More On Romney & Bain’s SEC Filing — Was It Fraud?

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In Bain’s SEC Filings I wrote, “Key point: those SEC forms reassure Bain partners that Romney WAS running things after 1999. Tons of $$ involved. If he wasn’t that’s fraud.” On Sunday’s Up With Chris Hayes a former Bain partner seems to have confirmed my theory.
In 1999 Mitt Romney left Bain Capital to run the Olympics. But SEC filings and many other documents have turned up that claim Romney was still running Bain. This matters because after stories started to circulate that Bain was heavily involved in offshoring jobs to China, Romney has been insisting that he wasn’t there when Bain was doing the offshoring. (Never mind that he never asked them to stop doing that…)
My thinking is that the partners at Bain Capital insisted on maintaining the appearance that Romney at the helm to reassure their partners — investors, banks and buyout targets — that they were stable after Romney left when really they were not. They trusted Mitt and maybe there was a big danger of them pulling out of deals if they thought Mitt was not coming back. If Romney wasn’t there and they were assuring these companies that he was (and Romney insists he wasn’t there), that’s fraud (and conspiracy, with Romney signing the forms), never mind false signing of SEC forms. Fraud by Bain and fraud by Romney. And big money was on the line, so there was a lot of motive there.
As I wrote the other day, I interviewed Bain partner Ed Conard on the Fairness Radio program on May 16. I was pinning him down on how much risk Bain was taking to justify the huge returns they received, and he started talking about how their reputation is what holds all their partners to Bain. I wrote about this here, including links to the audio.
Then on Chris Hayes’ show this last Sunday Conard was on, and said quite a few things that I think might confirm what I was thinking. If you look at this as Romney suddenly leaving the firm to take on the Olympics job, which Conard talks about, and the firm scrambling to figure out what to do about this sudden departure which has left all the bankers, investors and buyout targets hanging, and the firm trying to reassure them things were stable, you see what I am talking about. Conard talked a few times on Hayes’ show about Romney’s “franchise value.” In other words, he means those partner companies wanted to see the name Romney at the helm of the firm.
So you see the motive for the double answers here — that he was and he wasn’t. The firm’s partners had a huge financial motive at the time to tell people Romney was there, and Romney went along with that ruse by signing things, and now Romney has a big motive to explain that he wasn’t really there. He’s calculating that public anger over offshoring (see Bain “Offshoring” Is A Big Deal Because Voters Want American Manufacturing) is a greater risk to him than people figuring out that he and Bain were committing fraud ten years ago.
Also by the way the fact that the firm didn’t put someone else at the helm, and as they say were running it with some kind of council of the firm partners, also tends to confirm what I suspect. If they officially put someone else in charge the people they were doing business with would learn that Romney (with all his “franchise value”) was not there running things. So the big question “so who was running Bain after Romney left?” really is the question, and they were hiding the fact that Romney had left, because various people they were doing business with might have pulled out.
Once again, if I am correct this was a fraud on those investors, banks and buyout targets. The statute of limitations has run out on this, but there is conspiracy, and there is Romney’s campaign still.
Here is Ed Conard on Up With Chris Hayes. With the above in mind, watch Ed Conard explain things, and tell me this doesn’t appear to confirm what I think is/was going on.

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Those 2010 Romney Tax Returns? Not.

Turns out that the 2010 taxes he showed us — were, uh, missing … uh … a few things.
Mitt Romney Taxes For 2010 Not Fully Disclosed

Romney released his 2010 tax return in January of this year, a document that first informed voters about the existence of his Swiss bank account and financial activities in Bermuda and the Cayman Islands. But people who own foreign bank accounts are required to file a separate document with the IRS that provides additional details on such overseas bank holdings, and Romney has not released that form to the public.
… Nevertheless, Romney’s omission of the form from the earlier disclosure raises questions for tax policy experts about the function of his Swiss bank account, and whether or not Romney used other offshore bank accounts that did not generate interest.
“The campaign has never told us why he had a Swiss bank account,” said Rebecca Wilkins, senior counsel for federal tax policy at Citizens for Tax Justice, a nonprofit tax reform group. “It just looks bad.”

