McCain’s Opposition Research – Part 34


Via or from BuzzFeed comes an opposition research file compiled by the McCain campaign in 2008.  The document is 194 pages long.  This post begins  near the bottom of 138 and ends at the top of pg 143.

I have bolded the first word in each entry for ease of reading.

BAIN CAPITAL AND DREXEL BURNHAM 

Romney Used Drexel Burnham Junk Bonds To Finance 1988 Leveraged Buyout, Right Around The Time SEC Officials Were Taking Formal Action Against The Company Bain Capital Financed Mid-1988 Deal With Junk Bonds Issued By Drexel Burnham And Notorious Financier Michael Milken.

“Sometimes, when Bain Capital was looking to make a deal, the bulk of the money came not from its investors but from other sources, such as junk bonds. In 1988, for instance, Bain Capital decided to buy two Texas department store chains, Bealls and Palais Royale, in a deal valued at $300 million. To fund the purchase, Bain sought out Drexel Burnham corporate financiers, based in Boston, who were working under junk bond impresario Michael Milken. Romney and the Bain Capital partner who oversaw the deal, Joshua Bekenstein, said they never dealt with Milken.”

(Mitchell Zuckoff and Ben Bradlee Jr., “Romney’s Business Record Gives Larger Picture,” The Boston Globe, 8/8/94)

Two Months After Hiring Drexel, The SEC Filed Extensive Complaint Alleging Insider Trading And Market Manipulation – Romney Defended The Decision To Keep Using Drexel In Transaction.

“On Sept. 7, 1988 -roughly two months after Bain Capital hired Drexel to issue junk bonds – the Securities and Exchange Commission filed a 184-page complaint against Drexel, Milken and others alleging insider trading schemes, manipulation of stock prices and other violations of federal securities laws. Bain Capital was put in the position of trying to close a deal with junk bonds from a company being sued by the SEC. Romney and Bekenstein defended their decision to hire Drexel before the SEC suit – at a time when rumors of the investigation were rife on Wall Street – as well as after the suit was filed.”

(Mitchell Zuckoff and Ben Bradlee Jr., “Romney’s Business Record Gives Larger Picture,” The Boston Globe, 8/8/94)

Romney:  “We did not say, ‘Oh my goodness, Drexel has been accused of something, not been found guilty. Should we basically stop the transaction and blow the whole thing up?’”

(Mitchell Zuckoff and Ben Bradlee Jr.,“Romney’s Business Record Gives Larger Picture,” The Boston Globe, 8/8/94)

Romney And Bain Capital Continued Using Drexel Burnham To Refinance Bonds Well After SEC Suit Was Initiated.

“Romney and Bekenstein said their main concern was whether the suit would damage Drexel so badly that it would be unable to sell the bonds for Bain Capital. As it turned out, the bonds sold quickly. Bain Capital then refinanced the bonds, also with Drexel, in mid-1989. Of 59 Bain Capital deals, only one involved Drexel.”

(Mitchell Zuckoff and Ben Bradlee Jr., “Romney’s Business Record Gives Larger Picture,” The Boston Globe, 8/8/94)

Romney Later Reminisced About “The Glorious Days Of Drexel Burnham,” Saying “It Was Fun While It Lasted.”

“The deal that jump-started Bain’s business came along in 1986, a $200 million buyout of Accuride Corp., the wheel and rim manufacturing unit of Firestone Co., Phoenix. Bain financed the deal with just $5 million of its own equity and borrowed the rest.  Just 18 months later, Bain sold Accuride to Phelps Dodge Co. for $320million. Its return on its investment: $130 million. ‘That was in the glorious days of Drexel Burnham,’ Mr. Romney recalled. ‘It was fun while it lasted, but fortunately, it came to an end.’”

(Jennifer Goldblatt, “Boston Buyout Firm Cashes In by Adding Value,” The American Banker, 12/23/97)

BAIN & CO. AND IRAN 

Bain & Company Was Hired By Iran’s National Oil Company In 2004 To Conduct Efficiency Study In 2004, Bain & Co.’s Italian Branch Was Hired By National Iranian Oil Company To Conduct Study On“How To Make The Bureaucratic State Company More Efficient.”

