Thursday, December 29, 2022

Biden Gets Personal PEU Hospitality


NY Post
reported:

When Biden receives free lodging, he’s supposed to disclose it on annual financial disclosure forms that are released publicly each May. The form requires the president and vice president to disclose free lodging worth more than $390. Ethics experts say the “personal hospitality” reporting exception on that form doesn’t cover instances where the homeowner isn’t present.

Not present for free Biden vacation stays were.

New Year's in St. Croix -- Bill Neville, CEO of LoanLogics, affiliate of Sun Capital Partners, a global private equity underwriter (PEU).  Neville and his wife Connie attended the White House state dinner for French President Emmanuel Macron.

Thanksgiving in Nantucket -- David Rubenstein, co-founder of The Carlyle Group, a politically connected PEU

Summer vacation in Kiawah Island --  Maria Allwin, widow of hedge fund founder James Allwin, Aetos Capital

It's a bad sign that a U.S. President can get free lodging from shadow bankers and not have to declare the gift.  What gifts are given in return that are also undisclosed?

It's not clear if President Biden will meet with any other billionaires vacationing in St. Croix on their Superyachts.  If so, the American public likely has no ability to find out.

Update 12-29-22:  Bill Neville was a 63.7% owner in BBVI, a Virgin Islands broadband internet provider.  He sold it to Liberty Latin America LTD in late 2021.  The price may have been boosted by nearly $85 million in federal money.

Broadband VI has won an $84.5 million federal bid to buildout phase 2 of the Connect USVI program, whose aim is to provide affordable voice and broadband services for 10-year periods with speeds of up to 1 gigabit per second downstream.

Neville stepped down as LoanLogics CEO two months ago.  

Neville played an instrumental role in LoanLogics being selected as the technology provider behind Freddie Mac’s FAST.
This is the way our Government Corporate Monstrosity works.

Unethical Shadow Banking Profits OK


Here's one way the greed and leverage boys have tapped Uncle Sam for big profits:

Worrall was an employee at the Center for Medicare-Medicaid Services (CMS); Blaszczak, a consultant for hedge funds, was a former CMS employee. Huber and Olan were partners in a hedge fund ("Deerfield"). At various times between 2009 and 2014, Worrall gave Blaszczak nonpublic information about the timing and substance of proposed CMS rule changes that would change reimbursement rates for certain types of medical care for various health conditions. Blaszczak gave that information to Huber, Olan, or another Deerfield partner, following which Deerfield engaged in profitable short sales of shares of companies that would be negatively affected by reimbursement rate reductions when they became effective. 

Note the former government employee consulting for a shadow banker (hedge funds, private equity) and the government insider (regulator, elected official).  This kind of information trade is regular business in our Government Corporate Monstrosity. 

The Justice Department decided the above actions were OK as "the confidential information at issue in this case does not constitute "property" or a "thing of value."  

... a planned CMS regulation, even if disclosed to outsiders prematurely, remains within the exclusive control of CMS.

It kept wire fraud in play for the above actions.

That's a relief for Carlyle Group co-founder David Rubenstein and Blackstone co-founder Stephen Schwarzman.  Both are policy making billionaires with inordinate influence over non-property government decisions. 

It's also a relief for the many former Medicare Chiefs employed by private equity underwriters (PEU).   The greed and leverage boys have made big bets on healthcare firms.   It's no surprise a court and the "Just Us" department endorse unethical profits for shadow bankers employing former government officials.

Update 12-31-22:  CommonDreams revealed the early roots of our Government Corporate Monstrosity.

Wednesday, December 28, 2022

Biden Joins Superyachts in Caribbean

U.S. President Joe Biden and his family have joined billionaires vacationing in the Caribbean for New Year parties.  Biden landed in St. Croix in the U.S. Virgin Islands.  Over 200 superyachts are scattered around the Caribbean to ring in the New Year.   How many Caribbean superyacht owners are the private equity underwriter (PEU) kind?

It's rare for a U.S. president to visit the U.S. Virgin Islands while in office.  It's not rare for billionaires to have undue influence on our government.  Will Biden meet with any PEUs during his time in St. Croix?   Little St. James would be a fitting location for at least one PEU, Leon Black of Apollo Global.

Update 12-29-22:  The U.S. Virgin Islands is suing Wall Street bank J.P. Morgan:

“Human trafficking was the principal business of the accounts Jeffrey Epstein maintained at JPMorgan.”

Last month Epstein’s estate agreed to pay the USVI more than $105m as part of a settlement in a case involving his sex trafficking and child exploitation on the islands’ territory.

As part of the agreement, the estate agreed to pay the USVI half the proceeds from the sale of Little St James, the private island he bought in 1998 and allegedly used for many of his sexual crimes.

The settlement, which does not include any admission of wrongdoing, includes the return of more than $80m in economic development tax benefits that Epstein and others had “fraudulently obtained to fuel his criminal enterprise”.

Will they sue Bill Clinton or Tony Blair for providing political cover for Epstein?

Santos is a Real PEU


In an interview with Fox News Tulsi Gabbard Santos said:

"I can sit down and explain to you what you can do in private equity, in capital intro, in servicing limited and general partners.  We can have this discussion that's going to go way above the American people's head."

Santos said he didn't lie because he is a real greed and leverage boy.  Private equity's public perception has not improved over the last several decades.  That's because many Americans experienced the trauma of their employer coming under PEU ownership.  

Santos is a howler monkey throwing out lies like feces.  Wrapping himself in PEU skunk skin for credibility just stinks up our government even more.  

Politicians Red and Blue love PEU and increasingly, more are one.

