In light of the impending
housing bubble burst, and the still lingering effects of the dot com collapse of 2000, venture capitalists might very well be wondering where they might best invest their money in order to ensure a big time Return On Investment (ROI).
I have some sure fire advice: Invest in a Republican lawmaker. With the right strategy and connections, venture capitalists can make hundreds, if not thousands of times over their investment by making their local Republican Congressman the next IPO.
Via Atrios:
See how on the flip.
As recent revelations are showing, there can be virtually NO better place to put your money than into the hands of a Republican lawmaker, who can then, as the opening refrains of the Mary Tyler Moore used to intone,
"take a nothing date, and make it all seem worthwhile."
I mean, MY GOD, the investment opportunities! Just out there waiting to be had.
And all you have to do is mix in a bogus land deal here, a quick trip to Scotland there, and voila! multi-million dollar contracts appear out of thin air!
Of course, the poster boy for all this -- if we don't count our boy, the Bug Man, Tommy Boy -- is San Diego republican congressman Randy "Duke" Cunningham. (Interesting to note, The Bug Man sees nothing wrong with any of The Duke's land dealings.)
But the Duke ain't alone. Oh no he ain't. Not by a long shot. Republican can be "invested in" from as far north as the tundra of Alaska (subscription req'd) to the heartlands of Ohio and all places in between. But if you really want to know how to invest your money -- and get a jump on your competitors -- it is best to study the case of The Duke.
(Anyone interested in the full history of the "landcapades" of Duke Cunningham has to click on over to Josh Marshall's work at TMP. Josh is ahead of most of the MSM on this story, although the local papers in San Diego and the North County are hammering it pretty good as well.)
The Anatomy of a Venture Capital Investment in a Republican.
Using the Duke as a case study, let's say you have, oh I don't know, pick a figure out of the air, let's say $700,000 with which to invest and, oh yeah, you also have a yacht that you've conveniently docked in DC, and you want some major ROI if you're gunna drop that kind of coinage. Furthermore, you need some kind if differentiator from other "investors" who want a piece of the action. Here's what you do:
1) Make sure that you represent an industry that your Republican investment can, shall we say, "influence." In the case of the Duke, that industry would be defense, since the Duke serves on the influential House defense appropriations subcommittee. In his work on defense appropriations, the Duke might be able to swing a little business your way.
For the sake of argument let's name our investor Mitchell Wade and say he's the President of MZM Inc., which happens to be a defense contractor that occaisionally works for the Pentagon. (Editor's note: Any similarity to actual defense contractors is purely coincidental.)
But in 2003 and 2004, roughly around the time of the house transaction, MZM's fortunes began to soar. In fiscal year 2003, it received $41 million in defense contracts. Since then, MZM has added tens of millions of dollars in additional contracts, including a $5 million sole source contract to provide interpreters in Iraq.
In 2004, MZM had $66 million in revenues, according to Washington Technology magazine, which put the relative corporate newcomer on its 2005 list of "Top 100 Federal Prime Contractors."
2) Once you've established the pipeline between your industry (defense), your Republican investment (the Duke), and your company (MZM), the next step is to get your money invested.
Unfortunately, because of those pesky campaign finance laws, it's tough to set yourself apart from the "run-of-the-mill" influence peddlers, it's best to hatch a scheme whereby you can transer a large sum of money without all the untidy "disclosures" that accompany political contributions.
One good way that Mitchell Wade found to "invest" hundreds of thousands of dollars in his Republican -- without having to declare a dime of it -- was to cook up a real estate scam, thus exploiting the volatile nature of California's real estate market, which in most cases, can effectively hide an appearance of impropriety.
3) Once you've settled on a strategy, it is time to implement.
(TIP: It is helpful if the investor and the "investment client" have a personal relationship, which can help grease the wheels of mutual investment.)
Start by having your Republican come up with an "independent source" (in this example, we'll call our source first-time real estate agent and long-time Duke contributor, Elizabeth Todd) who can set the sale price based upon over-inflated comparable housing prices in the area. In the interest of keeping your investment on the QT (lest pesky reporters, auditors, or competing investors catch wind), consider using only Trusted Team Players as "indepedent sources." One good way to make sure that you have a TTP is by looking into the political contributions the TTP has made to your Republican investment. In our example, Ms. Todd's loyalty is bought, paid for, and beyond dispute.
4) So in our example, Ms. Todd set the sale price of the Duke's home at $1.675 million, which our investor, Mr. Wade, gladly paid in a "non comissioned sale." (Ms. Todd receives no commission for her work, but Wade and the Duke don't have to list the house on the MLS Listings, thereby avoiding further scrutiny.)
(TIP No. 2: You must make it worth your "independent source's" while to make such ethically questionable business decisions. In Ms. Todd's case, Wade contracted her to be the selling agent on the house for the flip, and she also earned her FIRST COMMISSION as a professional realtor as the buying agent on the Duke's new $2.55 million pad. The point is, it's best if these things are win/win/win.)
5) Now unfortunately, after buying the Duke's home for $1.65 million, Wade realized his company had absolutely no use for the property. So he put it up for sale -- using the versatile Ms. Todd's services -- and the house sat without sale for months. Never mind that the San Diego housing market is white hot and homes are appreciating at staggering rates, Mr. Wade's new Del Mar home wouldn't sell. Eventually, the home sold for $975K, which most likely represented the home's true value.
And what this transaction represents in real terms is this: MZM President Mitchell Wade manages to give The Duke an "off the books" donation of $700K, and in return, the Duke sends millions and millions of dollars in defense contracts the Duke's way. MZM sees an ROI of somewhere in the neighborhood of 50 to 100 times return on investment.
Let's see you get that at Pets.com.
Now, in these troubled times, it is wise to remember that all parties involved should always Remember The Troops:
"The congressman was the keynote speaker at MZM's Christmas party for 385 people at the Four Seasons Hotel in Georgetown last Dec. 8, where he helped dispense silver dollars to recovering Iraq war veterans whom
the company invited to the festivities"
So let's see if this is life in America as we know it:
Congressman with new $2.2M house. Check.
Congressman with new yacht "Duke-Stir. Check.
Congressman with $20K softmoney donation to get re-elected. Check.
Congressman and family on numberous boards of "charities". Check.
Defense contractor with $40M "defense" contract. Check.
Recovering Iraqi vets with ONE SILVER DOLLAR. Check.
(Disclaimer: This investment strategy carries with it certain risks and, while we consider these risks minimal, they do exist.)
Hat tip to dKos lurker HOWD for the idea and the final "checklist."