* Illinois Public Radio…
Bruce Rauner says there’s “nothing sinister” about venture capital firms using the Cayman Islands as a tax shelter, but says he has never used the investment vehicle for his personal benefit. […]
Until he stepped down to run for governor, Rauner was head of a capital investment firm, GTCR, which has several investment pools there.
At an appearance at the Illinois State Fair last night, Rauner — wearing a plaid shirt, jeans and brown boots — insisted it’s a “widespread, common practice.”
“What my firm did is what many, many financial firms do and I think the majority of venture capital firms and private equity firms do, and that is - when they invest in a foreign company, a non-U.S. company, they’ll set up an investment vehicle, often in the Caymans, so that their limited partners are treated, for tax purposes, the same way as, as if it was a U.S. company.”
He ran GTCR, so if his firm made money off Caymans investments, then he personally profited.
* But the focus is shifting today to another island nation, Bermuda…
The onetime head of a company tied to Bruce Rauner and an associate — men the GOP candidate for governor Thursday called “rogue employees” — have been indicted in federal court in New Jersey on charges they stole millions of dollars in a sophisticated trading fraud.
Anthony Blumberg, 49, of New Jersey, and Craig Marshall, 47, of Bermuda worked for ConvergEx Global Markets Limited, a Bermuda-based broker and subsidiary to a firm Rauner’s former private equity company helped found.
Blumberg and Marshall were indicted late Wednesday on criminal charges of securities fraud, wire fraud and conspiracy to commit securities and wire fraud.
The indictment is here.
* More…
“These were rogue employees at a subsidiary of a company GTCR had invested in,” Rauner campaign spokesman Mike Schrimpf said. “The employees were fired, and ConvergEx cooperated with the investigation. What they are alleged to have done is unacceptable, and they are rightfully being prosecuted.” […]
Rauner joined GTCR in 1981 and was its chairman until stepping down in October 2012 but “had no say in hiring either of the two people,” Schrimpf said.
* Background info from the Quinn campaign…
GTCRauner formed ConvergEx in October 2006 and installed Blumberg as CEO that very month until 2011: http://www.convergex.com/about-us/history
GTCR was the largest shareholder and controlled the board (they had more seats than any other partner)
GTCR features ConvergEx on its website as an example of a successful company: http://www.gtcr.com/our-focus/financial-services-technology/portfolio/convergex-group
Rauner told Chicago Magazine in 2011 that GTCR’s - his- whole business strategy was handpicking executives. Here’s the profile. http://www.chicagomag.com/Chicago-Magazine/June-2011/GTCRs-Bruce-Rauner-Talks-Investments/ Here’s Rauner’s q&a in the article:
Q: Most private equity firms buy mature companies and unwanted divisions of large corporations, managements intact. But you seem to go out and find management and then, together with them, go buy the companies.
Rauner: We’re in two businesses: industry research and executive recruiting. We study industries, and we network like crazy to find the superstars. Today, we’re partners with two dozen CEOs. Some we’re backing for the second, third time. It can take from six months to nine years from the time we meet someone until we actually become partners with each other.
Q: But sizing up the executive is nearly everything?
Rauner: A lot of reference checking. Are they winners? How did they handle failure in their careers? We go to all the trade shows. We call it the leader strategy. Deal flow comes to them. Talented executives come to them.
Key Point: Now GTCR Chairman Rauner wants to pretend he has nothing to do with the guy who was put in place by GTCRauner to be the CEO of ConvergEx from Day One when GTCR was in charge every step of the way? How stupid does he think we are?
* Background info from the Rauner campaign…
BNY and GTCR were equal investors in Convergex. Convergex though was staffed with BNY executives. As shown below, Blumberg was already with BNY and had been since 2002. He came with the deal.
