According to a recent New York Times/CBS News poll, an astounding 66 percent of Americans said the nation's
wealth should be more evenly distributed. A similar majority believes the rich
should pay more in taxes. And 69 percent of respondents
said Republican policies favor the rich.
According to a Wall Street Journal/NBC News poll, even a majority of people who describe themselves as Republicans believe taxes should be increased on the rich.
It's no wonder that guys like Mitt Romney and Herman Cain (and virtually all Republicans) want to repeal the Frank-Dodd Act and want LESS financial reform since our economy collapsed in 2008...even knowing that the banks have been ripping us off.
But they (the 1%) have been very busy making some very serious controversial news lately.
Yesterday we heard about Herman Cain's other big scandal regarding campaign contributions and a possible IRS violation. Today two more big stories broke.
The first is about Jon Corzine, former New Jersey Governor and senior partner at Goldman Sachs, who ran MF Global and has just filed a $41 billion bankruptcy - the eighth largest bankruptcy in U.S. history. Lehman Brothers filed the biggest bankruptcy in U.S. history in September 2008. The S.E.C. is also investigating an estimated $750 million in missing funds from MF Global. Read: "MF Global Bankruptcy Rattles Wall St. Firms"
The second story is about Presidential candidate Mitt Romney and his son's connection to an $8.5 billion Ponzi scheme. This story was first posted by Lee Fang at ThinkProgress.Org
As Robert Reich writes today for the Huffington Post: "Instead of lionizing the rich, we're beginning to suspect they gained their wealth by ripping us off."
|Tagg and Mitt Romney at a basketball game.
Nov 1, 2011 - Mitt Romney and his son Tagg, and Romney’s chief fundraiser, Spencer Zwick, have extensive financial and political ties to three men who allegedly participated in an $8.5 billion Ponzi scheme. A few months after the Ponzi scheme collapsed, a firm financed by Mitt Romney and run by his son and Mitt's chief fundraiser, partnered with the three men involved with the Ponzi scheme and created a new “wealth management business” as a subsidiary.
In an exclusive interview with ThinkProgress, Tagg Romney confirmed
their business relationship, but falsely claimed that the men were cleared of
any wrongdoing associated with the Ponzi scheme. Tagg Romney told ThinkProgress
that his three partners collected about $15,000 from their involvement in the
Ponzi scheme. Court documents obtained by ThinkProgress show that the
legal proceedings are ongoing and the men made over $1.6 million selling
fraudulent CDs to investors.
The Ponzi Scheme
In 2009, prosecutors announced charges against the Stanford Financial Group, which managed a portfolio of $8.5 billion, for running a “massive, ongoing fraud” against its investors. The Ponzi scheme bust was one of the largest in recent history, second only to Bernie Madoff. The Stanford Ponzi scheme wiped out the savings of thousands, including many American retirees across the country. In Texas, 1290 people lost their retirement savings because of the Stanford Ponzi scheme; in Louisiana, several hundred reportedly suffered the same fate.
The Romney Business Connection
Solamere Capital, the investment company founded by Tagg Romney with seed money from his father, Mitt Romney and other investors. Launched in 2008 by Romney’s son Tagg and a few others, including Mitt Romney’s chief fundraiser Spencer Zwick, Solamere Capital is a “fund of funds,” meaning that it primarily invests in other investment companies, like private equity groups.
Mitt Romney himself made a $10 million initial seed investment in Solamere Capital and Romney's personal financial disclosure forms reveal that he has received between $100,000 and $1 million in returns from his stake in Solamere. Romney has come under fire for refusing to release his tax returns, which would likely reveal additional details about his financial relationship with Solamere Capital.