Update 12-29-22:  The Daily Beast reported:

Santos, who in 2020 reported holding no assets and a salary of $55,000 from a vice president position at a financial company called LinkBridge, appears to have suddenly come into substantial wealth, claiming a net worth of as much as $11.5 million on his 2022 financial disclosure. Almost all of it came through the newly formed Devolder Organization, which the 34-year-old says paid him between $1 million and $5 million in dividends along with another $750,000 in salary.

That money, it turns out, came from some wealthy sources who also had financial stakes in Santos’ political bid.

The Daily Beast has confirmed four Devolder Organization clients: the New York-based Tantillo Auto Group, two organizations tied to the influential Ruiz family in south Florida, and another firm associated with Long Island insurance magnate James C. Metzger. Santos acknowledged all four of these clients on Wednesday.

Update 12-30-22:  DailyNews suggests Santos needs a good lawyer on speed dial:

Santos appears to have swiftly built personal wealth despite a history of debt and financial troubles.

Update 1-1-23:  Rep. Kevin Brady (Red Team- TX) said:

Santos could be forgiven by the GOP for owning up to the false statements and that it wasn’t up to the party to punish Santos.

The party is complicit in perpetrating the fraud.  It's up to the Red Team to admit their creation and sponsorship of a political fraud.  

Update 1-2-23:  The fraud is going to Congress.

Update 1-4-23:  Politico reported last week:

....it’s been crickets. The NYT and CNN this week reached out to leadership offices and the NRCC for comment. There were no responses.

Santos had a lonely day in a crowded House chamber yesterday. 

His new office was once occupied by N.Y. Rep. Chris Collins who was convicted of insider trading in early 2020.   A Trump pardon got Collins out of jail.  A House staffer called the situation like "being in a cartoon."

Update 1-5-23:  Even Santos housing picture is unclear.  Is the new Congressman elect a millionaire or a deadbeat renter?  I hope he actually lives in his House District.

New York Rep-elect George Santos reportedly does not appear to have an office or staff in his district.

Update 1-8-23:  Santos is a fraud and worked for a ponzi scheme.  He's the perfect elected official to reveal our ethically broken Congress.  Institutional Risk Analyst reported:

The question is how state and federal regulators, as well as elected officials in both political parties, did not see that the entire construct of crypto currency was at best a form of money laundering and at worse outright fraud.

Update 1-12-23:  Rep. George Santos may not be a real PEU after all.   Ethically he smells horribly but he may just be PEU wannabee.  He did make it into the realm where connected people push copious amounts of cash around to one another.

Update 1-14-22:  Video shows George Santos introducing himself as Anthony Devolder in 2019.  Santos is reflective of societal ills.  One columnist attributed his rise to a lack of local investigative reporting.  Another said:

(Santos) lies are the product of a political system that incentivizes dishonesty, punishes sincerity and is rife with opportunities for petty crooks. In that sense, Santos is the politician that we deserve.

I would offer Santos is there to serve the PEU class.  Politicians Red and Blue love PEU and increasingly, more are one.  Fraudster Santos is there to save PEU preferred "carried interest" taxation, get a regulatory format in place for crypto and steer Uncle Sam's wallet to the greed and leverage boys, as well as his personal pocketbook.  

Update 1-19-23:  Santos' mother was not in the country on 9-11-2001 so she could not have been in the Twin Towers.  REp. Santos raised $3,000 for surgery for a homeless veteran's support dog and never gave a penny toward the needed surgery.  

Comedian Jon Stewart said of Santos, “It takes people with no shame to do shameful things.”  That also applies to the people who knew all about Santos and said nothing, Kevin McCarthy et al.

A lot of shameful stuff is coming.  

Update 1-23-23:  Santos former roommate called him "the Anna Delvey of Queens" for lying his way into Congress with the full support of the NRCC.

Tuesday, December 27, 2022

Digital PEU Congressman Elect is Fake


Representative elect George Santos (Red Team-NY) admitted his bio was largely fraudulent.  The Red Team knew this as well, yet promoted Santos lies.

Senior House Republicans were apparently aware of the inaccuracies and embellishments in the Rep.-elect’s resume, and the topic became a “running joke,” multiple insiders close to House GOP leadership told The Post over the weekend.

“As far as questions about George in general, that was always something that was brought up whenever we talked about this race,” said one senior GOP leadership aide. “It was a running joke at a certain point. This is the second time he’s run and these issues we assumed would be worked out by the voters.

The National Republican Congressional Committee altered Santos bio in the last 24 hours.  


Santos claims to be a digital PEU.  That has not yet been debunked.

Private equity underwriters (PEU) started by hiring former elected officials and public servants for government tea leaf reading and non-lobbying influence re: laws and regulations.  That shifted to the PEU boys running for office and often times winning.  

What does it mean that a political party would fraudulently promote a PEU candidate for Congress?  The ceaseless pursuit of power and greed has no morals. Rather than do the honorable thing Santos blamed the elite media for his fraudulent representations.

Santos is accountable but the elite group he wished to please was not the media.  It was the group he wished to join.  Politicians Red and Blue love PEU and increasingly, more are one.  

Update 12-28-22:  In an interview with Fox News Tulsi Gabbert Santos said:

"I can sit down and explain to you what you can do in private equity, in capital venture, in servicing limited and general partners.  We can have this discussion that's going to go way above the American people's head."

Santos said he didn't lie because he is a real greed and leverage boy.  Private equity's public perception has not improved over the last several decades.  That's because many Americans experienced the trauma of their employer coming under PEU ownership.  