Anthony Blumberg Came Into Convergex From Bank Of New York-Mellon. “BNY ConvergEx management includes Velli, Kerry Pack, John Meserve, Anthony Blumberg, George Costafos and Charlie Raphold from BNY. The trading grossed $297 million last year. Tom Gavin, David Quinlan and Jeff Shoreman make up the Eze contingent. The vendor grossed $43 million last year. Much of that is recurring or commission-like coming from routing orders to brokers. Goldman Sachs, previously a large owner of Eze Castle, does not have a stake in BNY ConvergEx. Operations will be split between New York and Boston, Eze’s current headquarters. The deal is expected to close this year.” (Peter Chapman, “BNY ConvergEx Eyes Hedge Funds with Eze Merger,” Traders Magazine, 8/1/06)
Anthony Blumberg Originally Worked For Credit Lyonnais, And Then Bank Of New York-Mellon, Before Joining Convergex. “Prior to the formation of ConvergEx Group, Mr. Blumberg served as a Managing Director at Credit Lyonnais Securities where he established G-Trade Services, one of the world’s largest global portfolio trading groups, which was later acquired by The Bank of New York and became a part of BNY Securities Group in 2002.” (“Our Leadership Team,” Archived Convergex Webpage, 2/10/11)
…Adding… More from the Rauner campaign…
(T)he Quinn fact sheet you just put up on ConvergEx is false and intentionally misleading. It’s not a typo, the Quinn campaign has repeatedly tried to mislead the public over the last 16 hours by claiming Mr. Blumberg was the CEO of the entire CovergeEx company to give the false impression that he was hired by or otherwise directly connected to Bruce Rauner.
That’s simply false. He was the CEO of a subsidiary to ConvergEx who was hired by Bank of New York Mellon in 2002, four years before GTCR invested. Additionally, GTCR was not the “largest shareholder” of Convergex. It was an equal investor with BNY Mellon, which is why the firm’s and its subsidiary’s leadership, including Blumberg, came over from BNY Mellon.
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Caption contest!
Friday, Aug 8, 2014 - Posted by Rich Miller
* This pic was sent to me by the Quinn campaign. It features a man holding a Bruce Rauner sign standing in front of a pile of Illinois State Fair manure. I don’t know whether this was staged or not, but they claim it’s a Rauner supporter..
Heh.
Try very, very hard to keep your comments clean. I know it won’t be easy, but try. Thanks.
…Adding… This is obviously no Rauner supporter. I didn’t look at the sign closely enough, but it has an anti-Rauner message, which certainly gives the caption a different potential twist.
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* Drip, drip, drip…
Gov. Pat Quinn’s campaign says the 2013 hiring of an $80,000 per year policy analyst at the state’s transportation agency had nothing to do with politics.
But, records show Edward M. Healy, 29, served as chairman of a campaign fund that had close connections to the Chicago Democrat’s campaign until June of that year.
Healy, who serves as a public transportation policy analyst for the Illinois Department of Transportation, chaired the Stronger Illinois Committee, which raised money from labor unions and funneled it to Democratic candidates running in the 2012 election for the General Assembly
The executive director of the Stronger Illinois committee was Cheryl Byers, a longtime Quinn friend and supporter who is now back on the governor’s campaign payroll as political director after helping him win the race for governor in 2010. […]
Quinn campaign spokeswoman Brooke Anderson dismissed questions that Healy’s hiring at the DOT was political and said Quinn did not create the Stronger Illinois PAC — even though Byers told the state board of elections the address was in the same suite of offices as the Quinn campaign.
* Rauner campaign react…
“Pat Quinn got his start as convicted Governor Dan Walker’s patronage chief so it’s no surprise that Pat Quinn’s administration is now embroiled in its own patronage scandal. It looks like it still pays to know Pat Quinn.” – Rauner spokesperson Mike Schrimpf
*** UPDATE 1 *** The Quinn campaign wants you to know that Healy has a Master’s degree in Urban Planning from Harvard.
And here’s more from the Rauner campaign…
Stronger Illinois Paid Just $250 A Month In Rent For A River North Office
Stronger Illinois Paid Just $250 A Month In Rent For A River North Office. (Illinois Board Of Elections, Accessed 8/7/14)
In 2013, The Average Cost Per Sq. Foot For Chicago Office Space Was $32.24 Per Month. (Chicago Office Market Overview,Colliers International, Q3 2013)
If Stronger Illinois Was Paying Average Rates For An Office Separate From Taxpayers For Quinn, Then The Office Was Just 15.5 Sq. Feet.
