Amy Davidson:
Tagg Romney, Solamere, and His Father's Money : The New Yorker: “No one we went to as an investor said, ‘Oh, your dad is Mitt Romney, I’m going to give you $10 million dollars,’ ” Tagg Romney told the Times. And yet a good number of people did give him that kind of money: as the Times reports, sixty-four investors put two hundred and forty-four million dollars into Solamere, a private equity fund that Tagg started after the 2008 campaign, operating, at first, out of the same offices as the campaign headquarters, soliciting people who had been campaign contributors, with ten million dollars from his mother’s blind trust; and later with his father speaking at an investor’s conference and a number of employees who had worked either for the campaign or for another company that turned out to be “a multi-billion dollar Ponzi scheme.” (That one was an actual financial Ponzi scheme, not a political one like, say, the Gingrich campaign.)…
Cheryl Senter
Ties to Romney ’08 Helped Fuel Equity Firm: About a month after Mitt Romney ended his bid for the Republican presidential nomination in February 2008, his eldest son, Tagg, and Spencer Zwick, the campaign’s top fund-raiser, met with a beef company executive who had been a major campaign donor over dinner at the posh Torrey Pines resort in San Diego…. [T]he younger Romney, who had been a senior adviser to his father, and Mr. Zwick presented the executive, John R. Miller, with a business proposition: the opportunity to invest in a private equity fund they were starting, Solamere Capital. Neither had experience in private equity. But what the close friends did have was the Romney name and a Rolodex of deep-pocketed potential investors who had backed Mr. Romney’s presidential rum…. Two years later, despite a challenging fund-raising climate for private equity, Solamere, named after a wealthy enclave in Utah’s Deer Valley where the Romneys have a winter home, finished raising its first fund. The firm blew past its $200 million goal, securing $244 million from 64 investors, including a critical, early $10 million from Mitt Romney and his wife, Ann, and hefty commitments from wealthy supporters of the campaign.
The small firm, including Tagg Romney, 42, Mr. Zwick, 32, and a third partner they brought in, Eric Scheuermann, 47, the only one with a private equity background, is in line to collect at least $16.8 million in fees over the first six years of the fund….
“No one we went to as an investor said, ‘Oh, your dad is Mitt Romney, I’m going to give you $10 million,” Tagg Romney said, noting that his father’s political future was uncertain when the firm began. He added, “Our relationships with people got us in the door, but that did not get us investors.” Even so, Mitt Romney was the featured speaker at Solamere’s first investor conference in Deer Valley in January 2010…. The firm shared its first address with the Romney campaign headquarters in Boston. Later, the company was located in the same building as Mr. Romney’s leadership PAC, Free and Strong America…. When Mr. Zwick was leading Solamere’s fund-raising in 2008 and 2009, he was also raising money for the leadership PAC, which paid his finance consulting firm, SJZ, LLC, more than $425,000 during those years….
[S]everal private equity executives said that what the Solamere partners accomplished — given the tough economy and their limited experience — would have been nearly impossible without their connections. Antoine Dréan, founder of Triago, which raises money for private equity firms, said that given Mitt Romney’s success at Bain, “even without the politics attached to it, the name opens doors.” The Romneys’ $10 million investment in Solamere came through Ann Romney’s blind trust, which was set up when Mr. Romney became governor. Brad Malt, a Boston lawyer who administers the trust, said he invested in Solamere without consulting Mitt Romney. Mr. Malt said he liked Solamere’s diversified approach and while he could have invested in more-established funds, his decision came down to knowing the founders. “I had confidence in their talents, integrity and intellect,” he said….
[I]n mid-2009… the three Solamere Capital founders and some of their investors made a $100,000 personal investment in a North Carolina financial advisory firm… Solamere Advisors. All but one of the firm’s 11 employees, however, had come from the Charlotte office of Stanford Financial Group, which federal officials had closed earlier that year for selling sham certificates of deposit financed through a multibillion-dollar Ponzi scheme. Solamere’s executives said that Solamere Advisors’ employees had been with Stanford only briefly and knew nothing about the fraud.
The court-appointed receiver for Stanford, however, has filed a federal lawsuit contending that former Stanford employees ignored warning signs of the fraud, and seeking to recover money from more than 300 of them, including three Solamere Advisors founders. The three, Timothy Bambauer, Deems May and Brandon Phillips, were at Stanford just over a year and received incentive compensation derived from proceeds of the bogus C.D.’s, according to court filings…. Mr. Bambauer declined to comment through a lawyer…
