Stone Lion Capital Partners, one of the vulture funds in Puerto Rico, is lying and misrepresenting the role that hedge funds are playing in Puerto Rico…and hiring Puerto Ricans to help them do it.
At a recent conference in New York City, Stone Lion Capital Partners was represented by one of their “investment associates” named Julio Cabral-Corrada…but Julio is not just “any” investment associate. According to Magacín: La Galería Mas Exclusiva de Eventos Sociales, Julio is one of the “12 Best-Dressed Men in Puerto Rico.”
The well-dressed Julio wasted no time. He immediately blamed Puerto Rico for its own fiscal crisis, portrayed the vulture funds as their financial savior, and branded anyone who disagreed with him as “ignorant and uninformed.”
In ten dazzling minutes, Julio created a parallel universe in which the lamb (the people of Puerto Rico) is responsible for being eaten by the wolf (Wall Street, corrupt politicians, and Julio).
He wove a hallucinogenic financial tapestry worthy of Tom Wolf’s The Electric Kool-Aid Acid Test. By the end of his performance, one could easily imagine Julio and the Stoned Lion Crew – drinking their LSD, driving their Kool-Aid bus into the sunset – with all of Puerto Rico’s money inside it.
Julio and his Merry Pranksters, aka Stone Lion Capital Partners
THE WORLD ACCORDING TO JULIO
According to Julio, Puerto Rico is responsible for her own demise, because she’s been “living beyond her means.”
It is difficult to tell an island with a per capita income of $15,200, a sales tax of 11.5%, electricity rates 300% higher than New York City, and a cost of living 12% higher than the US, that she is “living beyond her means.”
The only ones “living beyond their means” are the Wall Street hustlers and politicians who cooked up illegal COFINA bonds, as a way of generating profits in New York and patronage in San Juan.
HEDGE FUNDS OWN “ONLY 12 PERCENT” OF PUERTO RICO’S DEBT
At a conference of Fordham Law School students, Julio announced that hedge funds own “only 12% of Puerto Rico’s debt.” With great conviction and condescension, he then labeled anyone who disagrees with him as “ignorant and uninformed.”
Apparently, virtually every financial news source is ignorant and uninformed.
The New York Times, Bloomberg Business, Barclays PLC, Fortune Magazine, and The Nation have all calculated the hedge fund ownership at 30% to 50% of the overall debt…roughly 300% to 400% higher than Julio from Stone Lion.
But there is a deeper point here.
With his 12% figure plucked from who-knows-where, Julio meant to show that vulture funds are playing a relatively insignificant role in the destruction of Puerto Rico’s economy…but his 12% figure proves the exact opposite.
Assuming for a wild moment that the 12% claim is true, then this amplifies the transparent greed and arrogance of the vulture funds. With a mere 12 percent investment, these funds are at best a tertiary underwriter of the Puerto Rican economy…yet they insist on being the primary beneficiary.
They buy as low as 30 cents on the dollar, yet insist on a full dollar’s return.
They lobby against HR 870, the bankruptcy amendment which would restore Puerto Rico’s access to Chapter 9 bankruptcy relief.
They file immediate lawsuits, whenever Puerto Rico attempts to pursue any debt re-structuring.
They throw fundraisers for US presidential candidates such as Marco Rubio – who then change their position from “favoring” to “opposing” Chapter 9 for Puerto Rico.
They even commission “economic reports” which recommend “alternatives” to bankruptcy re-structuring for Puerto Rico.
Less than one year ago, 34 hedge funds paid several ex-IMF economists for a “report” which presented some of these alternatives: including lower wages, pension rollbacks, teacher layoffs, school closures, and the selling of $4 billion worth of public buildings.
If one accepts the dubious claim of 12% hedge fund ownership, then it is the height of arrogance to insist on a 300% ROI; to block the entire Puerto Rican economy; to file lawsuits, hire lobbyists, commission biased reports, and demand a complete sell-off of the Puerto Rican infrastructure…all for a mere 12% skin in the game.
For a minor 12% stake, purchased at discounted rates (as low as 30 cents on the dollar), they would hold an entire island of 3.5 million people hostage, to their quarterly profits and year-end bonuses.
This hostage attempt is being led by the same people who engineered the 2007 mortgage crisis, and who received a trillion dollar bailout from US taxpayers. Which brings us to Bear Stearns and Stone Lion Partners…
THE SHARKS AT BEAR STEARNS and STONE LION
Bear Stearns was one of the primary engineers of the 2007 mortgage crisis. As an investment bank, they pumped out so many fraudulent CDSs (credit default swaps) and CDOs (collateralized debt obligations) that the entire US economy became infected with them.
These financial instruments were absolutely toxic: the housing market collapsed and Wall Street required a trillion dollar bailout. As a leader in this fiasco, Bear Stearns also collapsed…and closed its doors forever, in utter disgrace.
Bear Stearns executives arrested for fraud, conspiracy, and insider trading
Distressed debt and high yield trading killed Bear Stearns…
And the co-heads of “Distressed Debt and High Yield Trading” at Bear Stearns were Alan Jay Mintz and Gregory Augustine Hanley.
Mintz and Hanley drove Bear Stearns and the US economy, into the toilet.
Mintz and Hanley and other Wall Street sharks, received a trillion dollar bailout.
And now…Mintz and Hanley…are the co-founders of Stone Lion Partners !
STONE LION PARTNERS — DESPERATE FOR ACCESS TO QUICK CASH
It’s a new corporate disguise…but the same old Mintz and Hanley.
Just three months ago, in December 2015, the Wall Street Journal reported a bombshell about Mintz and Hanley, and Stone Lion Partners. The firm was not able to meet the investor payments in its oldest account, and had to “suspend redemption.”
In other words, Stone Lion told its oldest investors, “we’re sorry, but we can’t pay the money we owe you. The gate is down.”
So the founding fathers of Stone Lion…the twin engines of disaster at Bear Stearns…have created a new disaster.
They were short of money…and gated their oldest and most loyal investors, two weeks before Christmas 2015.
BLEEDING PUERTO RICO DRY
With a liquidity catastrophe in December 2015, and a documented history of predatory lending, Stone Lion Partners is now operating in Puerto Rico.
They hire Julio Cabral-Corrada, an ambitious boy all dressed for success, to lie about the “benefits” their hedge fund will bestow on Puerto Rico.
They send him to conferences as the token Puerto Rican…whose “facts” are unassailable and beyond question, except by the ignorant and uninformed.
But the brutal fact is this: Stone Lion is gating its investors.
They are desperate for access to cash, and will exploit Puerto Rico as much as possible. They will turn her into a cash cow…and when the cash runs out, they will demand a “public private partnership” with one of the island’s public assets (i.e. roads, highways, schools, prisons, the water supply).
If a Financial Control Board is installed in Puerto Rico, Stone Lion will use it aggressively and without remorse, as their personal collection agency.
THE SADDEST FACT OF ALL
After 118 years, it is sad to see Puerto Rico with a Jones Act around its neck – unable to create a shipping industry, or any other industry, because of US colonial policies.
Sadder still, is to see Puerto Rico bled dry – by predators who sank the US economy, received a trillion dollar bailout, gated their investors, and now bring the same business model of “high yield trading and distressed debt” to the island.
Saddest of all, is when they hire a Puerto Rican hustler — one of the “12 best-dressed men in Puerto Rico” — to help them do it.
For a history of the War Against All Puerto Ricans, read the book…
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