“[A]s oil minister, Bijan Namdar Zanganeh, an ally of powerful former president Ali Akbar Hashemi Rafsanjani, in the late 1990s pushed through billions of dollars in agreements with Shell, France’s Total, Italy’s Eni, Schlumberger and Halliburton to develop large and technically challenging projects, such as Iran’s huge South Pars field, which is believed to hold 7% of the world’s natural gas supply. … [National Iranian Oil Company] once tried to put on more of a Western face. Zangeneh planned to streamline it along the lines of, say, Shell, and even hired Bain & Co. Italy to conduct a $2.3 million study on how to make the bureaucratic state company more efficient. Bain & Co., headquartered in Boston, says its independent Italian unit did the work and no U.S. sanctions were violated.”

(Daniel Fisher, “Running Dry,” Forbes,7/3/06)

Bain & Company Italy – “The Italian Branch Of Bain & Company” – Opened In 1989 And Has Grown“To Become One Of Bain’s Leading Offices Worldwide.”

“Bain & Company Italy, the Italian branch of Bain & Company, opened in Milan in 1989. Over the years, Bain & Company Italy has grown to become one of Bain’s leading offices worldwide and the leader in strategic management consulting in Italy. Today Bain & Company Italy has 350 professionals and intends to further develop its success. Being part of an international group allows us to manage clients and projects at a multinational level, to develop practices and global themes, and to access information, research and supporting databases from Bain’s worldwide network. Our offices share Bain’s approach, values and experiences.”

(Bain & Co. Website,www.bain.com, Accessed 2/22/07)

Bain & Company Italy Listed In “Contact Us” Section Of Main Bain & Company Website.

(Bain & Co.Website,www.bain.com, Accessed 2/22/07)

Romney Served A Stint As CEO Of Bain & Co. In The Early 1990s.

“Bain & Co. said that it completed a financial restructuring and transfer of ownership from eight top-ranking partners to 75 senior partners. Concurrent with the transaction, W. Mitt Romney will become chief executive officer of the Boston-based international management consulting firm. Romney has provisionally held that position since January.”

(Paul Hemp, “Restructure At Bain Is Completed,” The Boston Globe, 6/19/91)

DAMON CLINICAL LABORATORIES 

Romney Was Board Member Of Company Fined Over $100 For Medicare Fraud – At The Time, It Was The Largest Criminal Fine For Health Care Fraud In History Romney Sat On Board Of Damon Clinical Laboratories, A Bain Capital Portfolio Company Fined Nearly$120 Million In 1996 Due To Medicare Fraud.

“A Needham clinical laboratory agreed yesterday to pay $119million in criminal and civil fines after pleading guilty to charges that it defrauded the nation’s Medicare system by seeking reimbursements on millions of dollars worth of unnecessary blood tests. … Damon Clinical Laboratories Inc. admitted it tried to boost its profits by submitting the unnecessary tests. The company, the government said, misled doctors into ordering the tests, ensuring that they would be covered by Medicare, the federal health care program for the elderly.”

(Kimberly Blanton, “Needham Lab Fined $ 119m For Fraud,” The Boston Globe, 10/10/96)

At The Time, Largest Criminal Fine In Massachusetts History:

“The settlement … would mark the largest criminal fine ever levied in Massachusetts.”

(Kimberly Blanton, “Needham Lab Fined $ 119m For Fraud,” The Boston Globe,10/10/96)

At The Time, Largest Health Care Fraud Criminal Fine In History:

“The $35.3 million criminal fine in the Damon case, one piece of the $119 million total settlement, is the largest ever recovered in a health care fraud case.”

(Kimberly Blanton, “Needham Lab Fined $ 119m For Fraud,” The Boston Globe, 10/10/96)

Romney Was On Damon’s Board Of Directors While The Fraud Took Place – He Initially Claimed He Was Unaware Of Any Criminal Investigation.

“Mitt Romney, former Republican challenger to US Sen. Edward M.Kennedy, who was a member of Damon’s board, said he was unaware of any investigation. … Romney said that[Damon’s then-CEO Robert] Rosen told the board in about 1992 ‘that all current practices at the company were now in conformity with government regulations and that in the past there may have been practices which would not be deemed appropriate.’”

(Kimberly Blanton, “Needham Lab Fined $ 119m For Fraud,” The Boston Globe, 10/10/96)

“Made Large Profits … From A Criminal Scheme To Fraudulently Bill The Federal Medicare System…”

“[Romney] and his venture capital firm made large profits from the 1993 sale of a Needham medical testing company whose robust revenues were generated in part from a criminal scheme to fraudulently bill the federal Medicare system for unnecessary blood tests.”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,” The Boston Globe, 10/10/02)

“Pure And Simple … Corporate Greed Run Amok.”

