In 1986, John Ellis Bush joined the five-person board of directors of a new Swiss-owned bank with the fitting name of The Private Bank and Trust. The institution, which was described that year by the Miami Herald as a place “where the money of wealthy foreigners is managed — very discreetly,” served as a fee-based investment bank for wealthy, mostly-Latino investors. The newspaper detailed the firm’s extreme secrecy, noting that upon arriving at the bank, “the general manager or one of his aides will lead you to one of three sparsely furnished conference rooms and will close the door. Under the bank’s rules, officers must meet with clients in secluded offices, not at their desks, where outsiders could see confidential papers.”
Bush, whose father happened to be the vice president of the United States at the time, received $1,200 for his board service before resigning in 1987 to become Florida’s state commerce secretary. Four years later, federal regulators seized The Private Bank. According to the St. Petersburg Times, the government determined it had been “making investments contrary to client instructions and putting funds in companies affiliated with or managed by the bank.” Bush defended his prior tenure, saying, “There were no financial problems for me to be aware of when I was a director.”
A “self-made man”
Eight years ago, Bush — best known by the acronym “Jeb” — departed from Florida’s governor’s mansion determined to boost his $1,288,000 net worth in the private sector. Since, he has made millions in corporate board fees, speaking gigs, and consulting payments — but, much like his tenure before getting into public life, has done so with a series of companies that have found their way into legal or financial quagmires.
Jeb Bush has often been portrayed as a “successful businessman,” but ThinkProgress reviewed Bush’s current and past business record and found a great deal of controversy and struggle. In some cases, the companies have faced financial problems during or after his tenure. In others, people with whom he has had business dealings have ended up in legal hot water. While Bush’s corporate work has not always been publicly disclosed, a substantial percentage of that which has been revealed has proven problematic. Bush’s spokeswoman did not respond to a ThinkProgress request for comment.
In 1994, Bush mounted his unsuccessful maiden campaign for Florida governor, promising an “entrepreneurial” approach to government and offering himself as a “self-made man.” When his Democratic opponent brought up his business record, Bush cried foul. But, a spokeswoman for incumbent Gov. Lawton Chiles (D), who would narrowly narrowly prevail on Election Day, responded: “What [Jeb Bush] calls mudslinging is just shining a light on his past. His record is his business dealings.”
Two decades later, as Bush reportedly considers a potential 2016 presidential run, he is once again focused on making money. In April, Bush’s spokeswoman told the New York Times: “Jeb Bush had a successful career in commercial real estate and business before serving as Florida’s governor. After eight rewarding years in public service leading the state, he is enjoying running his own business again.”
International Medical Centers
In 1992, as President George H. W. Bush was unsuccessfully running for a second term in the White House, Mother Jones did an examination of the his family and its business dealings. In looking into Jeb’s business relationship with Miguel G. Recarey, Jr., the International Medical Centers (IMC) president-turned-international fugitive, a former federal prosecutor told the magazine that “he considered two possibilities — Jeb was either crooked or stupid. At the time, he concluded Jeb was merely stupid.”
CREDIT: U.S. Social Security Administration
According to the St. Petersburg Times, Recarey paid Bush’s real estate firm $75,000 in 1985, ostensibly for realty work. But IMC never actually purchased a building shown by Bush — who claimed he was unaware of Recarey’s previous arrest record and history of income tax evasion. Bush came to Recarey’s aid in a different way. Under a pilot program, IMC had received an temporary waiver from a rule limiting its maximum percentage of its receipts could come from Medicare and Recarey wanted to renew it. At his request, Bush — whose father was the U.S. Vice President at the time — agreed to contact the Department of HHS to encourage a “fair hearing” for the firm.
Bush has repeatedly claimed that he only contacted a low-level official and sought no special treatment for his client. But two HHS officials testified in 1987 to Congress that Bush had in fact contacted then-HHS Secretary Margaret “Peg” Heckler. In 2012, Heckler herself told the Huffington Post that Jeb Bush had lobbied her and that it had weighed heavily on her thinking on the matter: “He was involved, and I know that his compassion and my sense of conscience and his, I thought, matched, and therefore I was positive, acting upon this.” Federal regulators shut down the insolvent IMC in 1987 and Recarey was indicted for Medicare fraud. He left the country before he could be arrested and remains an international fugitive. In 1998, Bush told the St. Petersburg Times he was not as gullible at 45 as he had been 13 years earlier: “I have to have better radar.”
