Monday, September 3, 2012
Mitt Romney and Bain Capital on the cover of the Rolling Stones
Dr Hook sang about being on the cover of the Rolling Stones. Well, Mitt Romney made it there and CBC is reporting that the Rolling Stone's Bain-bailout report is upsetting Romney's big night.
So now we have the story of Mitt Romney and Bain Capital on the cover of the Rolling Stones. It is a huge concern when a politician makes millions after a company goes bankrupt. Just like it was when Newt Gingrich made all that money off Fannie Mae. Only that cash grab was welfare fraud because their bail out was with tax dollars.
The Rolling Stones article claims what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place.
What Bain Capital did to American Pad and Paper, KB Toys as well as to Bealls Brothers and Palais Royal are three examples of this pattern of load with debt then suck them dry Bain kept repeating across the country. The Rolling Stones article explains:
Sadly, minus that tax break, Romney's debt-based takeovers would have been unsustainably expensive. "In the majority of these deals," Turner says, "the tax deduction has a big enough impact on the bottom line that the takeover wouldn't work without it."
Thanks to the tax deduction, in other words, the government actually incentivizes the kind of leverage-based takeovers that Romney built his fortune on. Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. "I don't know what Romney would be doing but for debt and its tax-advantaged position in the tax code," says a prominent Wall Street lawyer, "but he wouldn't be fabulously wealthy."
Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.
Then in 2000, right before Romney gave up his ownership stake in Bain Capital, the firm targeted KB Toys. The debacle that followed serves as a prime example of the conflict between the old model of American business, built from the ground up with sweat and industry know-how, and the new globalist model, the Romney model, which uses leverage as a weapon of high-speed conquest.
In a typical private-equity fragging, Bain put up a mere $18 million to acquire KB Toys and got big banks to finance the remaining $302 million it needed. Less than a year and a half after the purchase, Bain decided to give itself a gift known as a "dividend recapitalization." The firm induced KB Toys to redeem $121 million in stock and take out more than $66 million in bank loans – $83 million of which went directly into the pockets of Bain's owners and investors, including Romney. "The dividend recap is like borrowing someone else's credit card to take out a cash advance, and then leaving them to pay it off," says Heather Slavkin Corzo, who monitors private equity takeovers as the senior legal policy adviser for the AFL-CIO.
Bain ended up earning a return of at least 370 percent on the deal, while KB Toys fell into bankruptcy, saddled with millions in debt. KB's former parent company, Big Lots, alleged in bankruptcy court that Bain's "unjustified" return on the dividend recap was actually "900 percent in a mere 16 months." Patnode, by contrast, was fired in December 2008, after almost four decades on the job. Like other employees, he didn't get a single day's severance.
Under Romney's business model, leveraging other people's debt means you can carve out big profits for yourself and leave everyone else holding the bag. The only ones who profited in a big way from all the job-killing debt that Romney leveraged were Mitt and his buddies at Bain, along with Wall Street firms like Goldman and Citigroup.
This is corporate Communism at it’s best. It is a war on the Constitution and the Free Market. It pays off politicians to deregulate the market so corporate criminals can rape, pillage and plunder while giving a kickback to the politicians that enabled them.
The Federal Bailout That Saved Mitt Romney
Off Shore Tax Evasion:
An LA Times story follows Romney's recent acknowledgement to the National Review that he established funds in the Cayman Islands for the explicit purpose of helping wealthy investors avoid paying American taxes. Bain currently operates at least 138 shell companies headquartered in the Cayman Islands, which, like Panama, has long been associated with both legal and illegal tax machinations and money laundering.
While many of Bain's early investors lived outside the U.S., shell companies in Panama and the Cayman Islands can also help American taxpayers invest in U.S. companies without accruing a tax bill with the IRS. By establishing personal offshore entities, Americans can pose as foreign investors and avoid paying U.S. taxes on investments in American firms.
"Even a U.S. investor pretending to be a foreign investor, by using a Bermuda or Cayman Islands shell entity, can avoid U.S. tax this way," Wilkins said. "And we know that's going on. We know that U.S. investors are evading taxes by pretending to be foreigners."
The United States ratified a free trade agreement with Panama in 2011 which was negotiated by President George W. Bush and shepherded through Congress by President Barack Obama. The deal was heavily criticized by tax experts for preventing the U.S. from cracking down on improper tax schemes in Panama. Romney's trade policy platform calls for more agreements similar to the Panama pact.
Intelligence agencies used Panama shell companies to defruad $1.5 billion from Banco Ambrosiano through the Vatican bank in 1982. Here in Western Canada we know a convicted money launderer named Kourosh Ziaee who defrauded banks in Florida out of a million dollars. At least some of the money was laundered through the Italian bank account of a corporation Ziaee set up in Panama.
Sheldon Adelson,, Chairman of Las Vegas Sands Corp, is a major donor to the super PAC supporting presumed Republican presidential nominee Mitt Romney against President Barack Obama and plans to spend US$100 million (RM340 million) on Republican candidates in November’s elections.
Adelson, who owns casinos in Las Vegas, Macau and Singapore, began this campaign season as a major donor to Newt Gingrich before Gingrich dropped out of the Republican presidential race. He has since switched his support to Romney and last month was in Jerusalem with the candidate when Romney met Israeli Prime Minister Benjamin Netanyahu, who Adelson also strongly supports.
Las Vegas Sands Corp, controlled by billionaire Republican donor Sheldon Adelson, is the target of a federal investigation into possible violations of US money-laundering laws, the Wall Street Journal reported August 6 2012.
The Los Angeles US attorney’s office is looking into the casino company’s handling of the receipt of millions of dollars from a Mexican businessman, later indicted in the United States for drug trafficking, and a former California businessman, later convicted of taking illegal kickbacks, the Journal said, citing lawyers and others involved in the matter. The transactions date from the mid-2000s.