(By Tom Hamburger and Peter Wallsten, Washington Post, 21 September 2013)
The pitches to potential investors in a new electric-car company have been unabashed about its promise: It will enjoy “billions” in government subsidies and tax credits, will rise to a dominant position in the U.S. electric-car industry and, perhaps most critically, has a politically connected founder with the savvy to make it all happen.
That founder, Virginia gubernatorial candidate
Terry McAuliffe (D), is listed in a recent confidential memorandum to prospective investors as GreenTech Automotive’s “chairman emeritus.” The 70-page document includes photographs and references to McAuliffe’s close ties to former president Bill Clinton. It recounts his political pedigree in detail, from serving as finance director for Jimmy Carter’s 1980 presidential reelection campaign to breaking fundraising records for the Democratic Party and chairing Hillary Rodham Clinton’s 2008 presidential campaign.
A section dedicated to GreenTech’s public relations efforts cites only one specific initiative: McAuliffe’s past promotion of electric vehicles on “national television news programs.” Dated March 12, the previously undisclosed prospectus, provided to The Washington Post by the nonprofit watchdog group Cause of Action, notes that McAuliffe is “currently the largest individual shareholder” of GreenTech. The prospectus, along with other documents reviewed by The Post, shows how GreenTech fits into a pattern of investments in which McAuliffe has used government programs, political connections and access to wealthy investors of both parties in pursuit of big profits for himself.
That formula has made McAuliffe a millionaire many times over, paving the way for a long list of business ventures, including his law firm, from which he resigned in the 1990s after profiting — along with his partners — from fees paid by domestic and foreign clients seeking results from the federal government.
A review of McAuliffe’s
business history shows him often coming out ahead personally, even if some investments fail or become embroiled in controversy.
One high-profile example involved
Global Crossing, a telecommunications firm whose demise in the 1990s cost investors billions of dollars. McAuliffe was working as a consultant to Global Crossing founder Gary Winnick, a prolific political donor, and became an investor in the company. McAuliffe sold some of his Global Crossing shares before the stock price plummeted and made an estimated $8 million before the company went sour.
Few of McAuliffe’s investments have been as ambitious as GreenTech, which the Democrat pointed to when he launched his candidacy as evidence of his entrepreneurial skill. But in April, McAuliffe sought to distance himself from GreenTech. He issued a surprise statement saying that he had resigned as chairman that previous December — an announcement that came amid growing questions about GreenTech’s ambitious promises and its conduct in soliciting investors through a special visa program. Nevertheless, the company’s confidential March memo implies to investors that he would remain involved. Were McAuliffe to win his race for governor, the memo says, he would “resign all positions with [GreenTech] and appoint a representative to vote his shares.” McAuliffe’s campaign declined to make him available for an interview. Spokesman Josh Schwerin said in an e-mail that the memo “appears to have been written long after Terry resigned and he never saw or approved of this document. Terry left the company in early December and since then has had no official role and no responsibilities. Any suggestion to the contrary is simply not correct.”
GreenTech, in an e-mailed statement, said that McAuliffe was “no longer involved in the day-to-day operations of the company” and that his emeritus title “recognizes his previous contributions to the board’s efforts.” The firm declined to comment on the 70-page “Private Placement Memorandum,”saying that securities counsel advised that it “may not comment directly” on the memo “as these are communications with prospective investors that contain confidential nonpublic information about the company.”
Since the time McAuliffe says he resigned as chairman, GreenTech has become the focus of scrutiny in Washington.
The
Securities and Exchange Commission launched an investigation this year looking in part at the firm’s claims to potential investors interested in using the visa program, known as EB-5. The SEC has subpoenaed documents from GreenTech and a sister company, Gulf Coast Funds Management, which is led by Anthony Rodham, brother of Hillary Clinton. Both firms have said they are cooperating.