Edward Healy’s Brother, Brian, Works For Quinn’s Reelection Campaign
Brian Healy, Edward Healy’s Brother, Is On Taxpayers For Quinn’s Payroll And Has Been Paid $7,582.31 Since January 29, 2014. (Illinois Board Of Elections, Accessed 8/7/14)
Edward Healy’s Sister, Margaret, Was A Quinn Surrogate
Margaret Healy, Edward Healy’s Sister, Appeared At A Quinn Press Conference To Attack Bruce Rauner.“Margaret Healy, a sixth-grade Chicago history teacher at Chicago City Day School, held up her pay stub and talked of living in a basement apartment and sometimes borrowing her parents’ car to make ends meet.” (Natasha Korecki and Sydney Lawson, “Quinn: Rauner Uses Loopholes To Dodge Taxes,” Chicago Sun-Times, 7/9/14)
*** UPDATE 2 *** Quinn was asked about this issue today…
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* The same Tribune writers who penned that goofy piece about alleged legislative “interference” with the teacher licensing process (which uncovered no evidence of any unqualified teachers) are at it again…
Illinois school districts have employed hundreds of educators to teach everything from science to special education even though they lacked proper credentials in those subjects, a Tribune investigation has found.
Their primary evidence…
As part of an overhaul of teacher licensing in Illinois, the state has begun to close loopholes that allow educators to teach in areas in which they’re not credentialed.
Eliminated last year, one long-standing loophole let districts hire someone without the appropriate credentials in a particular subject and let them work for up to three years. Districts had to show that they tried but couldn’t find a candidate who met the state standards. And the teacher had to pursue getting fully credentialed in the subject, though records show some never did.
Educators approved under the loophole may still teach until 2016. About 200 requests for this provision have been submitted in recent years, according to the state. Several districts asserted they couldn’t find an applicant even in teaching fields with a large surplus such as language arts, the Tribune found.
Notice, they report that 200 requests have been submitted “in recent years.” They don’t say how long that time period is. Ten years? Five years?
Also notice that the “loophole” in question is being closed.
* And when they asked an expert about the dangers of teachers instructing classes that they aren’t credentialed to teach, the expert said, in part…
“What if it were your kid?”
* Part of the problem here is the Illinois State Board of Education’s cumbersome credentialing process. It takes forever just to read the agency’s 21-page explanation of the process. So, while districts wait on the ISBE, they occasionally ask for exemptions.
* But is this really an issue at all? Check out the Illinois Federation of Teachers’ response to the Tribune article…
In Chicago, only 75% of teachers at a charter school must be licensed, and the school has three years to hit that bar. Where is the Tribune’s outrage?
The word “charter” is nowhere in the Trib’s story.
And neither is any mention of this point made by the IFT…
The Tribune has yet to write a takedown of the “Teach for America” program that has been around since 1990 and places recent college grads in some of the neediest schools to teach for two years without a license.
And…
The Tribune has been silent on the disconnect between state and national requirements that mean teachers who are “highly qualified” under the federal No Child Left Behind may not have their Illinois licenses. Perhaps following a few teachers through the red tape could show the public how dysfunctional the system that teachers must navigate to serve their students is
* The Illinois Education Association also jumped into the fray…
It’s unfortunate that the Chicago Tribune, which employs many first rate reporters covering news and politics, has an editorial board that is committed to advancing the agenda of those who wish to privatize public education. There is supposed to be a wall between editorial and news but, at the Tribune, there are holes in that wall.
The paper’s editorial philosophy is regularly promoted in overblown front page stories that unfairly and inaccurately attack public education and education employees. Here’s the latest example.
The strategy is simple: run as many front page stories as possible talking down public schools, implying classrooms are typically staffed by under qualified and overcompensated teachers. It’s a lie, of course, but the theory is that, if public support of our public schools can be reduced, the goals of the privateers can be achieved.