“Damon Corp. pleaded guilty in 1996 to a federal conspiracy charge of defrauding the government of $25 million between 1988 and 1993. It paid a record $119million fine and penalty for a scheme that then-US Attorney Donald Stern labeled ‘a case, pure and simple, of corporate greed run amok.’”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,” The Boston Globe, 10/10/02)

1993: Immediately Following Acquisition By Corning, Damon Closed Plant In Needham Heights, Laid Off115 Massachusetts Workers.

“Republican businessman Mitt Romney … helped direct a Massachusetts medical diagnostics company toward a merger that resulted in the permanent closure of a Needham Heights plant and layoffs of about 115 Massachusetts workers. Damon Corp. was headquartered in Massachusetts for more than30 years until it was purchased by Corning Inc. in 1993 and the Needham facility was closed. … The day after the merger with Corning was completed, the new company notified the Massachusetts Department of Employment and Training that it was permanently closing the Needham plant and laying off about 115 people.”

(Meg Vaillancourt,“Romney-Aided Deal Closed Damon Plant,” The Boston Globe, 10/9/94)

Romney “Feared” The Massachusetts Layoffs Would Come, But Voted To Approve Deal Anyway.

“As a board member, Romney pointed out he had a legally binding ‘fiduciary responsibility’ to get the best deal he could for the shareholders, though he acknowledged that at the time he feared Corning would close down the plant and lay off the Massachusetts employees. … No one met Corning’s tender offer, which Romney described as ‘stunning.’ He said he voted to accept the offer, as did the vast majority of other shareholders. ”There was nothing I could do.’”

(Meg Vaillancourt, “Romney-Aided Deal Closed Damon Plant,” The Boston Globe, 10/9/94)

As A Gubernatorial Candidate, Romney Claimed He Helped “Uncover” And Stop The Fraud At Damon.

“[R]omney said Thursday he helped uncover the fraud at Damon and hired an outside law firm to investigate it. ‘We took action based on what was told to us by the law firm,’ Romney said …”

(Ron DePasquale, “Romney Downplays Report He Profited From Firm Tied To Fraud,” The Associated Press, 10/10/02)

Romney Tries To Take Credit:  “Mr. Romney said yesterday that he aided in uncovering and stopping the fraud one year before the sale. … Mr. Romney said board members, including himself … had started an inquiry that led to the disclosure.”

(John Monahan, “Ex-Presidents Stump For O’Brien, Romney,” Telegram & Gazette [Worcester, MA], 10/11/02)

“Romney Has Said He Helped Uncover The Fraud But Never Reported It To Authorities.”

(Tom Benner,“O’Brien Sees Savings Possible In Budget,” The Patriot Ledger [Quincy, MA], 10/23/02)

Federal Investigators Rebuffed Romney’s Claims, Saying The Fraud Continued Until Bain And Other Owners Sold Damon To Corning In 1993.

“A spokesman for Romney, Eric Fehrnstrom, said Thursday that Romney and other board members helped uncover the fraud at Damon after similar fraudulent practices were found at another laboratory in 1992. … But court records, including statements by prosecutors and by Damon officials, indicated that the fraud continued until Corning purchased the firm.  Prosecutors gave Corning sole credit for cleaning up the fraud.”

(“Report: Mass. Candidate Romney Profited From Sale Of  Firm That Later Admitted Medicare Fraud,” The Associated Press, 10/10/02)

“Federal Officials … Have Disputed Mr. Romney’s Claim That He Helped Stop And Correct The Practice.”

“Mr. Romney was a director from 1990 to 1993 and said he and the board of directors learned of the problem in 1993 when its own legal staff investigated the billings. Federal officials who prosecuted the case have disputed Mr. Romney’s claim that he helped stop and correct the practice, saying the company did not report the fraud to federal authorities and the practice was stopped by the company’s new owners after it was sold.”

(John Monahan, “Romney Talks To Crowd At Fallon,” Telegram & Gazette[Worcester, MA], 10/12/02)

 

“No Corrective Action Was Taken When Romney Was On The Board…”

“In the 1996 settlement, records show the [fraud] scheme was carried out between 1988 and the time that Damon was sold, indicating that no corrective action was taken when Romney was on the board and served as a member of its strategic planning committee.”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,” The Boston Globe, 10/10/02)

Officials Gave Corning Sole Credit For Cleaning Up Damon’s Fraudulent Practices.

