The private equity firm run by Tagg Romney—Mitt’s eldest son, who is now taking a leadership role in guiding his father’s presidential campaign—misled reporters last year about its involvement with a company run by men accused of taking part in a multibillion-dollar Ponzi scheme.
Last year, I reported that Tagg had formed a business partnership with several North Carolina investors who are still facing a lawsuit for receiving bonus pay for selling CDs as part of the $8 billion Stanford Financial Group Ponzi scheme.
In a nutshell, Tagg helped these investors form a company—called Solamere Advisors, a nod to Tagg’s firm Solamere Capital—shortly after their boss, Allen Stanford, was caught by law enforcement for his elaborate Ponzi fraud.
When I interviewed him in Las Vegas, Tagg told me that his associates were “cleared” of any wrongdoing associated with the Stanford Ponzi scheme. Court documents directly contradict Tagg and show that the lawsuit has not been dismissed.
The New York Times followed up on my story with its own report and confirmed that Tagg’s business partners received incentive pay for selling bunk Stanford CDs. They wrote about one Stanford victim, a local Charlotte businessman and philanthropist named Herman Stone. Stone was pressured by Brandon Phillips, an executive working now for Tagg’s firm, into putting $2 million into a fraudulent Stanford CD and lost everything.
Solamere Capital attempted to distance itself from the story by claiming that their business was not actually connected to the Ponzi-tainted firm, Solamere Advisors. In a statement to ABC News, they claimed that their managers, not Solamere Capital itself, were involved (emphasis added):
“It is inaccurate to suggest that Solamere Capital made an investment in this firm [Solamere Advisors]. Solamere Capital was approached to invest in a new wealth management firm being launched by these three individuals. After extensive due diligence, Solamere Capital decided not to invest because the business was at an early stage and did not meet our investment criteria. However, Spencer Zwick, Tagg Romney and Eric Scheuermann each own a minority stake in the business as individual investors.”
However, Solamere Capital’s statement, provided to ABC News, is false. Disclosures from the Securities and Exchange Commission show that Tagg’s company indeed maintains ties with the Ponzi-linked firm, Solamere Advisors.
The claim that Solamere Group didn’t invest directly in Solamere Advisors, the firm employing former Stanford employees, appears to have been an attempt to shield Mitt Romney. Mitt invested about $10 million into Tagg’s Solamere Capital venture, which would suggest Mitt has a direct financial relationship with folks involved in a Ponzi scheme. That’s because Solamere Capital pools together investment money to co-invest in other companies.
According to this form and this form filed with the SEC, Solamere Group owns a large stake in Solamere Advisors (referred to in the documents as “CAMG Solamere.”) So it is impossible to argue that Solamere Capital—the Romney family’s investment company—does not have direct financial ties with Solamere Advisors, the firm filled with executives who sold CDs as part of the Stanford fraud. The Stanford scandal is second only to the case of Bernie Madoff.
The disclosures are made on part of the SEC website enhanced by the new Dodd-Frank law, the Wall Street reform Romney says he wants to repeal.
For more on the complex web of relationships spun by Tagg Romney’s private equity firm, see my new story for The Nation and the Nation Institute.