Blue Team Members File PEU Bill

Barron's reported:

Sen. Elizabeth Warren (D., Mass.) on Thursday unveiled a proposal for new rules on private-equity firms, likening companies to “vampires” as she took her latest get-tough approach to the financial industry.

Legislation from the 2020 presidential candidate and fellow Democratic lawmakers would require private-equity firms to assume the debts and pension obligations of the companies they buy, prevent loans to private-equity-owned firms already in debt, and make other policy changes.

“Sometimes the companies do well,” Warren said in a post on Medium about the acquisition targets of private-equity firms.  “But far too often, the private-equity firms are like vampires—bleeding the company dry and walking away enriched even as the company succumbs,” she added.

PEU Report chronicled many private equity vampire bites over the last twelve years.

The American Investment Council, an advocacy group for the private-investment industry, blasted Warren’s proposal.

The AIC was once named the Private Equity Growth Capital Council (PEGCC).  My nickname after listening to their message was Private Equity Capital Knowledge Executed Responsibly (PECKER).

The former PECKER Council offered:

“Private equity is an engine for American growth and innovation—especially in Senator Warren’s home state of Massachusetts,” said Drew Maloney, the group’s president and chief executive, in a statement. “Extreme political plans only hurt workers, investment, and our economy.” The group’s members include Blackstone Group (ticker: BX) and Carlyle Group (CG).

Extreme interest expense, debt funded dividends and management fees also hurt workers.  My employer was bought out by a PEU consortium  and they increased debt by 67%.  This is the second time I've worked for a private equity affiliate.  The first time was in the early 1990's.  Today's PEU is much meaner.  

Extreme management cuts hurt customers and employees. When PEU strategies hurt customers, some actually walk.  Employees do likewise.  Turnover in my office has been over 60% under majority PEU ownership.  I've witnessed huge drops in customer service.

The Carlyle Group provided the impetus for PEU Report.  It's good name was not sullied by 25 patient deaths in LifeCare Hospital in New Orleans after Hurricane Katrina.  Carlyle also avoided scrutiny when it sold fifty airport operations to Dubai Aerospace after the public Dubai Ports world brouhaha.  LifeCare sank into bankruptcy under Carlyle ownership.

PEU Report warned about Carlyle's purchase of ManorCare.  Ten years of PEU financial abuse sent ManorCare into bankruptcy.

Serious reporters reached out after reading this blog.  One found it around 2010, another read my numerous ManorCare posts, one from 2011, and contacted me.  That reporter wrote:

The rise in health-code violations at the chain began after Carlyle and investors completed a 2011 financial deal that extracted $1.3 billion from the company for investors but also saddled the chain with what proved to be untenable financial obligations, according to interviews and financial documents. Under the terms of the deal, HCR ManorCare sold nearly all of the real estate in its nursing-home empire and then agreed to pay rent to the new owners.

Taking the money out of ManorCare constrained company finances. Shortly after the maneuver, the company announced hundreds of layoffs. In a little over a year, some nursing homes were not making enough to pay rent. Over the next several years, cost-cutting programs followed, according to financial statements obtained by The Post.

Senator Warren faces an uphill battle as PEUs bleed both Red and Blue.  It's part of the big money machine behind Republican and Democratic politicians.  The greed and leverage boys learned decades ago the benefit of influencing elected officials.  The Carlyle Group located in Washington, D.C for that very reason. 

The other interesting element is PEU ties to serial sex abuser Jeffrey Epstein.  

One Wall Street source with direct knowledge of Epstein’s business said one source of Epstein’s income was providing “tax advice and estate planning” to rich clients, like Apollo Global Management founder Leon Black, presumably because Epstein had experience with offshore funds after basing his office in the Virgin Islands. In 2015 Black made a $10 million donation to Epstein’s foundation. 

Esptein's case reveals the sordid underbelly of big money-politics.  Big PEU names have to be nervous about the-ir Epstein ties, Leon Black, Tony Blair and Bill Clinton (whose presidency saw the rise of many private equity firms).. 

Unraveling stories takes time and patience and the Epstein case is monstrous.  The PEU boys can spin better than most.  For the last twelve years I've tried to unwind some of them. 

Did you know The Carlyle Group put Petroplus in a position for bankruptcy long before Philadelphia Energy Solutions?  Both companies operated oil refineries.   Carlyle affiliate Semgroup operated oil pipelines and declared bankrupt due to $2.4 billion in bad energy bets.  

Who can forget the 2008 Financial Crisis canary in the coal mine, Carlyle Capital Corporation?  The "safe" mortgage backed security fund was levered 39 times.  It imploded in March 2008.  Carlyle claimed no responsibility for CCC's bankruptcy, attributing it to unprecedented tumult.   A reader offered:

You should offer your blog as data for rebuttal...it would drive a stake into the vampires. The dead bodies of victims are all around.

A dark PEU history hides behind by lofty words offered by professional lobbying groups, past and current.

Update 7-23-19:  NYMag published names from Epstein's black book.  PEUs are among the dark crowd.

Update 12-2-19:  Blackstone's Team Health said it stopped suing poor people.  It did not say it stopped overcharging those who could pay.  

 

Update  1-29-23:  Epstein died in a New York jail summer of 2019.  Many believe Epstein was a sextortionist, using images of famous people in compromised positions with his underage harem to garner power, money and influence.  Prince Andrew settled a case out of court with an Epstein victim and now wants to reverse the deal to bolster his reputation.  Does that mean Andrew will have worked both sides of sextortion, victim/perpetrator to perpetrator/victim?