* Hedge fund loan had sparked controversy, investigations
* Falcone used loan proceeds to pay taxes
By Matthew Goldstein
NEW YORK, March 21 Billionaire trader Philip
Falcone recently rid himself of a headache when he paid off the
balance of a controversial $113 million loan he had taken from
his hedge fund, public records reveal.
On March 11, lawyers for Falcone's Harbinger Capital
Partners filed a formal "termination" notice for the loan with
the New York State Department of Corporations.
The termination notice removes a lien the hedge fund had
placed on some of Falcone's assets at the time the loan was
arranged in October 2009. Liens are terminated when a debt is
Last year, the Securities and Exchange Commission and
federal prosecutors in New York opened a preliminary
investigation into the loan, which occurred during a time that
Falcone was restricting some investor withdrawals. Federal
authorities opened the investigation after fielding complaints
from some of Harbinger's investors.
A spokesman for Falcone declined to comment.
It was not clear what, if any, impact Falcone's repayment
of the loan will have on the investigation. An attorney with
the SEC did not return a phone call seeking a comment.
Harbinger investors, including several interviewed by
Reuters, said they were disturbed that Falcone took five months
to officially notify them that he borrowed money from the hedge
In November, Falcone, commenting on the loan controversy,
told Reuters that he had paid back half the money and intended
to retire the loan with a few months. Falcone said he borrowed
the money from Harbinger's Special Situations Fund to meet some
of his federal and state tax obligation arising from his own
personal investment in Harbinger.
The interest rate Falcone paid on the $113 million was
never disclosed. But Falcone had up until October 2014 to repay
(Reported by Matthew Goldstein; Editing by Steve Orlofsky)