Legislation and the Biden family business: Close quarters

WASHINGTON — When Joe Biden’s brother and son wanted to buy a hedge fund company two years ago, they turned for financing to a law firm that had lobbied the Delaware senator’s office on an important piece of business in Congress — and in fact had just benefited from his vote. The firm promised James and Hunter Biden that it would invest $2 million, and quickly delivered half of it.

That deal eventually fell through and the money was returned. But it highlighted the close ties that Joe Biden and his family have developed with SimmonsCooper, an Illinois law firm that specializes in asbestos litigation — a multimillion-dollar line of business that was under threat in Congress.

In addition to providing financing for the hedge fund deal, SimmonsCooper chose the law firm of another of Biden’s sons, Beau, to work with it on dozens of asbestos cases in Delaware. “It was only natural that we worked with my friend Beau Biden and his firm,” said Jeffrey Cooper, longtime managing partner of SimmonsCooper.

And SimmonsCooper employees have donated about $200,000 to Biden’s campaign efforts since 2001 — making the firm his No. 1 donor. All told, SimmonsCooper employees provided much more money to Biden than to any other senator during that period.

His family’s financial dealings could be troublesome for Biden as part of a Democratic presidential ticket that has vowed to reform Washington’s traditional money culture.

A spokesman for Biden said all the business deals with his sons and brother were above board, involved no special favors and were arranged without the senator’s knowledge. Biden — one of the Senate’s leading advocates for trial lawyers and the right of victims to sue in court — long has taken a skeptical view of efforts by the asbestos and insurance industries to get asbestos-related lawsuits out of the courts by creating a trust fund to handle billions of dollars in claims. SimmonsCooper has spent $6.4 million since 2002 lobbying in Washington, according to records on CQ MoneyLine, much of it directed at opposing the trust fund bill.

David Wade, Biden’s spokesman, noted that the $1 million investment in the business venture was made after Senate action on asbestos reform had been completed in 2006, and that the Bidens fully repaid the law firm the money. Biden’s opposition to the asbestos bill “was well established” long before his sons became involved with the asbestos litigation firm, Wade said.

SimmonsCooper officials said any suggestion of a connection between business deals with Biden’s family and official Senate actions was “ludicrous.” Nonetheless, SimmonsCooper’s interests in Washington were clearly aligned with Biden’s philosophical views, and his position on the Judiciary Committee was enormously important to such a firm.

SimmonsCooper is one of the nation’s best known and most successful asbestos litigation firms. Its Web site boasts that it has obtained more than $1 billion for clients, many of whom suffered from mesothelioma, a deadly lung disease that results from contact with asbestos, a once commonly used fire retardant and insulation material.

Biden and others — including many Democrats, trial attorneys, victims groups and organized labor — have claimed that any trust fund must be large enough to compensate cancer victims. And in 2003, when Senate Judiciary Committee chairman Orrin G. Hatch, R-Utah, sponsored legislation to create a trust fund, Biden attached an amendment that would have allowed plaintiffs to return to court if the trust fund ran out of money.

The amendment was opposed fiercely by industry groups and GOP lawmakers. And when Hatch’s bill collapsed, those supporters pledged to continue to work to create the trust fund.The following year, SimmonsCooper began contributing heavily to Biden, providing $45,500 to the Delaware senator.

In 2005, when asbestos legislation was revived by Sens. Arlen Specter, R-Pa., and Patrick J. Leahy, D-Vt., Biden again pushed for a guarantee that plaintiffs could return to court if there was insufficient money in the fund. The bill stalled.

It was during this period that the first financial connections to the Biden family emerged. SimmonsCooper began filing asbestos cases in Delaware in 2005 using, as its local counsel, the law firm where Biden’s son Beau worked.

Beau, 39, a former federal prosecutor, had just joined the firm — which became Bifferato, Gentilotti &Biden — and was looking to do more complex litigation work. Beau Biden, who is now the attorney general of Delaware and a captain in a National Guard unit heading to Iraq, did not respond to requests for comment. But a partner in his former firm credited the senator’s son with securing the SimmonsCooper business.

