Philip Falcone

While failing to pay his taxes, hedge fund billionaire Phil Falcone was still able to travel in style on his private jet.

In a Thursday Bloomberg story by Katherine Burton, Saijel Kishan and Joshua Gallu, it recounts the early billionaire lifestyle for Falcone with his $49 million Manhattan mansion, private jet, bodyguards and funding a new film producing career for his wife, Lisa.

Meanwhile, Falcone also owed personal taxes estimated at $113 million but didn’t want to pay from his own assets.

This picture had been painted as a result of Wednesday’s U.S. Securities and Exchange Commission lawsuit against Falcone. Refusing to take a bank loan through the backing of his hockey team investments, Caribbean home or art collection, the billionaire instead broke into the cash from one of his Harbinger Capital Partners LLC funds.

Translation (and a familiar story): Falcone used clients’ money without their knowledge.

According to the SEC suit, he favored certain investors such as Goldman Sachs Group Inc. (NYSE:GS), and participated in market manipulation. Also taking part in the misbehavior was the hedge fund’s former chief operating officer, Peter Jenson.

Robert Khuzami, the SEC’s enforcement director in Washington said of the lawsuit via Bloomberg, “The charges read like the final exam in a graduate course in how to operate a hedge fund unlawfully. Clients and market participants alike were victimized.”

Should the agency win its case, Falcone could be barred as either an officer or director of any public company. As noted by Bloomberg, there goes his ambitions to become the future Warren Buffett.

Wednesday’s lawsuit also represents the second one in two months against Falcone.

It was a fast rise for Falcone who once saw his hedge fund increase in 2008 to $26 billion thanks to a bet against subprime mortgages that ultimately went his way. Fast forward to the present and Falcone is now seeing $23 billion in losses and withdrawals. He is fighting to keep LightSquared Inc., Harbinger Capital’s biggest investment, but it will be a challenge: in May, it filed for bankruptcy.

Falcone declined to comment, according to Harbinger’s spokesman Lew Phelps, on the suit. One of his attorneys, Matthew Dontzin, did say in a statement, “The notion propagated by the SEC that investors were harmed by that conduct or any other is not only irresponsible but completely unsupported by any evidence.” He added that all the charges will be “vigorously defended in the courthouse.”