Republican Eric Hovde poured millions into dubious overseas ventures

Wisconsin U.S. Senate candidate Eric Hovde invested millions in three separate foreign banks that were implicated in money laundering, ponzi schemes, and sanctions evasion.

Hovde, a Republican, launched his campaign challenging incumbent Democratic Sen. Tammy Baldwin earlier this year. He is expected to easily win the Republican primary on Aug. 13.

In 1994, Hovde co-founded Hovde Capital, an asset management firm that oversees hedge funds. According to a bio on the now-defunct Hovde Capital website, Hovde was “responsible for investment strategy” at the firm.

Between 2003 and 2013, Hovde Capital invested tens of millions in more than a dozen foreign companies. According to data from the Securities and Exchange Commission (SEC), Hovde Capital reported in 2006 that it had a $9.6 million stake in the Dutch bank ABN Amro.

In 2010, ABN Amro was forced to pay a $500 million fine to the U.S. government for violating the Bank Secrecy Act, a law intended to prevent banks from being used for money laundering. Between 1995 and 2007, ABN Amro altered documents to hide transactions of U.S. currency in sanctioned countries, including Iran, Cuba, Libya, and Sudan.

“ABN Amro facilitated the movement of illegal money through the U.S. financial system by stripping information from transactions and turning a blind eye to its compliance obligations,” said Assistant Attorney General Breuer.  “It is essential that financial institutions both large and small properly monitor the origins of funds flowing into our financial system.  When financial institutions fail to do so, and, even worse, manipulate information in order to profit from prohibited transactions, they will be held accountable.”

Hovde first ran for U.S. Senate in 2012 but failed to advance past the Republican primary. His financial disclosures from that campaign showed earnings from two hedge funds managed by Hovde Capital. Each of those funds had investments in the Italian bank Unicredit SpA.

In 2012, it was reported that Unicredit SpA was being investigated by the Department of Justice, the United States Treasury, and the Manhattan District Attorney’s office for allegedly helping Iranian entities and investors dodge U.S. sanctions. That investigation concluded in 2019 when two subsidiaries of Unicredit SpA were forced to pay a $1.3 billion fine. 

One of those subsidiaries, the Germany-based Unicredit AG, pled guilty to defrauding the United States. Between 2002 and 2012, Unicredit AG helped a shipping company owned by the Iranian government evade U.S. sanctions. The company allegedly provided military supplies to terrorist group Hezbollah. 

It is not known if Hovde Capital still had investments with ABN Amro or Unicredit SpA when the fines were imposed.

In 2003, Hovde Capital reported a $5.1 million investment in Bank of Bermuda, now known as HSBC Bermuda. 

In 2001, Bank of Bermuda paid $67.5 million to settle lawsuits related to a ponzi scheme. The bank allegedly helped facilitate fraudulent transactions by C4T Management. The company attracted investors with the promise of high interest car title loans. The investors’ funds, however, were used to pay earlier investors creating the illusion of a successful business. 

Bank of Bermuda was implicated in another scandal in 2006. The bank allegedly facilitated transactions that helped the owners of the reinsurance company Scottish Re avoid paying U.S. taxes. 

Between 2005 and 2006, Hovde capital reported $18 million in investments in Scottish Re. 

Hovde Capital still exists but appears to operate on a significantly smaller scale. Hovde has been involved in other ventures. He co-owns a property management company and is the current CEO of Sunwest Bank.

Asked for comment, Hovde spokesperson Ben Voelkel attacked this publication and provided the following statement: “Eric Hovde never had any controlling interest in any of these companies.”