* The IEA is also asking its members to sign an IFT MoveOn.org petition.
*** UPDATE *** Thanks to commenter “Soccermom” for finding this summary of state requirements to teach in private and parochial schools…
* Teacher certification is not required for teachers at recognized nonpublic schools unless the school governance chooses to require it as a condition of employment.
* The Illinois State Board of Education (ISBE) encourages all teachers at nonpublic schools to have at least a baccalaureate degree in the subject they are teaching. If the nonpublic teacher does not have his or her baccalaureate degree, then ISBE encourages the teacher to develop a timeline on how he or she plans to finish his or her education. If an individual with less than a baccalaureate degree is teaching, ISBE will note it in a report. This policy does not vary depending on the school‘s recognition status.
In other words, there basically are no requirements. Alert the Tribune!!!
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* From a press release…
Governor Pat Quinn today directed the Illinois State Police to deploy 40 state troopers to join Chicago Police officers in patrolling four city neighborhoods. The action follows the city’s request for assistance and is part of Governor Quinn’s agenda to ensure the safety of all people in every community across Illinois.
“The state of Illinois will do whatever is necessary to protect public safety – in Chicago and every community across Illinois,” Governor Quinn said. “Earlier this year I told Mayor Emanuel we would help in any way we could to combat violence in the city. When he requested assistance, I immediately agreed to help.”
At the Governor’s direction, the State Police will deploy troopers to areas coordinated with the Chicago Police Department (CPD). The State Police and CPD will set up 20 to 25 “surge” teams with five Chicago Police officers and two State Troopers on each team. The teams will focus on apprehending those with known violent criminal histories who are wanted by law enforcement. The troopers will come from State Police districts across the state. The assistance will be accommodated with current State Police resources.
State Police Colonel Michael Zerbonia will coordinate the effort. Zerbonia is chief of operations for the State Police and has more than 30 years of military service. He joined the Illinois National Guard in 1991 after three years as an air defense artillery officer, served in Iraq from June 2005 to June 2006 and was deputy brigade commander for the Polish 12th Mechanized Brigade in Afghanistan as part of Operation Enduring Freedom. He was promoted to Brigadier General within the Illinois National Guard in February 2014 and currently serves as Illinois Army National Guard Land Forces Component Commander.
Forty isn’t a lot, but it’s better than nothing. At least the mayor has swallowed his pride on this one, but he has now opened the door to questions about the sufficiency of Chicago police staffing levels.
*** UPDATE *** The ISP’s top guy recently bemoaned current staffing levels…
The Illinois State Police graduated 37 state troopers today Friday, the last class the academy will graduate for a while. State police officials say they can’t train more due to the state’s budget. […]
State Police Director Hiram Grau says the state funding the agency was counting on didn’t come through.
“This class graduates today and I wish I had another class coming in after them, but … we’re going to have to operate with the manpower that we have,” he said. “We really do need some more bodies.”
For a while now, the state police has compensated short staffing by making overtime part of the regular schedule.
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Today’s quotable
Wednesday, Aug 6, 2014 - Posted by Rich Miller
* From a press release…
Oberweis: Durbin deserves scorn, not praise for Walgreen’s
Jim Oberweis, candidate for U.S. Senate, issued the following statement today re: Walgreen’s
“The Walgreen’s saga symbolizes Dick Durbin’s 32-year career in Washington. His bullying of Walgreen’s was a political stunt designed to help only one person: Dick Durbin. It didn’t create any jobs. It didn’t reform our job-killing tax code. Like in the IRS scandal, Dick Durbin was using government power to achieve partisan political gain. Instead of praise, Dick Durbin deserves our scorn.”
…Adding… For context, here’s Sen. Durbin’s statement…
“Earlier this morning, I spoke with the CEO of Walgreen’s, and am thrilled to say that the corner of happy and healthy is still right here in Illinois. As Walgreens themselves noted, Illinois has been their home for more than 110 years, and locating their global business here in the U.S. was the right decision for their customers, employees and shareholders. I’d add to that that it’s the right decision for every taxpayer in Illinois and across America.”
