Don't do this, Virginia...

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Earlier this week I wrote about a blogger’s dinner with Terry McAuliffe that I attended last Friday. Something I didn’t mention (because I had forgotten about it) was T-Mac’s pledge to run a fully positive campaign – to reserve all negativity for the general election.

Under normal circumstances, that sounds pretty good, right? We progressives remember what happened in Iowa in 2004 – Howard Dean and Dick Gephart fought each other tooth and nail, opening up the door that John Kerry (and John Edwards after him) waltzed through. The mudslinging came at a cost.

I suspect Creigh Deeds and Brian Moran will approximate McAuliffe’s pledge and minimize the negativity, but I fear that, in this case, a sanitized campaign may work to their detriment.


Because minimizing Terry McAuliffe’s record works very well for Terry McAuliffe. A lot of things seem to work out very well for McAuliffe; it’s kind of uncanny.

Let’s review.

I’ve been reading the late Marjorie Williams’ Reputation: Portraits in Power – specifically the chapter on Terry McAuliffe. I recommend it to anyone that wants to know more about influence in Washington – it’s a gripping read.

Anyway, I’m going to pull a few nuggets from her book, a 1999 Jeff Gerth article for the New York Times (yeah, I know… that Jeff Gerth. All I can say is that even a stopped clock is right twice a day) and a Paula Dwyer article that appeared in a December, 1997 issue of Businessweek.

After assimilating this data-dump, I’ll leave you to your own devices to figure out why Terry McAuliffe might find it in his interest to run an unexamined (read: negativity-free) campaign.

Before we begin, I think a little contextualizing is important. The dawn of the nineties saw the bursting of the S&L bubble. The crisis was perhaps the first time that American politicians at the federal level realized that there were fortunes to be made for themselves and their benefactors through exploitive deregulation and regulatory tweaks. Essentially, the scandal boiled down to two key elements: the FDIC protection was increased to $100,000 and regulations restricting the investment vehicles available to S&L managers were eviscerated. The changes resulted in several newly minted millionaires, politicians with overflowing campaign coffers (and sometimes personal bank accounts) and a tax-payer bill of over $50 billion dollars. Particularly sweet for the criminals that perpetrated the scam? The corruption was bi-partisan, so we never saw any sort of meaningful investigation or accountability.

This was the environment in which T-Mac rose to prominence. And as you may suspect, McAuliffe found a way to take advantage of the tax-payer's misfortune.

As part of the clean-up of the S&L mess, the government formed a company called the Resolution Trust Corporation. Its primary mission was to take ownership of insolvent S&L’s and sell whatever assets remained at the best price they could get. One of the S&L’s they took ownership of was American Pioneer Savings Bank. Its owner? Richard A. Swann. Significance? Swann was Dorothy Swann’s father. Dorothy Swann is now better known as Dorothy McAuliffe.

A set of properties that had been owned by American Pioneer Savings Bank (APSB) included “5 apartment complexes and a rundown shopping center.” In 1991, McAuliffe put together a deal in which the properties were purchased by a union (The International Brotherhood of Electrical Workers) for $38.7 million. McAuliffe put up none of his own money, but received a 50% ownership stake for structuring the deal. The next year, he used the same property as collateral for a $5.8 million loan from the same union that participated in the first deal. You may or may not find it interesting that the union’s International Secretary and co-Chairman of its pension fund was Jack Moore – a close friend of McAuliffe’s since they both worked on Dick Gephart’s 1988 presidential run.

The story devolves from there. The union’s pension fund was investigated and sued by the United States Department of Labor. It turns out that the union members got a raw deal; the return on the investment was paltry by any objective standard. Furthermore, the union ended up divesting itself of the properties.

The properties were sold to Terry McAuliffe and a new business partner, Carl H. Lindner Jr.

Maybe you’ve heard of Lindner.

Carl Lindner and his family have been strong supporters of the Republican Party for quite some time. During the 2004 election cycle, the Lindner family contributed tens of thousands of dollars to various Republican groups, including the Republican National Committee and several Republican politicians. In 2004, the Republican National Committee named Lindner as one of 62 "Super Rangers", the highest level of fundraising recognition, accorded to those who raise $300,000 or more for the Republican Party.[5] Lindner, a close ally of George W. Bush, secured the use of Great American Ball Park for Bush's re-election campaign on October 31, 2004, two days before the 2004 Presidential Election.

In 2005, Lindner was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush.

Or maybe this is how you know Carl Lindner:

The co-host of a recent top-dollar fundraiser for Sen. John McCain oversaw the payment of roughly $1.7 million to a Colombian paramilitary group that is today designated a terrorist organization by the United States.

