Trump’s Billionaire Club, Part 1: John Paulson

Donald Trump’s vague campaign promises to take on the power structure – and some nervousness, from the power structure, about his erratic behavior and racist appeals – have given way to a remarkably close alliance between Trump and financial elites following his election.

The stock market has rallied to all-time highs. Trump has tapped billionaires and mega-millionaires for cabinet seats and key appointments. Hedge fund managers and corporate CEOs are cheering Trump on from the sidelines, eager to reap the spoils from his favored economic policies – deregulation, privatization, and tax cuts. In essence, a new club of financial elites is forming, with Trump at the center, and varying levels of access and benefits conferred upon members.

It will be important for journalists, organizers, and researchers to investigate and map these networks in the months and years ahead. Who belongs to this emergent club? What are their networks – political, business, investment, philanthropic, social? How are they benefiting – or poised to benefit – from Trump administration policies? This kind of research can lay the groundwork for challenges to the power structure that surrounds and enables Trump.

This piece, on Trump donor John Paulson, is our first contribution to this effort. If you are interested in contributing research to this project, sign up here.

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Trump’s Billionaire Club, Part 1: John Paulson

By Gin Armstrong and Molly Gott

While Donald Trump was campaigning for president, many prominent Wall Street Republicans refused to publicly support him. One notable exception was John Paulson, the billionaire hedge fund manager famous for making $4 billion by betting that the housing market would collapse in 2007. Paulson is the founder of Paulson & Co., a New York City-based hedge fund that manages nearly $20 billion in assets. When Paulson aligned himself with Trump, he made perhaps the biggest bet of his career.

Now that bet is likely to pay off. Paulson is positioned to wield a great deal of influence over the Trump administration, and he has a wide range of business interests that could benefit from a Trump presidency.  He may also serve as a key bridge between the Trump administration and its Democratic opponents during upcoming legislative battles, since he is one of the top all-time donors to Chuck Schumer, the leader of the Senate Democrats.

For all these reasons, Paulson deserves a great deal of scrutiny in the months and years ahead.

Over the course of the last year, Paulson supported Trump in at least three key ways. Most tellingly, he joined Trump’s economic advisory team, positioning himself to most effectively influence economic policy in his favor. He also donated at least $330,000 combined to Trump’s presidential effort, the Republican National Committee and the National Republican Congressional Committee. And last June, he hosted a lavish campaign fundraiser at the chic La Cirque in Midtown Manhattan. The $50,000-a-head entry fee fell just short of the median annual income for a household in the United States. As a host Paulson paid $250,000.

Trump and Paulson have a long-standing relationship. The president-elect is an investor in three of Paulson’s funds, and kept $15 million there even as the hedge fund manager realized significant losses in recent years. According to his financial disclosures with the FEC, Trump made anywhere from $300,000 to $3,000,000 in profits from those funds.

Before joining Trump’s economic advisory team, Paulson was perhaps best known for making more than $4 billion in profits by betting against subprime mortgages during the 2007 housing market collapse. Much of this profit was the result of a rigged bet manufactured by a few well-connected players, including Goldman Sachs. Paulson and his staff worked with banks to create packages of subprime mortgage securities (known as Collateral Debt Obligations or CDOs) that were known to be bad and thus designed to fail. The banks then sold those bad CDOs to unsuspecting (i.e. less connected) investors so that Paulson could bet against them.

More recently, Paulson has set his sights on Puerto Rico. Paulson & Co. is one of dozens of “vulture funds” that bought up Puerto Rican debt with the hope of profiting off the island’s economic crisis, which has spurred massive cuts to healthcare and public transportation services, as well as the closure of 100 schools.  Paulson himself has been the most outspoken advocate of turning Puerto Rico into a luxurious tax haven for the 1%.

While Puerto Ricans are leaving their homes for the mainland at a historic rate because of worsening poverty and unemployment, Paulson is attempting to lure millionaires to the island. In 2014, he co-organized a conference aimed at convincing the ultra-wealthy to move to there. It emphasized not only Puerto Rico’s generous tax loopholes for the super-rich, but also its other amenities, including white-sand beaches, pleasant temperatures year round, luxury apartment buildings, and private international schools that send their students to Ivy League colleges. In his presentation, he predicted that Puerto Rico would become “the Singapore of the Caribbean,” referring to the infamous Asian tax-haven. Hoping to cash in on the influx of millionaires, Paulson has bought up several luxury hotels and condo developments on the island.

Now, Paulson is hoping his bet on Trump will pay off in the form of a newly-lucrative stake in Freddie Mac and Fannie Mae. The mortgage giants were bailed out by the government in 2008 at the ultimate cost of $187.5 billion. The Obama administration later changed the bailout terms so the government received most of the companies’ profits. For years, Paulson and other shareholders have lobbied for some of the profits that are currently going to the U.S. treasury to go to shareholders instead. Freddie Mac and Fannie Mae shares surged after Trump was elected amidst speculation that Trump would enact Paulson’s favored policy plans.

