Is Bruce Rauner bad for business?
The Republican candidate for Illinois governor retired from running the private-equity firm GTCR more than a year ago. But his past as a wealthy wheeler-dealer continues to haunt him as he wages an anti-corruption crusade against Gov. Pat Quinn while trying on an Everyman persona in plaid button-downs and an $18 watch to show solidarity with 99 percenters.
The Sun-Times reports GTCR is the target of a federal lawsuit from Universal American Corp., which alleges that the firm sold it an ailing company -- APS Healthcare -- for $222.3 million in March 2012. Four months later, APS' revenues fell 90 percent from what GTCR had initially forecast.
APS execs and ex-GTCR managing director David Katz participated in a "deliberate campaign to conceal the truth," claims Universal's suit, which does not mention Rauner, who left the company in October 2012 to run for Springfield's highest office.
In 2011, APS shelled out $13 million in settlement money after the federal government and the state of Georgia said the company had "failed to provide the required services to a large portion of the Medicaid recipients and over-billed the Georgia Department of Community Health," said the Sun-Times, quoting the feds.
"Bruce is not involved with this, and it is best to let GTCR’s motions speak for themselves," said Rauner representative Mike Schrimpf. "Bruce was never on the board at APS, did not put together the deal and played no role in the management of the company."
Responding to Universal's case of buyer's remorse, attorneys for GTCR and APS argued: "Budget projections are exactly the sort of uncertain, forward-looking statements that cannot give rise to fraud claims."
News of the lawsuit comes on the heels of another GTCR-related legal headache that came to light last week. A Florida judge, accusing the Chicago-based outfit of masterminding a Mafia-esque "bust out" scheme, ruled in favor of continuing litigation into a $1 billion case involving claims of wrongful death and abuse at nursing homes in which Rauner had invested.
The Winnetka-based multi-millionaire said he hopes that "if there is any wrongdoing, that it gets punished."
Meanwhile, Team Quinn -- dogged by federal and state probes into a failed anti-violence program and improper patronage hiring at the Illinois Department of Transporation -- is capitalizing on GTCR's legal woes in its battle against political rookie Rauner. Early Wednesday, Quinn's campaign issued a press release citing "additional examples" of fraud committed by Rauner-backed companies.
Cynical insiders sniff that Rauner should drop the Average Joe act and run as he is: a successful businessman and government outsider whose corporate experience could help keep Illinois afloat during these dire economic times. (After all, voters can smell a phony from miles away.)
Should Rauner himself become directly implicated in GTCR-related shadiness, his two big selling points -- financial competence and squeaky-clean ethics -- would most certainly be his undoing.
He just might go the way of the Blago.