Late last month, Durbin sent a letter to Walgreens CEO Greg Wasson, expressing his strong opposition to the speculation that the company would buy Alliance Boots and use a strategy called “inversion,” to move the company’s headquarters overseas, but only on paper, in order to avoid paying U.S. taxes. Durbin has been the leading voice in Congress against these schemes, raising the issue in the face of a growing trend in U.S. corporate tax avoidance.
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* From a Bruce Rauner campaign press release…
In his desperate attempt to distract voters from his 67% income tax hike, record job losses, skyrocketing property taxes and multiple criminal investigations, Pat Quinn has painted himself into a corner.
The governor’s own pension fund — just like the state pension fund for teachers and all state workers — is heavily invested overseas, including in the Cayman Islands.
Pat Quinn either needs to apologize to Bruce Rauner for lying about the facts or apologize to Illinois teachers and state workers for calling them unpatriotic. If Pat Quinn refuses to apologize and tell the truth, he should immediately move to divest all state investments from companies and funds domiciled overseas, including in the Cayman Islands.
Individual teachers and state workers didn’t make those particular investment decisions, so that’s a stretch.
I do agree, however, that Quinn calling Rauner “unpatriotic” yesterday was a new low in this campaign. Questioning your opponent’s patriotism is a despicable act. And nothing good ever comes of it.
* Anyway, some examples…
Pat Quinn Is A Member Of The General Assembly Retirement System, Which Is Managed By The Illinois State Board Of Investment. “The Illinois State Board of Investment (ISBI or Board) has fiduciary responsibility for managing the pension assets of the General Assembly Retirement System, the Judges’ Retirement System of Illinois and the State Employees’ Retirement System of Illinois.”(http://www2.illinois.gov/isbi/Pages/default.aspx)
The Illinois State Board Of Investment Had $2.3 Billion Invested In Overseas Companies As Of March 31, 2014. (“Statements of Net Assets,” Illinois State Board Of Investment, 3/31/14)
The Illinois State Board Of Investment Invests With Advent International GPE VI-A, Which Is Domiciled In The Caymans. (“Consultants, Investment Advisers, and Other Contractors,” Illinois State Board of Investments, Accessed 8/5/14)
* And…
The Illinois Teachers Retirement System Invests $8.3 Billion In Companies Based Overseas. (Comprehensive Annual Financial Report – FY2013, Teachers Retirement System, p.38)
The Illinois Teachers Retirement System Has $433.5 Million Invested In Private Equity Funds That Are Domiciled In The Caymans.
…Adding… From the Rauner campaign…
Quinn appoints 6 members of the TRS Board and 5 members of the ISBI.
Click here for all the documenting links and more.
…Adding More… 47th Ward makes a valid point…
Pension funds aren’t subject to income taxes. Individuals and corporations are. No comparison. Apples and bowling balls, etc.
Unfortunately I think Rauner will be able to muddy this enough so that the truth remains obscured. It’s another false equivalence, which is the same as lying. But it’s a neat trick if you can get away with it.
…Adding still more… Rauner campaign regarding the above comment…
Pension funds can be subject to taxes, which is one reason why they may be in some place like the Caymans. Caymans can help pension funds on tax issues but they don’t provide individuals with tax advantages.
*** UPDATE *** The Quinn campaign response…
“This is a total canard by a Republican billionaire who has chosen the Cayman Islands as a place to stash his money and is hiding his tax records from voters.
“The Governor’s future pension is fixed and the payout won’t be impacted by the performance of any individual investments. State pension boards are also completely independent.
“By contrast, Mr. Rauner has personally funneled millions of dollars to funds in the Cayman Islands to avoid taxes.
“We’d love to reply with specific numbers but unfortunately we can’t because Mr. Rauner has not released his income tax records, including schedules. We have no idea what his sources of income are, what investments he has, and what loopholes he’s used to drastically lower his tax burden by more than half.
“Governor Quinn’s bank accounts are all located in Illinois, United States of America.”
