WASHINGTON – The Lifelike Co., a Colorado manufacturer of toy dolls, bedeviled Bain Capital and Mitt Romney, a losing investment that cost Bain at least $2.1 million.
Now the small, defunct business has grown from an odd blemish on Romney's financial career into a political headache for the presumptive GOP nominee for president. It is among the pieces of evidence that undermine Romney's claim that he did not participate in Bain Capital investing activities after 1999.
Romney served on the Lifelike board from its founding in the mid-1990s until 2001, according to the former governor's financial disclosure forms and other public records. Romney described his responsibility as a board member in his testimony in 2002 before a state panel considering a challenge to his eligibility for the ballot.
In that testimony, he said he was on a "leave of absence'' from Bain since 1999. In his run for president — seeking to deflect Democratic attacks based on Bain's business practices — Romney has revised the description of his departure as "retired,'' with no further role at all in Bain operations or Bain entities. Yet Romney and Bain stuck it out with Lifelike for two more years after early 1999. Bain dumped its dwindling investment at the end of 2001 — the same year Romney's financial disclosures indicate he left — for just $10,000 to $15,000, said an investor who bought the Bain stake.
"I paid them a few dollars for their stock and they wrote it off,'' said Rodney Hawes, a Connecticut investor who was listed as a board member along with Romney. "The game was over by that time. I was hoping it would get revived, and it didn't.''
The Lifelike deal began differently than most big Bain ventures Romney led, because of its small size and its close personal connections to Romney. It ended in bankruptcy and acrimony.
The company was launched by an old friend of Romney's and fellow Mormon from Brigham Young University and Harvard, Reed Wilcox of Littleton, Colo. It also employed Romney's brother-in-law, Roderick Davies, promoting him to vice president in 2000 and placing him on the executive council, according to court records.
Romney provided a personal loan to the company, on top of the Bain stake he helped arrange. He listed interest income from that loan in the range of $10,001 to $20,000 on his 2001 financial disclosure form during his run for governor.
Romney's campaign has emphasized those personal connections to the company, seeking to demonstrate that Romney's presence on the board was not related to the $2.1 million in Bain financing he arranged for Lifelike. The campaign asserts that his involvement in Lifelike does not contradict a 2012 federal financial disclosure statement by Romney that after 1999 he was "not involved in the operations of any Bain Capital entity in any way."
The campaign cites a change of address in 2000, when Lifelike's corporate filings listed Romney's home in Utah — where he was leading the winter Olympics at the time. Previously, Romney's address on Lifelike documents had been listed as the Bain headquarters in the Back Bay.
"This confirms that Mitt Romney was involved with Lifelike in a personal capacity with the company — the founder was a friend from college — and not on behalf of Bain Capital,'' the campaign said in a statement.
"Mitt Romney was a board member of a Colorado-based doll company that by the time of Romney's departure was facing severe challenges and was being wound down. He chose to remain on that company's board in his personal capacity due to his relationship with the company's founder after he left for Salt Lake," Bain responded.
Lifelike occupied a specialty niche in the doll business: 2-foot high replicas of actual children, fashioned using photographs supplied by parents. They sold for $150, under the brand name "My Twinn.''
Lifelike had manufacturing operations in Colorado and Hong Kong, and marketed itself via catalogs mailed to customers. Heavily dependent on seasonal holiday sales, the company suffered setbacks when a supplier failed to deliver dolls on time. The company went through a reshuffling of the board in 2000. Wilcox, who did not return a call seeking comment, was moved off the board of directors.
In 2001, its catalogs arrived in homes across the country in early September. The Sept. 11 terror attacks stifled demand and destroyed earnings that year, company officials said in court records.
By the end of that season, Bain and Romney were ready to end their relationship with Lifelike. Hawes said he dealt with Bain executives in Boston, not Romney, in negotiating Bain's fire-sale price. Romney, he said, did not appear to be personally involved in Lifelike's management decisions.
"He certainly wasn't running the place. That's for sure,'' said Hawes. "The Olympics was on then.''
With Romney and Bain gone, the company's death spiral accelerated. Davies — the brother of Romney's wife, Ann — was given the job of moving all of Lifelike's operations to China and setting up a new corporation in Bermuda to assume ownership.
But by mid-2003, Davies had departed after a dispute with the company's chief executive. In subsequent litigation initiated by the company, Davies was accused of colluding with Lifelike's suppliers and creditors to start his own company. Davies did not respond to a request for comment.
The company's lawsuit against Davies was suspended when the company was forced into bankruptcy, but not before some exhibits were entered into the record, including a potential witness list that was topped by Romney and his son, Taggart Romney. The documents included desperate pleas from the company's chief executive, Kenneth Thiess, to creditors and potential investors, including a direct e-mail appeal to Tagg Romney just a month after Lifelike had "severed all relationships'' with Tagg's uncle, Davies.
"Tagg, I have no idea where you are with regard to an investment in My Twinn at this time, but in case you still had some interest I didn't want the departure of Rod to be a barrier to further discussions,'' Thiess wrote.
"I am going to pass on any equity investments for now,'' Tagg Romney wrote back. "I hope all goes well for the company.'' Lifelike entered Chapter 7 bankruptcy proceedings six months later.
Christopher Rowland can be reached at crowland@