Investment Probes Dog Mcauliffe In Va. Gov Race
The multimillionaire businessman and former Democratic National Committee chairman, a close friend of Bill and Hillary Rodham Clinton, is pledging to use his business savvy to land more jobs for his state than any of his fellow governors.
But since he entered the race in January, hes been dogged by questions about his investments in telecom giant Global Crossing. He faces two opponents in a June 9 primary.
In 1997, McAuliffe sank $100,000 into the Beverly Hills, Calif.-based startups bold plan to link North America and Europe with a trans-Atlantic fiber optic cable, a super-fast conduit for voice, video and digital data.
“When I invested in Global Crossing, understand that it was a very risky deal,” McAuliffe said in an Associated Press interview about his finances.
His return was $8.1 million, mostly on the sale of 176,017 shares in 1999, the year Global Crossing stock peaked beyond $60 a share.
He could have made much more – closer to the $18 million in some published reports – had he sold all of his shares in 1999. Stock transaction records he provided to the AP show his last shares were sold in January 2002, after the companys stock had plunged to 14 cents per share. And, as McAuliffe notes, he was never a board member or officer of the company.
When Global Crossing filed for bankruptcy protection that year, investors lost $54 billion and 10,000 employees lost jobs. Even after 2008s spectacular Wall Street failures, Global Crossings bankruptcy still ranks among the largest in U.S. history.
McAuliffes most bitter primary rival is pounding him on it. State House Democratic Caucus leader Brian J. Morans only television ad, which debuted last week, accuses McAuliffe of “working insider deals for himself.”
Moran maintains the jobs lost at Global Crossing counter McAuliffes claims that he can generate jobs for Virginia.
“It undermines his reason for running for governor,” Moran said in an interview.
The other candidate, state Sen. R. Creigh Deeds, has stayed clear of the issue, declining to comment on McAuliffes business dealings.
Its also unclear how much voters will care. Interest in the off-off-year primary is low statewide. Gov. Tim Kaine cant run again because Virginia does not allow its governors consecutive terms.
Those were never a factor, “and I cant imagine that it will be for many people,” she said.
McAuliffe wont disclose his net worth, citing concern for his children, senior campaign adviser Delacey Skinner said. His portfolio, however, is long, diverse and lucrative, including Internet startups, real estate development, banks and even a well-connected Washington, D.C., steakhouse. He says that business acumen will help with efforts to bring jobs to Virginia.
“I dont want my fair share, I want more than my fair share,” he famously bellows at debates and campaign rallies, as much a statement about jobs as it is bringing in every dime of federal stimulus cash he can get his hands on.
In 1990, two years before he moved to Virginia and raised the millions Bill Clinton needed to win the White House, McAuliffe partnered with Jack Moore, a union pension fund trustee and Democratic donor, in a Florida real estate development venture. The pension fund invested $39 million; McAuliffe put up $100.
McAuliffes total profit, through what he called “sweat equity,” ultimately reached $16 million. The pension fund realized a modest profit, but the Labor Department sued the pension trustees, claiming the deal was a bad one for union retirement money. McAuliffe was not a party to the suit.