AL-Sen: Democratic Sen. Doug Jones is running his first TV spot hitting Republican Tommy Tuberville over the scandal involving his old hedge fund.
The narrator declares that, after Tuberville stopped coaching but was “still being paid a quarter-million dollars for a no-show job at Auburn, Tommy Tuberville helped start a hedge fund that defrauded investors.” The ad continues, “An Alabama teacher and parents saving for their children’s education lost everything. Tuberville’s partner got 10 years in prison.” The narrator concludes by saying that, while Tuberville insisted he was ignorant to what was happening, “He had the money to settle out of court.”
Last month, just before the Republican primary runoff, reporter Danny Hakim wrote an article in the New York Times that brought national attention to this story. About 10 years ago, Tuberville joined with former Lehman Brothers broker John David Stroud to create a hedge fund partnership that, as Hakim writes, “turned out to be a financial fraud.”
Stroud pleaded guilty to securities fraud in 2013 and was sentenced to a decade in prison, while Tuberville was not charged. However, Tuberville was sued by investors for fraud and, as Hakim writes, “violating his fiduciary duty to take care of their investments.” Tuberville reached a settlement that same year, and the terms remain private.
Tuberville repeatedly insisted that he’d done nothing wrong and that Stroud had used his famous name to lure in customers. In February, the Republican said of Stroud, “He went to jail. And then they sued me because I invested in it and he used my name to get other people to put money in.” Tuberville continued, “I was an investor like the rest of them.” However, Tuberville did acknowledge during his deposition during the lawsuit years before that he’d conducted no research into Stroud before partnering with him, saying, “I just got to know him more as a guy hanging around, going out with us.”
Hakim also writes that Tuberville did more than just allow Stroud to use his name. “While he was not picking stocks, or even a frequent presence in the office,” Hakim reports, “Mr. Tuberville made introductions to potential investors, had business cards identifying himself as managing partner, and leased a BMW and got his health insurance through the company.” Still, the director of the Alabama Securities Commission declared, “It appears from our investigation of the case that Mr. Tuberville was one of the largest victims in the Stroud theft, and that Mr. Tuberville did not do any actual trading himself.”
Details about this case have been known for some time. In February, Jason Zengerle wrote in the New York Times Magazine that this was one of the reasons that some unnamed state and national Republicans feared that Tuberville would be a disastrous general election candidate, which led them to recruit former U.S. Attorney General Jeff Sessions to run.
So far, though, it hasn’t harmed Tuberville’s electoral prospects. Hakim’s story, which highlighted Tuberville’s role in the hedge fund, was published a little more than a week before Tuberville’s July 14 Republican primary runoff against Sessions. Sessions tried to make it an issue and ran ads on the topic, but the Trump-endorsed Tuberville won 61-39. Jones, however, is hoping that it will be a more poignant topic in the general election.
