JACKSONVILLE, Fla. - Mitt Romney’s campaign sought yesterday to explain complexities in his financial trusts, following his assertion in Thursday’s debate that investments related to Fannie Mae and Freddie Mac were made without his knowledge.
The trustee who manages Romney’s money said those investments were made through a charitable trust “operated on a totally blind basis’’ that Romney did not control. He also said that the investment related to Fannie Mae and Freddie Mac, quasi-public agencies that many conservatives blame for the housing crisis, has been sold.
“This investment, which has been sold, was not known to Governor Romney,’’ Brad Malt said in a statement. Although Romney’s financial disclosure forms do not list it as such, Malt said the fund was held within a charitable trust and has been managed “on a totally blind basis since 2002.’’
The financial disclosure forms that Romney filed last year show that he reported owning between $250,001 and $500,000 in a mutual fund that invested in debt notes of Fannie Mae and Freddie Mac, among other government entities.
Unlike most of his financial holdings, which are held in a blind trust and unknown to Romney, this particular investment was listed on a page separate from those held in a formal blind trust. It is listed on the same page as his Bank of America cash account, compensation for his “No Apology’’ book, speaking fees, and time on the Marriott board - as well as at least $250,000 in gold holdings.
The Globe first reported about the issue in September, saying that Romney’s investment in funds related to Fannie Mae and Freddie Mac would have been known to him because it was outside of his blind trust investments. The Romney campaign at the time declined to comment on the record and did not dispute anything in the Globe report until yesterday.
Romney placed his assets in a blind trust after he was elected governor in 2002.
Romney’s profits from Fannie Mae and Freddie Mac have increasingly become an issue in the Republican nominating contest as Gingrich rebuts charges he was a lobbyist to Freddie Mac.
“We began digging in after Monday night because, frankly, I’d had about enough of this,’’ Gingrich said in the debate. “We discovered to our shock, Governor Romney owns shares of both Fannie Mae and Freddie Mac. Governor Romney made a million dollars off of selling some of that.’’
Romney countered that his investments were not known to him, since they were managed by a trustee and in a blind trust. Romney also clarified that his investments were not made in Fannie Mae or Freddie Mac directly, but through a mutual fund that in turn invested in the government-backed mortgage companies.
“I don’t own stock in either Fannie Mae or Freddie Mac,’’ Romney said. “There are bonds that the investor has held through mutual funds.’’
“And Mr. Speaker, I know that sounds like an enormous revelation, but have you checked your own investments?’’ Romney added. “You also have investments through mutual funds that also invest in Fannie Mae and Freddie Mac.’’
Gingrich has holdings in three mutual funds that include investments in the two entities, according to CNN.
Pro-Gingrich PAC releases film blasting Romney, Bain
A super PAC supporting Newt Gingrich has released a seven-minute film on its website attacking Mitt Romney for a Bain Capital investment in a company that was charged with Medicare fraud in the 1990s.
The company, a medical-testing outfit called Damon Corp., was based in Needham and received a $4 million Bain investment in 1989. Romney, as a board member, would help sell the company to Corning Inc. in 1993 - about the same time, it would later come to light, that Damon was being investigated by federal prosecutors for overbilling Medicare for blood tests.
In 1996, Damon pleaded guilty to criminally defrauding Medicare and Medicaid of $25 million and paid $119 million in fines. It was the largest health care fraud in Massachusetts history at the time.
The film, posted by the super PAC Winning Our Future, cites news stories but gets some facts wrong. It alleges that Romney “managed’’ the company in addition to serving on the board, but that is not accurate. Romney was a director of the company, with responsibility for Bain’s 8 percent investment stake.
Romney has said that he first learned of the overbilling allegations when another firm was being investigated in 1992 and that he insisted the board hire an outside lawyer to look into Damon’s billing. But he was criticized when he ran for governor in Massachusetts in 2002 for failing to tell prosecutors about his concerns and about Damon’s internal findings.
At the time, Romney said the board had taken “corrective action,’’ and he and the board had been able “to blow the whistle’’ on the overbilling. But prosecutors later said it was Corning and a former Damon employee who had blown the whistle, not Romney and his fellow directors.
The film accuses Romney of overseeing a fraud and of being among those who would “prey upon’’ Medicare.
Bain Capital made three times its investment, or about $11 million, when it sold Damon. The day after the deal was completed, the Needham plant was shut down and 115 people were laid off, the Globe reported.
The Romney campaign issued a statement in response to the film, saying, “Newt Gingrich’s super PAC ads would make Michael Moore proud and have already struck a chord with President Obama’s liberal allies.’’