Additional Background:
As those familiar with state government know, the Governor of Illinois makes no policy decisions related to any pension boards nor the firms selected to manage investments. These boards are independent by law and the Governor of Illinois has no involvement whatsoever in their investment decisions, as required by law.
Furthermore, Governor Quinn signed a pension board reform law to clean up corruption after swindler Stuart Levine - who Mr. Rauner had on his payroll - corrupted the system.
Unlike Governor Quinn, Bruce Rauner personally makes his own investment decisions. Rauner’s investments are NOT managed by a blind trustee, which even Mitt Romney had.
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Illinois Freedom PAC launches TV ad
Wednesday, Aug 6, 2014 - Posted by Rich Miller
…Adding… The Rauner campaign says this ad started running July 31st, which explains why Rauner’s new TV ad addresses the Social Security issue.
* Rate it…
* Script…
Narrator: In 2012 Billionaire Bruce Rauner made $53 million dollars but paid a lower tax rate than many of us.
Ellen: Ya know…When I read that Bruce Rauner paid a lower tax rate…I was appalled.
Narrator: Rauner used loopholes to avoid paying into Social Security and Medicare for 2 straight years.
Ellen: The working families of Illinois cannot trust Bruce Rauner…
Narrator: And Rauner said he’d be open to taxing our Social Security and retirement income…making it harder for Illinois families to get by.
Ellen: We can not afford Bruce Rauner to be our Governor. No way.
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* This is pretty big news. From a press release…
The Illinois Education Association’s political action committee, IPACE, the Illinois Political Action Committee for Education, and the National Education Association’s political action committee, the NEA Fund for Children and Public Education, today endorsed the reelection of United States Representative Rodney Davis.
“Congressman Rodney Davis has the right values and vision to continue to speak up in Congress for educators and students,” said Cinda Klickna, president of the Illinois Education Association. “As a lawmaker who puts Illinoisans first, he understands the pressing issues facing our schools. He knows the important role education plays in preparing students for the jobs of tomorrow so that America can compete in the global marketplace. We look forward to continuing to work with Rep. Davis in Washington.”
“Representative Rodney Davis shares our values and the values of the working families of Illinois’ 13th Congressional District,” said NEA President Dennis Van Roekel. “A proud product of Illinois’ public schools, he is a relentless advocate for students and educators and understands that the road to economic prosperity and security starts in our nation’s public schools. He’s a champion of working families, and if reelected, he will continue to work hard to make our economy work for all of us. That’s why we are proud to endorse Rep. Davis’ reelection to Congress.”
That’s a big blow to Democrat Ann Callis’ campaign. Big.
…Adding… Callis was previous endorsed by the IFT.
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* “It’s Time”…
Script…
The 2nd highest property taxes in America. And Pat Quinn wants to make his 67% income tax increase permanent. Pat Quinn he just doesn’t get it. Bruce Rauner has a plan to grow jobs not taxes. Repeal all the Quinn-Madigan tax increase. Stop corporate welfare giveaways. Freeze runaway property taxes and require voter approval to raise them. It’s time to turn Illinois around. Bruce Rauner, shake up Springfield bring back Illinois.
* “Ever”…
Script…
BRUCE RAUNER: Pat Quinn raised taxes on everyone. Took about one full week’s pay from each middle class family every year. Now he wants to make it permeant. My plan will repeal the Quinn-Madigan tax, and get rid of corporate welfare, and no taxes on social security ever.
AD: Bruce Rauner
BRUCE RAUNER: I’ll freeze runaway property taxes. No more property tax increases without voter approval period.
AD: Shake up Springfield bring back Illinois
*** UPDATE *** From the Quinn campaign…
MISLEADING AD CLAIM: Bruce Rauner says he wants to let the income tax increase expire in January.
FACT: Here is a real headline from the Chicago Tribune: “Rauner opens door to higher income tax rate.” Rauner expressed openness to raising the income tax rate this year.
MISLEADING AD CLAIM: Rauner is suddenly opposed to taxing Social Security.
