A Tennessee businessman claims a younger brother of Democratic presidential candidate Joe Biden, a hedge fund manager and the owner and CEO of a hospital chain each played a role in a scheme to steal his company's business model.
In a lawsuit filed in July, Michael Frey alleges Jim Biden and others tricked him into turning over sensitive business information about a model for rural healthcare he helped develop. Hedge fund manager Michael Lewitt, Grant White, founder and CEO of Fort Lauderdale, Fla.-based Americore Health, and hedge fund owner Amer Rustom are also named as defendants in the federal complaint, according to The Knoxville News Sentinel.
Mr. Frey, who founded Diverse Medical Management with Mohannad Azzam, MD, developed a healthcare model for rural residents "seeking treatment for opioid addiction, mental health issues, veterans' issues, and sexual trauma," according to Politico, which cited the complaint. In 2017, Mr. Frey began receiving offers from investors, including Mr. White.
According to the complaint, Mr. White wanted Mr. Frey and Dr. Azzam to use their model to run Americore's rural hospitals. At the request of Mr. White, Mr. Frey pitched his business model to hospitals in Kentucky. At one of those sales pitches, Mr. Frey met Mr. Biden, who identified himself as "a principal with Americore," according to The Knoxville News Sentinel.
In early 2018, Mr. Frey and Dr. Azzam entered into talks with Mr. White about merging with his company. Mr. Biden and Mr. Lewitt allegedly promised they would secure international investors, and offered loans through Mr. Lewitt's hedge fund to buy hospitals. Instead of securing the funds, the defendants allegedly engaged in a scheme to steal Mr. Frey's business model.
The lawsuit claims Mr. Biden and Mr. Lewitt repeatedly promised funds were on their way, and that investments were being finalized. However, Mr. Frey alleges they never intended to provide the investment funds.
After Mr. Frey disclosed details about his business model to the defendants, they allegedly presented it as their own. According to the lawsuit, Mr. Biden and Mr. Lewitt pitched the business plan to Turkish investors in a whitepaper presented by Mr. Rustom, "His Excellency Jim Biden," and "Her Excellency Sara Biden," according to The Knoxville News Sentinel.
The defendants have denied engaging in a scheme to defraud Mr. Frey and Dr. Azzam, claiming in a response to the complaint that the plaintiffs sought them out as investors.
"Biden and his wife, Sara, have a long-held and passionate commitment to finding solutions for the improved treatment of both substance abuse and post-traumatic stress disorder and the linkage between them, particularly in rural areas where so many local hospitals are failing," states a response to the original complaint. "DMM appeared to offer an opportunity to invest in a business that provided important services to this sector."
Mr. Lewitt's hedge fund entered into a confidential settlement with the plaintiffs, according to the Ellwood City Ledger.
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