Carlyle Group is Deliberately ?

The Carlyle Group published an Annual Review and Corporate Citizenship Report.  The co-founders' letter mentioned LifeCare's bankruptcy and Synagro's equity write off.  They didn't mention Church Street Health Management, another Carlyle affiliate that went bankrupt in early 2012.

LifeCare lost 25 patients in the aftermath of Hurricane Katrina.  The hospital with the highest death toll warranted not one mention in Fran Townsend's Lessons Learned Report, enabling Carlyle to keep their good name.

Synagro bribed the wife of Rep. John Conyers D-MI, Monica Conyers.  Synagro declared bankruptcy last week.

Church Street Health Management settled with Medicaid for billing for unnecessary procedures for low income children.

ARINC received a 33 month ban from the World Bank for "procurement violations." 

Carlyle is deliberately different, causing heavy losses from poor management theory.  They will never learn.

Update 5-6-13:  The Baltimore Sun reported on the Synagro bankruptcy.  "Synagro has a contract with Baltimore to operate and provide equipment at Patapsco Wastewater Treatment Plant on Asiatic Avenue and Back River Wastewater Treatment Plant on Eastern Avenue.  The plants treat wastewater for the city, and Synagro recycles the byproducts for use as fertilizer and as an energy source, said Tom Becker, a company spokesman. The plants' assets, and wastewater treatment plants in Philadelphia and Sacramento, will be included in the sale to EQT but not in the Chapter 11 filing, the company said.

Partners Plan to Cash In Carlyle Units for $8.2 billion?

SEC documents show The Carlyle Group, a publicly traded private equity underwriter (PEU) filed a shelf registration, meaning some Carlyle partners are ready to monetize their holdings.  Potential proceeds could total:

$8,243,038,140

The registration did not indicate which Carlyle partners wish to cash in, Carlyle's legendary co-founders/associates, Mubadala Development Corporation or CalPERS. 

The shelf registration at 264 million shares is nearly 7.5 times Carlyle's IPO float of 35 million shares   Carlyle issued  a press release on the filing. 

Chinese PEU Stories

Not every private equity deal turned to gold in China.  Sure, The Carlyle Group's investment in China Pacific Life ended up a ten bagger, but other PEU's have not had similar luck.  South China Morning News ran a series of articles on PEU investments, the kind that won't be found at the bottom of a raiinbow:

Chinese PEU investments aren't yet dog food or infant formula, both tainted with toxic melamine by Chinese manufacturers.  Ironically, Carlye invested in Yashilli, an infant formula maker, with an aim to produce high quality, i.e. safe baby milk.

Despite Carlyle's best efforts, even poor Chinese parents find a way to import baby formula.

"If China cannot even handle baby food, what can we trust?"

It seems Carlyle's quality promise didn't change things for many Chinese citizens.  However, New Zealanders might be happier given Yashili's plans to build a $100 million infant formula plant in their country..

Private equity and China's central planners have much in common.   Neither are worthy of trust.

Rubenstein's Preeminent PEU Contributions

Newswise reported:

The 2013 American Academy of Arts & Sciences class includes Nobel Prize winner Bruce A. Beutler, philanthropist David M. Rubenstein, astronaut John Glenn, actor Robert De Niro and singer-songwriter Bruce Springsteen.

The Academy selected the new Fellows as a result of their preeminent contributions to their disciplines and society at large. The honorees will be formally inducted into the Academy on October 12 at its headquarters in Cambridge, Massachusetts.

"Election to the Academy honors individual accomplishment and calls upon members to serve the public good," said Academy President Leslie C. Berlowitz. "We look forward to drawing on the knowledge and expertise of these distinguished men and women to advance solutions to the pressing policy challenges of the day."

One of the nation's most prestigious honorary societies, the Academy is also a leading center for independent policy research. Members contribute to Academy publications and studies of science and technology policy, energy and global security, social policy and American institutions, and the humanities, arts, and education.

Philanthropist David Rubenstein, co-founder of The Carlyle Group, makes his money by levering, then streamlining companies.  This can involve dumping the worker pension, as Carlyle did in the case of RAC and Brintons, two British companies.

Private equity underwriter (PEU) Rubenstein just pledged $10 million to Thomas Jefferson's Monticello, a magnificent estate just outside Charlottesville, Virginia.

