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Was Mitt Romney Running His Own Bankruptcy Ring?

more from Rmuse
Wednesday, September, 12th, 2012, 10:35 am

It is standard procedure for many industries to use specialized teams to conduct tasks that are high in complexity, and the team usually comprises dedicated individuals who work together often to assure success. For example, a record label frequently uses the same producer, engineer, promoter, and recording studio for all their artists, and it is not uncommon for land developers to use the same set of sub-contractors on all their projects to guarantee consistency. In many cases, a team is chosen based on their track record and familiarity with the goals and expectations of their employer, and it is the same in the judicial system where teams of lawyers specializing in corporate bankruptcies are retained to guarantee everyone involved is treated fairly .

Since Willard “Mitt” Romney entered the presidential race, there has been extra attention given to his business dealings as head of Bain Capital, and it is in part due to his assertion that his best qualification to fix the nation’s economy is his business acumen. However, Romney’s record reveals that much of his wealth came from leveraging companies with crushing debt and using a team of trusted specialists who mastered the art of manipulating bankruptcies that left investors and creditors with little or nothing. After looking at some of the companies Bain Capital managed and eventually bankrupted, a pattern develops that begs the question; did Mitt Romney & Bain Capital own a bankruptcy ring consisting of Jack Bush, Barry Gold, Paul Traub, and Michael Glazer?

Matt Taibbi’s Rolling Stone cover story, “Politics: Greed and Debt: The True Story of Mitt Romney and Bain Capital,” provided a description of how Romney leveraged companies with debt, zero assets, and eventual bankruptcy. Taibbi briefly mentioned KB Toys as an example of Bain Capital’s practice of taking out millions of dollars in cash, adding millions more to the company’s bottom line, and leaving creditors claiming Romney’s team was “breaking open the piggy bank.” If Taibbi had delved deeper into Romney’s record, he would have discovered that besides KB Toys, his incestuous bankruptcy team also were involved in Jumbo Stores, Stage Stores, FAO Schwartz, and eToys bankruptcies that always worked for Bain’s benefit and left investors and creditors with nothing to show for their trouble.

To understand why there are serious questions surrounding the “team” that went from one bankruptcy case to the next, it is important to note a bankruptcy court golden rule that “mandates all disclosures of conflict of interest,” and according to 18 USCS § 152 (3) “A person who knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1s746 of title 28, in or in relation to any case under title 11 shall be fined under this title, imprisoned not more than 5 years, or both.” In a case in the 7th Circuit, U.S. v. Gellene, 182 F.3d 578, a lawyer, John Gellene, filed two disclosures that said, “After due inquiry I am unaware of any other current representation by —— of an equity security holder of institutional creditor of [BE].”( 182 F.3d. at 583). When it was revealed that Gellene’s disclosure was false, he was indicted, prosecuted, convicted and he went to prison. Gellene’s firm, Milbank and Tweed, had to disgorge (give back) $1.9 million in fees and settle the $100 million lawsuit for tens-of-millions of dollars due to Gellene’s deception.

In 2000, a company Romney owned controlling shares in, Stage Stores, filed for bankruptcy. The company’s two co-directors, Jack Bush and Michael Glazer, hired Barry Gold as assistant director, and he hired Paul Traub, who failed to disclose that he previously worked with Jack Bush and Barry Gold which, according to the law, should have earned him a disqualification and a review of perjury. However, Traub filed a supplemental affidavit and disclosure detailing to the court that he worked with Barry Gold in 1997, Jack Bush and Gold in the JumboSports bankruptcy in 1999, and again with Gold in Luria Inc. bankruptcy in 1997. In the StageStores bankruptcy, besides Michael Glazer and Jack Bush, Willard Mitt Romney is listed as controlling shareholder in an SEC filing, but Romney’s involvement does not end there.

In a court document filed in November 2001, Sankaty Advisors, Inc. applied for allowance and payment of administrative expense in the Stage Stores bankruptcy. The document does not specify what the allowance and payment is for, but it is interesting because according to a Security and Exchange Commission (SEC) filing, “Mr. W. Mitt Romney is the sole shareholder, a director and President of Sankaty Ltd. and thus is the controlling person of Sankaty, Ltd.” Now, it is important to remember that bankruptcy court “mandates all disclosures of conflict of interest,” and it begs the pertinent question; when Sankaty was asking the court to be paid in the Stage Stores bankruptcy, did Sankaty tell the bankruptcy court that W. Mitt Romney owned both Sankaty and Stage Stores, and is the Bain Capital bankruptcy team employing John Gellene methods that landed Mr. Gellene in jail?

There is a pervasive problem with the Federal bankruptcy court that was addressed in the Third Circuit Court in a case, re Arkansas 798 F. 2d 645, that noted that Congress stipulated in 1978 that “in practice, the bankruptcy system operates more for the benefit of attorneys than for the benefit of creditors,” and it leads one to ponder; “is it legal for the Bain Capital cohorts to constantly end up in bankruptcy that favors Bain Capital with so many companies they allegedly help?” Matt Taibbi’s Rolling Stone article highlighted the tactics Bain Capital used as a matter-of-course to decimate companies and leave them without assets and crushing debt, all the while rewarding Bain Capital with management fees and cash assets they were able to extract from the companies. However, Taibbi did not mention that KayBee and eToys were in bankruptcy multiple times with Bain Capital getting a sweet deal each time; Bain Capital still owns them under their Toys R Us deal. In the case of KB Toys, less than a year-and-a-half after acquiring KB, “Bain gave itself a gift known as a ‘dividend recapitalization,’ and induced KB Toys to redeem $121 million in stock and take out more than $66 million in bank loans, $83 million of which went directly into the pockets of Bain’s owners and investors, including Romney.”

Willard Romney is appealing to the American people to elect him as president of the United States because he got filthy rich eviscerating and bankrupting companies. If he is elected president will he appoint his trusted bankruptcy team to rape and pillage the Social Security Trust and Medicare to reward his cronies on Wall Street? Romney says his experience creating wealth for himself is the reason he should be handed the keys to the White House, but after bankrupting company after company for profit, how long before he bankrupts America with Bain Capital’s “creative destruction” method and handpicked bankruptcy team? Does Willard “Mitt” Romney have a Barry Gold, Michael Glazer, Paul Traub bankruptcy ring problem? The American people deserve answers, and if Romney were not ethically bankrupt himself, he would provide answers.




Was Mitt Romney Running His Own Bankruptcy Ring? was written by Rmuse for PoliticusUSA.
© PoliticusUSA, Wed, Sep 12th, 2012 — All Rights Reserved


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