After helping elect his father president of the United States, Jeb Bush teamed in 1989 with then-Moving Water Industries, Corp. (MWI) president and CEO J. David Eller, to create Bush-El. The eponymous partnership aimed to market MWI’s water pumps internationally. In 2002, the Miami Herald revealed that on one of Bush’s trips to Nigeria to help sell them MWI pumps in 1991, that company’s corporate pilot claimed he saw a suitcase full of cash — an apparent bribe for Nigerian officials. The pilot did not implicate Bush and a Bush spokesman noted inconsistencies in the claims. ”The governor was adamant he was not on an airplane with a suitcase full of cash,” the spokesman said, adding Bush was “unaware of any plane he was on with luggage on it full of cash.”
Bush has reportedly said his involvement in the Nigeria effort was conditioned on a private loan being secured (as his father was president at the time and he wanted to avoid any appearance of impropriety). But the company instead went to the U.S. Export-Import Bank for the $74.3 million it needed for the deal. In 1998, after a whistleblower alleged “knowingly false or fraudulent claims” connected to that financing, the Department of Justice filed suit against MWI. The company has steadfastly denied the allegations, but was found liable by a jury last year and fined $580,000 (the MWI has appealed the verdict). Bush was not implicated and was never forced to testify in the case after a federal judge ruled him irrelevant to the case.
Bush said later that the bad publicity from Bush-El had proven highly troublesome for him: “I made money. That’s the only benefit I can see… Otherwise, it’s been unmitigated grief.” While he said he took no money on the Nigeria deal, he made $648,250 on the Bush-El venture, between pump sales in other countries and selling his half-share in the partnership to Eller in 1994, prior to his gubernatorial campaign.
An MWI company spokesman declined to comment for this story.
In 1995, Jeb joined the board of directors of Ideon Group, a credit card registry service company run by Paul Kahn. Kahn, who had raised tens of thousands of dollars for Bush’s unsuccessful 1994 campaign, “had grandiose plans for a quirky array of new services — selling credit card perks for golfers, a “Family Protection Network” membership club to help find missing children and a line of Vatican-approved art objects,” as well as a potential Pope-blessed credit card for Catholics, according to the St. Petersburg Times. But the company paid its directors $50,000 annually, plus additional fees for meetings and conference calls and stock options — well above most other companies in Florida were paying at the time. Bush served on the company’s audit committee.
Things headed south for the company, leading to significant layoffs. In 1996, Kahn was removed as CEO and Bush and the board voted to sell Ideon to CUC International. Bush resigned soon after that. And the shareholders of Ideon filed suit against Bush and other directors, alleging stock manipulation. The successor company settled the lawsuits for about $15 million and the Ideon directors avoided having to admit any wrongdoing or pay any of the damages. Bush claimed he did not know of the company’s problems when he joined the board and did everything he could do to save the company.
CREDIT: AP Photo/Mark Lennihan
In June 2007, five months after his tenure as governor came to an end, Jeb Bush joined the world financial services behemoth Lehman Brothers as a paid consultant. According to the Tampa Bay Times, two months later, Florida’s State Board of Administration’s “$1.4 billion of risky, mortgage-related securities,” predominantly sold by Lehman Brothers, began to tank. A Bush spokeswoman told the paper that his role at the bank did not include any work relating to those investments.
As the company’s financial situation became increasingly precarious, due in large part to the firm’s investments in subprime loans, Bush was dispatched for an unsuccessful last-ditch effort to save Lehman Brothers: he traveled to Mexico to ask billionaire Carlos Slim Helú to make a major investment in the firm. This failed mission was identified in internal emails as “Project Verde.” Lehman Brothers failed in 2008, Florida lost hundreds of thousands of dollars in investments, and the United States economy nearly collapsed as a result of the subprime market implosion — but Bush reaped millions in fees from it and Barclays (which acquired much of its assets after Lehman’s bankruptcy). A bankrupcy examiner in 2010 alleged balance-sheet manipulation by Lehman Brothers. Jeb remains with Barclays today, reportedly receiving a seven-figure compensation.
Late in 2007, co-founder and co-CEO Claudio Osorio recruited Jeb Bush to join InnoVida, a building construction material manufacturer. Though, according to the New York Times, a background check by Bush found that Osorio’s previous company (CHS Electronics) had gone bankrupt, Bush agreed to join the board and his consulting company signed on to represent Osorio’s companies. Between 2007 and 2010, they paid Jeb Bush & Associates $15,000 a month, plus expenses — $468,901.71 in total, according to court filings. Concerned about the company’s practices, Bush and his company ended the arrangement in 2010.