Santos is a howler monkey throwing out lies like feces.  Wrapping himself in PEU skunk skin for credibility just stinks up our government even more.  

Politicians Red and Blue love PEU and increasingly, more are one.

Update 12-29-22:  The Daily Beast reported:

Santos, who in 2020 reported holding no assets and a salary of $55,000 from a vice president position at a financial company called LinkBridge, appears to have suddenly come into substantial wealth, claiming a net worth of as much as $11.5 million on his 2022 financial disclosure. Almost all of it came through the newly formed Devolder Organization, which the 34-year-old says paid him between $1 million and $5 million in dividends along with another $750,000 in salary.

That money, it turns out, came from some wealthy sources who also had financial stakes in Santos’ political bid.

The Daily Beast has confirmed four Devolder Organization clients: the New York-based Tantillo Auto Group, two organizations tied to the influential Ruiz family in south Florida, and another firm associated with Long Island insurance magnate James C. Metzger. Santos acknowledged all four of these clients on Wednesday.

Update 12-30-22:  DailyNews suggests Santos needs a good lawyer on speed dial:

Santos appears to have swiftly built personal wealth despite a history of debt and financial troubles.

 Senior House Republicans remain silent on their running joke.

Update 1-1-23:  Rep. Kevin Brady (Red Team- TX) said:

Santos could be forgiven by the GOP for owning up to the false statements and that it wasn’t up to the party to punish Santos.

The party is complicit in perpetrating the fraud.  It's up to the Red Team to admit their creation and sponsorship of a political fraud. 

Update 1-2-23:  The fraud is going to Congress.  

Update 1-4-23:  Politico reported last week:

....it’s been crickets. The NYT and CNN this week reached out to leadership offices and the NRCC for comment. There were no responses.

Santos had a lonely day in a crowded House chamber yesterday. 

His new office was once occupied by N.Y. Rep. Chris Collins who was convicted of insider trading in early 2020.   A Trump pardon got Collins out of jail.  A House staffer called the situation like "being in a cartoon."

Update 1-5-23:  Even Santos housing picture is unclear.  Is the new Congressman elect a millionaire or a deadbeat renter?  I hope he actually lives in his House District. 

New York Rep-elect George Santos reportedly does not appear to have an office or staff in his district.

Update 1-8-23:  Rep. Nancy Mace (Red Team- South Carolina) said on Face the Nation:

“It’s very clear his entire resume and life was manufactured until a couple days ago, when he finally changed his website.”

His website?  It was the NRCC website that changed between 12-26 and 12-27-22.  Mace is a Vice Chair for the NRCC.  She had an official role in pushing Santos as a credible candidate.

Update 1-12-23:  Rep. George Santos may not be a real PEU after all.   Ethically he smells horribly but he may just be PEU wannabee.  He did make it into the realm where connected people push copious amounts of cash around to one another.

Update 1-14-22:  Video shows George Santos introducing himself as Anthony Devolder in 2019. Santos is reflective of societal ills.  One columnist attributed his rise to a lack of local investigative reporting.  Another said:

(Santos) lies are the product of a political system that incentivizes dishonesty, punishes sincerity and is rife with opportunities for petty crooks. In that sense, Santos is the politician that we deserve.

I would offer Santos is there to serve the PEU class.  Politicians Red and Blue love PEU and increasingly, more are one.  Fraudster Santos is there to save PEU preferred "carried interest" taxation, get a regulatory format in place for crypto and steer Uncle Sam's wallet to the greed and leverage boys, as well as his personal pocketbook. 

Saturday, December 24, 2022

Congressional Delay Re: PEU Side Letters


Jacobin
reported on another way private equity underwriters (PEU) can influence elected officials:

Wall Street firms and their political allies — including a U.S. senator with substantial private equity holdings — are trying to stop federal regulators from intervening to protect retirees by banning firms from giving some investors preferential treatment. And there are no rules requiring lawmakers with investments in private equity to disclose whether they are being given special investment preferences while they lobby to protect those asset managers. 

The new battle revolves around the secret “side letters” that private equity, hedge fund, and real estate firms ink with individual investors, giving them privileges not afforded to others in the same investment funds.
...side letters “can create preferred liquidity terms or disclosures. This can create an uneven playing field among limited partners based upon those negotiated terms.”

It should be no surprise that political insiders can look after their PEU brethren and benefit disproportionately while doing so.  

The Blue political team took bold action by slowing down political comment.

Democrats were raking in more than $34 million of campaign cash from private equity and investment firms, a dozen Senate Democrats sent a letter to Gensler demanding that the SEC slow down its rulemaking process by extending comment periods 

A Tennessee Senator from Hall Capital went further with a letter demanding a stop to the rule from further consideration.
...the American Investment Council, the top lobbying group for private equity, is also fighting the reforms
Politicians Red and Blue love PEU and increasingly, more are one.  
All the lobbying has already resulted in one key win for the (PEU) industry: a line slipped into Congress’s end-of-year omnibus spending bill.

That unrelated spending legislation currently states that Congress “strongly encourages the SEC to reconduct the economic analysis for the [side letter rule] to ensure the analysis adequately considers the disparate impact on emerging minority and women-owned asset management firms, minority and women-owned businesses, and historically underinvested communities.”
It's their PEU brethren they serve and only a miniscule number are minority and women-owned.

SBF's Greed: Now Freed on Bail


FTX's Sam Bankman-Fried is out of a Bahamas jail and back home with his Stanford professor parents.  Bankman-Fried has been "charged with orchestrating a years-long fraud in which he used billions of dollars of FTX customer funds for personal expenses and high-risk bets."  He is out on a $250 million bond.

