Ex-Congressman Sues Carlyle

Jul 16 2009 | 10:59am ET

A former congressman is suing the Carlyle Group over the collapse of a mortgage-backed securities hedge fund last year.

Michael Huffington accuses Carlyle and co-founder David Rubenstein of misrepresenting the risk of Carlyle Capital Corp. The mortgage hedge fund, which employed tens of billions in leverage, missed a margin call in March 2008, leading banks to seize its assets and liquidate the fund.

Huffington, who lost $20 million on Carlyle Capital, said he was personally assured by Rubenstein—introduced to him by former President George H.W. Bush—that the fund was “low risk.” He said that Rubenstein visited him in Boston to push the fund, and told him in a 2006 letter that its “downside is very limited.” What’s more, after the fund collapsed, Huffington said Rubenstein assured him, “I guarantee you will get your money back.”

“Mr. Huffington did not get his money back,” the lawsuit, filed in Massachusetts state court, alleges.

Huffington’s suit is the first stemming from the collapse of Carlyle Capital.

Huffington, a Republican, represented southern California in Congress for one term in the early 1990s. He narrowly lost a bid for the U.S. Senate in 1994—the year when Republicans took control of both houses of the U.S. Congress—and was once married to Arianna Huffington, the conservative-turned-liberal commentator and blogger.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of