Bruce Rauner says he regrets investing in a Chicago venture capital firm that did shady business with City Hall under the reign of Mayor Richard. M. Daley, the Sun-Times reports.
The Illinois gubernatorial candidate lost thousands when the feds snatched Cardinal Growth in June 2011 for financing companies tied to the ex-mayor's son Patrick Daley that inked contracts with City Hall.
"Bruce invested in Cardinal years before Patrick Daley apparently got involved but regrets ever investing one penny with Cardinal," Rauner's spokesman, Mike Schrimpf, tells the paper.
According to Schrimpf, Rauner was encouraged to invest in Cardinal Growth by acquaintances of Bob Bobb. The former U.S. prosecutor formed the firm 14 years ago in order to profit from flipping troubled companies and Rauner was an initial investor, contributing $200,000 for a small stake in the start-up.
Bobb and his business partner, Joseph McInerney, used money from the wealthy venture capitalist and 32 others to take out some $21 million in loans from the Small Business Administration (SBA). They funneled those loans into firms such as Municipal Sewer Services, whose anonymous owners were Patrick Daley and his cousin Robert Vanecko. Cardinal moved to finance the sewer operation in 2003, the year it won a contract through City Hall, making the younger Daley a millionaire. (Nobody went to prison in that deal except for Anthony Duffy, another Cardinal partner, who pleaded guilty to fibbing to FBI agents about the Daley family's involvement.)
Rauner, meanwhile, was forced to pay the remainder of his six-figure investment or face a lawsuit from the SBA.
Said Schrimpf: "Bruce believes companies should follow the law. MSS apparently did not follow the law and was appropriately held accountable for that.”
As it happens, Illinois Gov. Pat Quinn is also linked to Cardinal Growth through a professional relationship with McInerney, whom he previously appointed to the Illinois Finance Authority but hasn't spoken to recently. Quinn doesn't know Bobb personally, but Bobb has donated to Quinn's campaign.
Patrick Daley runs the Chicago-based investment firm, Tur Partners, with his father.
It's a small world after all.