Solamere Capital (Boston) > Solamere Advisors (Charlotte, North
After news of the Ponzi scheme precipitated the collapse of Stanford in 2009, Tagg Romney partnered with several of Stanford’s North Carolina executives to start a firm called Solamere Advisors. At least three prominent brokers who had worked for Stanford — Tim Bambauer, Deems May, and Brandon Phillips — joined Tagg to help run Solamere Advisors, a wealth management business located in Charlotte, North Carolina. “We are excited to be associated with such a highly capable group of financial advisors with a proven track record of meeting the needs of their clients throughout the Southeast,” said Tagg in a press release announcing Solamere Advisors, which borrows its the name from its parent company, Solamere Capital.
The Romney Campaign Connection
The Romney campaign and the Romney family investment company are deeply entwined. A recent Boston Globe investigation found that top donors to the Romney campaign have invested into Tagg’s firm, and that Romney’s star campaign fundraiser, Spencer Zwick, doubles as a managing partner for Solamere Capital. The Romney campaign has paid Zwick’s firm, SJZ LLC, over $2 million in fees this year alone. Mitt Romney’s brother Scott Romney is listed as a senior advisor to Solamere Capital.
Tagg Romney Defends Partners, Falsely Claims They Were Cleared Of Wrongdoing
In an interview with ThinkProgress after the CNN debate in Las Vegas, Tagg said he was proud of his investment with Solamere Advisors, the wealth management firm now run by Stanford’s former executives. “They’re friends of ours, they use the [Solamere] name, we own a piece of them,” he said. “We helped them get started.” Romney’s son said he owns a minority stake in Solamere Advisors, but noted that they operate with some level of independence. “We don’t control them at all, we just own them,” he explained.
The Solamere Advisors website [once listed] Bambauer, May, and Tagg Romney among the directors of the firm, but have since been conspicuously removed. (Eric Scheuermann, a managing partner for Solamere Capital, is also a director of Solamere Advisors). The Solamere name comes from “a private community in Deer Valley, Utah, where Mitt]Romney owned a ski mansion,” reports Globe writers Michael Kranish and Donovan Slack.
Tagg Romney had spoken to ThinkProgress for a few minutes
while walking around the Venetian hotel after the GOP presidential debate.
“Did you know that some of those guys were in with, there were allegations that some of those guys were involved with the Allen Stanford Ponzi scheme?” ThinkProgress asked him.
Tagg replied, “Before we invested in them, they were in that. But they were cleared of that before we made our investment."
Solamere Advisors, a wealth management firm employing brokers who allegedly participated in the Stanford Financial Group Ponzi scheme. Tagg Romney helped found Solamere Advisors with an investment from Solamere Capital.
ThinkProgress also asked about the allegedly fraudulent profits made by Tagg's partners in helping orchestrate the Stanford Financial Group Ponzi scheme and the current effort by Stanford’s victims to retrieve their money.
In response, Tagg claimed that his colleagues are also victims:
“They probably made, their pay there was like $15,000 total. Those guys got
totally screwed by the whole thing. It almost ended their whole careers because
they moved all their clients over [to the Stanford Financial Group], and then
the place was shut down two months after they moved their clients over. They
hadn’t made any money yet. They had bonuses and everything promised to them,
but they didn’t make any of their money. So they made no money.”
Tagg’s assertions, that his Solamere Advisors partners who were employed in the Stanford Ponzi scheme didn’t make “any money,” and that they their involvement in the Ponzi scheme has been “cleared,” contrasts with court documents obtained by ThinkProgress. According to documents reviewed by ThinkProgess using the Pacer search engine, charges against Tim Bambauer, Deems May, and Brandon Phillips have not been dropped. A recent court filing shows May requesting the court for arbitration instead of going to trial. ThinkProgress also spoke to the deputy clerk for the federal District Court in Dallas, and confirmed that the three men are still defendants in the lawsuit to recover the Ponzi scheme money.
Moreover, a court-appointed audit of the Stanford Financial Group found that several of the former Stanford brokers made far more than what Tagg claimed:
Solamere Advisors managing partner Tim Bambauer made $1,143,392 in incentive pay selling fraudulent CDs to investors.
Solamere Advisors partner Deems May made $465,000 in incentive pay selling fraudulent CDs to investors.