Several of SBF's partners in crime have been charged as well.

“From 2019 through 2022, I was aware that Alameda was provided access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried,” Alameda CEO Caroline Ellison said. “In practical terms, this arrangement permitted Alameda access to an unlimited line of credit without being required to post collateral, without having negative balances and without being subject to margin calls on FTX.com’s liquidation protocols.”

SBF testified before a Congressional committee in May 2022 about FTX's strong customer protections and conservative risk model.  That was clearly perjury.  

The fallen peer of Carlyle Group co-founder David Rubenstein invested alongside Rubenstein's Declaration Partners in Paxos.  

Rubenstein and Paxos board member Sheila Bair need federal regulation to save their wish of equity stake profits.  Ferreting out SBF's lies and misrepresentations will be important as regulation strategies move forward.  

CPA and former Texas Congressman Mike Conaway might provide insight.  He recently served as D.C. lobbyist for FTX.  Conaway sniffed out fraud at the National Republican Congressional Committee but missed FTX's accounting nightmare in his FTX lobbying engagement due diligence.

There is much at stake going forward.  Truth and honesty are needed to design systems that corral those spinning untruths and harming others with their greed, arrogance, and hubris.  I'm not sure a time-out in SBF's parent's basement will do the trick.

Update:  Bankman-Fried freed in time for the holidays.  Warms the heart he can spend it with family while the people he ripped off face their diminished present. 

Update 12-25-22:  Former Labor Secretary Robert Reich noted how SBF and other tantrum tossing billionaires were not reigned in by regulatory bodies.

Update 1-5-23:  SBF's General Counsel at FTX "told prosecutors what he knew of Bankman-Fried's use of customer funds to finance his business empire."  He had over a year to learn how SBF did business.

8-3-2021:  Cryptocurrency exchange FTX.US named a former Sullivan & Cromwell LLP and U.S. Commodity Futures Trading Commission attorney as general counsel.

Meanwhile Sullivan and Cromwell remains the law firm for FTX, before, during and after the revelations of gross mismanagement and fraud.

Thursday, December 22, 2022

Fink Decided Carlyle an Ill Fit


BlackRock passed on buying a CEO-less Carlyle Group.  

BlackRock, the world's largest asset manager, had been considering acquiring Carlyle, to expand into alternative assets, but decided against pursuing it, three people with knowledge of the talks told FT. The size of the deal, the firm's turmoil, and a cultural mis-match played parts in the decision, they said.

It would have been fitting to have a Fink as head of Carlyle. 

Update 12-29-22:  BlackRock passed on Carlyle but is all in on Ukraine.  

Monday, December 19, 2022

Digital PEU George Santos Going to Congress


Congressman elect George Santos is a former digital private equity underwriter (PEU) with Harbor City Capital.  In April 2021 the SEC charged Harbor City Capital and CEO JP Maroney with running a ponzi scheme.

Santos is under scrutiny for items on his resume that haven't stood up to the most basic confirmation.  His undergraduate college has no record of his graduation and several Wall Street firms could not confirm his employment claims.  

Politicians Red and Blue love PEU and increasingly, more are one.  Why do the greed and leverage boys need direct access to lawmakers?  

For the first six months of the year, our real estate strategies appreciated 9% to 10% versus a 20% decline in the REIT index, equaling an outperformance of roughly 3,000 basis points. I don't know many asset classes that perform -- outperform indexes by 3,000 basis points.--Blackstone founder Stephen Schwarzman

To rewrite the rules supporting their false claims of asset values. 

Update 12-26-22:  Who better to support false PEU asset values than a Congressman elect with a completely fabricated personal history.  He called it "resume embellishment" but it might as well be "political puffery."  Will the Insane Red Team seat this fraudster?  Of course they will. 

Senior House Republicans were apparently aware of the inaccuracies and embellishments in the Rep.-elect’s resume, and the topic became a “running joke,” multiple insiders close to House GOP leadership told The Post over the weekend.

“As far as questions about George in general, that was always something that was brought up whenever we talked about this race,” said one senior GOP leadership aide. “It was a running joke at a certain point. This is the second time he’s run and these issues we assumed would be worked out by the voters.

 This is grotesque, just like the PEU greed that pervades our hallowed halls of government.

Update 12-29-22:  The Daily Beast reported:

Santos, who in 2020 reported holding no assets and a salary of $55,000 from a vice president position at a financial company called LinkBridge, appears to have suddenly come into substantial wealth, claiming a net worth of as much as $11.5 million on his 2022 financial disclosure. Almost all of it came through the newly formed Devolder Organization, which the 34-year-old says paid him between $1 million and $5 million in dividends along with another $750,000 in salary.

That money, it turns out, came from some wealthy sources who also had financial stakes in Santos’ political bid.

The Daily Beast has confirmed four Devolder Organization clients: the New York-based Tantillo Auto Group, two organizations tied to the influential Ruiz family in south Florida, and another firm associated with Long Island insurance magnate James C. Metzger. Santos acknowledged all four of these clients on Wednesday.

Update 12-30-22:  DailyNews suggests Santos needs a good lawyer on speed dial:

Santos appears to have swiftly built personal wealth despite a history of debt and financial troubles.

Update 1-1-23:  Rep. Kevin Brady (Red Team- TX) said:

Santos could be forgiven by the GOP for owning up to the false statements and that it wasn’t up to the party to punish Santos.

The party is complicit in perpetrating the fraud.  It's up to the Red Team to admit their creation and sponsorship of a political fraud.  

Update 1-2-23:  The fraud is going to Congress. 