It is not known precisely what the SEC is investigating. But agency investigators have examined possible fraud among other participants in the visa program, in which foreign investors pay at least $500,000 to companies to gain access to permanent U.S. residency for themselves and their families. The program requires that the investments create jobs. But critics say the program is loosely regulated, allowing U.S. companies to profit from foreign payments and fees sometimes with little job creation to show for it. In the meantime, these critics say, investors gain entry to the United States, even if they have little direct involvement in the fate of the companies they have ostensibly invested in.
GreenTech has also become a focal point in an increasingly vitriolic dispute within the Department of Homeland Security, where several career employees have raised concerns about favoritism shown to the firm and about whether there has been sufficient scrutiny of foreign nationals whose investments in GreenTech have entitled them to special immigrant visas.
The courtship of Chinese investors by McAuliffe and his partners has already proved fruitful — dozens of investors have contributed tens of millions of dollars to the effort. The March prospectus says that the company has received about $46 million from EB-5 investors, with a goal of $60 million.
The investments have led to little in the way of making cars. In Tunica County, Miss., where a
mostly vacant lot sits where GreenTech plans to build a plant, local officials remain hopeful but a bit nervous.
“At this point, it sounds like they’re selling visas,” said state Rep. Gene Alday (R), whose district includes Tunica County.
Special treatment alleged
In Washington, GreenTech’s aggressive pursuit of the special investor visas has prompted complaints by career immigration service staffers who say top managers have given the firm and other politically connected applicants
special treatment.
The complaints about Department of Homeland Security managers, now under investigation by the department’s inspector general, have stalled the nomination of the immigration agency’s top official for the No. 2 post at DHS.
Department officials and GreenTech have denied that the company received any favorable treatment. McAuliffe and his partners have complained of repeated delays by the government in approving visa applications, which they said put the project at risk of losing much-needed capital.
But eight career employees of the division have requested “protected status” as whistleblowers so they can make their “preferential treatment” case to members of Congress. Sens. Tom Coburn (R-Okla.) and Charles E. Grassley (R-Iowa) have reviewed the employee complaints and say they are concerned.
Many of the whistleblowers cite alleged favors provided to McAuliffe’s company — among others — to support their claim. “It’s not often that so many whistleblowers come forward on the same subject, with similar concerns,” Grassley said Friday. “It shows that this isn’t just one person who has a gripe with their boss, but rather fundamental concerns by several career civil servants about political favors and national security.”
Some whistleblowers claimed that top managers ignored or waved off warnings that some GreenTech investors from China merited extra scrutiny before being granted immigrant visas. Whistleblowers who talked with Senate staff in the past two weeks said their concerns about GreenTech visas were heightened late last year when they learned that some company officials had previously been affiliated with a Chinese firm that had been the subject of a classified government inquiry about national security risks. Ties with the previous firm were severed before McAuliffe joined the newly formed company as a co-founder. A DHS official familiar with the matter rejected the employee claims, saying staff concerns were heeded. Holds were placed on several GreenTech applicants and were removed “only after further checks were made in coordination with other law enforcement agencies,” said the official, who requested anonymity because he was not authorized to speak on the matter.
Self-described entrepreneur
McAuliffe, 56, has long described himself as an entrepreneur, pegging his start to a driveway-sealing business he launched as a precocious 14-year-old in Syracuse, N.Y. In the 1980s, McAuliffe was the chairman of a small financial institution, the Federal City Bank of Washington, which made loans to several top Democratic Party leaders. It was cited by regulators in the early 1990s for unsound banking practices and then merged with another bank. After Bill Clinton was elected president in 1992, federal investigators examined a $375,000 fee paid to McAuliffe in case his services were needed to help secure a lease of office space from the federal Pension Benefit Guaranty Corp. Ultimately, the payment was deemed improper. McAuliffe was not accused of any wrongdoing, but the leasing company — Prudential Insurance — was required to pay a fine.
