Leaning on his father's fame, his father's money and ties, Romney's son, Tagg, set up an investment business after his father's 2008 run that may be -- could be -- a serious problem for Mitt Romney in 2012. The New York Times has done some digging.
... The younger Romney, who had been a senior adviser to his father, and Mr. Zwick presented the executive, John R. Miller, with a business proposition: the opportunity to invest in a private equity fund they were starting, Solamere Capital.
Neither had experience in private equity. But what the close friends did have was the Romney name and a Rolodex of deep-pocketed potential investors who had backed Mr. Romney’s presidential run — more than enough to start them down that familiar path from politics to profit. ...NYT
Familiar territory. Nothing very unusual here in the halls of venture capitalism or capitalist politics. And it was a family thing: parents Mitt and Ann Romney chipped in.
(This was a time, and continues to be a time, when most investors were taking hits and most Americans were floundering in debt and insecurity. In Romneyland, millions were sliding from here to there and back again.)
The firm blew past its $200 million goal, securing $244 million from 64 investors, including a critical, early $10 million from Mitt Romney and his wife, Ann, and hefty commitments from wealthy supporters of the campaign. ...NYT
However it turns out, it's clear that the senior Romneys were involved in more than politics during the run-up to 2012. They had clear ties to Solamere.
... The overlap between the elder Romney’s political apparatus and Solamere adds a different, potentially nettlesome dimension, given the widespread presumption since the last presidential election that the former Massachusetts governor was next in line for the Republican nomination.
Solamere’s founders dispute any notion that they have cashed in on their political connections, arguing that Solamere, like any fund, has had to persuade investors on its merits.
“No one we went to as an investor said, ‘Oh, your dad is Mitt Romney, I’m going to give you $10 million,” Tagg Romney said, noting that his father’s political future was uncertain when the firm began. He added, “Our relationships with people got us in the door, but that did not get us investors.”
Even so, Mitt Romney was the featured speaker at Solamere’s first investor conference in Deer Valley in January 2010. Mr. Romney, who made his fortune in private equity at Bain Capital, also gave early strategic advice. ...NYT
Enter the political activities of Spencer Zwick, Tagg Romney's friend and partner in Solamere. Spencer Zwick had also been Mitt Romney's 2008 campaign's "top fund-raiser." The new business and Romney's campaign were supported by many of the same "investors." The overlap between campaign fund-raising and Solamere's search for investors increased as more campaign workers got involved in Solamere.
Kaitlin O’Reilly is another employee who pulled double duty. At Solamere, she researched potential investors, helped coordinate the investor conference, and lined up a $1 million investor, according to LinkedIn. At Mr. Zwick’s consulting firm, she tracked donors and helped coordinate finance events for Free and Strong America. She later became a finance coordinator for the Romney 2012 campaign. ...NYT
Solamere has been in trouble with the feds along the way, for its ties to the Stanford Financial Group, a company that was selling "sham certificates of deposit."
The court-appointed receiver for Stanford ... has filed a federal lawsuit contending that former Stanford employees ignored warning signs of the fraud, and seeking to recover money from more than 300 of them, including three Solamere Advisors founders. The three, Timothy Bambauer, Deems May and Brandon Phillips, were at Stanford just over a year and received incentive compensation derived from proceeds of the bogus C.D.’s, according to court filings.
Mr. Bambauer, who was a managing partner of Solamere Advisors but left the firm last year, earned commissions and bonuses totaling more than $210,000 from actually selling the C.D.’s. Records show that he sold at least 48 fraudulent C.D.’s to 37 customers, totaling more than $13 million, said Kevin Sadler, the lead lawyer for the receiver.
Herman Stone, 70, a Charlotte businessman, said he put $2 million into a C.D. after Mr. Bambauer and his assistant, Mr. Phillips, vouched for it. “They said, ‘Mr. Stone, this is so safe,’ ” he said, adding that he plans to sue. ...NYT
The incestuous nature of Solamere/Romney campaign certainly seems intense. But it gets ridiculous when one looks into what Solamere, a venture capital firm, invests in. Struggling businesses? International start-ups? Solid job-creating investments?
Naw. It invests in other venture capital firms.
Great fleas have little fleas upon their backs to bite 'em,
And little fleas have lesser fleas, and so ad infinitum.
And the great fleas themselves, in turn, have greater fleas to go on;
While these again have greater still, and greater still, and so on. ...Augustus de Morgan
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Paul Waldman talks about the "opportunity society" and what Republicans really mean by equality of opportunity. For the rest of us, Tagg Romney represents the breaks most father's sons don't get in his (and his father's) grab for riches.