Solamere Advisors operations manager made Brandon Phillips $70,000 in incentive pay selling fraudulent CDs to investors.
lawsuit filed by the Securities and Exchange Commission claims
the Stanford Financial Group built its Ponzi scheme by incentivizing
brokers to sell fraudulent CDs with an array of bonuses. A
document filed in the District Court of North Texas says that Stanford “used
an elaborate and sophisticated incentive program” to encourage brokers, like
Bambauer and others, to lure investors into the Ponzi scheme. A suit to recover
money for Stanford’s victims declares that Stanford’s former brokers are not
entitled to their performance pay because those funds were made in “furtherance
of the Ponzi scheme.”
Despite Tagg’s assertion that his partners were innocent and had no idea what was going on, representatives for Stanford’s victims differ. San Antonio attorney Edward C. Snyder, an attorney representing Stanford’s investor victims, scoffed at the notion that Stanford’s brokers did not know what they were getting into. They were “making outrageous fees and commissions from selling and promoting CDs,” said Snyder in an interview with ThinkProgress, adding, “no one makes that kind of money doing that.” As the litigation continues, Synder said he is confident that all of Stanford’s brokers that received performance pay selling CDs “are going to give the money back.” Snyder told us that many of Stanford’s brokers have made the argument that they had no idea what was going on, but he isn’t buying it. “Anyone that was selling a related-company offshore bank CD to his clients, and making such a large percent of commission, should have their license revoked,” wrote Snyder in an e-mail.
Bambauer, hired by Tagg in July 2009 as the managing partner for Solamere Advisors, left the firm two months ago, according to Deems May, who spoke to ThinkProgress last week. Bambauer was a higher level executive at the Stanford Financial Group. The Solamere Advisors website still lists Deems May (but Bambauer, as a director of the firm, along with Tagg, has since removed). A message left with the Bambauer household has not been returned.
Asked about the current effort by the court-appointed receiver to retrieve the commissions received in selling Stanford Financial Group Ponzi scheme CDs, Deems May said he “can’t comment on anything like that.”
Tagg Romney told ThinkProgress that he now only owns a 5
percent stake in Solamere Advisors, but Deems May said to check with Eric
Scheuermann, Tagg’s business partner, about the extent of Solamere Capital’s
ownership holding in Solamere Advisors. Deem Mays also referred ThinkProgress’
other questions to Solamere Capital, but the firm has not responded to ThinkProgress’
request for comment.
ThinkProgress compiled a chart illustrating the financial connections between Mitt Romney, the Romney for President campaign, Tagg Romney, and the alleged Ponzi scheme brokers. (Click photo to enlarge)
Despite Ponzi Business Connection, Romney Promises To Repeal
New Investor Protection Laws
The revelation about Romney’s ties to the Stanford Ponzi scheme unmask the risks associated with removing new investor protections. The Dodd-Frank Wall Street Reform law, a reform Romney says he will repeal if he wins the presidency, attempts to address future Ponzi schemes by enacting new protections for whistle-blowers to alert authorities when they find evidence of fraud. The law also creates a new Investor Advocate and Investor Advisory Committee within the Securities and Exchange Commission to detect and investigate future Ponzi schemes.
Mike Hudson, a reporter with iWatch News and author of a new book about how predatory Wall Street practices created the financial crisis, told ThinkProgress that Dodd-Frank “could be a game changer that helps the SEC identify and shut down Ponzis and Ponzi-like schemes.”
But on the campaign trail, Mit Romney, a fierce critic of
efforts to reign in Wall Street practices, has
called new investor protections like Dodd-Frank “extraordinarily burdensome.”
When ThinkProgress spoke to Tagg Romeny in Las Vegas, the last question about the Stanford Financial Group Ponzi scheme was this: “How do you prevent a Ponzi scheme like that?”
“Hey guys, we’re done,” Tagg said before taking off.
..and they wonder why people are protesting Wall Street and the 1%.