The Florida liberal millionaire congressman
hoping to replace GOP Sen. Marco Rubio is under fire for using a hedge fund in the offshore tax haven of the Cayman Islands – reportedly in possible alleged violation of House ethics rules.
Rep. Alan Grayson is the target of ethics complaints accusing him of violating a ban on House members receiving compensation for services where they have a fiduciary role – and for improperly allowing his name to be used as an investment fund, the
Tampa Bay Times reports.
Grayson has now changed the name of his hedge management company from Grayson Fund to Sibylline Fund, the newspaper notes.
"I haven't gotten one penny of compensation," Grayson tells the Tampa Bay Times about his fund's prospectus – and documents filed with the Securities and Exchange Commission this month referring to "ongoing" management fees and incentive payments.
Grayson argues he may be the manager of the company paid to manage the funds, but that doesn't mean he's getting paid for it.
"Management fees go to a corporate entity, not Rep. Grayson," the lawmaker's office tells the newspaper.
Added Grayson: "An LLC [limited liability company] is the fund manager."
The newspaper reports Grayson is the only officer listed in that LLC's corporate filings. He signs official paperwork as that LLC's manager, and on his 2012 and 2013 congressional financial disclosure form he lists the LLC as one of his assets, worth between $15,000 and $50,000.
"Alan Grayson and/or related family entities or persons are the sole members" of the LLC, stated a 2011 memo to investors filed with the New York Attorney General's Office, the newspaper reports.
According to Sugata Ray, a lecturer at the University of Florida's Warrington College of Business, who looked at Grayson's hedge fund documents for the Tampa Bay Times, "Everything in these records suggests he's getting compensated."
According to the Tampa Bay Times, Grayson – who founded a telecom company in the 1990s, later worked as a lawyer and is worth as much as $105 million – in April 2011 created several inter-connected investment funds: Grayson Fund, based in Delaware, and Cayman Islands-based funds called Grayson Master Fund (Cayman) and Grayson Fund (Cayman). All trading for the pooled investments were to be done through the Caymans-based Master Fund.
But as a liberal populist and Senate candidate who often complains about income inequality and companies evading taxes, the setup created, "at the very least, a perception problem," the Tampa Bay Times reports.
"You're trying to create this appearance, which is not true, that I'm a hypocrite," Grayson responded to the newspaper, it reported. "You have given ([Democratic Senate rival)] Patrick Murphy a knife to stick in me, which is not fair."
Grayson's office has told the newspaper he closed the Caymans funds.
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