In the 1990s, McAuliffe launched what might be his most lucrative and substantive business, American Heritage Homes, with Carl H. Lindner Jr., who headed Chiquita Brands International. During this period, the Clinton administration initiated a favorable policy on a complex banana tariff issue, and Lindner, a longtime GOP donor, stepped up his donations to Democrats, staying overnight as Clinton’s guest in the Lincoln Bedroom. In 1999, the Labor Department reviewed a real estate venture involving McAuliffe that used money from the International Brotherhood of Electrical Workers’ pension fund. The department sued the union, saying the deal was a bad investment for its members. Union officials said the deal ultimately provided profits to the labor group. McAuliffe, who had invested only $100, made millions. McAuliffe has not disclosed his net worth. His campaign referred to the Virginia financial disclosure form that he was required to submit as a candidate, but the form is vague. He lists, for instance, 25 assets worth a minimum of $250,000 each.
Predictions of jobs
McAuliffe joined GreenTech soon after his failed 2009 bid for Virginia governor. At the start, company documents predicted the firm would have 25,000 employees in the United States capable of producing 1 million electric cars in 2015-17. In speeches in Virginia and elsewhere, McAuliffe has offered varying predictions of the jobs that would be created by his company. Several times in 2012, he told reporters that 900 U.S. jobs would be created by the year’s end by GreenTech, which is based in McLean. The firm has produced few, if any, cars, and a statement from the company says it employs “more than 80 full time employees.”
The documents obtained by The Post show that GreenTech’s success depends on government help. A 2009 prospectus said that billions of dollars in subsidies could potentially be granted by Mississippi to support the plant. The current prospectus estimates the combined value of its local and state government aid in Mississippi to be $25 million. So far, the numbers are much smaller. The state lent GreenTech $3 million under the condition that the firm create 350 jobs by December 2014, according to Mississippi Development Authority spokesman Jeff Rent. Tunica County, using a separate $2 million loan from the state, purchased the land where the company has said it will build the factory. In an e-mailed statement to The Post, the company said that “market and financial conditions and other current events have led GTA to reexamine our original target market and, therefore, our initial projected capacity needs.”
GreenTech’s struggles have become fodder for Republicans and their allies, who have spent months scouring McAuliffe’s business record. Cause of Action, which provided the confidential investor memo to The Post, received more than $900,000 two years ago from the libertarian-leaning Franklin Center, whose Watchdog.org Web site has been sued by GreenTech for defamation. McAuliffe put his bipartisan political muscle on display during a star-studded event at the GreenTech site in Mississippi last year with former governor Haley Barbour and Bill Clinton. The event showcased models of the “MyCar,” the golf-cart-like 40-mph vehicles that would be the signature product of GreenTech. Barbour, in an interview, said he had no regrets. “We felt that if they invested $60 million of hard cash, we’d be willing to take a couple-million-dollar risk,” he said.
Barbour, a McAuliffe friend who left office in 2012 after two terms, said McAuliffe’s role was not a factor in the state’s decision to provide help. “It doesn’t disqualify you to know the governor, but you’ve still got to meet the same standards” as any firm appealing for state development aid, he said. The confidential 2013 memo to potential investors explained in some detail how McAuliffe’s run for governor would affect his role in the firm. “Until the election, Mr. McAuliffe will dedicate his full time to the election campaign but will remain as a shareholder of GTA’s Parent,” it says. “If Mr. McAuliffe becomes Governor of Virginia, federal and state law requires that he resign all positions with GTA and appoint a representative to vote his shares of GTA’s Parent. “On January 7, 2013, the board of directors of GTA assigned to Mr. McAuliffe as Chairman of the Company the duties and responsibilities appropriate for a Chairman Emeritus during the course of his gubernatorial campaign,” the memo added. Describing that job, it says: “The Chairman Emeritus of the Company will have such duties and responsibilities as designated by the Board of Directors from time to time.”