Carl H. Lindner Jr., the billionaire Cincinnati businessman, was CEO of Chiquita Brands International from 1984 to 2001, and remained on the company's board of directors until May 2002. Beginning under his tenure, Chiquita executives paid hundreds of thousands of dollars to the United Self-Defense Forces of Colombia (known by the Spanish acronym AUC), which is described by George Washington University's National Security Archive as an "illegal right-wing anti-guerrilla group tied to many of the country's most notorious civilian massacres."

Following a Justice Department indictment last year, Chiquita admitted to illegally funding the paramilitaries and agreed to pay a $25 million fine. Chiquita's payments to the AUC began in 1997 and lasted seven years; roughly half of the funds came after the group was designated a Foreign Terrorist Organization by the U.S. State Department in 2001.

According to the Justice Department, the payments "were reviewed and approved by senior executives" of Chiquita, who knew by no later than September 2000 "that the AUC was a violent, paramilitary organization."

Late last week, Lindner co-hosted a $25,000-per-person fundraiser for McCain and the Republican Party in the wealthy Indian Hills neighborhood of Cincinnati, Ohio. The event raised about $2 million; Lindner also serves on McCain's Ohio Victory Team.

I’m thinking that if I was running for Governor and I had intimate business relationships with people that had looted our nation’s treasury and financed terrorism… well, there just might be a reason to make a big show out of promises to avoid negative campaigning.

Of course, I’m just scratching the surface here. There’s a LOT more I’m about to get to in the weeks ahead.

Before I sign off for now though, I do want to address one question that some of you may be raising… And that is: Why am I sullying someone who very well may be our party’s standard-bearer in a crucial election?

The answer is multi-faceted:

  1. This information wasn’t hard to dig up. Lexis-Nexus and Westlaw are as available to the McDonnel campaign as they are to me. They must be salivating at the prospect of running against Terry McAuliffe. If this stuff doesn’t get aired now, it gets aired then.
  2. I really don’t think a person that seems to see morality as something fungible… someone that seems to value money and personal net worth over the lives of those of us that work for a living… Well, I just don’t think that is was the state of Virginia needs right now.
  3. Simply put: it’s time to turn the page on the corporate Democrats that gave us George W. Bush.

I’ll have more for you next week.

A postscript: For the sake of fairness, I reached out to the McAuliffe campaign for comment. In fact, I violated a pretty sacrosanct tenet of journalism in that I sent them the entire article so they could respond to the fullest extent possible. In addition, I spoke with the campaign on the telephone as they sought to do some damage-control. In that conversation, I specifically asked when the McAuliffe association with Lindner ended - if it had. Below, you'll find the response I got from McAuliffe's shop - in nested blockquotes, I'll add my personal comments to their response. You will note that the Lindner issue was not addressed.

“McAuliffe put up none of his own money, but received a 50% ownership stake for structuring the deal.”

Terry sourced the deal and brought it to IBEW for its consideration. IBEW then negotiated a partnership agreement where Terry would be the managing partner, IBEW would be the capital partner - a very common arrangement.

Under Florida law, a partnership is established by paying a nominal fee of $100.

The agreement stipulated that IBEW received a “preferred return” on the invested capital, meaning that Terry would not make any money on the deal until IBEW made its money back, plus a return of almost ten percent. Any money made after that was subsequently split 50/50.

So McAuliffe's risk was? Zero. The substance of the story is that McAuliffe took inside information from his father-in-law (that may have looted the S&L he ran), leveraged that information to structure a deal that he then brought to a crony he got chummy with a few years earlier that now co-chaired a union pension fund.

“The union’s pension fund was investigated and sued by the United States Department of Labor.”

That investigation focused on how the union structured its investments. It never targeted Terry or accused him of doing anything wrong. [Pensions and Investments, 11/12/01]

As you'll see in forthcoming articles, McAuliffe has absolutely led a charmed life. It seems everywhere he's gone, he walks away with millions of dollars while his business partners walk away with subpoenas and lawsuits. Whether it is turning $100 into millions, or $100,000 into many millions or nothing into lots and lots of money, McAuliffe always wins. The same can't be said for the pensioners, union members, retirees and even peasants that find themselves on the other side of his deals.

“It turns out that the union members got a raw deal; the return on the investment was paltry by any objective standard.”

