Former GOP Rep. Michael Huffington sues Carlyle Group

(RAW STORY)   Former Republican Congressman Michael Huffington is suing the now collapsed private equity and investment powerhouse Carlyle Group after he says they wheedled him out of $20 million. Huffington was a onetime Republican California Senate candidate, and is the ex-husband of Arianna Huffington.

Huffington says the Carlyle Group’s David Rubenstein took him for a ride after an introduction from ex-President George H. W. Bush. They met at an Icelandic dinner in Bush’s honor in 2006, he said in a court filing reported by Courthouse News.

Carlyle Group collapsed last spring. During its heyday, it apparently leveraged its bets by a factor of 32 to 1 — a process that allows investors to make much bigger stock bets than they actually have money for. Leverage is incredibly effective when prices are going up, but is a recipe for bankruptcy when prices drop. The group was heavily involved in mortgage securities, a part of the market that has all-but-collapsed.

Huffington “claims that Rubenstein and others at Carlyle promised that their fund would maintain a low leverage ratio and would be a ‘conservative’ investment.”

Reports Courthouse News:

After expressing his disinterest in private equity during the presidential dinner, Huffington says, he told Rubinstein he was interested in low-risk investments. He says Rubenstein came to Huffington’s Boston home in October 2006 to discuss an investment…

The primary assets held by the Fund were said to be Residential Mortgage-Backed Securities issued by Fannie Mae and Freddie Mac.

Huffington claims Stomber made additional misrepresentations, which increased his losses, after Huffington invested in the fund on Feb. 28, 2007.


Huffington says Rubenstein called him on March 14 to tell him that the Fund was going under but that Huffington would not lose money even if the Fund did not survive; he says Rubenstein asked him not to sell any of his shares.

Huffington says he did not sell but he did lose his money.

Between July 2007 and March 2008 the share price dropped from $19 to 35 cents.

Huffington says Rubenstein came to Boston on May 15, 2008 and apologized for the losses. He says Rubenstein assured him he would get his money back with interest after Carlyle persuaded other investors to invest more money in other deals without being charged fees.

One Response to Former GOP Rep. Michael Huffington sues Carlyle Group

Leave a Reply

Your email address will not be published. Required fields are marked *

Show some support!

We are 100% Listener & User supported!! Every little bit helps us continue. Donations help fund the site and keep all the free information on it. Thanks in advance and KEEP UP THE FIGHT!!!

Visitor Map

Subscribe For New Posts & Updates

Enter your email address to subscribe to FederalJack and Popeyeradio and you will receive notifications of new posts by email.

News Categories
The Wigner Effect
Col. L Fletcher Prouty: Secret Team