Two healthcare companies are suing a hedge fund manager and James Biden

Accusations of hedge fund fraud are back in the headlines.

A hedge fund manager and the brother of a Presidential candidate are accused of defrauding two medical companies in Tennesee.

Last month, Azzam Medical Services and Diverse Medical Management filed a complaint with the U.S. District Court for the Eastern District of Tennessee.

In the suit, they claim a group spearheaded by Michael Lewitt and James Biden stole their business models. They claim the investors promised financing that never came and ultimately attempted to bankrupt the firms.

Reports state that Lewitt is a hedge fund manager who runs the Third Friday Total Return Fund. Biden is the brother of former Vice President Joe Biden and a principal at Americore Health.

The two other defendants are Americore Health founder Grant White and Platinum Group US co-founder Amer Rustom.

Following the lawsuit, the defendants have until mid-August to respond to the attornies of plaintiffs Michael Frey and Dr. Mohannad Azza.

The two businessmen founded Diverse Medical Management as part of a broader plan to save and reform failing rural hospitals.

Accusations of Hedge Fund Fraud

The accusations come at a difficult time for Joe Biden’s campaign. Since the start of the campaign, Biden has claimed the center on economic issues. Meanwhile, rivals like Elizabeth Warren and Bernie Sanders have railed against hedge funds and private equity managers.

The lawsuit claims that Americore offered to buy both companies in 2018 for about $7 million. However, the deal didn’t close by its expected September deadline. As a result, the plaintiffs found themselves in a tight capital position.

The suit claims that Biden, Americore investor Lewitt, and Rustom allegedly approached the defendents.

They allegedly then pitched the idea of securing funding from foreign investors like Dogan Holdings in Turkey or the Qatar Investment Authority.

Now, the plaintiffs claim that the defendants engaged in a “bait and switch.” Frey and Azzam claim that the defendants urged the firms to borrow $10 million from Lewitt to purchase new businesses and service lines.

After making the purchases, they assumed foreign investment capital would arrive to cover those expenses.

However, the money never came.

As a result, they claim Lewitt threatened to sue the firms for failure to repay the borrowed capital.

“They repeatedly assured (Frey) that investment capital originating from and flowing through foreign entities was not only certain but was imminent,” attorney Robert A. Peal wrote.

According to reports, the resulting charges against Lewitt, Biden, and the other defendants include negligent misrepresentation, tortious interference with business relationships, civil conspiracy, and fraud.