Election 2012

Much Bigger Than Cain's Harassment Problem

Mitt Romney has ties to a Madoff-style Ponzi scheme.

Mitt Romney, his son Tagg, and Romney’s chief fundraiser, Spencer Zwick, have extensive financial and political ties to three men who allegedly participated in an $8.5 billion Ponzi scheme. A few months after the Ponzi scheme collapsed, a firm financed by Mitt Romney and run by his son and chief fundraiser partnered with the three men and created a new “wealth management business” as a subsidiary.

The ThinkProgress narrative is a little difficult to follow, but the story goes like this.

Tagg Romney, Mitt's son, started a wealth management firm, Solamere Capital, with three partners named Tim Bambauer, Deems May, and Brandon Phillips who worked for the company that ran the Ponzi scheme. According to court documents, Bambauer made $1,143,392 from the scheme, May made $465,000 from the scheme, and Phillips made $70,000 from the scheme.

Mitt Romney invested $10 million in Tagg's company. In other words, Mitt Romney invested money in a business that's being run by three men who were involved in the second largest Ponzi scheme ever -- second only to Bernie Madoff. All of the three partners (Bambauer, May and Phillips) have been charged by authorities, and ThinkProgress reports that they're also "defendants in a lawsuit to recover the Ponzi scheme money."

Not good news for Romney. The words "Ponzi scheme" might be more politically toxic than "sex scandal" since the Madoff case. I mean, Rick Perry is using that phrase to demonize Social Security. If the mainstream press picks up on this story, it could be very, very bad for Romney, especially if ThinkProgress's reporting is confirmed.