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Health-Care Companies Sue Hedge Fund Manager, James Biden for Alleged Fraud

Azzam Medical Services and Diverse Medical Management allege that a group of investors stole their business models.

Two health-care providers in the rural south have sued a group of investors including hedge fund manager Michael Lewitt and James Biden — the brother of Democratic presidential candidate Joe Biden — for allegedly defrauding them by promising funding that never came.  

Azzam Medical Services and Diverse Medical Management last month filed an amended complaint in the U.S. District Court for the Eastern District of Tennessee, alleging the group stole their business models and sought to drive the companies into insolvency. The defendants named in the complaint include Third Friday Total Return Fund and money manager Lewitt; Americore Health and founder Grant White; Platinum Group USA and co-founder Amer Rustom; and Americore principal Biden. 

According to the lawsuit, Americore last year offered to buy Tennessee's Azzam and Diverse, which was founded in Alabama, for about $7 million. The deal was expected to be completed in September, but never closed. Then, Biden, Americore investor Lewitt, and Rustom allegedly held talks with the health-care providers about securing funding from foreign investors including Qatar Investment Authority and Turkish investment firm Dogan Holdings.

For months, they encouraged Diverse and Azzam to acquire new business and service lines, allegedly promising that capital arriving from “foreign entities” was imminent, according to the complaint. It turned out to be “a classic fraudulent bait-and-switch,” the plaintiffs alleged in the document. Azzam and Diverse have sued the defendants for negligent misrepresentation, civil conspiracy, tortious interference with business relationships, and fraud.

An attorney lawyer representing Azzam and Diverse declined to comment beyond the complaint. Spokespeople for Americore Health and Platinum Group did not return phone calls seeking comment. Third Friday Total Return Fund declined to comment. An attorney representing Biden and other defendants did not immediately return a phone call seeking comment.

In an August 2 report on the lawsuit, Tennessee newspaper Knoxville News Sentinel described James Biden as the brother of former U.S. vice president Biden. According to the amended complaint, James Biden had allegedly promised Azzam and Diverse that their intensive outpatient model, a mental health and addiction treatment program that allows patients to live at home while receiving treatment, “would play an integral role in health care policy at the highest levels of the United States government.”  

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In late March, Michael Frey, the founder and chief executive officer of Diverse, allegedly asked Lewitt about the deal’s progress, and Lewitt allegedly responded: “Nothing has changed,” the amended complaint shows. The next day, Lewitt allegedly sent a text to Frey that said: “Actually things have changed. We have multiple companies that want to do the deal now!!!,” according to the amended complaint. 

When an attorney representing Diverse contacted Lewitt, he allegedly responded: “I know you are putting on a show for your client but this is a friendly deal and if you want it to continue to be a friendly deal you need to adopt the proper tone and drop the nonsense,” the court document shows.

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