Ad Targets Cuccinelli Fight With Climate Scientist
(By Laura Vozzella, Washington Post, July 29, 2013)
The newest TV ad in the Virginia governor’s race focuses on Attorney General Ken Cuccinelli II’s legal battle with a University of Virginia climate scientist. Titled “Witch Hunt,” the commercial recalls a two-year effort by Cuccinelli, the GOP nominee for governor and a climate change skeptic, to obtain records from Michael Mann, then a U-Va. researcher. The campaign of Terry McAuliffe, Cuccinelli’s Democratic rival, released the ad Monday. It declined to say where it will run and for how long. “It’s been called ‘Cuccinelli’s witch hunt.’ ‘Designed to intimidate and suppress,’ ” a narrator for the 30-second spot says, quoting newspaper editorials from the time. “Ken Cuccinelli used taxpayer funds to investigate a U-Va. professor whose research on climate change Cuccinelli opposed. Cuccinelli, a climate change denier, forced the university to spend over half a million dollars defending itself against its own attorney general. Ken Cuccinelli — he’s focused on his own agenda, not us.” The ad is part of McAuliffe’s broader strategy to portray himself as a business-oriented moderate and Cuccinelli as someone outside the mainstream on a range of cultural issues. The opening image of the ad shows McAuliffe sitting at table, having a seemingly productive discussion with others gathered there.
In 2010, Cuccinelli issued a civil investigative demand — essentially a subpoena — for grant applications and correspondence exchanged among Mann, research assistants, and scientists around the country. He based that demand on a 2002 state law designed to combat government employees defrauding the public of tax dollars. Cuccinelli said he was trying to investigate if Mann had, while seeking grants to study climate change, had used manipulated data to show that there has been a recent spike rise in the Earth’s temperature.
Skeptics of global warming seized on Mann after references to a statistical “trick” he used in his research came to light in e-mail leaked from the University of East Anglia’s Climatic Research Unit. Mann and others have said that the word was taken out of context. Several inquiries, including one by the National Science Foundation, found no evidence that Mann had falsified or suppressed data.
U-Va. refused to turn over the records, contending that the demand exceeded Cuccinelli’s authority and infringed on the rights of professors to conduct research free from political pressure. Using $570,698 in private funds, the university hired outside counsel and ultimately fought Cuccinelli all the way to the Virginia Supreme Court. In March 2012, the court sided with the university, finding that Cuccinelli lacked authority to demand the records. “The investigation referenced was never about science itself, but rather whether taxpayer money was used improperly,” said Anna Nix, a spokeswoman for Cuccinelli’s campaign. “What is indisputable is that Terry McAuliffe and Michael Mann joined together to campaign in support of an energy policy that will raise electricity prices for all Virginians and put people in Southwest Virginia out of work.”
Va. Supreme Court: U-Va. Doesn’t Have To Give Cuccinelli Documents
(By Anita Kumar, Washington Post, March 2, 2012)
After two years and more than half a million dollars in legal fees, the Virginia Supreme Court on Friday rejected Attorney General Ken Cuccinelli II’s assertion that the state’s flagship university had to turn over documents related to global warming. The decision was a defeat for Cuccinelli (R), a global-warming skeptic who has garnered national attention for a string of high-profile lawsuits, just as he kicks off his campaign for governor next year. And it comes months after a federal appeals court tossed out Cuccinelli’s challenge to the new federal health-care law. The state’s highest court wrote in an opinion that Cuccinelli lacked the authority to subpoena records — including e-mails, drafts and handwritten notes — from the University of Virginia involving well-known climate scientist Michael Mann’s research.
Mann, now a professor at Pennsylvania State University, accused the attorney general of engaging in a two-year “character assassination’’ against him. He just completed a book, “The Hockey Stick and the Climate Wars,” about global-warming skeptics, including Cuccinelli, and what he calls their attacks on scientists. “It’s a victory for science,’’ Mann said of Friday’s decision. “I hope that this is the end of this long and unfortunate episode so I, and other scientists, can get back to work.”