FACT: Bruce Rauner has said he is open to taxing retirement income earlier this year and to this day has not ruled it out. During a GOP primary debate on WTTW, Rauner said he wouldn’t rule out taxing retirement income, according to the Chicago Tribune. Rauner said he would consider every tax before making a judgement. Other GOP candidates immediately ruled out the tax. But not Rauner. [VIDEO - at 00:32:20]
(This is not to mention the fact that he himself used exotic accounting methods to avoid paying Social Security and Medicare tax.)
MISLEADING AD CLAIM: Bruce Rauner SAYS he wants to freeze property taxes.
FACT: First, the Governor does not have the power to freeze or raise local property taxes. Second, Rauner has proposed blowing an $8 billion hole in the budget that would decimate funding for public schools, which would leave local governments with NO CHOICE but to raise property taxes to protect funding for schools. The best way to reduce property taxes is by properly funding education. That’s why Governor Quinn has proposed viable property tax relief for homeowners in addition to properly funding schools to reform the system and reduce the burden on property taxpayers.
MISLEADING AD CLAIM: Bruce Rauner is now opposed to corporate welfare.
FACT: Rauner has benefited to the tune of hundreds of millions of dollars over the years from corporate welfare. A mere few examples include, PrivateBancorp, which received $244 million in federal bailout money and Zenta Inc., which received $8.5 million in corporate welfare from the State of North Carolina. Governor Quinn by contrast has proposed closing corporate tax loopholes that Rauner has been jumping through to give himself hundreds of thousands of dollars for his own financial benefit.
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*** UPDATE *** From Rauner campaign spokesman Mike Schrimpf…
When Bruce spoke with the Tribune, he said he wasn’t aware of GTCR Funds in the Caymans - that’s because all of their main funds are indeed based in the U.S. Nonetheless, the campaign followed up twice with the Tribune making that same point and offering to help determine what the discrepancy was. They never followed up on it, despite repeated inquiries.
So, apparently, the Trib reporters were asking about Cayman Islands investments and yet didn’t circle back to hear the Rauner explanation for any discrepancies between the original comment and what the Tribune supposedly found.
If true, then this could very well be a “gotcha” story.
[ *** End Of Update *** ]
* Oops…
During a June interview, the Tribune asked Rauner about the SEC documents that listed GTCR’s Cayman investments. “I don’t think that’s true,” Rauner said at the time. “No GTCR fund that I’m aware of has its base in the Cayman Islands.”
On Sunday, however, Rauner offered a different answer when asked about the firm’s Cayman investments: “GTCR has its own structure for just a couple of investments. When they invest in overseas companies, they set up that particular structure.”
* From the Quinn campaign…
This is not the first time that Rauner has changed his story after being confronted with evidence to the contrary. Earlier this year, Rauner denied using clout and making a call to the then-head of Chicago Public Schools to get special treatment at the exclusive Walter Payton Prep High School. After Rauner changed his story several times, the outgoing Inspector General of CPS confirmed last month that special treatment is exactly what Rauner got.
In addition, Rauner is running television attack ads that feature false headlines that his campaign either made up or doctored.
* But let’s get back to the Tribune article…
The GTCR Cayman investments appear to be in financial instruments typically referred to as blocker funds or alternative investment vehicles that are legally walled off for tax purposes from related investments based in the United States. The arrangement helps non-profit institutional investors avoid taxes.
But experts say it typically provides no tax advantage for individual American investors like Rauner, who are required by U.S. law to pay taxes on all income earned worldwide.
“It’s a common structure that in my view is not abusive in the way that people might think when they see the name Cayman Islands,” explained Victor Fleischer, a professor who teaches tax law at the University of San Diego and has written extensively about tax avoidance strategies.
Even so, the New York Times reported in 2012 that Romney, who publicly released two years worth of complete tax returns during his presidential run, may have used offshore investments to avoid some special taxes in a different way. The newspaper said it involved debt financing that could have been levied against Romney’s normally tax exempt Individual Retirement Account.
We’d know a lot more if Rauner would do as Romney did and release all of his tax forms - which is probably exactly why he’s refusing to do so.
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