Over Alleged $65.8 Million Default, Warhol Painting
(Bloomberg) -- Former Harbinger Capital hedge fund manager Philip Falcone was accused in a New York lawsuit of defaulting on $65.8 million in loans and violating the terms of lending agreements by selling two paintings used as collateral, including one by Andy Warhol.
Melody Business Finance LLC sued Falcone in Manhattan state court Friday, claiming he and his wife, Lisa Falcone, had personally guaranteed the loans, which were made to three companies they control. The lender also is seeking to recover the collateral, including artworks and jewelry.
“To date, Mr Falcone has not been able to refinance Melody’s debt, despite many attempts,” Andres Scaminaci, a principal of Melody Capital Partners LP, said in a court filing. Falcone and the companies that borrowed the money have been in default since 2016, Scaminaci said.
“This is a personal dispute without merit,” Alex Spiro, a lawyer for Falcone, said in a statement. “We will fight this.”
Falcone became a billionaire after betting against the U.S. housing market. His Harbinger Capital was once one of the biggest hedge-fund firms, which at its peak in 2008 managed $26 billion.
He was barred from the securities industry for at least five years as part of a 2013 government settlement. U.S. regulators had accused Falcone of using firm funds to pay personal taxes and giving preferential treatment to some investors. He did not admit wrongdoing under the deal.
As part of the settlement, Falcone had to liquidate his hedge funds under the supervision of an independent monitor. He and his firm paid an $18 million fine.
Falcone stepped down as chairman and chief executive officer of the Harbinger Group the following year. He is chairman, president and chief executive officer of HC2 Holdings Inc., which owns companies in construction, energy, life sciences, marine services, telecommunications and other industries, according to its website. HC2 isn’t a defendant in Melody’s suit.
The case is Melody Business Finance LLC v. Falcone, No. 651155/2020, Supreme Court of the State of New York (Manhattan).
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