There are actually many explations for this phenomenon. The most simplest explanation in type II diabetics is just looking at the risk factors in developing hyperlipidemia and diabetes. It has been demonstrated that a diet rich in FFA's and high caloric intake is associated with both, so it's no surprise that many patients end up with both diseases. Regarding a molecular mechanism (this I had to look up), insulin actually causes lipid synthesis and prevents lipid degradation in the normal state. In cases of type II diabetics where hyper-insulinemia sometimes occurs in the setting of insulin resistance, it's been demonstrated that hepatic insulin receptors that are responsible for downregulation of glucogenesis are downregulated or made resistant while receptors for insulin that tell the liver to make lipids are up-regulated or are made more sensitive through some unknown mechanism. Insulin actually inhibits lipolysis in adipose tissue, which seems counter-intuitive to me, but I guess it has to do with insulin promoting growth and being an anabolic hormone. Most type II diabetics eventually become hypo-insulinemic, secondary to beta cell dysfunction probably secondary to their hyperglycemic and hyperlipidemic state. I'm not certain what mechanism causes these patients and type I diabetics to have hyperlipidemia when this occurs. I suspect that it has something to do with the hyperglycemic state that these diabetics are in and the increase in athersclerosis that occurs secondary to this sequestering more lipids in the plasma. It also may have to do with the non-physiologic administration of insulin we are giving these patients. Also, remember that diabetes and hyperglycemia is an independent risk factor for cardiovascular disease making any lipid present in the vascular system more "potent". That's why it's been demonstrated that practically all diabetics, irrespective of their lipid levels, will probably benefit from being placed on a statin.