"The gift will significantly accelerate our progress to create the landscape of slavery along Mulberry Row." 

Jefferson became a PEU pioneer by borrowing heavily, using slaves as collateral.  Rubenstein and his PEU ilk contributed to America's shrinking middle class by exporting jobs overseas and stashing investment vehicles in foreign tax shelters.

Private equity's contributions to society at large are more like a cancer, something to be excised.  Instead Red and Blue politicians cater to this manipulative investment class, enacting tax laws, budgets and regulations to benefit their PEU sponsors..

Carlyle Flushes Synagro

The Carlyle Group's latest bankruptcy is Synagro Technologies, an infrastructure play that never seemed to recovered from bribing the wife of Rep. John Conyers (D-MI). 

Synagro joins other bankrupt Carlyle affiliates, referred to as rare missteps by WaPo:

Carlyle Capital Corporation
BlueWave Partners
SemGroup
Hawaiian Telecom
Edscha
IMO Carwash
Stallion Oilfield Services
Verari Systems
Willcom
Oriental Trading
Church Street Health Management 
LifeCare Holdings
Synagro Technologies

It's hard to know who Carlyle will blame for their lack of performance.  They cited a puffery defense in SemGroup shareholder lawsuits.  After claiming in SEC documents that 25 patient deaths in LifeCare facilities post Hurricane Katrina didn't hurt the company financially, LifeCare's bankruptcy filing said the company never recovered from its Hurricane Katrina hit. 

PEU debt put LifeCare under and flushed Synagro.  The question is did other Carlyle funds have credit default swaps on Synagro?  Did one fund lose while others won?  That would fit the PEU way, greed, 30% annual returns, unlevel playing field.... 

Rubenstein's Patriotic PEU Philanthropy

The AP reported:

One-time slave quarters will be recreated at Thomas Jefferson’s home at Monticello, and more of the Declaration of Independence writer’s living quarters will be restored using a $10 million gift from a philanthropist who has a keen interest in the nation’s history.

Mulberry Row, the community where slaves lived on the Virginia plantation, will be reconstructed with the funds. Monticello officials plan to rebuild at least two log buildings where slaves worked and lived and will restore Jefferson’s original road scheme on the plantation. The gift will also fund the restoration of the second and third floors of Jefferson’s home that are now mostly empty and will replace aging infrastructure.


Businessman David Rubenstein, the co-CEO of The Carlyle Group private equity firm, announced his gift on Friday night. It is one of the largest ever to the Monticello estate.

Thomas Jefferson was a pioneer in the use of leverage to grow his business activities, based on slave labor.   The Smithsonian reported:

It had long been accepted that slaves could be seized for debt, but Jefferson turned this around when he used slaves as collateral for a very large loan taken out in 1796 from a Dutch banking house in order to rebuild Monticello.  He pioneered the monetizing of slaves, just as he pioneered the industrialization and diversification of slavery.

The Carlyle Group's David Rubenstein perfected borrowing to buy companies, to fund dividends paid to sponsors (like Carlyle) and to minimize tax liability. He did so in an era where corporations became people.

Rubenstein told The Associated Press he has become a student of Jefferson in recent years since purchasing several copies of the Declaration of Independence and came to admire the man who wrote that “all men are created equal.”

Jefferson went from "all men are created equal" to borrowing against his slave position.  He later refused to release his slaves, despite funding for such a thing from a dear friend's will.

Might such a gift ensure McIntire School of Commerce continues charging premium tuition and teaching private equity underwriter (PEU) ways?  Jefferson, it turns out, was a PEU pioneer.

PEU Daddy! Dat's Sum Lo Taxes...

Dealbook highlighted the many ways America's tax system caters to private equity underwriters (PEU's). 

1  Carried Interest
2.  Management Fee Waivers
3.  Limited Partner Loophole
4.  S Corp Loophole
5.  Exception to publicly traded partnership rule
6.  Supercharged public offerings
7.  Enterprise value (selling interests to PEU management company at capital gain rates.
8.  Angel Investor Loophole
9.  IRA diversions
10.  Interest deductions

PEU founders garnered these benefits, courtesy of Congress et al the last two and half decades.  Red and Blue politicians in Congress and The White House created modern day robber barons. Together they spread the reach and influence of the Government-Corporate Monstrosity, Eisenhower's Military-Industrial Complex on trillions in federal steroids.