At this point Paulson has even more reason to feel optimistic. The very day Steven Mnuchin was named to head the Treasury Department he suggested that Freddie Mac and Fannie Mae should be privatized. Paulson and Mnuchin are business partners whose dealings go back to at least 2009 when they pooled resources with other wealthy elites to buy up IndyMac, a failing lender in California, and turned into foreclosure machine OneWest. OneWest foreclosed on at least 36,000 homes in California under Mnuchin’s watch.

See more details on Paulson, his network, investments, and investors below. More in-depth information is also available on the LittleSis pages linked below. Continue reading Trump’s Billionaire Club, Part 1: John Paulson

CPV: A Private Equity Fracking Play

Competitive Power Ventures (CPV), an energy company behind nine planned or operational natural gas power plants across the US and Canada, has faced strident local opposition to several of its east coast projects. Proposed plants in New York and Connecticut have highlighted how CPV uses political influence, including the hiring of well-connected lobbyists and political operators, to override opposition to the projects. In New York, construction of CPV’s Valley natural gas plant continues, though Governor Andrew Cuomo has ordered state agencies to suspend all communication and regulatory proceedings with CPV amid a federal law enforcement investigation of the company’s dealings with a top Cuomo aide.

Behind CPV are Wall Street interests – including alumni of Credit Suisse and General Electric – that have invested in the company through a private equity firm called Global Infrastructure Partners (GIP). This post highlights the private equity backers seeking profit from CPV’s business. Future posts will explore how CPV has pushed its gas projects forward, even in the face of grassroots protest and carbon reduction goals.

Continue reading CPV: A Private Equity Fracking Play

Who’s profiting from drilling Los Angeles?

by Rob Galbraith and Gin Armstrong

Freeport-McMoRan is far and away the largest oil and gas producer in Los Angeles, with 1,311 active wells in Los Angeles County according California’s Division of Oil, Gas, and Geothermal Resources. The corporation, a multinational mining giant, acquired most of its Los Angeles wells in its 2012 purchase of Plains Exploration and Production, which brought the Inglewood oil field, the largest urban oilfield in the United States, into Freeport-McMoRan’s portfolio. The Inglewood oil field is home to 911 wells, 16% of all wells in Los Angeles County.

At Freeport’s annual meeting on June 8, the shareholder advocacy group As You Sow introduced a resolution requesting that the company report on its enhanced oil recovery operations, including steps it is taking to mitigate negative environmental and health effects. The proposal noted that “oil operations have the potential to contaminate water supplies, release toxic fumes, and harm communities.”

The board of directors urged shareholders to vote against the resolution.

Freeport’s board – primarily wealthy white men – are unlikely to directly face the health impacts of their company’s drilling. A 2014 Natural Resources Defense Council report found that the impacts of drilling in California are disproportionately visited upon low-income communities and communities of color and that in Los Angeles County, 78% of the people living within a quarter mile of a gas well were black or Latino.

Continue reading Who’s profiting from drilling Los Angeles?

SUNY Poly administrator who evaluated developer bids worked for decades at CHA

An engineering firm targeted in federal investigations of potential bid-rigging in New York State enjoyed an especially cozy relationship with one of the state officials who evaluated some Buffalo Billion developer bids, LittleSis has learned.

The firm, CHA (formerly known as Clough Harbour & Associates), was in the news last month because it paid consulting fees to a top aide to Governor Cuomo, Joe Percoco, and also received contracts through the Buffalo Billion, Cuomo’s signature economic initiative in western New York. Additionally, CHA has donated over $200,000 to Cuomo and his lieutenant governor, Kathy Hochul.

What hasn’t been reported: CHA also has strong ties to an official at SUNY Polytechnic who was directly engaged in evaluating Buffalo Billion developer proposals.

The official, Thomas O’Brien, joined SUNY Poly in 2013 after a 30-year career at CHA, most recently as a senior vice president and group manager. He is also tied to the company through his family: his daughter, a college student, indicates that she is an intern at CHA on her social media accounts.

Continue reading SUNY Poly administrator who evaluated developer bids worked for decades at CHA

Hochul raised $35k from Buffalo Billion contractors now under investigation

Campaign finance records show that in early August 2014 Lieutenant Governor Kathy Hochul brought in more than $35,000 from at least eight people and businesses named in subpoenas in the investigation into Governor Andrew Cuomo’s Buffalo Billion initiative. The donations coincide with a private fundraiser Hochul held at a Buffalo law firm, suggesting that numerous beneficiaries of the Buffalo Billion program all gathered with Hochul in Buffalo to donate to her and Cuomo’s campaign.

On August 4, 2014, Hochul told a central New York newspaper that she was going to make economic development a major focus of her campaign as Cuomo’s running mate. “I have a good handle on economic development issues for sure from my time in Congress, so we’ll be laser focused on that issue,” Hochul told Canandaigua’s Daily Messenger.

Photo via Giancarlo's Restaurant Instagram
Photo via Giancarlo’s Restaurant Instagram

The next day, Hochul held a fundraiser at the headquarters of Buffalo law firm Phillips Lytle LLP, and, over the following two days, Hochul’s fundraising committee reported $333,741 in donations, more than any other three-day stretch in her campaign. Tens of thousands of dollars of the contributions during that period came from people and businesses that had benefitted from Cuomo’s economic development programs, including the Buffalo Billion.