By 2011, things had gone south for the company and it filed for bankruptcy protection. The Securities and Exchange Commission charged InnoVida and Osorio in 2012 with “defrauding investors in an offering fraud scheme,” and a U.S. Attorney indicted Osorio on multiple counts of fraud. Accused of using investors’ funds to pay for a mansion and a Maserati, Osorio ultimately pleaded guilty to three counts of conspiracy. He is serving a sentence in federal prison and is not scheduled to be released until 2023.
While there is no evidence that Bush or members of the board knew of Osorio’s actions, investors complained that the directors exercised no meaningful oversight. Admitting no liability and asserting that it “provided services in good faith for reasonably equivalent value in exchange for such Consulting Payments,” Jeb Bush & Associates agreed last year to return $270,000 to InnoVida’s creditors, as part of a settlement in the bankruptcy proceedings.
Jeb Bush got another tony corporate board appointment in November of 2010: he was elected director for Swisher Hygiene Inc., a sanitation and cleaning supply company. For his service on the company’s board and its compensation committee, Bush received $313,825 in cash and stock over his four-year term.
According to the New York Times, Swisher Hygiene executives acknowledged that during Bush’s tenure, “their financial statements were unreliable and their accounting practices inadequate.” As the company’s accounting problems became public, its stock prices dropped precipitously — losing “more than three-quarters of Swisher’s value.” Shareholder lawsuits followed against Bush and his colleagues, “accusing him and fellow board members of insufficient oversight.” A lawsuit naming Bush was combined with other lawsuits against the the company itself and Swisher Hygiene agreed to a class-action settlement in February, with no admission of fault.
Swisher Hygiene did not immediately respond to a ThinkProgress request for comment.
Since joining the board of directors of Tenet Healthcare in April 2007, Jeb Bush has received more than $2 million in fees and stock awards. The Dallas-based company owns dozens of hospitals and outpatient medical facilities and offers health insurance plans. In its 2014 SEC filings, Tenet notes that Bush serves on both the board’s nominating and corporate governance committee and its quality, compliance and ethics committee — and that he received $128,500 in cash (including deferred 2006 compensation) and $170,000 in stock in 2013. The company’s revenue that year: an impressive $11.1 billion — and despite Jeb Bush’s fervent personal opposition to Obamacare, the company’s chief executive told the New York Times he expects it will earn $100 million in new earnings in 2014 thanks to the landmark legislation.
But Tenet’s corporate history has not been without problems. In 2006, Tenet paid $900 million in fees to settle claims that it overbilled Medicare in the 1990s. CEO Trevor Fetter told the Wall Street Journal, “I hope we have changed the culture… because ultimately your culture is your only protection.” But six years later, it agreed to pay $42.75 million to settle allegations of Medicare overbilling between 2005 and 2007. And last December, Tenet paid another $5 million to settle a whistle-blower lawsuit alleging that the company paid kickbacks to doctors, in violation of the False Claims Act. A Connecticut newspaper noted in 2013 that, all totaled, Tenet Healthcare has paid “more than $1 billion over the last decade to settle a series of fraud, overbilling, kickback, and other allegations by its biggest customer: the federal government.”
Tenet did not immediately respond to a ThinkProgress request for comment.
Creating the right business climate
Bush’s tenure as governor of Florida was pretty consistently one of supporting businesses. A 2007 South Florida Sun-Sentinel analysis of his two-terms noted that he “championed tax cuts that chiefly benefited business and the wealthy, trimmed the state’s payroll, [and] stripped job protection from thousands of mid-level civil servants.” And, it noted, “while Florida led the nation in job creation, much of that was in low-paid service industry jobs that left many Floridians without health insurance and scrambling for affordable housing amid a real estate boom that helped fuel business-friendly tax breaks.”
In a 2012 campaign appearance in support of Mitt Romney, Jeb Bush talked about his “hope and dream” for America. That, he said, was that “we create the right business climate and allow [entrepreneurs] to pursue their dreams with a vengeance, because that will restore American greatness and sustained economic growth.” He blasted President Obama as someone who believes in “massive new regulations” for the economy.
But underregulated businesses sometimes run into trouble — and Jeb Bush should know that better than anyone.