Update 1-4-23:  Politico reported last week:

....it’s been crickets. The NYT and CNN this week reached out to leadership offices and the NRCC for comment. There were no responses.

Santos had a lonely day in a crowded House chamber yesterday. 

His new office was once occupied by N.Y. Rep. Chris Collins who was convicted of insider trading in early 2020.   A Trump pardon got Collins out of jail.  A House staffer called the situation like "being in a cartoon." 

Update 1-5-23:  Even Santos housing picture is unclear.  Is the new Congressman elect a millionaire or a deadbeat renter?  I hope he actually lives in his House District.

New York Rep-elect George Santos reportedly does not appear to have an office or staff in his district.

Update 1-8-23:  Santos is a fraud and worked for a ponzi scheme.  He's the perfect elected official to reveal our ethically broken Congress.  Institutional Risk Analyst reported:

The question is how state and federal regulators, as well as elected officials in both political parties, did not see that the entire construct of crypto currency was at best a form of money laundering and at worse outright fraud.

Update 1-12-23:  Rep. George Santos may not be a real PEU after all.   Ethically he smells horribly but he may just be PEU wannabee.  He did make it into the realm where connected people push copious amounts of cash around to one another.

Update 1-14-22:  Video shows George Santos introducing himself as Anthony Devolder in 2019.  Santos is reflective of societal ills.  One columnist attributed his rise to a lack of local investigative reporting.  Another said:

(Santos) lies are the product of a political system that incentivizes dishonesty, punishes sincerity and is rife with opportunities for petty crooks. In that sense, Santos is the politician that we deserve.

I would offer Santos is there to serve the PEU class.  Politicians Red and Blue love PEU and increasingly, more are one.  Fraudster Santos is there to save PEU preferred "carried interest" taxation, get a regulatory format in place for crypto and steer Uncle Sam's wallet to the greed and leverage boys, as well as his personal pocketbook. 

Sunday, December 18, 2022

Trophy Bosses at World Cup Finial

Affinity Partners Jared Kushner and Tesla/Twitter/Boring/SpaceX/Neuralink's Elon Mush watched the World Cup final in Qatar. 

These trophy bosses have significant Saudi investors in their enterprises.  The dickish lot is all about power and greed.

Wednesday, December 14, 2022

Carlyle Group News

FT reported that Carlyle's fundraising for a $22 billion U.S. buyout fund has slowed and the deadline has been extended until August 2023.  

Carlyle funded Litmus Music bought Keith Urgan's music and the artist is quoted in a press release as excited about the deal (in contrast to Taylor Swift).

 

Carlyle Group co-founder David Rubenstein went on CNBC to talk about FTX's implosion and save his family office's crypto infrastructure investment.  Not stated in the interview is Declaration Partners stake in Paxos.  Sam Bankman-Fried also owned equity in Paxos through MacLaurin Investments Ltd.  Paxos has not said if they will return the $5 million to help make FTX victims whole.

Oddly, SBF (effective altruism) and Rubenstein (patriotic philanthropy) highlight their contributions to charity. The two peers incensed investors with major bankruptcies, FTX ($32 billion) and Carlyle Capital Corporation ($21 billion), and both wanted to earn investor money back.

CNBC hosts seemed surprised by Rubenstein's soft handling of FTX investors due diligence, or lack thereof.   He has an investment to save.  Also, Rubenstein knows how quickly an asset valuation implosion can take down even a Carlyle investment (CCC, Moroccan oil refinery inventory).

David Rubenstein was also soft on SBF in a September interview on Bloomberg.  They didn't talk about their Paxos stakes or Bankman-Fried's hitting up Declaration Partners for a stake in FTX.  There is much unsaid as Rubenstein works behind the scenes to carve out a profitable future for Paxos.

Monday, December 12, 2022

Elon the Extrinsic Motivator

 Billionaire Elon Musk asked employees to envision themselves as a crime victim to increase productivity.  He also invited Twitter employees to not leave the workplace by providing beds in conference rooms.

Musk likely drove away many intrinsically motivated Twitter workers.   Live-in work under management by e-mail sounds like a special kind of hell.

Update:  Founder Jack Dorsey said Twitter meets "none of the standards he hoped to achieve and that harassment of its staff is shortsighted and dangerous." 

Update 12-14-22:  Twitter debt holders are writing down the value of their debt/notes.

The biggest chunk of the debt -- $10 billion worth of loans secured by Twitter's assets -- might have to be written down by as much as 20%.

Update 12-16-22:  Twitter's Elon Musk, the free speech absolutist, banned a number of journalists.  That got a warning from the European Union.  Censorship by whim or retaliatory impulse is so 2022.

Update 12-20-22:  Management by poll got a process change after Twitter users voted for Elon to step down as CEO.  Now only paying Twitterheads votes will count.  

Update 12-26-22:  Free speech absolutist Musk turns out to be a corporate autocrat.  Visitors must wait for an hour and can only speak after Wizard Elon.

Update 12-29-22:  In the midst of widespread technical problems shared by Twitter users Musk wrote "Works for me."  Hellscape achieved.  

Update 12-30-22:  More evidence of Twitter's new Hellscape under Musk:

Some Twitter employees are bringing their own toilet paper to work after the company cut back on janitorial services.

The company's San Francisco headquarters have been left with dirty bathrooms and the office is in disarray, per the publication. The stench of leftover takeout food and body odor is present throughout the premises.

Zero based budgeting has returned to Twitter.  That brings a special hell for employees.  

Update 12-31-22:  TechCrunch reported:

Fidelity, which was among the group of outside investors that helped Elon Musk finance his $44 billion takeover of Twitter, has slashed the value of its stake in Twitter by 56%.