“[C]ourt documents – and Damon’s admission – reveal that the fraudulent activity was occurring right up until the time Corning purchased the company from Bain and other owners. … [D]amon’s filings with the federal Securities and Exchange Commission during the weeks and months just prior to the sale contain no mention of possible legal problems over its billing system, or potential negative impact that would require downward revenue revisions.”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,” The Boston Globe, 10/10/02)

“Damon’s Activities Cost US Taxpayers Nearly $40 Million, The Government Said.”

(Kimberly Blanton, “Needham Lab Fined $ 119m For Fraud,” The Boston Globe, 10/10/96)

Romney Personal Profit From Bain’s Sale Of Damon: More Than $470,000.

“Republican gubernatorial candidate Mitt Romney and his venture capital firm made large profits from the 1993 sale of a Needham medica ltesting company whose robust revenues were generated in part from a criminal scheme to fraudulently bill the federal Medicare system for unnecessary blood tests. Romney personally made $473,000 when Corning Inc.purchased Damon Corp., on whose board he served between 1990 and 1993.”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,”  The Boston Globe, 10/10/02)

Romney Earned Nearly $40,000 In Directors’ Fees Alone.

“Romney’s firm, Bain Capital, and Romney himself were minority investors in Damon from 1990 through August 1993. The Belmont businessman sat on Damon’s board of directors, earning nearly $40,000 in directors’ fees, and was a member of the company’s strategic planning committee when Damon was sold to Corning.”

(Meg Vaillancourt, “Romney-Aided Deal Closed Damon Plant,”  The Boston Globe, 10/9/94)

Bain Capital Tripled Its Investment On The Deal:

“[Romney’s] firm, Bain Capital, tripled its initial investment, making a profit of $7.4 million over a four-year period for its investors, according to copies of Bain documents obtained by the Globe.”

(Frank Phillips, “Romney Profited On Firm Later Tied To Fraud,” The Boston Globe, 10/10/02)

Romney “Proud” Of Role With Damon.

“‘I’m proud of the small part I played in the growth of  Damon,’ Romney said yesterday. ‘It’s something that Ted Kennedy doesn’t have a clue about – creating real jobs in the private sector.’”

(Meg Vaillancourt, “Romney-Aided Deal Closed Damon Plant,” The Boston Globe, 10/9/94)

AMPAD 

Romney’s Firm Owned Company Named Ampad That Purchased Indiana Paper Plant, Fired Its Workers And Offered To Bring Them Back At Drastically Reduced Salary And Benefits In 1994, Bain Capital-Controlled Company Named Ampad Bought An Indiana Paper Plant And Promptly Laid Off Hundreds Of  Workers – Firings Became An Issue In Romney’s Senate Race.

“Romney’s business background became a liability in his unsuccessful 1994 challenge to US Senator Edward M. Kennedy … The issue erupted over Ampad Corp., a paper company Bain Capital controlled. In July 1994, Ampad bought an Indiana paper plant, fired the existing workers, and gave most employees their jobs back at reduced wages and benefits.”

(Stephanie Ebbert, “Romney Seeks High Office With Confidence, Pedigree,” The Boston Globe, 8/11/02)

 

Layoffs Came On Top Of Wage And Benefit Cuts, “Sparking A Bitter Strike.”

“Bain owned 80 percent of Ampad when it bought the Marion plant in July 1994, slashing wages, cutting benefits and sparking a bitter strike. Workers were fired and forced to re-apply for their old jobs at less money.”

(Andrew Miga, “Plant Workers May Resurface,” Boston Herald, 4/4/02)

 

After First Defending Layoffs, Romney Later Tried To Convince Striking Workers He Was Not Involved By Showing Them Flowchart Of Bain Capital Management Structure.

“Romney initially tried to justify the layoffs, defending them as necessary in corporate restructuring. Prodded by the workers to meet with them in Boston, Romney eventually did so, but even then, he further distanced himself, showing a diagram of Bain Capital’s corporate structure, claiming he was not to blame.”

(Stephanie Ebbert, “Romney Seeks High Office With Confidence, Pedigree,” The Boston Globe, 8/11/02)

 

Romney Claimed He Was On Leave From Bain Capital When Ampad Layoffs Began, But Former Bain Executive Said Romney Bore Responsibility.