“While Beau was here, he was the person considered responsible for bringing the SimmonsCooper work to our firm,” said Connor Bifferato. He said the relationship started because “Beau knew Jeff (Cooper).” Beau Biden’s interest in expanding his firm’s portfolio coincided with SimmonsCooper’s concern about declining prospects for plaintiffs’ cases in their home base of Madison County, Ill., which had become such a center for filing tort claims that one business group dubbed it “America’s judicial hellhole.

Bifferato added that he did not think Beau Biden’s ability to secure the SimmonsCooper account had anything to do with his being a senator’s son. He also said the SimmonsCooper work did not generate any “measurable income” until after Beau left the firm at the end of 2006.

Cooper said his friendship with Beau Biden was one reason he chose Bifferato, Gentilotti &Biden to help file asbestos cases in Delaware. But another reason was that Biden’s firm was “one of the best firms in the state.”

He added that Beau has had no interest in the firm’s cases since he moved to the attorney general’s office, but, “His old firm continues to do a great job on SimmonsCooper cases.”

In 2006, the Leahy-Specter legislation reached the Senate floor, and Joe Biden again rose to speak against it.

“The real problem is that there are a lot of people out there suffering from the effects of asbestos. There are not a lot of companies out there with the money to pay all of these claims. There is the concern that some of the very companies we have to go to, to recover from, may very well declare bankruptcy. So I understand the motivation. It is a decent, honorable motivation,” he told his colleagues on Feb. 14, 2006.

“But the bottom line is, what we are asking an awful lot of people to do is to give up a right in tort that has existed in common law for hundreds and hundreds of years. … The victims are not in on this bill.”

When the measure came up for a vote that evening, Biden was among 41 senators who voted against it — meaning it fell just short of the 60-vote supermajority needed for passage. It never came up for another vote.

A few months after that bit of Senate drama, the complex deal involving the senator’s brother and son moved forward. His brother James — a now 59-year-old Pennsylvania businessman — and son Hunter — 38 and a Yale Law School graduate working as a lawyer and lobbyist in Washington — sought to acquire a group of hedge funds known as Paradigm. To get the initial capital for the deal, they went to Cooper, who described himself in a brief e-mail exchange with the Los Angeles Times as an admirer of the senator’s and a longtime “friend of the Biden family.” He noted that his wife and Hunter’s wife had gone to high school together.

Wade, the campaign spokesman, said Hunter and Cooper met “several years ago and they became good friends.”

The Illinois firm, based in the downstate city of East Alton, agreed to provide the initial $2 million of the purchase of the company in exchange for a 10 percent interest.

In an affidavit from a lawsuit involving the Bidens and another partner in the Paradigm deal, Hunter Biden said that he and his uncle, after agreeing to buy a controlling interest in the Paradigm hedge funds, “sought and obtained an additional investor, SimmonsCooper.” Biden said that SimmonsCooper agreed to make the initial $330,000 payment for the purchase and to cover other costs.

Hunter Biden said in his affidavit that SimmonsCooper made that payment on May 2, 2006, which he and his partners used as down payment so that they could begin managing Paradigm hedge funds while they finalized the purchase over the next six months. SimmonsCooper sent a second payment of $670,000 a week later, bringing its total investment to $1 million.

According to the affidavit, SimmonsCooper pulled out of the deal after the Bidens said that their other partner, Anthony V. Lotito, had misled them about the value of the hedge funds and about expenses.

Lotito’s lawyer denied the allegations, which the Bidens made in an ongoing lawsuit filed by Lotito against them.

The Bidens have said in court filings that they incurred a $1-million debt to SimmonsCooper for the money they had been advanced.

“Jim and Hunter repaid SimmonsCooper the $1 million they had invested because they believed it was the right thing to do,” said Nicholas Gravante, the lawyer for the two Bidens.

Like many plaintiffs’ firms, SimmonsCooper distributes campaign contributions liberally to influential Democratic lawmakers — most of whom opposed the proposed legislative solution to limit asbestos lawsuits.

“We support a lot of Democrats,” said SimmonsCooper senior partner Michael Angelides. “We generally support candidates who are for consumer and victim rights. … ” He described Biden as “a real champion for consumer rights issues.”

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