In 2010, Cuccinelli issued a civil investigative demand — essentially a subpoena — for Mann’s grant applications and correspondence between Mann and research assistants, secretaries and 39 other scientists across the country. Cuccinelli used a 2002 state law designed to catch government employees defrauding the public of tax dollars to investigate whether Mann, to obtain grants, used manipulated data to show that there has been a rapid, recent rise in the Earth’s temperature. “From the beginning, we have said that we were simply trying to review documents that are unquestionably state property to determine whether or not fraud had been committed,” Cuccinelli said in a statement.
In an unusual step, U-Va. hired its own attorney and fought back, arguing that the demand exceeded Cuccinelli’s authority under state law and intruded on the rights of professors to pursue academic inquiry free from political pressure. U-Va. spokeswoman Carol Wood said the school spent $570,698 on legal fees — all of which came from private funds. “This is an important decision that will be welcomed here and in the broader higher education community,” U-Va. President Teresa Sullivan said in a statement. “I am grateful for the ongoing support of our own faculty and the faculty at many institutions around the world.”
Mann’s work has long been under attack by global-warming skeptics, particularly after references to a statistical “trick” he used in his research surfaced in a series of leaked e-mails from the University of East Anglia’s Climatic Research Unit. He and others have said that the e-mail was taken out of context. Some of his methodology has been criticized by other scientists, but several inquiries, including a high-profile one by the National Science Foundation, concluded that there was no evidence that Mann engaged in efforts to falsify or suppress data. “For two years, the attorney general has joined a small but vocal minority in a pointless and costly investigation that has done nothing but distract Virginia from the real challenge: mitigating and adapting to climate change,’’ said Michael Halpern, a program manager for the Union of Concerned Scientists’ scientific integrity program.
A Circuit Court judge initially dismissed the subpoena, ruling that Cuccinelli had failed to provide evidence of wrongdoing by Mann or any other climate scientist. Cuccinelli then filed a new, more specific demand pertaining to just one $214,700 state grant, but he also appealed the ruling to the Supreme Court. The Supreme Court ruled that the state anti-fraud act does not authorize the attorney general to issue civil investigative demands against U-Va. or other state agencies because under the act, they are not considered “persons.” A spokesman for Cuccinelli said he has no recourse for appeal. Both sides said they will ask an Albemarle County Circuit Court judge to dismiss the case.
Cuccinelli Sues Federal Government To Stop Health-Care Reform Law
(By Rosalind S. Helderman, Washington Post, 24 March 2010)
Not five minutes after President Obama signed health-care legislation into law Tuesday, top staff members for Virginia Attorney General
Ken Cuccinelli II made their way out of his office, court papers in hand and TV cameras in pursuit, and headed to Richmond's federal courthouse to sue to stop the measure.
Thirteen other state attorneys general also sought to stop the health-care law Tuesday, jointly suing in Florida. But Cuccinelli (R) went his own way, arguing that a Virginia law enacted this month that prohibits the government from requiring people to buy health insurance creates an "immediate, actual controversy" between state and federal law that gives the state unique standing on which to sue.
The move was classic Cuccinelli -- bold, defiant and in-your-face, an effort to use any means at his disposal to stop what he sees as a federal government gone wild. That approach has transformed him in just a few months from being a fairly obscure state senator into a national conservative folk hero -- a tea partier with conviction and, more importantly, power. Since vowing last week to sue to stop health-care reform, Cuccinelli has become a fixture on national cable TV news shows. A conservative blog posted a cartoon of his head atop Superman's body, with the caption: "You don't tug on Superman's cape . . . and you don't mess around with Ken." His Facebook page is full of messages of support from across the country, some next to the yellow "Don't Tread on Me" flag, which Cuccinelli has embraced -- one sits next to the Virginia flag in his office.
To his supporters, Cuccinelli is the necessary antidote to Obama, determined to put government back where he thinks it belongs and follow the letter of the law, without regard to political consequences. "People are tired of the middle-of-the-road, wishy-washy political talk. . . . They want people who will shoot straight and do what they say they will. And that's Ken," said Jamie Radtke, chairman of the Federation of Virginia Tea Party Patriots. "He was a tea party person before there was a tea party," she said.