Continue reading Hochul raised $35k from Buffalo Billion contractors now under investigation

Mapping the players in the Peabody Energy bankruptcy

Peabody Energy – the world’s largest private sector coal corporation – filed for bankruptcy in April, the latest in a series of major coal company collapses. As Peabody’s bankruptcy hearings unfold, there is growing concern amongst environmental, labor, and indigenous justice groups that the company will use the bankruptcy process to pay back their big bank and hedge fund creditors and give bonuses to their white collar employees, but shirk financial responsibilities for environmental cleanups and pension and healthcare obligations to retired coal miners.

There are numerous stakeholders with competing interests involved in the Peabody bankruptcy, so some St. Louis activists used LittleSis to create a map detailing the players involved and their power networks.

Continue reading Mapping the players in the Peabody Energy bankruptcy

Buffalo Billion developer flouted New York State disclosure laws

Buffalo developer Paul Ciminelli was legally required to file annual financial disclosure statements with New York State during his four-year tenure on the public authority controlling Buffalo Billion spending, Empire State Development (ESD). But Ciminelli’s forms are extremely deficient for the first two years he served on the board and missing for the second two. And New York State’s ethics watchdog appears to have done nothing to compel Ciminelli to file an accurate statement.

The statements require disclosure of income, contracts, assets, and other financial interests and in Ciminelli’s case could have shed some light on the nature and scale of his interests – and conflicts of interest – as a major Buffalo developer and ESD board member. As we reported last week, Ciminelli has benefited significantly from the Buffalo Billion, which is now under federal investigation (LPCiminelli, run by his brother Louis, has received a subpoena in that investigation). In his position on ESD’s board, Ciminelli recused himself from Buffalo Billion funding votes but never disclosed the nature of his conflicts.

Continue reading Buffalo Billion developer flouted New York State disclosure laws

Paul Ciminelli and Ciminelli Real Estate’s conflicted Buffalo Billion roles

Though much of the reporting around Andrew Cuomo’s Buffalo Billion project has focused on Buffalo construction firm LPCiminelli, relatively little attention has been paid to another major beneficiary of Buffalo Billion spending: Ciminelli Real Estate.

Owned by Paul Ciminelli, the brother of LPCiminelli chairman & CEO Louis Ciminelli, Ciminelli Real Estate has been involved in four Buffalo Billion projects to date, three of which were awarded while its executives held governance positions at state agencies and donated generously to Governor Cuomo’s campaigns.

While these projects were procured by Fort Schuyler Management Corp (FSMC), a non-profit affiliate of SUNY Polytechnic, their funding came from Empire State Development. Ciminelli Real Estate’s president, CEO, and sole owner Paul Ciminelli sat on the Empire State Development board from 2010 through 2014. The land for the SolarCity project was sold to Fort Schuyler by the Buffalo Urban Development Corporation, where Ciminelli Real Estate Executive Vice President Dennis Penman is vice chair.

Though Ciminelli recused himself from votes that benefitted his and his brother’s companies, he did not leave the room during the deliberation and voting process. Penman raised his affiliation with Ciminelli Real Estate, but was permitted to participate in voting and discussion without recusing.

Neither executive disclosed their participation in LPCiminelli’s bid to the boards they sat on as they were making decisions on the project.

Continue reading Paul Ciminelli and Ciminelli Real Estate’s conflicted Buffalo Billion roles

Republican Convention Host Committee Tied to Company Moving Jobs to Mexico

Yesterday, we looked at the host committee unfurling the carpet in Philadelphia for the Democratic National Convention this summer, including three locals with a number of questionable associations. Now we’re examining the Republican National Convention’s host committee chairs, most of whom are connected to an electrical equipment and car parts manufacturer called Eaton Corporation.

Continue reading Republican Convention Host Committee Tied to Company Moving Jobs to Mexico

Republican or Democrat? Both parties’ convention host committees represent the 1%

The host committees for both the Republican and Democratic national conventions are composed of wealthy officials who spend their day-to-day lives representing the interests of health insurers, fracking companies, banks and other large corporations.

Host committees are comprised of locals picked by party elites to represent the cities hosting each convention. This year’s Democratic National Convention is in Philadelphia, and features prominent political and business people from the region; likewise, influential Clevelanders sit on the host committee of the Republican National Convention.

Democratic Convention Hosted by Republican Donors, Anti-Obamacare Lobbyists, and Fracking Advocates

As a recent article in The Intercept pointed out, several of this year’s host committee members are hardly Democratic Party devotees. In fact, Independence Blue Cross CEO Daniel Hilferty, former Pennsylvania Governor Ed Rendell, and Comcast Executive Vice President David Cohen have donated thousands of dollars to Republican presidential and congressional candidates this cycle and actively undermined and lobbied against progressive policies including fracking regulations, Obamacare, and net neutrality regulations.

Click through the map below for details on how this year’s DNC host committee members are donating thousands of dollars to Republicans and undermining progressive causes.

Keep your eyes open for our next blog post on the Republican Nation Convention Host Committee!