From the delightful gift that is John McCain's opposition research on Mitt (courtesy of namelessgenxer) comes the sordid tale of Mitt's tenure on the board of Damon Clinical Laboratories, which plead guilty to charges of defrauding Medicare and agreed to pay what was at the time the largest health care criminal fraud fine in history - $35,300,000. They also agreed to larger civil fines which totaled $83,700,000.
I originally published this back in January, but given the recent focus on Bain it's worth a revisit. Also, I'm republishing this to The Bain Files to add to that archive of Mitty evildoings.
The time line goes as follows.
- 1988: Damon begins a systemic practice of fraud. The government estimates later that the total cost to taxpayers of this fraud is around $40,000,000
- 1990: Bain Capital (CEO Mitt Romney) buys a minority stake in Damon. Mitt takes a seat on the board of directors
- 1990 to 1993: Mitt serves on the board of directors, earning ~$10,000 per year for doing so. He is on the company's "Strategic Planning" committee
- 1992: Romney said that [Damon’s then-CEO Robert] Rosen told the board in about 1992 ‘that all current practices at the company were now in conformity with government regulations and that in the past there may have been practices which would not be deemed appropriate.
- 1993: Damon is taken over by Corning, with Mitt Romney voting in favor of the acquisition
- 1993: Corning immediately closes Damon's Massachusetts plant and lays off 115 workers
- 1993: Corning uncovers the fraud and alerts authorities. The SEC filings made by Damon prior to the acquisition make no mention of any potential earnings write-downs or legal problems
- 1993: Mitt Romney's share of Bain's profit from the Damon investment: $473,000
- 1993: Bain's profit from its investment in Damon: $7,400,000, which represented a tripling of the initial investment
- 1994: Running for Senator, Mitt Romney says:
I’m proud of the small part I played in the growth of Damon,’ Romney said yesterday. ‘It’s something that Ted Kennedy doesn’t have a clue about – creating real jobs in the private sector.
- 2002: While running for governor, Romney claims that he helped uncover the fraud by starting an investigation. This version of events is disputed by Corning and by the Federal Prosecutors. Mitt also says he never alerted the authorities, which no one disputes.
So - Bain invests in a company. Mitt gets personally involved with managing said company. Company profits are significantly based upon Medicare Fraud. Bain & Romney never uncover the fraud in 4 years, Corning uncovers it immediately upon buying Damon. Despite the fraud, Bain triples its investment, and Romney's share of that profit is a cool half a million.
Damon laid off workers despite Mitt Romney serving on the board and the strategic planning committee. Despite the failure of the business model to generate new jobs, Bain Capital tripled its investment, and Romney himself made nearly half a million dollars. Rampant fraud was supporting earnings, yet Romney was not able to notice.
How, exactly, does this demonstrate a knowledge of how to create jobs as President? And isn't rooting out fraud and corruption something you'd want a President (actually, his underlings) to show an interest in doing?
And of course Willard M. Romney lies to make himself look good when actually he failed. That does seem to be a pattern for the man who saved Detroit.