So DID Mitt Romney Really “Create Jobs” At Staples?

Did Mitt Romney really “create 100,000 jobs” with Staples? Simple answer: only if no one else was selling office supplies, stationery, etc. before Staples came along. What Staples did was force many competing stationery, office supply and computer stores out of business, probably shifting their employees into lower-wage jobs. Staples was just one more part of the Wal-Martization of our economy in the last few decades. In our system the wealthy few have the power to lay people off or force pay cuts and then pocket the difference for themselves. We have to come to grips with that, and fix the system.

Job Creator?

Mitt Romney says he should be President because he and his company Bain Capital created 100,000 jobs at Staples and “created jobs” at other companies that Bain took over. So … did Mitt Romney really “create jobs” at Staples? Or did he and Bain really just follow the Wal-Mart model, using the advantages that come with having large, national chains, putting a number of local, smaller businesses out of business, while shifting a lot of people into lower-paying jobs? Understanding the difference is important because Romney says he will help the country “create jobs” the way he helped “create jobs” at Staples.
He says his experience is just what is needed to solve our national jobs emergency. He wants to apply the methods that “created 100,000 jobs at Staples” to the entire country. He says he will cut regulations and cut government and make the country more “business-friendly.” This means we should take a good look at Staples and the rest of the companies Mitt Romney and Bain Capital and others like them operated, and decide if this is really the way We, the People want to go.

Staples

Staples grew into a major chain because they consolidated what different kinds of stores sold, offering a one-stop-shop for stationery products, office supplies, office-furniture, computers, etc. They also were able to be competitive because of the advantages of scale as they grew into a national chain, centralizing functions like accounting, purchasing, legal, marketing, etc. And never underestimate the power of having a ton of cash at your disposal. This is all just smart business, well executed.
As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores — often local retailers. Staples did not “create” jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.

Low Wages?

How do these”Romney job creator” jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That’s $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

Wal-Martization

Big, national chain stores like Wal-Mart have tremendous advantages over local businesses because they are able to take advantage of scale. They buy from manufacturers and distributors in mass quantities, which means they can demand lower prices from them, and offer lower prices to customers. They can centralize accounting, HR and other management functions and employ these people in-house instead of contracting with local accounting firms, etc., also enabling them to offer lower prices.
And when they are big enough they can squeeze, and squeeze and squeeze their workers for lower wages and fewer benefits, their suppliers for discounts and other concessions, and even their customers by reducing support and staff, again enabling them to offer lower prices.
This is just the kind of “job creation” that makes a few people really wealthy at the expense of the rest of us, “hollowing out” the middle class.
(Here’s an industry secret –those multi-page advertising supplements that come in the Sunday paper are profit centers for the chains, not an advertising expense. The market power of these big chains enables them to demand “market development” payments from product manufacturers and distributors before they can gain shelf space, effectively making the newspaper and other advertising into profit centers instead of advertising costs.)

The Effect On America

I wrote about the impact of this “squeeze them all” business model on the American landscape in Lorain, OH Keep It Made In America Town Hall Meeting:

As you drive from town to town in Michigan and Ohio you see one after another a ring of the “big box” stores and national chain stores around each city. You also see the “brownfields” of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.
You used to hear about how Wal-Mart was predatory, how it would show up in an area and after a while the downtowns would dry up, local business-owners would go broke, local business employees would be laid off, and the local people would have to work for low wages at Wal-Mart, while the region’s spending money would go off to the wealthy few who run these things.
Well a juicy story of devastation like that one gets around, and there are those who hear it and say, “Hey, that’s a great idea, I wanna get me some of that.” So the Wal-Mart business model has taken off and now there are any number of these vultures, ringing the cities and towns around the country, so often private-equity owned. They are draining away the lifeblood of the downtowns, fighting off the unions to keep wages down, even demanding tax breaks to move in and “create jobs.” You see all the same stores circling every town now, running all of the local and regional businesses unto the ground.

