This editorial appeared in the Oct. 30 Providence Journal:
In 2008, Mitt Romney’s son Tagg co-founded an investment company named Solamere Capital — a “fund of funds” that invests in private-equity companies. Tagg was helped by at least $10 million in seed money from his parents. The other co-founding partners are Spencer Zwick, a campaign fund-raiser for Mitt Romney, and Eric Scheuermann, with a private-equity background.
But it’s more complex than that – there’s a labyrinth of overlapping investments involving the Romney family and their friends and allies. Mitt Romney, of course, is Bain Capital’s founding chief executive. Below the surface are troubling possibilities for selling access to, and favors from, the man who may well be our next president. Solamere touts its “access to compelling opportunities.” Indeed. Solamere held an investor conference in Salt Lake City last June just as rich Romney donors were at a fundraising retreat in the building next door. Mitt Romney vows that if elected, he will put his investments in a federally qualified blind trust and would sell off other assets “not fully compliant with federal disclosure and other rules applicable to the office of the presidency.” But that would not be the case with Tagg’s Solamere: It would not have to offer that level of disclosure. As reported in The Boston Globe and The Nation magazine, Solamere’s partners own scores of companies that live or die by government contracts and favorable regulations. Just having an inside track on what’s being talked about in the various federal bureaucracies is worth millions of dollars a year. One Solamere investor is Sun Capital, whose Scooter Stores are seen on television advertising motorized wheelchairs paid for by Medicare. A Centers for Medicare and Medicaid Services report found that 80 percent of the Scooter Stores’ sales did not meet Medicare rules, at a waste to taxpayers of nearly half a billion dollars. Marc Leder, the principal of Sun Capital, has given a total of $525,000 to Mitt Romney’s presidential campaign. And the Scooter Store has spent nearly $900,000 on lobbyists trying to stop Medicare from disqualifying its wares for taxpayer subsidies. On the campaign trail, former Governor Romney has talked up for-profit colleges, particularly one (Full Sail University) owned by TA Associates, another Solamere investor. These colleges are known for providing questionable education at high cost. Some 85 percent of their revenues come from the federal government. Fracking and other energy interests have their money with Solamere. So have investors with holdings in health-care companies and military contractors. Private-equity executives have long lobbied to keep their huge tax loophole — taxing what are effectively partners’ salaries at the low 15 percent capital-gains rate. Himself having helped create a private-equity fortune, Mitt Romney has shown no inclination to touch that particular loophole. And Solamere has followed in Bain Capital’s footsteps setting up shop in the Cayman Islands to shield its investors from tax liabilities that ordinary companies and individuals face. Don’t hold your breath waiting for tax reform on that. Adam Smith, a spokesman for Public Campaign, a reform group that reports on money in politics, called the Mitt-Tagg team “absolutely a conflict of interest.” As he told The Nation, Solamere investors, “many of whom are likely Romney campaign donors, will have extra access and influence in a Romney administration.” That Solamere is openly marketing the Mitt Romney connection is deeply troubling. Solamere’s creation is also yet another example of how America’s financial-sector plutocracy perpetuates itself. http://blogs.providencejournal.com/ri-talks/this-new-england/2012/10/taggs-terrific-team-of-crony-capitalists.html
Imperium Watch: The Solamere Money Machine
It counts your votes—and enriches the Romneys.
By Stephanie Kraft
Valley Advocate, November 01, 2012
Solamere Capital Partners is an equity firm started up with $10 million in seed money from Mitt and Ann Romney by their son Tagg and Romney chief fundraiser Spencer Zwick. It invests in other equity firms, many run by Romney political donors. One of those firms is HIG Capital. HIG in turn invests in firms that make things, things like the Hart Intercivic voting machines
that are used in certain districts in Ohio and other states. Several officials of HIG and Hart Intercivic are donors and bundlers for candidate Romney. The point is not that Republican minions are likely to tamper with the machines—though, given the sudden uptick in votes for George Bush in certain districts in Ohio in 2004 and the impossibility of tracking votes on the machines, the idea of tampering is not altogether absurd. But what common sense can’t deny is the lack of concern for appearances, the lack of protectiveness toward the perceived integrity of the electoral process, in this ownership chain. As Forbes editorialized, “… why would a political candidate and his family have a financial relationship with a company that owns a chunk of the voting machine company that will be counting the actual votes given to that political candidate or his opponent?” And there’s more you should know about Solamere. It has a subsidiary, Solamere Advisors, started up in 2009 by the Romneys’ son Tagg. Solamere Advisors went into business soon after the financial empire of Allen Stanford collapsed in February, 2009, when he was arrested on federal charges of bilking investors by selling worthless offshort bank CDs. At the time, the news was shoved into the background because everyone wanted to learn more (and more, and more) about the Bernie Madoff scandal; few noticed that there were lesser Bernie Madoffs, including Allen Stanford. Stanford owned banks that had been linked to South American and Mexican drug cartels and other enterprises that showed how fragile the line between clean big money and dirty big money can be. His firm, Stanford Financial Group, carried out a $7 billion Ponzi scheme by selling the phony CDs. Some of Stanford’s employees eventually landed in North Carolina with a financial advisory firm; three, Tim Bambauer, Deems May, and Brandon Phillips, were hired by Solamere Advisors. Tagg Romney told reporters for the Thinkprogress blog that Bambauer, May and Phillips had been cleared of involvement in the Stanford Financial Group Ponzi scheme and that they had made little or no money from it, but Thinkprogress learned that the three were among the defendants in a federal court case filed to recover money for Stanford investors. Bambauer, who left Solamere Advisors in 2011, collected $210,000 or more from selling $13 million worth of the phony CDs, according to information compiled by the receiver for the now-defunct Stanford operation and reported by the New York Times. The point is not that Romney himself is connected with the Stanford companies or tainted by the malfeasance of their owner. But a question arises that’s similar to the one raised by Forbes about the Hart Intercivic connection. Why would a member of the Romney family go into business with former Stanford associates, and give the press a misleading answer about their histories? Where is the concern for probity and the appearance of probity? In a nation with a superfluity of financial operatives, why choose old Stanford hands as partners in a new company? Then, in the face of Romney’s statements about not wanting to hurt the auto industry, the purchase by a Romney partner of autoparts maker Delphi when the White House wanted to reunite it with General Motors; the move of Delphi jobs to China; and the gambit that funneled government job preservation money for Delphi into the hands of a hedge fund in which Romney had an interest—all recently reported by Greg Palast in The Nation—raise more disturbing questions. Here’s one reason these questions are irritating: many in the “99 percent” are stuck every day with the need to make distasteful compromises, large or small, in order to survive in workplaces that are, to a minor or major degree, corrupt. But one of the best uses of money in the life of a person who has a great deal of it—and a great deal of choice about how to make it—is to enable him to stay above compromises and conflicts of interest, even perceived conflicts of interest. Follow the trail of Romney family money, however, and you stumble over one unpleasant fact, or question, after another. Why the HIG connection? Why the secondhand association with the Stanford employees? Why the investments in Chinese companies, discussed in last week’s column, that are textbook illustrations of what Romney says is wrong with China? Between the personal integrity Romney projects and the world that is built by his and his family’s way of making money, there is a troubling disconnect. http://www.valleyadvocate.com/article.cfm?aid=15819