Cutbacks at Twitter abound as the company approaches $1 billion in interest payments due on $13 billion in debt, all while revenue dips.

The greed and leverage boys are happy to pay interest but will do anything to not pay taxes.  Elon is a PEU in and of himself.

Update 1-1-23:  Horror movie is close to Hellscape:

...the Twitter situation-- it's a nightmare on Elm Street that doesn't end.

Update 1-29-23:   Hellscape achieved says many Twitter workers.

Thursday, December 8, 2022

Old Enemies Rebuffed FTX's SBF


Three years ago Taylor Swift pleaded with The Carlyle Group for help getting permission to use her old music for an American Music Awards medley.  Carlyle financed the purchase of Swift's music collection.

Both Taylor Swift and Carlyle Group co-founder David Rubenstein turned down FTX's Sam Bankman-Fried.  SBF wanted Swift to promote FTX and reportedly offered her $100 million.  Insider asked:

How does Taylor Swift have better due diligence practices than half of Silicon Valley? What does it say about venture investing in general that a pop star with no background in finance could vet a deal better than them?

Taylor knows a snake when she sees one.  She took on the greed and leverage boys over rights to her music creations.  

Rubenstein just wrote a book on great investors.  His Bloomberg television show interviewed SBF. The "peer to peer" program aired September 1, 2022.  The pair neglected to disclose they each had invested in Paxos, SBF through MacLaurin Investments Ltd. and Rubenstein through his family office Declaration Partners.

They also failed to mention SBF hit up Declaration Partners for funding.  One might expect a business interviewer to review those materials and ask cogent questions.  That did not happen, but Rubenstein said this in hindsight:

Did you invest in FTX?

I didn’t. My family office team looked at FTX at the $30bn valuation [earlier this year]. It didn’t move forward, and the memo never reached me, but the other day they showed me what they had prepared. The memo pointed out all the concerns about conflicts of interest. There wasn’t a lot of transparency.

The Carlyle Group's latest 10-K gave similar warnings:

Our failure to deal appropriately with conflicts of interest in our investment business could damage our reputation and adversely affect our businesses.

Carlyle Group Management L.L.C. has significant influence over us and its interests may conflict with ours or yours. 

Our certificate of incorporation will not limit the ability of our former general partner, founders, directors, officers or stockholders to compete with us.

And that's why Declaration Partners exists.  Rubenstein's appetite for money is insatiable.

SBF courted old enemies and lost prior to FTX's implosion.  He did win by being designated a peer of David Rubenstein.  That should go down in history.

PEU Boys Target Healthcare


Financial News
reported on a Barron's interview with Carlyle Group co-founder David Rubenstein.  Rubenstein shared where he sees investment opportunities:

Right now, at Carlyle, an enormous percentage of our investments go into healthcare, not only in the US, but also around the world. It is one of the fastest-growing and likely most stable areas of economic growth. When I worked in the White House in the late 1970s, 7% to 8% of US GDP was in healthcare. Today, it’s roughly 20%.

Helping to make healthcare more expensive are former Medicare Chiefs, now employed by private equity, and elected officials with private equity ties and huge healthcare investments. 

David Rubenstein's family office Declaration Partners is also big into healthcare.  Not winning in all this is the average citizen.  The greed and leverage boys have a long history of predatory behavior and destroying healthcare providers' intrinsic motivation.  

The crapification of healthcare will continue and citizens will pay dearly for it.  

Politicians Red and Blue love PEU (private equity underwriters) and increasingly, more are one.

Update 12-14-22:  Numerous digital health firms share user information with advertisers.  The greed and leverage boys are betting big on healthcare and expect to make money multiple ways.

Update 12-15-22:  Andrew Park identified PEU owned healthcare firms that had their debt downgraded.  He wrote on Twitter:

What a disaster when private equity firms try to operate healthcare companies and squeeze their patients for money.

Update 1-5-23:  Matt Stoller's BIG takes on the PEU boys and the damage they do to corporations, especially in the healthcare arena.  This blog chronicled KKR's bleeding of hospital giant HCA and The Carlyle Group's driving nursing home giant ManorCare into bankruptcy.  Greed harms a lot of people.

Wednesday, December 7, 2022

SBF's Paxos Investment

FTX bought a stake in Paxos in July 2021.  Carlyle Group co-founder David Rubenstein invested in Paxos in several funding rounds through his family office Declaration Partners.

Rubenstein interviewed fellow Paxos investor and FTX founder Sam Bankman-Fried (SBF) on his Bloomberg show in September 2022.  

Late in the interview Rubenstein mentioned his stake in crypto infrastructure firm but did not identify Paxos.  

"I have invested in companies that service the industry.."

Sam did not disclose his roughly $5 million stake in Paxos, however FT did and I am grateful for that.  FT showed a Cayman Islands investment in Paxos through MacLaurin Investments Ltd., which is now in bankruptcy in a Delaware court.

Rubenstein closed the Bankman-Fried interview with coaching on how to remain incognito.  SBF may want more advice from the Carlyle co-founder on dealing with upset investors (Carlyle Capital Corporation).

Also unsaid in the interview, SBF hit up Rubenstein's family office for funding.  Financial News recently interviewed the Carlyle co-founder:

Did you invest in FTX?

I didn’t. My family office team looked at FTX at the $30bn valuation [earlier this year]. It didn’t move forward, and the memo never reached me, but the other day they showed me what they had prepared. The memo pointed out all the concerns about conflicts of interest. There wasn’t a lot of transparency.

That would have been good research for an interview on Bloomberg.   So much for a hard hitting business interview.  It's front stage acting for the benefit of the masses.

