Romney’s Business Journey To The Ultimate “Acquisition” of the White House

Posted on: Sunday, January 15th, 2012 by Tricia Erickson

Romney’s Business Journey To The Ultimate “Acquisition” of the White House

In 1984, while working at Bain & Company, Romney was asked to found the private equity firm. Under Romney, Bain Capital grew in to one of the world’s largest and most profitable private equity firms, touting billions in assets. From his success, Romney’s wealth was estimated at between $190-250 million in 2007.

However, under Bain Capital, some of Romney’s success resulted in losses for others. While many of the companies Romney and his team managed did wind up healthier and more profitable, team Romney caused hundreds of layoffs, closed factories and received enormous fees, just before the companies closed their doors.

In 2007, former Bain Managing Director Marc B. Wolpow reported to Bob Drogin of the Los Angeles Times, “They’re whitewashing his career now…We had a scheme where the rich got richer. I did it, and I feel good about it. But I am not planning to run for office.”

Pure and simple, under Romney’s tenure, Bain used bank loans and debt to back up several of their targeted acquisitions and investments. Then pulled cash out, removed assets, paid themselves high dividends and fees, stripped the companies down to the bone and flipped their interests by taking the company public.This strategy became quite a fast turning moneymaker for Romney and team.

One example is Calumet Coach, a medical systems manufacturer. In 1986, Bain Capital procured a stake in the company by investing $1 million and taking out loans for $10 million. After two years, they sold their stake in the company making 34 times their original investment.

Another company, DDi Corporation, was taken public by Bain Capital. Bain made 36 million off the deal. Mitt made 4.1 million, after which DDi’s stock nose-dived, the company went bankrupt and 2100 employees lost their jobs.

According to the Los Angeles Times, the suit “argued that DDi was poorly managed and ‘hemorrhaging cash’ before the stock offering, court records show.”

The Romney team also purchased a stake in Damon Corporation in 1990, which was a medical testing company. Romney served on the board. The company was purchased by Corning Inc. Bain made 3 times the money invested. Upon selling his stock, Romney declared $100,000 in capital gains. Following, in 1996, Damon was found guilty for overbilling Medicare and had to pay $119 million for civil and criminal violations.

Bob Drogan (LA Times) reported, “In 1996, however Damon pled guilty to overbilling Medicare and paid $119 million in criminal and civil fines. When asked about this during his gubernatorial race in Massachusetts, Romney claimed he was a whistleblower in the scandal. US Attorney Donald K. Stern, however, had no recollection of such actions by Romney.”

In fact, Robert Gavin of the Boston Globe reported “court records suggest that the Damon executives’ schemes continued throughout Bain’s ownership and prosecutors credited Corning, not Romney with cleaning up the situation. Bain meanwhile tripled its investment. Romney personally reaped $473,000,Romney aides would later claim that reporters “misunderstood” his whistleblowing claims – something his aides would continue to do on a number of Romney’s misrepresentations of the truth.”

Walking further down memory lane, in 1994, when Romney ran against Ted Kennedy for the Senate seat, he (Romney) made grandiose claims of creating more than 10,000 jobs. Senator Kennedy clarified that in 1992, the paper products company that Bain invested in laid off workers, cut salaries and benefits and filed for bankruptcy. “Bain Capital didn’t escape Ampad’s eventual bankruptcy unscathed. It held about one third of Ampad’s shares, which became worthless. But while as many as 185 workers near Buffalo lost jobs in a 1999 plant closing, Bain Capital and its investors ultimately made more than $100 million on the deal,” according to Robert Gavin, the Boston Globe.

All in all, Romney’s stint at Bain made him a wealthy man, enabling him to use his fortune to promote his image, career, and his ultimate acquisition of The Office of the Presidency of the United States of America.

http://triciaerickson.tumblr.com/

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Articles by Tricia Erickson

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