* Gov. Rauner was asked in October about a lawsuit filed against him by Kip Kirkpatrick. Media outlets had reported that Rauner had demanded the case be sealed. So, a reporter asked him “Why are you fighting to keep that sealed?”…
Gov. Rauner: I am not. So, to be clear, my assets, all my investments are in a trust that I don’t control. I did that when I became governor. I can’t comment on any business disputes. That gets settled in its own process.
Reporter: Is that the reason why it’s sealed because it’s through a blind trust?
Gov. Rauner: I can’t even tell you, I mean, I don’t really have much to do with that.
Reporter: Is there attorneys who are doing that?
Gov. Rauner: I assume. I don’t know.
Rauner aide: Alright, thanks everyone.
He didn’t know anything about it and didn’t have much to do with it, eh?
* The original lawsuit was just released from its judicial seal today. I’ve highlighted portions which seem to contradict what Rauner told reporters last October…
Rauner invested $5 million as a limited partner in Kirkpatrick Capital to acquire a minority share in United Shore Financial Services, LLC (”United Shore”), a privately held mortgage lender.
Rauner received an exceptional return on that investment which was made possible by a settlement of two distinct disputes with United Shore—a personal bonus claim brought by Kirkpatrick against United Shore and derivative claim brought by Kirkpatrick Capital against United Shore. This parties’ dispute concerns the allocation of those settlement proceeds. Rauner’s share of the settlement proceeds turned his $5 million investment into more than $20 million.
This $15 million gain, however, apparently is not enough for Rauner. Rauner now seeks to cut-off Kirkpatrick, in a confidential arbitration closed to public scrutiny, from his fair share of the settlement proceeds by seeking to ensure his own, self-serving interpretation of the United Shore settlement agreement (even though he is not a party to it). Rauner seeks to use Kirkpatrick Capital’s partnership agreement as a shield in the proceeding, alleging that his claims arise under Kirkpatrick Capital’s partnership agreement (which has an arbitration clause). Rauner’s claims, however, do not arise from the partnership agreement, but instead from the settlement agreement (which requires litigation in this Court) and therefore must be heard in this Court. […]
Kirkpatrick specifically kept Rauner informed throughout the litigation regarding his objectives in terms of a return on Rauner’s investment and the allocation of the settlement proceeds. At an in-person meeting in Springfield, Illinois, on May 11, 2015, on the back porch of the Governor’s mansion, Kirkpatrick laid out his expectations regarding the return to Kirkpatrick Capital from a settlement and the allocation of the settlement. These expectations were updated and communicated at a second in-person meeting between Rauner and Kirkpatrick at the Chicago Club on the evening of September 15, 2015. At neither meeting did Rauner object to the proposed allocation of the settlement proceeds, nor the return on his investment he would receive. […]
Rauner’s total proceeds from the United Shore investment were approximately $20 million, with $15 million of that being profit.
In the summer of 2017, after receiving all payments due to him, Rauner filed a demand for arbitration before the American Arbitration Association that the settlement agreement precludes Kirkpatrick Capital’s allocation of the United Shore settlement proceeds and claiming that Kirkpatrick and the Kirkpatrick Capital breached and interfered with the LPA.
Tellingly, Kirkpatrick Capital’s other two investors, Ganzi and Chaifetz—who are seasoned and sophisticated equity investors did not dispute or take issue with Kirkpatrick Capital’s allocation of the settlement proceeds.
Also, Politifact took a look at the “blind trust” angle. Click here. The topic will likely be revisited now that an allegation has been made that Rauner took an active role in his investments while he was governor.
*** UPDATE 1 *** Biss campaign…
“This is why we need to be careful when a billionaire uses the word “trust” colloquially. From Rauner’s investment scams to JB Pritzker and Chris Kennedy’s tax scams, it’s getting hard to tell these guys apart.” - Tom Elliott
*** UPDATE 2 *** Pritzker campaign…
Today, a judge unsealed Kip Kirkpatrick’s lawsuit against Bruce Rauner, shedding light on a business dispute Rauner had previously claimed to have no involvement in and no knowledge of.
The lawsuit details Bruce Rauner’s maneuvers as governor to maximize returns on a $5 million investment he had made in Kirkpatrick Capital. Kirkpatrick claims to have met repeatedly with Rauner, including once at the governor’s mansion, regarding his business interests despite Rauner’s claim to the public that “all my investments are in a trust that I don’t control.”
“Bruce Rauner is allegedly conducting private business out of the governors’ mansion and then openly lying about it to the public,” said Pritzker communications director Galia Slayen. “It is no wonder this failed governor tried to keep this lawsuit sealed, but now that it’s public, it is time for Bruce Rauner to tell voters the truth.”
*** UPDATE 3 *** Kathleen Murphy at the Jeanne Ives campaign…
“Lying and screwing people out of their money is apparently a practice Bruce Rauner brought with him from his dealings in the private sector to his dealings as Governor.”