Update 12-28-22:  Sam Bankman-Fried's 56 million shares of Robinhood stock came from a $546 million loan from Alameda Research.  SBF parked the shares in Emergent Fidelity Technologies.  Creditors are trying to get that money.  Where did FTX client funds go and how can those be clawed back?  

Update 12-30-22:  FTX ventures used $200 million in customer money to invest in two fintechs, Dave and Mysten Labs.  

Update 1-7-23:  SBF wants to keep "his" $450 million in  Robinhood stock to fund his legal bills.  Wall Street on Parade noticed Paxos last fall.

Update 1-12-23:  Bankruptcy court learned:

Sam Bankman-Fried instructed his FTX cofounder Gary Wang to create a "secret" backdoor to enable his trading firm Alameda to borrow $65 billion of clients' money from the exchange without their permission.

Borrowing is not the right word.  Some of those embezzled funds were used for investment purposes.  Still no word from Paxos on refunding SBF's $5 million equity stake.

Sunday, December 4, 2022

State Dinner Chock Full of PEUs


Comedian Stephen Colbert recently poked fun at the greed and leverage boys, then he dined with them at the White House State Dinner for French President Emmanuel Macron.

Former PEUs in Biden White House:

 Lloyd Austin, Defense Secretary - Pine Island Capita)

Secretary of State Anthony Blinken - Pine Island Capital

Jonathan Finer, Deputy National Security Adviser - Warburg Pincus

Jennifer Granholm, Energy Secretary - Ridge-Lane Limited Partners

Avril Haines, Director of National Intelligence - Tikehau Capital

Ron Klain, White House Chief of Staff - Revolution LLC

Michael Pyle, Deputy National Security Adviser - BlackRock

Gina Raimondo, Commerce Secretary - Point Judith Capital 

Wendy Sherman, Deputy Secretary of State - Albright Stonebridge Group

Linda Thomas-Greenfield, UN Ambassador - Albright Stonebridge Group

Albright Capital is comprised of a deeply experienced investment team and Albright Stonebridge Group (“ASG”), the premier global strategy and commercial diplomacy firm.
Tom Vilsack, Agriculture Secretary - Ridge-Lane Limited Partners

Jeff Zients, Coordinator of the COVID-19 Response and Counselor To The President - Cranemere Group & Facebook board (alongside multiple other PEUs)


Current PEUs:

Roger Altman - Evercore 

Evercore's Investment Management business manages private equity funds and traditional asset management services for sophisticated institutional investors. 

Stewart Bainum - Sunbridge Capital Management

Blair Effron - Centerview Partners, rumored Biden White House appointment

Jeffrey Katzenberg - WndrCo

Henry Kravis - KKR 

Ann Lamont, wife of Connecticut Governor Edward Lamont - Oak Investment Partners (Focus areas:  Healthcare, Financial Services)

Annie is ranked the number one healthcare investor on the Forbes Midas List.

Yehuda Neuberger - Active PEU investor (Bio)

Xavier Niel - Founder Kima Ventures and NJJ Capital

Jeff Worthe -- (Partnered with Blackstone) 


Influence peddlers:

Tom Donilon - BlackRock Investment Institute 

Christopher Korge - The Americas Group

The Americas Group generates income primarily through success fees and participation in royalties from sales, franchises and licensing agreements. Our financial objective is to create a long-term recurring income flow through participation, as a principal or an agent, in a percentage of the sales and royalties generated by the success of our marketing and advisory efforts.

Jaime Harrison, DNC Chair - Recruited corporate lobbyists for at large DNC members

Kenneth Jarin, White House nominee for Chair of the International Broadcasting Advisory Board. - Government relations attorney

Terry McAuliffe - Capital Management International

Henry Munoz III - Finance Chair DNC

 

CEOs

David Calhoun - Boeing (formerly with Blackstone)

Tim Cook - Apple

Josephy Kiani - Masimo, Cercacor Labs, Like Minded Entertainment Ventures founder

John Scott Kirby - United Airlines

Arvind Krishna -- IBM (sold Watson Health to a private equity firm)

Sanjay Mehrotra - Micron Technology

Bill Neville - LoanLogics, an affiliate of Sun Capital Partners


Leading Government/PEU charge:

Mitch Landrieu, White House Senior Adviser/Infrastructure Implementation Coordinator

....states that have leveraged tolling and other transportation user fees as a part of their infrastructure investment plans have demonstrated effectiveness in project finance, private equity contributions, financial oversight, new technology deployment, innovative business practices, customer value, equity, climate change, resilience and environmental justice.

PEUReport will update this post as this list is a work in progress.  

Update 12-29-22:  Biden is currently vacationing at the St. Croix home of Bill Neville. 

Update 1-4-23:  Raimondo has been mentioned as a future Treasury Secretary should Janet Yellen move on.

Thursday, December 1, 2022

SBF on DealCrook


Six months ago FTX founder Sam Bankman-Fried told the House Agriculture Committee about his firm's "conservative risk model" and "strong customer protections."  SBF took the opposite stance in recent interviews, one which was sponsored by NYT Dealbook.

"There is something maybe even deeply wrong there, which was I wasn't even trying," the crypto mogul said. "Like, I wasn't spending any time or effort trying to manage risk on FTX and that that was obviously a mistake."

"If I had been spending an hour a day thinking about risk management on FTX, I don't think that would have happened," he added. "And I don't feel good about that."


Here is Sam's testimony to the Ag Committee from May:

We also have strong customer protections under our model. It is a safe and conservative risk model which would have helped to alleviate some of the instances that we have seen with recent futures exchanges like the LME nickel fiasco earlier this year by having the collateral pre-funded at the clearinghouse rather than relying on credit, and having a real-time risk engine.