“In 1994, Romney tried to distance himself from the Ampad controversy, since he was on a leave of absence during the initial downsizing. But [former Bain Capital executive and Ampad board member Marc] Wolpow, who came to Bain in 1990 from Drexel Burnham, the infamous junk bond company, says: ‘I reported directly to Mitt Romney … You can’t be CEO of Bain Capital and say, “I really don’t know what my guys were doing.”‘ And what were Romney’s guys doing? ‘My job was to maximize the profits to Bain Capital’s partners from the Ampad transaction,’ says Wolpow…”

(Joan Vennochi, Op-Ed, “Questions Romney Shouldn’t Dodge,” The Boston Globe, 10/24/02)

 

Three Months After Plant Controversy Roiled 1994 Election, Ampad Decided To Close The Plant Altogether Union Officials Say Romney Was Running Bain Capital When The Plant Ultimately Closed In February 1995.

“Workers blamed Romney for shutting down the Ampad plant in Marion, Ind., three months after he lost to Sen. Edward M. Kennedy (D-Mass.), eliminating some 200 jobs and sowing misery for hundreds of families. …[U]nion officials said Romney returned to Bain after the Nov. 8 election and was there when the plant closed Feb. 15, 1995.”

(Andrew Miga, “Plant Workers May Resurface,” Boston Herald, 4/4/02)

 

Candidate Romney Promised He Would Look Into Workers’ Complaints After The Election, Then Sat By As Ampad’s Board (40% Of Which Answered To Him) Voted To Close The Plant.

“Romney was routed despite promising the Indiana workers that he would ‘look into’ their complaints after the election. So when Ampad’s five-member board, two of whom answer to Romney via Bain Capital, voted to give up and let the paper plant close, the defeated candidate felt little need to make noise on labor’s behalf. ‘That was a local decision made on local merits,’ he said after the Ampad plant received its death warrant. ‘My record on creating jobs herein Massachusetts speaks well for itself.’”

(Tom Mashberg, “Romney Backers, Foes Spar Over Plant Closing,” Boston Herald,2/21/95)

 

Then-State AFL-CIO Head Joseph Faherty Promised He Would Remember Romney’s Actions And “Expose His Record For The Sham It Is.”

“If payback is sweet, then Mitt Romney enjoyed his with extra icing last week when the 250 Indiana unionists who helped scuttle his Senate bid finally saw their own jobs go under.… Joseph C. Faherty, head of the state’s AFL-CIO, [indicated] that the political payback could keep going around, and coming around.  ‘Romney has exacted the final retribution against Ampad workers,’ he said. ‘Should he decide to seek office in the future, we will be there to expose his record for the sham it is.’”

(Tom Mashberg, “Romney Backers, Foes Spar Over Plant Closing,” Boston Herald, 2/21/95)

“The Plant Closed … With Hardly A Whimper Of News. ‘We Won’t Forget,’ Faherty Said Yesterday. ‘Be Warned.’”

(Tom Mashberg, “Romney Backers, Foes Spar Over Plant Closing,” Boston Herald, 2/21/95)

Ampad CEO Had No Doubt Romney Authorized “Rollup” Strategy That Cost Workers Their Jobs.

“[Charles Hanson III] was CEO of Ampad from 1992 until 1998, when Bain asked for his resignation. Hanson said thatthough he had had no direct contact with Romney after Bain took over Ampad in 1992, it was clear to him that‘any significant direction we received would certainly have been authorized by him.’ Bain Capital, he said, was interested from the start in a ‘rollup’ of Ampad, a consolidation of its resources that clearly involved the layoffs the workers decried yesterday. And Hanson said he had no doubt Romney approved of that strategy.”

(Yvonne Abraham,“Workers Press Romney On Layoffs,”  The Boston Globe, 10/29/02)

Ampad Went Public In 1996, Earning Bain Capital Over $100 Million, Then Declared Bankruptcy Four Years Later A Year After Indiana Paper Plant Was Shuttered, Bain Capital Made Over $100 Million Profit By Bringing Ampad Public.

“Ampad raised $243 million when it went public in July 1996. Bain Capital earned $107 million by selling its shares, a sizable profit over its initial $5 million investment in 1992, according to a Bain Capital sales brochure obtained by The Associated Press. The document did not say how much Romney himself earned.”

(JohnMcElhenny, “Democrats Revisit Labor Deal That Hurt Romney In 1994,” The Associated Press, 10/22/02)

“In January 2000, Ampad Declared Bankruptcy.”

(Joan Vennochi, Op-Ed, “Questions Romney Shouldn’t Dodge,” The Boston Globe, 10/24/02

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