Donor with deep Ukraine ties lent $500,000 to Biden’s brother

By Ben Schreckinger

A donor with deep ties to Ukraine loaned Joe Biden’s younger brother half-a-million dollars at the same time the then-vice president oversaw U.S. policy toward the country, according to public records reviewed by POLITICO.

The 2015 loan came as Biden’s brother faced financial difficulties related to his acquisition of a multimillion-dollar vacation home, nicknamed “the Biden Bungalow,” in South Florida.

There is no indication that the loan influenced Joe Biden’s official actions, but it furthers a decades-long pattern, detailed in a POLITICO investigation earlier this month, by which relatives of the former vice president have leaned on his political allies for money and otherwise benefited financially from the Biden name.

Details of the loan are laid out in property records in Collier County, Florida, where Biden’s younger brother, James, and James’ wife Sara, owned until recently a home on Keewaydin Island. The luxurious, six-bed, seven-bath home comes with a guest house and sits on five acres along a pristine, miles-long stretch of sandy beach.

In May 2015, James and Sara Biden took out a second mortgage against the home. The mortgage secured a $500,000 loan they had received from a corporate entity, 1018 PL LLC, that had been registered in Delaware two months earlier.

The documents gave no hint who was behind 1018 PL, but last February, as James and Sara were selling the house, the lender filed a release of the mortgage, a document that discharges a lien in the public land records. The release revealed that 1018 PL LLC was controlled by John Hynansky, a Ukrainian-American businessman and longtime donor to Joe Biden’s campaigns.

"John Hynansky is a longtime friend of the Bidens,” said a spokesman for James and Sara Biden. “He did provide a series of loans during a two-year period while the Bidens were undergoing major renovations of the island home.” The spokesman said that the debt was also secured by James’ and Sara’s primary residence, and that the 6 percent interest they paid was above prevailing market rates. He did not address a question about why they sought financing from Hynansky rather than a financial institution.

The former vice president’s ties to Hynansky date back to at least 1987, when Hynansky and his then-wife, Deanna, cut campaign checks for $1,000 each to support Biden’s first presidential run. A spokesman for the Biden campaign, Andrew Bates, declined to comment for this story.

Hynansky, born in Germany after his parents fled Ukraine during World War II, came to the U.S. as a child in 1949, settling in Delaware. He became a successful car dealer, first in the U.S., then in Post-Cold War Ukraine, earning a reputation as a hard-nosed negotiator who was well-liked by his employees. He also became a major philanthropist of Ukrainian causes in the U.S. and Ukraine, underwriting sports, culture, orphanages and hospitals.

In the early 1990s, when the government of Ukraine lacked the funds to buy the property for a consulate in New York, Hynansky financed the purchase himself.

Over the years, Hynansky and his relatives donated generously to both Republican and Democratic causes. Biden’s campaign coffers have been the largest recipients of their largesse, taking in roughly $100,000, including a $30,800 contribution to the Obama Victory Fund in 2008, according to FEC records.

As a senator, Biden’s campaign occasionally paid, in accordance with Senate ethics rules, for him to make use of a private jet owned by Hynansky’s son, Michael, who has succeeded his father as president of Winner Automotive Group. Michael Hynansky has donated thousands of dollars to Biden, and more recently, to both Donald Trump and the Republican National Committee.

Neither John nor Michael Hynansky responded to emails requesting comment. A person answering the phone at Michael Hynansky’s office said Michael Hynansky would not be commenting.

The Hynanskys and the Bidens also overlapped in the small world of Delaware’s upper crust, where Hynansky’s daughter, Alexandra, grew up as a close friend of the senator’s sons, according to a person who knows both families. Joe Biden was prominently seated at Alexandra Hynansky’s wedding, according to the person, who also attended. "John made a point of noting that Biden was present, and thanked him," the person said.

The entrepreneur’s style could be flamboyant — he used a cigarette holder and occasionally wore a cape — but he made for a soft-spoken presence on the Wilmington social scene, especially in contrast to the gregarious senator, according to the person. "If Joe Biden was there, you knew Joe Biden was there,” the person said. “You could be blind and only have ears, but you knew Joe Biden was there. That wasn't true of John at all."