Restructuring?

The changes in our economy that are hollowing out the middle class come from the restructuring that Wal-Martization represents. (And bad trade deals, never forget that.) Big, national chains have natural advantages over small, local businesses. And when they are big enough they have the power to squeeze employees, suppliers and even customers. The same kinds of advantages also hold for other industries.
Big, multinational corporations have advantages of scale over smaller companies. Etc., throughout our system. And big companies have tremendous power to squeeze workers, making them accept lower pay and benefits. They have the power to squeeze suppliers and customers as well.
These giant companies even have the power to squeeze communities and even states, demanding tax concessions with the threat of relocation. This has put our tax base in a downward spiral along with our wages.
These giant businesses have the wealth and power to force changes that move the benefits of business and our economy entirely to a few at the very top.

The Playing Field

As I wrote above, this is all just smart business, well executed. Business are just neutral bundles of contracts that operating on a playing field of laws and regulations. They only do what we let them do with the laws and regulations that we set out there for them to operate under, and those that do that the best and smartest win the game.
But why would We, the People allow businesses to do things the way Wal-Mart and the rest do them with the terrible results we see all around us? Don’t we want businesses that benefit all of us? Isn’t that the point of having a We, the People country? Don’t we want businesses that pay good wages, provide good products and services, and pay us back with taxes that enable us to have good infrastructure, internal improvements, and public structures like good schools, universities, courts, police, firefighters, health care, retirement and a fair share of all the other benefits of modern society?
Why is the playing field defined in a way that is so obviously hurting us and funneling all the benefits of our economy to a very few at the top? This restructuring is occurring the way it is because we let these businesses do these things to us. Businesses are not good or bad — they can’t be, they are not sentient and do not have morals. They are just bundles of contracts. Again, businesses are neutral, operating on a playing field defined by us. We can change that.
Our problem today is that a few people are able to change the rules of that playing field, for their own benefit. Once we allow money to influence our government decision-making and our public attitudes and understandings at all, then of course it will influence that decision making to their advantage, and will do so more and more as they gain more wealth and power from it, until there is nothing left. This is the road we are on.
The playing field is tilting and tilting and We, the People are starting to fall off the edge.

What Can We Do?

Cut to the chase. We currently operate under an economic paradigm, or system, in which the Romneys have so much power they can fire masses of people or force people to take pay cuts, and then pocket the difference for themselves. They can squeeze their suppliers for greater and greater concessions and then pocket the difference for themselves. We have to come to grips with that.
Romney/Bain didn’t really create jobs with Staples, they put small office and stationery retailers and other already-existing competitors out of businesses and moved the workers from those outlets into jobs at Staples that pay very little. In other words, they didn’t create 100,000 jobs, they lowered 100,000 people’s wages.
Romney made his money opertating on a playing field of business rules that let him and Bain and Wal-Mart and the rest do what they do. They were all able to tilt that playing field in their favor using the wealth and power they already had, and they tilted it in ways that gain them more wealth and power.
Mitt Romney gained his wealth and power on that playing field, and is campaigning with a promise to further tilt that playing field in favor of the few who already have great wealth and power.
We can change those rules. We can demand better pay, higher taxes at the top, better products, better service, and all the things sensible people would demand if We, the People were really in charge.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Note – while researching this post I came across Jonathan Tasini making a number of these points in the LA Times in January, in Not all jobs are equal,

Even if he’s telling the truth by some measures, the fact is that private equity buyouts often enrich those who arrange them by sharp cost-cutting, including dismantling pay and benefits for most of the workers who remain or new hires who join the more “efficient” enterprise. It’s simple math: To service the huge debt taken on in virtually every buyout, workers take cuts. And the new jobs aren’t necessarily a path to the American dream.
Take Staples, which Romney trumpets as one of his successes. The company certainly pays some of its employees well: Staples Chairman and Chief Executive Ronald L. Sargent received a total pay package of more than $15 million in 2010. But jobs in retail — one of the fastest-growing job sectors in recent decades — tend to pay poorly, and Staples jobs don’t seem to be an exception to that rule.