This is nothing but hyperbole. Both Terry and the IBEW made money. Terry's projects with the IBEW pension fund made a return of about 10.5 percent. Other large pension funds made a median return of 10.9 percent on their investments in the early 1990s. [Brewer, Beemer, Kuehnhackl & Koon, 12/12/97; Associated Press, 9/30/99]

We aren't talking about McAuliffe's "projects". What I wrote was specifically focused on the project involving the 5 apartment projects and the rundown shopping center.

“Lexis-Nexus and Westlaw are as available to the McDonnel campaign as they are to me. They must be salivating at the prospect of running against Terry McAuliffe. If this stuff doesn’t get aired now, it gets aired then.”

This has already been aired, which is why it’s easily available on Lexis-Nexis and Westlaw. The right wing tried to attack Terry on this before, and the attack fell flat.

What was McCauliffe running for at that time? Was it a democratic primary? Was it a governor's race? Could these issues be more salient now than they were then?

“It’s time to turn the page on the corporate Democrats that gave us George W. Bush.”

Quite the opposite. This is a smear that Republicans used when Terry vociferously attacked George W. Bush’s shady business dealings and legislative agenda.

National Review printed a Byron York column shortly before the 2002 elections attempting to attack then DNC chairman McAuliffe in response to questions posed by McAuliffe as chairman of the Democratic Party about President Bush’s energy dealings. York noted in the article: “He is perhaps the most aggressive and public critic of George W. Bush's record in business… Much of this might have escaped public notice had McAuliffe not chosen to attack George W. Bush on the issue of business ethics.” [National Review, 9/16/02]

National Review printed a column just before the 2002 elections that attempted to use the pension fund incident to attack McAuliffe and the Democratic party on Social Security, thus scaring a major constituency – seniors. “Democrats are spending the days before the November election scaring retirees about Social Security. But what should spook seniors is Democratic National Committee chairman Terry McAuliffe's record… The DNC's claim that Bush, therefore, endangers seniors rings hollow when compared to McAuliffe's adventures in retirement-asset management.” [National Review, 10/31/02]

I really haven't even begun with the detailing of McAuliffe's record that is warranted. For now, if you haven't made up your minds already, I guess we'll have to see how well T-Mac's record stands up when exposed to the klieg lights. I don't think people know half of the story, even if it has been reported previously in second-rate rags like the Weekly Standard. In the end, the record is the record. McAuliffe has every right to spin his version of the facts, but he shouldn't look to escape accountability for choices and decisions he's made. I think his choices have exploited working people - sometimes egregiously. In the end, the primary will be the final arbiter.

The fact that Terry thinks he can win

is proof that he doesn't know Virginia. The only people he's represented are Democrats and businesspeople. In other words, he's a millionaire who has spent his career being surrounded by people who agree with him. That experience can cloud someone's perceptions. What I don't think he understands is how fiercely independent Virginians are. They voted for Mark Warner right after 9/11. But the Warner comparisons don't hold for McAuliffe. Everyone knows what business Mark Warner founded. Terry keeps saying he's a businessman, but what kind of business did he run?

Know Nothings Return

This post is like a dark alley attack. There are no credible allegations concerning Terry McAuliffe.

Terry McAuliffe has a lot of grassroots support because he is the strongest candidate for Governor. He has spent his career being successful and working hard for the Democratic Party. He is very knowledgeable about the full range of policy issues.

So he does not travel in the league of some of his critics. He raised a lot of money from rich people and had a good time doing it. Who cares?

McAuliffe is smart, capable and honest. He has an outsized personality. Horrors! His critics should get over their resentment of him. It is beyond childish and stupid.

Nothing against his personality

In fact, I think he has the right personality for a gubernatorial candidate. And I didn't mean that it's wrong to make a lot of money; my point was that it can cloud one's judgment. I've always said that I will support McAuliffe if he wins the primary. I appreciate the work he's done for the Democratic Party, but unfortunately that means little to the average voter. At this time I don't see much genuine grassroots support. Every Terry supporter I've met so far has been one of the following:

1. A paid staffer
2. An opportunist who either hopes to get paid or expects some personal benefit in the future
3. A Hillary Clinton supporter

I define grassroots as coming from the bottom up. This is all top-down. Yes, Terry has been successful and he's knowledgeable. But I'm a "know nothing" because his campaign has told me nothing about what he's done in the business world outside of the Democratic Party and outside of some shady real-estate deals. The average Virginia voter doesn't care what Terry has done for the Democratic Party. They don't care what campaign he worked on. They want to see a record of commitment to Virginia.

When will it stop?

I can understand #s 1 and 2 on your list, in that they argue there is an ulterior motive for their support of McAuliffe and therefore you question whether it is genuine, but what does having been a Hillary Clinton supporter have to do with it? You put it on that list as though having supported Clinton somehow renders a person's subsequent support for McAuliffe illegitimate?