But as the fervency and number of Cuccinelli's supporters have grown, so has the vigor of his detractors, who are convinced that he is an ideologue using his office to further a political agenda and that he is interested only in representing those who share his views.
"He thinks he's the attorney general for Fox News," said Paul Goldman, a Richmond lawyer and former head of the Virginia Democratic Party. "He wants to be Glenn Beck's favorite attorney general, and he's moving right on up there."
Before filing
his lawsuit Tuesday, Cuccinelli had filed briefs to challenge the science of global warming and the Environmental Protection Agency's ability to regulate greenhouse gases. This month, he wrote letters to every public college in Virginia to say that they could not adopt nondiscrimination policies that protect gays without authority from the General Assembly.
About 50 students and alumni associated with campus gay rights groups protested Cuccinelli's appearance Tuesday evening at George Mason University's law school, of which he is an alumnus, holding signs reading "Cuccinelli: Bad for Virginia" and "Virginia Is for All Lovers."
In his suit to stop the health-care law, Cuccinelli says the legislation's requirement that individuals buy health insurance exceeds the federal government's power to regulate interstate commerce under the U.S. Constitution. The lawsuit filed by Florida Attorney General Bill McCollum (R) and joined by other attorneys general presents a different argument. It says the new law violates the 10th Amendment by forcing states to carry out its provisions while not reimbursing them for the costs. Legal experts have expressed skepticism about the likelihood of success for either approach but have indicated that there are few direct precedents in either case on which to predict Supreme Court action.
It's not just Cuccinelli's aggressive challenge to the federal government that gratifies many grass-roots activists -- it's his willingness to rock the boat in defense of his agenda. "This is what we hired him for," said Ron Wilcox, a Fairfax County resident and organizer with the Northern Virginia Tea Party. During his campaign last year, Cuccinelli met with tea party groups across Virginia. When more than 1,000 rallied in Richmond in January in support of the state's anti-individual mandate bill, Cuccinelli took to the stairs of the historic bell tower in Capitol Square to address the crowd. "It's time for people like you all to step up and to draw the lines that our Founding Fathers thought they drew very clearly," Cuccinelli told the crowd. "We need to reemphasize that there are sovereigns in America. One of those is the Commonwealth of Virginia." At the state's Republican convention in May, Cuccinelli promised not to just "go along to get along," which he termed the "toughest test" of conservative principles.
Cuccinelli's newfound stature in his party could create tension in Richmond, where just a few short weeks ago it was Gov. Robert F. McDonnell who was being held up as the new face of the Republican Party, chosen by national leaders to deliver the response to Obama's State of the Union address. Although ideologically in line with McDonnell, who was also elected in November and supports Cuccinelli's lawsuit to stop the health-care law, Cuccinelli and his confrontational style could complicate the governor's efforts to rebrand the GOP as inclusive and pragmatic.
Cuccinelli did not alert McDonnell's office before sending his letter on nondiscrimination policies to colleges and universities, leaving officials to learn of it through a media inquiry. Although McDonnell agreed with Cuccinelli's legal reasoning, protests that followed were a distraction while McDonnell was trying to help legislators adopt a budget and conclude the first legislative session of his term. "This back-of-the-hand, gratuitous, finger-in-your-eye, hand-on-the-chest stuff -- people don't feel good about it," said a senior Republican strategist in Richmond, who spoke on condition of anonymity to avoid creating a rift in the party. "It's not how you build a broad-based coalition."
Democrats have sought to feature Cuccinelli in fundraising appeals and make him a favorite of liberal blogs and prime-time coverage on MSNBC. Audio of Cuccinelli answering questions about how courts could be used to challenge Obama's citizenship quickly made its way around the Internet, along with a video shot during the campaign of Cuccinelli discussing how the government could use Social Security numbers to track people. Cuccinelli said that he was answering hypothetical questions about Obama's citizenship and that he believes the president was born in the United States.