Bain’s SEC Filings

Key point: those SEC forms reassure Bain partners that Romney WAS running things after 1999. Tons of $$ involved. If he wasn’t that’s fraud.
Mitt Romney says he left Bain in 1999, and had nothing further to do with managing the company. The reason this is important is that soon after 1999 Bain was doing all kinds of things to send jobs to China. They were not just sending jobs to China, they were investing in companies that “pioneered” all kinds of ways to make money helping other companies move jobs out off the county.
The Obama campaign ran ads about this, so “fact checking organizations” tried to help out the Romney campaign by saying that Romney departed Bain in 1999. Romney is demanding an apology from Obama. (Never mind that Romney, running the firm or not, did nothing to STOP Bain from sending our jobs to China…)
BUT they didn’t get away with that. Talking Points Memo turned up SEC documents filed by Bain that claimed Romney was “Chief Executive Officer, President and Managing Director” at the time Romney claims he was not there.
Fraud?
Romney still claims he wasn’t there, that this filing was just a technicality. But this really matters, because the firm had reason to assure business partners that Romney was still running the company. On May 16 I was co-hosting the Fairness Radio radio show. We interviewed a former Bain partner, Ed Conard, who said that Bain’s competitive advantage was the reputation of its management. This is why partners came to them and invested, why companies let them take over, etc. So the people at Bain were very conscious of this.
Bain partnered with investors who were putting tens of millions into deals. They wanted reassurance that the Bain management they were comfortable with was in operation. If Bain was claiming Romney was still there in SEC documents, I think this was fraud, it was about reassuring partners and co-investors and businesses they were buying that their management was in place, stable, and had the reputation that was so important to them.
This is a big deal.
Click to hear Fairness Radio show interview with Ed Conard. Starting at 21:15 minutes Conard talks about the value of Bain’s business reputation.
It’s at 103:00 in the following, (but the slider is easier to use in the above link) (PS host introduces me as Huffington Post — I’m not an employee there.):

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Romney/Bain/Accounts – Where Is Our Country’s News Media?

Back when Bill Clinton was President there was a huge media-swarm controversy because a decade before her husband was elected Hillary Clinton had made $100,000 over ten months by investing in cattle futures. Now, skip forward to 2012. Report after report circulates about a candidate for President who owns a secret company in Bermuda, Swiss and Cayman Islands bank accounts and an IRA containing as much as $100 million — and who may have filed SEC documents containing false information (a felony). Huge media swarm this time? Not so much.

Cattle Futures?

In the 1970s Hillary Clinton made some speculative investments. Over a period of 10 months she made investments in cattle futures that did well, earning $100,000. Later when her husband was President, the media wanted to find out how she was able to make such a large, huge, ginormous sum from speculative investments.
Take a look at the 350,000-or-so web references to cattle futures trades made by Hillary Clinton way back in the 1970s. This might give you an idea of how big a deal it was back in the mid-90′s that Hillary Clinton had made $100,000 (!!!) on speculative investments back in the 1970s. (The number of stories located online is possibly reduced by the fact that the media swarm happened in the mid-1990s — largely before the Internet.)
Look at the outlets that assigned teams of reporters to investigate: All the TV networks, the Washington Post, New York Times, Newsweek, and all of the rest of the jouranilmalism crowd were all over what was considered to be a major story.
This story was investigated, written about, investigated, written about, and investigated. No evidence of any wrongdoing was ever found — which many in the media took as clear proof that there had been a massive cover-up.

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