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Mitt Romney Has a Huge New Conflict-of-Interest Problem

JANUARY 16, 2015

In 2012, Mitt Romney’s career as a businessman who earned many millions of dollars became a net loss, as political foes slammed him for running Bain Capital, a private equity firm that invested in US companies that downsized and shifted jobs overseas and that obtained financial stakes in foreign companies that depended on US outsourcing for profits. At the same time, Romney, who refused to do a full release of his tax returns, was hit with questions (he didn’t answer) about mysterious personal investments in offshore accounts. Should he mount a third presidential effort, as he has told GOP funders he is considering, all of these issues are likely to return. But there’s another matter that will be be added to the pile of financial controversies for Romney to face: Solamere Capital, the $700 million private equity firm cofounded by his son Taggart that Romney has helped run since March 2013. Who has Romney been investing with, and what has he been investing in? These are questions that Romney 2016 will confront and that, no doubt, the firm will not want to answer.

In March 2013, Mitt Romney became chair of Solamere’s executive committee and a member of its investment committee, and Solamere’s bare website currently lists him as the executive partner group chairman. The site only describes the company as “a collection of families and influential business leaders leveraging their broad networks and industry expertise to invest strategic capital.” But the firm has recruited scores of investors willing to give the Romneys millions, and it has invested in an untold number of other funds and companies. Any of these parties—the investors or the investments—could pose a conflict of interest for a presidential candidate or raise a significant question. Has Solamere invested in companies that outsource? Or in overseas firms that compete with US firms? Has it drawn investments from people or corporations at home or abroad that want to curry favor with a possible president? Might the companies and private equity firms Solamere invests in have an interest in lobbying a future Romney administration? There is no way for the public to know; the firm does not disclose any information on its investors or investments. So how will Romney respond to these and other questions about his work for Solamere?

- https://www.motherjones.com/politics/2015/01/mitt-romney-new-private-equity-problem-solamere-capital/

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Tagg Team: The Romney Family Recipe for Crony Capitalism

OCTOBER 29, 2012

This article was reported in partnership with The Investigative Fund at The Nation Institute, with support from The Puffin Foundation.

Marc Leder, a wealthy investor, played host to Mitt Romney last May at a private fundraiser at his $4 million home in Boca Raton. Little did Leder know at the time, however, that someone would videotape the event and later leak it to the world, revealing the GOP standard-bearer in the act of caustically dismissing 47 percent of the country as too “dependent upon government” even to consider voting for him this year.

Leder attempted to duck the ensuing storm of media attention, telling Fortune that he had simply “hosted a fundraiser for an old friend.” But Leder’s ties to the candidate run deeper than campaign contributions or an old friendship. As an investor, he is part of a network of links to the Romney family business empire that will acquire enormous relevance if the GOP nominee manages to ascend to the White House.

In 2008, soon after Romney ended his first bid for the presidency, his eldest son Tagg and his chief fundraiser, Spencer Zwick, formed Solamere Capital, a private equity firm named after the exclusive community in Utah where Romney owned a vacation ski lodge.

What Tagg lacked in experience in the world of high finance, he made up for with a vast network of political connections forged through his father, who seeded the firm with $10 million and was the featured speaker at its first investor conference in January of 2010. Romney also reportedly gave strategic advice to the company, which secured prominent campaign donors as some of its first investors.

Unlike most private equity firms dedicated to analyzing and buying companies, Solamere specializes in something else: billing itself as a “fund of funds” with “unparalleled networks,” it provides investors with “unique access” to an elite set of other private equity firms and hedge funds. Sun Capital Partners, the fund founded by Leder, is one of at least thirteen Romney-linked firms in Solamere’s network, according to a prospectus circulated among potential investors and uncovered by The Boston Globe last year. Solamere also has an investment relationship with Bain Capital, the pioneering fund founded by Mitt Romney.

Solamere, a firm predicated on its founders’ relationship with Romney, presents a channel for powerful investors to influence the White House if he wins. Private equity executives looking to lobby a Romney administration may very well have a leg up if they are already doing business with the firm that the president created for his son.

Requests for comment from a Solamere representative for this article were not answered.

- https://www.thenation.com/article/archive/tagg-team-romney-family-recipe-crony-capitalism/

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Ties to Romney ’08 Helped Fuel an Equity Firm

April 30, 2012

About a month after Mitt Romney ended his bid for the Republican presidential nomination in February 2008, his eldest son, Tagg, and Spencer Zwick, the campaign’s top fund-raiser, met with a beef company executive who had been a major campaign donor over dinner at the posh Torrey Pines resort in San Diego.

This meeting, however, was not about politics. Instead, 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.

Two years later, despite a challenging fund-raising climate for private equity, Solamere, named after a wealthy enclave in Utah’s Deer Valley where the Romneys have a winter home, finished raising its first fund. 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.

The small firm, including Tagg Romney, 42, Mr. Zwick, 32, and a third partner they brought in, Eric Scheuermann, 47, the only one with a private equity background, is in line to collect at least $16.8 million in fees over the first six years of the fund, according to a filing with the Securities and Exchange Commission. The firm has earned a 20 percent return since 2010, despite having invested only about half of its money so far.

It is not unusual for start-ups looking for investors to approach friends and relatives. But 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.

While Solamere has not operated exactly as a subsidiary of the Romney campaign, it has seemed that way at times. The firm shared its first address with the Romney campaign headquarters in Boston. Later, the company was located in the same building as Mr. Romney’s leadership PAC, Free and Strong America, before moving to trendy Newbury Street in Boston.

When Mr. Zwick was leading Solamere’s fund-raising in 2008 and 2009, he was also raising money for the leadership PAC, which paid his finance consulting firm, SJZ, LLC, more than $425,000 during those years.

Solamere began sending offering memorandums to prospective investors in May 2008, around the time the leadership PAC began collecting checks, raising the possibility that Mr. Zwick was soliciting some people for both ventures.

Mr. Zwick insisted there was no conflict, explaining that the work he did for the political committee was relatively low-key. He said the payments to his firm went to other contractors, and that he was a volunteer.

- https://www.nytimes.com/2012/05/01/us/politics/ties-to-romney-08-helped-fuel-equity-firm.html