I don't really want to get into the debate over this diary, but sheesh. This Hillary nonsense is getting tiresome.

My perception of Terry supporters

I was over-simplifying my view of who supports Terry in numbers 1-3 above. There are some volunteers who aren't in it for the wrong reasons. I just don't think he's the right candidate, that's all.
Also there's nothing wrong with having been a Hillary supporter. I only think it's wrong to use that as the reason to support Terry.

My apologies for the caricature of Terry supporters.

Stark Is A Know Nothing.....If You Want To Know

The blog post is total garbage. The author is known for seeking physical confrontations and/or running his mouth non-stop.

I don't think that is fair

While I don't think much of this particular post, Mike is not a know-nothing, although he is dogmatic.

He most definitely does not seek physical confrontations. That is simply false.

But, yeah, he can run his mouth non-stop. :)

Uhm, thanks?

I think...

Anyway, what I find perplexing - even dumbfounding - is that many people here that gave no shrift to George W. Bush for his Harken Energy/Arbusto Oil/Texas Rangers business shenanigans are more than willing to look the other way when a Democratic candidate partners with a known financier of terrorism.

In the end, I'll accept that some will find this kind of backgrounder an insufficient reason to make up their minds on McAuliffe. But just barely. (The Lindner stuff really is a deal-breaker for me - at least in terms of support in a Democratic primary.)

With that said, I've got plenty more coming; the surface has barely been scratched in terms of McAuliffe shadiness. I don't expect I'll be exposing any raging infernos, but by the end of my series, you'll be choking on the smoke. And at some point, hopefully, people will realize that when it comes to Democratic candidates, we're much better off leaving the baggage on the curb.

Hey, just joking

Look, Mike's a good guy. He doesn't need me to defend him.

I understand the whole "where there is smoke, there is fire" argument he is making, but I prefer something more specific and tangible. Republicans used that tactic to almost bring down Bill Clinton, to savage Hillary for two decades, to drive a troubled person, Vince Foster, to suicide, and to steal the presidency from Al Gore, not to mention denigrating the heroic war service of John Kerry (ok, not even any smoke there).

My point is, I'm not sure we need to be doing this to ourselves. I think this primary ought to be debated on other issues.

Where's the beef? (0+ / 0-)

I already commented on this when Mike posted it over at dailykos. Here's what I wrote (as 5oclockshadow) as a comment on that lively thread:

Where's the beef? (0+ / 0-)

The problem with this diary is that it's all smoke and no fire. For a guy who has been involved in so many big deals, I'd be surprised if there were never any questions about how McAuliffe ran any of his businesses. The guy was the youngest bank president in us history, after all.

I think it's worthwhile to ask some questions, but it's dangerous to level direct attacks when they're not founded on a fact. Where's the big crime here? Where's the scandal?

I applaud Mike for his research, but research should result in substance, especially if we're looking to attack a Democrat.

Apparently, Terry's been attacked like this before, and will again.

If McCain is the answer, then the question must be ridiculous. - NY Governor David Paterson

I've noticed a few issues with this line of attack.

First, that it seems to have no basis, that there's no, "THERE, there".

We're trying to keep thing factual here, which is why I wouldn't consider promoting this to the front page.

On the politics of the thing, I think it's clearly an effort to stoke the anti-Terry's, which is why it starts with a critique of Terry's call for an all positive campaign as a dodge to jump in on the negatives.

So, much ado about nothing.

I do personally take offense to people so willing to dismiss the greatness that is the Clinton legacy, and I also personally won't have anyone bashing Hillary on Blue Commonwealth.

So, let's keep the blows above the belt. We've got a hell of an opponent in that arch-conservative Bob McDonnell. George Allen's ideological heir and keeper of the madhouse that is the Roadblock Republican House of Delegates.

so it goes

Terry Runs On His Own Two Feet

All this Clinton legacy stuff is obsessed over by activists. It is irrelevant with regard to the general. It is just lame retread politics. Terry has decided to step out this year and run in his own right. Why not take him on about what matters?

I am not a Clinton supporter. The ONLY candidate I ever laid it ALL on the line for is Barack Obama.

On the merits, I think McAuliffe is a strong candidate. I will be happy to participate in a public forum with Todd or Big Mike or anyone else who wants to bring it on.

The McAuliffe campaign knows what I think about the race. I participated in a couple informal dinners and have spoken with them a number of times. I have had absolutely no connection with the campaign since the announcement tour when I volunteered to do some driving for them.