The Political Business of Terry McAuliffe
By JEFFREY ST. CLAIR
In May 1999, the Labor Department brought suit against Jack Moore and John Grau, charging the two men with mismanaging the pension fund for the International Brotherhood of Electrical Workers. Moore was the longtime secretary of the union, while Grau was the vice-president of the National Electrical Contractor's Association, which was partner in the fund. At issue was a series of sweetheart real estate deals in central Florida, which regulators labeled "imprudent", and cost the fund money. Moore and Grau eventually settled the case for more than six figures. The union was forced to kick in another $5 million to cover the losses to the pension fund. The person at the center of the scandal, however, made out in the deal very well, indeed. His name: Terry McAuliffe, now head of the DNC.
McAuliffe met Moore in 1988, when both were raising money for the doomed presidential bid of Dick Gephardt. They became close friends, allies in a campaign to redesign the Democratic Party into a more moderate political vessel, along the lines of the pre-Reagan Republicans. Moore controlled the $6 billion IBEW pension fund and had a reputation for investing money in businesses run by friends and political cronies.
So it was that in November 1990, McAuliffe approached Moore and his friend Grau with a proposal for a real estate partnership in central Florida with an investment company called American Capital Management, which McAuliffe owned with his wife Dorothy. The deal involved the purchase of the Woodland Square Shopping Center and five apartment complexes outside Orlando, Florida. It was a lopsided partnership. The pension fund put up $39 million to purchase the property. McAuliffe shelled out $100, yet he and his wife enjoyed 50 percent ownership in the project. He eventually parlayed his $100 investment into a $2.45 million profit.
Fresh from this triumph, McAuliffe approached Moore with a new proposal. He asked Moore to dip into the pension fund one more time for $6 million so that he could purchase a parcel of land south of Orlando called Country Run, which McAuliffe planned to subdivide into 500 single-family homes. Moore obliged and loaned McAuliffe the money. The development soon proved to be a bust. Only half the homes were built and many of them didn't sell. Years passed, but McAuliffe never bothered to make a single payment to the pension fund on the loan. According to Labor Department records, McAuliffe was in default from December 1992 through October 1997. The managers of the pension fund never demanded payment or called in the loan. The only collateral they had required was the nearly worthless Country Run property itself.
EDITED BY ADMIN: COPYRIGHT
http://www.counterpunch.org/stclair10192004.html