Monday, January 23, 2023

Biden Chief of Staff: PEU to PEU

President Biden will change his Chief of Staff in the near future.  Current Chief of Staff Ron Klain (Revolution LLC) will be replaced by Jeff Zients (The Cranemere Group and Portfolio Logic LLC).  Biden will go from one private equity underwriter (PEU) to another.  

Zients left PEU Cranemere to join the Biden White House.   

The Cranemere Group Ltd.

Prior to (joining) Cranemere (as CEO), Jeff served as the Director of President Obama’s National Economic Council. Jeff previously served as the acting director of the Office of Management and Budget and also was responsible for the technology turnaround of Before serving in Government, Jeff served as the Chairman, CEO, and COO of the Advisory Board Company and Chairman of the Corporate Executive Board. During his tenure, these companies created more than $2 billion in equity value for shareholders. Jeff also founded Portfolio Logic, an investment firm focused on healthcare and business services, serving on several portfolio company boards. With his wife Mary, he was part of the founding group of the Urban Alliance Foundation which provides economically disadvantaged youth with job training.

An SEC filing on the Pediatric Services of America (PSA) buyout showed Zients role with Portfolio Logic.  Four of the five signatures on the deal were Zients.

About Portfolio Logic LLC 

Portfolio Logic, a Washington, D.C.-based investment firm, primarily focuses on healthcare and business services companies. Jeffrey D. Zients, Managing Partner, previously served as Chairman of both The Corporate Executive Board and The Advisory Board, two successful business-to-business content companies serving these industries.

Portfolio Logic bought out PSA in 2007.

A 2015 Justice Department settlement with PSA stated:

The U.S. Attorney's Office announced that Pediatric Services of America Healthcare, Pediatric Services of America, Inc., Pediatric Healthcare, Inc., Pediatric Home Nursing Services (collectively, "PSA"), and Portfolio Logic, LLC agreed to pay $6.88 million ($6,882,387) to resolve allegations that PSA, a provider of home nursing services to medically fragile children, knowingly (1) failed to disclose and return overpayments that it received from federal health care programs such as Medicare and Medicaid, (2) submitted claims under the Georgia Pediatric Program for home nursing care without documenting the requisite monthly supervisory visits by a registered nurse, and (3) submitted claims to federal health care programs that overstated the length of time their staff had provided services, which resulted in PSA being overpaid.

And the reason private equity firms keep buying healthcare companies?  PPACA (Obamacare) designer Nancy-Ann Deparle was a PEU.  She received payments for residual private equity holdings that were not declared on her financial filings.  Senator Rick Scott (Red Team) did his best to hide his PEU healthcare holdings.

Flashback to 2006 when Zients was trying to buy the Washington Nationals:

Jeffrey D. Zients may work full time on his bid to buy the Washington Nationals, but in the past year he has taken some swings at the private equity business.

The Nationals are currently being pursued by fellow PEU and Carlyle Group co-founder David Rubenstein.

Politicians Red and Blue love PEU and increasingly, more are one.  They need continued access to Uncle Sam's wallet and "Just Us politically connected PEUs" Department.  The Biden cabinet is chock full of former PEUs.

The question is how many undisclosed residual PEU investments does Zients have?  How many residual PEU investments remain undisclosed on the wider Biden cabinet?  

Health reformer DeParle returned to her PEU roots.  Will Ron Klain do the same?

Update:  Zients started another PEU, Capital Logic Partners with friend John K. Delaney:

Capital Logic Partners was a private equity firm that was based in Washington, District of Columbia. The firm focused on small and middle market equity investments in manufacturing and service industries.

Update 1-24-23:   Zeints met with then Vice President Joe Biden, Hunter Biden and David Rubenstein in February 2016.  It was VP Joe and the PEU boys, one of them his.

"If shame were still operative in the modern politics of America" then Zeints would not replace Klain and the Biden Cabinet would have public servants without PEU ties.  

Update 2-15-23:  PEU Zeints took over last week for fellow PEU Ron Klain as White House Chief of Staff.  Klain went on Stephen Colbert and hit a Ted Cruz joke into outer space.  There is no word yet on which PEU may land Klain's services.

Update 4-25-23:  Ron Klain will be advising PEU executives from his former law firm O'Melveny.

Update 9-13-23:  Zeints' family is ringing the register as the result of Uncle Sam's support of TechMet.