We also have enhanced customer protections. We have all of the customer protections that exist on traditional features exchanges and on FCMs because we understand deeply that we have a responsibility to ensure that if there is direct access to the platform, that users are still afforded the same level of protection. On top of that, we have further customer protections, suitability, and transparency than what you find on most other platforms. 

Bankman-Fried got internal feedback on significant risk management, compliance and accounting weaknesses from staff who later quit.  Fox Business reported:

...... proposed setting up rigorous structures and systems for risk, compliance and accounting, Mr. Bankman-Fried was dismissive of the idea, according to the people.

He said such extensive controls could crimp Alameda’s activity and limit how fast the firm could move to place trades, the people said, reducing potential profit.

"I and a group of others all quit, in part because of concerns over risk management and business ethics."

SBF said other things that don't pass the smell test.

Sam Bankman-Fried says a multi-million-dollar house reportedly bought in his parents' name in the Bahamas was actually meant to be company property.

"I don't know the details of the house for my parents," Bankman-Fried told The New York Times' Andrew Ross Sorkin at the publication's DealBook summit on Wednesday. "I know it was not intended to be their long-term property. It was intended to be the company's property. I don't know how that was papered in."

FTX/Alameda was Sam's "personal fiefdom."  If he wanted the property for the company it would have been in a corporate name, not his parents.

A spokesperson for his parents, both Stanford University law professors, previously told Reuters that they had been trying to return the deeds to the company "since before the bankruptcy proceedings."

His father Joseph Bankman is a scholar in the field of tax law.  Did he advise SBF to set up in the Bahamas?

The Bahamas has no income tax, corporate tax, value-added tax or wealth tax for those investing in offshore companies. Foreign investment in tourism and banking is especially welcome.

His denial regarding taking FTX customer funds to cover trading losses at Alameda is not credible.

“I was nervous, because of the conflict of interest, of being too involved,” he said. “I didn’t have the bandwidth to run two companies at once.” At issue are the massive loans of customer money that FTX made to Alameda to cover the firm’s mounting losses, which — as with almost every bad decision that has come to light — Bankman-Fried framed as a mistake rather than deliberate wrongdoing. “I didn’t knowingly co-mingle funds,” he said.

SBF's fiefdom had 130 companies, not two.  His CEO and Board of Director hands are all over them.  Both roles come with fiduciary responsibilities.

SBF did not institute the most basic fiduciary controls (accounting, compliance and risk management., He had the accounting back door installed between FTX and Alameda.  So, why would he draw the line at conflicts of interest?  It makes as much sense as his answer as the veracity of his responses.

“I was as truthful as I’m knowledgeable to be,” he said.

Bankman-Fried had a duty to protect FTX customer accounts.  He highlighted that duty to a Congressional committee.  Instead he pilfered them.  That's the knowable truth and it indicts the former CEO.   SBF should be under the control of a legal authority, not speaking at a Dealbook Summit.

Update 12-2-22:  SBF forgot his prior sales talk of "strong customer protections" and "conservative risk model" with his advice that crypto investors should look for "all the things I wish FTX had been able to supply" when depositing their funds.

Adding to his malfeasance and outright incompetence:

SBF said he paid so little attention to his company expenses that he didn't realize he was spending more than he was taking in.

Sam Bankman-Fried says he "misaccounted" $8 billion after some FTX customer funds were mistakenly counted twice.

The balance sheet combined FTX and Alameda Research, the firm he said he didn't run due to conflicts of interest. I'm sure his CPA lobbyist Mike Conaway would've been glad to help explain things to SBF.

Bankman-Fried's statements are shocking in light of his closeness to political insiders of both Blue and Red teams.  They were going to rely on this guy to structure financial services?

“Regulators have some egg on their face,” he said. “Sam was very far along at pitching to be the cash Bitcoin market here in the US, both with the SEC and CFTC.”

Update 12-3-22:  CoinDesk called it SBF's self-incrimination tour. 

Update 12-6-22:  CoinMarketCap noted how the smartest guy in the room repeated pled ignorance, arrogance and stupidity during his "apology not jail" tour.  I've said for weeks he should be under the control of a legal authority.

Update 12-8-22:  CoinDesk added:

FTX was an improperly organized firm at its founding. Customer assets were always precariously placed. And we know this now because of SBF’s own description of its end.

Update 12-13-22:  SBF is finally under the control of a legal authority.  His planned Congressional testimony is quite the exercise in image management.

Update 1-1-23:  In an earlier financial crisis SBF promised lenders big returns for a cash infusion

....he promised annual returns as high as 20% in exchange for loans of cash or crypto, but offered few specifics.

Sounds like a young Rubenstein. 

Update 1-4-23:  The last count in the indictment is an allegation that SBF conspired with others to violate campaign finance laws.  SBF made "enormous illegal contributions disguised to look as if they were coming from SBF’s “wealthy co-conspirators.”

Update 1-5-23:  SBF's General Counsel at FTX "told prosecutors what he knew of Bankman-Fried's use of customer funds to finance his business empire."  He had over a year to learn how SBF did business.

8-3-2021:  Cryptocurrency exchange FTX.US named a former Sullivan & Cromwell LLP and U.S. Commodity Futures Trading Commission attorney as general counsel.

Meanwhile Sullivan and Cromwell remains the law firm for FTX, before, during and after the revelations of gross mismanagement and fraud.

Update 1-12-23:  SBF offered doublespeak on his Robinhood shares.