After Biden was sworn in as vice president, his office arranged for Alexandra and Deanna Hynansky to attend the annual White House Easter Egg Roll in 2009, according to a person familiar with the visit.

In July of that year, Biden name-checked Hynansky in a speech in the Ukrainian capital, Kiev. “My very good friend, John Hynansky, a very prominent businessman from Delaware, is here,” Biden remarked. “I had breakfast with him the other day.”

In March 2014, Russia annexed the Crimean peninsula in Eastern Ukraine, setting off an international crisis. As the administration’s point-man on Ukraine, Biden led the U.S. response.

The next month, Biden’s son Hunter was appointed to the board of Burisma, a Ukrainian natural gas company, receiving compensation that was reportedly as high as $50,000 a month at times. Two years later, Joe Biden successfully demanded the removal of Ukraine’s prosecutor general, Viktor Shokin, who was unpopular with Western leaders. At the time, Shokin's office had an open probe of Burisma’s owner. The potential conflict of interest has drawn scrutiny. Spokespeople for Biden have said his son's dealings did not influence his official actions, and no evidence has emerged of wrongdoing on his part in the matter, according to the New York Times.

In the meantime, James and Sara Biden were facing problems of their own. From the start, their $2.5 million purchase of the remote vacation home was, in many ways, more whimsical than practical.

"It's more than just beautiful,” said Sherry Irvin, a real estate agent involved in James and Sara’s purchase of the house, which is only accessible by boat. “It has a spiritual quality, if that doesn’t sound too corny."

Days after James and Sara acquired the house in late December 2013, Joe Biden arrived for a holiday visit. But the vice president’s entourage discovered a problem, according to a person familiar with the visit: a leaky cistern that left the house without running water.

A leaky cistern was only the beginning. While taking out a $2.1 million mortgage on the house, James and Sara missed federal tax payments of $589,000 in 2013 and $30,000 in 2014, according to IRS liens filed against the house. At the same time, they undertook expensive renovations, which they struggled to pay for. In December 2014, a contractor filed a lien against the house for $75,000 in unpaid bills for painting and other services.

As the problems mounted, James and Sara put the house up for sale in early 2015 with an asking price of $6 million. They also sought a new source of financing.

In Florida, a second mortgage can be harder to obtain, because the lender on a first mortgage gets preferential treatment in the event of a foreclosure, according to Alex Mestdagh, a real estate lawyer in central Florida. This makes a second mortgage riskier for a lender. "If there was a foreclosure, they would be wiped out," he said.

But that May, James and Sara obtained the half-million dollar loan from Hynansky through a second mortgage, and they went about settling their debts.

The house sat on the market, and in September 2017 another setback arrived. Hurricane Irma hit south Florida, inflicting significant damage on the Biden Bungalow. The resulting insurance claim was in the seven figures, according to a person familiar with it.

Last February, the Biden Bungalow finally sold for $1.35 million to SC-Keewaydin LLC, a corporation controlled at the time by two Florida architects — Randall Stofft, a past donor to George W. Bush’s and Rudy Giuliani’s presidential bids, and his business partner, John Cooney. Cooney declined to comment. The next month, Cooney amended SC-Keewaydin’s paperwork to add a new authorized member, FJP LLC, a Florida corporation controlled by Frederick J. Peruzzi, a Pennsylvania car dealer, who did not respond to emails requesting comment. The buyers appear to have no connection to Joe Biden.

Around the time that the sale closed, the holder of the first mortgage on the house filed a “satisfaction and release of mortgage” acknowledging “full payment and satisfaction” of the original $2.1 million loan. Meanwhile, Hynansky filed a “release of mortgage” on the second mortgage, identifying himself as the managing member, and acknowledging only “payment,” rather than full payment and satisfaction.

In general, a lender can file a simple release, rather than a “full satisfaction,” to release the lien on a house when a debt has not been fully paid back. In that case, the borrower still owes money to the lender, but the debt is no longer secured by the house.

Carlo Zampogna, the Florida lawyer who prepared both the satisfaction of the first mortgage and the release of second mortgage, the one from Hynansky, declined to comment.

The spokesman for James and Sara Biden said that they had settled the debt with Hynansky in full, paying more than $600,000, and that the Keewaydin house was sold for a loss.