Kushner Transfers 666 Fifth to Family Trust

The Real Deal reported:

Jared Kushner sold his equity stake in 666 Fifth Avenue, once the most expensive office building in America. According to a spokesperson for Kushner Companies, the stake was sold to a family trust, but the company declined to comment on who exactly would control it.

“Mr. Kushner’s ownership interests were sold using a third-party appraisal for fair market value to a family trust, of which he is not a beneficiary,” the spokesperson said.

Earlier this month, Kushner’s attorney Jamie Gorelick announced that upon taking the position of senior adviser in Donald Trump’s White House, Kushner would divest from more than 35 assets, selling many of them to either his brother Josh or a trust controlled by his mother, Seryl Kushner.

With 666 Fifth Avenue transferred to the trust of a close relative what will happen to Kushner's stake in Thrive Capital?  The Obama administration couldn't follow White House Health Reformer Nancy Ann Deparle's residual private equity stakes from CCMP Capital Partners health care investments.  The Trump White House appears to have even less attention to detail. 

Kushner's attorney Jamie Gorelick beat a multi-year accounting fraud rap as Chief Operating Officer of Fannie Mae.  Her bonuses totaled $2.8 million during the period of accounting fraud.  She negotiated with the Obama White House on behalf of BP for their 2010 Gulf of Mexico Oil Spew.  The Greed Queen of Disaster is on the Kushner case.  

Update 1-15-23:  A Kushner company biographer called the deal around 666 Fifth Avenue a ticking time bomb. I wonder if the Jamie Gorelick link will surface in the investigation.

Trump's Navy Man is PEU

President Donald Trump nominated Phillip Bilden for Secretary of the Navy.  Bilden is founder of Harbourvest Partners, a private equity underwriter (PEU).  Here's how a PEU qualifies one for Navy Secretary:

“has experience with moving large sums of money which is helpful when filling the Navy budget.”

Refilling the swamp with the Red Team's greed and leverage boys, that's Donald.  

Carlyle Ready to Cash In UniRush

Bloomberg reported:

Prepaid-card provider Green Dot Corp. is in talks to buy UniRush, a smaller competitor co-founded by Russell Simmons, the music industry entrepreneur behind rap label Def Jam, according to people familiar with the matter.

UniRush, which is backed by private equity firm The Carlyle Group, is worth about $150 million, one of the people said.

AltAssets reported Carlyle is shopping UniRush and its RushCard.  Carlyle might be able to squeeze maximum value given all the talk of cashless societies at the recent World Economic Forum in Davos, Switzerland.  

Carlyle invested in UniRush in 2010.  A year later Florida's Attorney General investigated the company for hidden fees.  Private equity firms have long been accused of hidden fees.  It should be no surprise that an affiliate might have been doing likewise.

Poor people did not love Rushcard's tech glitch in October 2015 that prevented users from paying bills or buying gas to get to work.  Dealbook said UniRush set aside $2 to $3 million dollars to refund customers for losses and inconvenience.  Carlyle and UniRush wrapped up this liability in 2016 (Bloomberg):

"agreeing to settle a lawsuit from holders of its RushCard who temporarily lost access to their money due to a system glitch."

Recall Carlyle's reputation as a savvy tech operator.

The Carlyle Group is exiting investments at a rapid pace (yet again).  What will their RushCard reward be?

Update:  Naked Capitalism and Washington's Blog ran stories on the the global cashless society push.

Update 2-2-17:  UniRush will pay $10 million in restitution on top of the $19 million settlement in a class action suit.  I wonder how much of this will hit Carlyle Group limited partners.  Note the MarketWatch story made no mention of Carlyle's ownership stake in UniRush. Reporters need to keep access to the general partners. 

Blue Presidential Foundations Taking Different Arcs

The tarnished Clinton brand can be seen by the shuttering of the Clinton Global Initiative, a popular annual gathering of global tamperers.  The Clinton Foundation remains a going concern but it will lose its most visible face.

The rising Obama Foundation intends to build a monument to President Obama's practical years of catering to the insider class, the type of people who make up the majority of his foundation board.  Six members come from the financial world, most are private equity underwriters (PEU).

Naked Capitalism reported on Obama's final gift to the PEU boys, having Fannie Mae and Freddie Mac back private mortgage loan pools.  The very programs intended to help struggling home buyers will backstop billionaire landlords raising rents on the people Fannie and Freddie were supposed to help.  That's been the role of government the last two decades, to protect and serve rapscallion financiers. Both the Reds and Blues played the game hard.

The Clintons' backing down should help the Obama's generate serious donations and possibly a new job for the ex-President.  Will the grateful offer him direct employment or millions in speaking fees like Bill and Hillary?  

Warrior Connected to War on Cash?

New Eastern Outlook reported on India's war on cash:  

Overnight, Modi’s government de facto outlawed an estimated 86 percent of all cash in circulation by value. People had 50 days to hand in the notes or they become worthless. Yet the government, despite stating it would issue new, more secure 500Rs and 1000Rs bills, had nowhere near the equivalent value of new notes ready for replacement. They say it may take up to a year to print enough, which means confiscation, de facto. Faked opinion polls with slanted questions done only via smart phone apps of which only 17% of the population has access, claimed that “90% of Indians approve” the demonetization.

Yet it’s far worse. India is an underdeveloped country, the largest in the world in population terms with more than 1.3 billion people. By demanding Indians turn in all 500Rs and 1,000Rs bills to banks, Modi is forcing major change in how Indians control their money in a country high on the corruption scale where few trust government let alone private banks, and prefer to deal strictly in cash or hoard gold for value. Nearly half the population, some 600 million Indians, do not hold a bank account and half of those, some 300 million Indians, lack a government identification, necessary to open an account.

When he presented his shock announcement, Modi pitched it in terms of going after India’s black economy. Soon he shifted gears and was praising the benefits of a “cash-less society” to enable Indians to enter the digital age, appealing to younger Indians, savvy in smart phones and digital networks, to convince the older of the benefits of online banking and consuming. The drastic demonetization declaration was planned by Modi and five other inner-circle ministers in complete secrecy.

It illuminated the United States role in advancing a cashless society:

The Modi cash-less India operation is a project of the US National Security Council, US State Department and Office of the President administered through its US Agency for International Development (USAID).

Astonishingly, the report, prepared for USAID by something called the Global Innovation Exchange, admitted that “97% of retail transactions in India are conducted in cash or check; Few consumers use digital payments. Only 11% used debit cards for payments last year. Only 6% of Indian merchants accept digital payments…Only 29 percent of bank accounts in India have been used in the last three months.” The US and Indian governments knew very well what shock they were detonating in India.

The Global Innovation Exchange includes such dubious member organizations as the Bill & Melinda Gates Foundation, a major donor to the Modi war on cash initiative of USAID. It also includes USAID itself, several UN agencies including UNICEF, UNDP, UNHCR. And it includes the US Department of Commerce and a spooky Maclean, Virginia military contractor called MITRE Corporation whose chairman is former CIA Director, James Rodney Schlesinger, a close associate of Henry Kissinger.

PEU Report recalled MITRE from a 2009 piece pushing Obama appointee Ashton Carter as an outsider, when basic research showed him to be the consummate insider.  At the time Carter was a PEU:

Senior Partner for Global Technology Partners, a defense oriented investment firm. He is also a member of the Board of Trustees of the MITRE Corporation.

Obama's Pentagon Chief was on the board of a spooky beltway military contractor pushing a cashless society.  For seventeen years Ash Carter served on MITRE's board.  Between Pentagon stints Carter joined the Markle Foundation to assist their Economic Future initiative.  The 2014 press announcement stated:

"The addition of Dr. Carter will strengthen our efforts to help Americans at all income levels transition to the economy of the future."

Does cashless fit into Markle's future?  Cashless societies were the topic du jour at the recent World Economic Forum in Davos.  Carter spoke at the 2016 WEF meeting stressing the need for technology and partnerships to keep America and the globe secure.  

Update 1-28-17:  Europe proposed restrictions on use of cash. 

Carlyle Monetizing Affiliates

Carlyle Group co-founder David Rubenstein spoke in Singapore before going to Davos.  The Business Times reported:

"We're trying to sell a lot, and we have sold a lot. We're very judicious in what we buy.  People are paying earnings multiples for companies which are historically high."

"I think when interest rates go further up, as I suspect they will, and the stock market goes down a bit, I suspect valuations will come down, but right now they are not cheap."

"High valuations mean that future returns will be lower. But client expectations have come down."  He noted that a net internal rate of return (IRR) of 15 per cent a year is still achievable and acceptable to clients. This means about 20 per cent a year before fees.

 As private equity returns came down investors adjusted.   Not long ago Mr. Rubenstein dangled 30% return on equity as consistent Carlyle achievements.

Private equity as an asset class has gained favour in the last five to 15 years, and is no longer regarded by governments as harming the environment or harming employee interests.

That because many, if not most, former public servants join private equity firms in retirement.  PEUs populated the last two White Houses, Red and Blue, and Presidet Trump has shown much PEU love.  The Clintons received numerous $250,000 checks for speaking to private equity investors at their annual meeting.

Ex-President Obama populated his foundation with numerous PEUs.  They are ubiquitous and their rise correlates strongly with income stagnation and employee benefit deterioration.  The Carlyle Group jettisoned more than one pension fund, Brintons and RAC, in their drive to buy low and sell high.  I would think that would've harmed employee interests.

Update 1-28-17:  Wall Street and other corporate insiders are also raising cash by dumping stock.

Media Encouraged to Get in Line

Donald Trump started his term as U.S. President as a billionaire real estate developer (in PEU fashion).

There are very few people out there who will talk and write honestly about private equity. I know from personal experience that the financial press is so eager to break news on "deals" that reporters (who are increasingly compensated on the number of "market moving stories" they write) can't afford to be critical of Carlyle, KKR and Blackstone, and risk losing access to people at those firms.

Trump expects the media to serve him.  Businessman Trump did not have to talk to the media.  He could set boundaries as to allowable questions and punish violators with permanent shunning.  I believe that's what the first White House Press Conference was about.  It wasn't really about numbers or counts.  It was about Trump's image.  Those he perceives as tearing him down will feel his wrath.   

Anthony Scaramucci, Trump interpreter at the World Economic Forum in Davos, provided insights:

"He's a counter punching sort of person.  I've never seen him throw the first punch, but boy if you are hitting him he likes to punch back hard."

Donald interpreted his inauguration attendance as a direct reflection of himself, therefore it had to be the biggest and best ever.  Period. The press corp got punched hard.  However bizarre on a mathematical level, Trump is training the press to stay within his bounds.  Members of his team know to give President Trump what he wants.

Here's what I think he was trying to say and if I'm wrong, believe me, my cellphone will be ringing and he'll correct me.  He's a great media coach.  Trust me.  He watches you on television.  He'll tell you what he likes about you, what he doesn't like about you.

Image management to the exclusion of truth is the PEU way.  Part of The Carlyle Group's mission is to protect their good name and that came front and center when Carlyle Capital Corporation imploded.

America elected a billionaire who has benefited from leverage, bankruptcy, tax havens, preferred taxation of partnerships, and keeping workers wages stagnant.

You can take the billionaire out of the tower, but you can't take the towering ego out of the billionaire, President or PEU.