Yes, everyone agrees that Tom Reilly was last night’s big loser. He made an incredibly bad strategic decision on how to handle the new St. Fleuriasco revelations, and he may have ended his gubernatorial aspirations in so doing. There’s one more debate (Wednesday Sept. 13, 7 pm, channel 4), and it’ll be interesting to see if he has a strategy makeover.
All of that said, some questions remain. The Cheryl Cronin connection – first noted, I believe, here on BMG – does look awfully suspicious, despite her denial that she was the leaker (Frank Phillips knows who it was, of course, but he’s not going to give up a confidential source, so it doesn’t really matter). She told the Globe that she never had a copy of the report. Reilly sounded pretty sure it was her, but then he says he never saw the report, so how would he know? Anyway, someone leaked it in a deliberate attempt to embarrass Reilly and undermine his campaign. And although I initially assumed that it was someone inside the Reilly campaign, as I think about it I wonder whether that’s really the case, since disloyalty on that extravagant level strikes me as unlikely, unless there’s a true mole working over at Reilly HQ. (Wouldn’t that be a hoot!) So who else could it have plausibly been?
In other Gabrieli-related news, the Herald has sorted through some of Bessemer Ventures’ clients, and found that not all of them are the upstanding job-creators that one might hope for. Specifically, two of them paid large fraud-related fines, and one of them settled with the families of a number of people who died after taking an experimental drug during “one of the deadliest clinical trials in U.S. history.”
Was Gabs running these companies? No – he was an investor and in one case a board member, and he had pulled out of the first two before the “unpleasantness,” though he was still invested in the third during the ill-fated clinical trial. The article ends:
According to [Gabrieli spokesman Joe] Ganley, Gabrieli had little involvement with running any of the companies other than his investment.
You can only be responsible if you have control, he said.
While Gabrielis campaign is distancing him from the companies scandals, the firms are among those Gabrieli has pointed to on the campaign trail as evidence of his claim to have created 100,000 jobs in Massachusetts.
What to make of Ganley’s comment? If you can “only be responsible if you have control,” can you plausibly be “responsible” for any of the jobs that these companies created? Is that the same candidate who tells us over and over again that he “expects to be held accountable”? Conversely, if you want to get at least some of the credit for the jobs that these companies created (and he does), don’t you also have to take some of the blame when those companies screw up?
Surely, we COULDN’T have a double standard in BOSTON media!
in the layoff decisions at that company that Ted K talked about? I can’t remember – I’m asking.
Ask the Democrats, and Mitt personally pulled the gold teeth out of the head of every widow he threw out into the snow.
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Ask Republicans, and it’s a decision made in a board room to cut further capital investment to a failing company, and the layoffs were their choice.
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In a very real sense, the truth is NOT out there, and was lost long ago.
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I do NOT think that Reilly will go to the midwest and bus in people who lost their jobs due to cuts Gabrieli made, like O’Brien did, but you never know.
“Corporation, n., An ingenious device for obtaining profit without individual responsibility.”
Ambrose Bierce
I think this is a great set of questions, but with all due respect to the leak inquiry, I think this is a red herring and Reilly gets what he wants if we do not focus on the matter at hand.
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The biggest question I have is whether or not the “leaked” information is accurate or not. The accuracy of what was released does not appear to be in question. This is not like Killer Coke, where the accuracy of what was provided was mixed in terms of accuracy – (leaked/coordinated coincidentally by Reilly and his campaign. Can you say that the pot is calling the kettle black?)
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Without some proof, Reilly’s charge is pure speculation, irresponsible, and very desperate – even sad. My instinct is that Gabrieli had nothing to do with this. His track-record of telling the truth and being accountable dwarfs Mr. Reilly’s.
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(Note – To save some time, I will leverage portions of what I wrote in other replies. There are some similar threads and questions on the site right now.)
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In one of Tom Reilly’s new ads, the announcer states “Tom Reilly believes that elected officials should be held to a higher standard”. I agree, so let’s focus on Tom’s “higher standard”.
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Tom wants us to believe that one of the reasons he did not want Chris Gabrieli as his running mate is because Chris would not release his tax returns – even though they are not required by law and Gabrieli has met and surpassed the standard for financial disclosures (note – so has Mr. Patrick). OK, so who does he choose instead ? A woman who did not pay her taxes and had a federal tax lien, 16 derogatory accounts, and a $4,948.00 lien on their home for unpaid property taxes in 2002 and 2003. And now thanks to yesterday’s Globe, now we learn that Tom Reilly (at least he should have) and his campaign knew of these issues in advance of their announcement to run with her on a ticket. Wow, that is brilliant, absolutely brilliant.
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Tom also said that he could not run with Gabrieli because “there could only be one governor”. What, so he passes on Gabrieli and picks St. Fleur? Is he implying that he wants a rubber stamp as his running mate instead of an intelligent and well-vetted partner? Anyone who knows Gabrieli from the ’02 campaign knows how solid, credible, and yet respectful of his role he was in that race – not to mention very wealthy. I bet you did not know that! 🙂
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Tom Reilly wants us to believe that he and/or his campaign commissioned a relatively standard background check and then did not request that he be given the results by his people prior to officially choosing and announcing St. Fleur. Please. Not to mention, he also goes on to throw his underlings under the proverbial bus rather than stand up and take responsibility for HIS MISTAKE.
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Don’t let Reilly distract us from the real questions here, which go to Tom Reilly’s competence, honesty, integrity, and judgment. How can he run our state if he can’t even handle this?
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Tom Reilly wants elected officials to be held to a higher standard. Forget about it Tom. In your case recently, you have not even met the minimum standard.
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As for the Herald story, you can take some credit for the jobs, but not necessarily the subsequent actions of the companies in question under these scenarios. The money you provided or invested help to prop up the company in question/bought them time/gave them working capital and allowed them to grow (i.e. jobs), but the money invested did not provide you with enough of a stake to be in day-to-day control of the company (i.e. majority stake) and make decisions on how things would be done. Also, if you helped create jobs with your money invested, but subsequently moved on prior to the bad acts specified, how can you be held accountable for that? Would some of these companies had been around in later years without the seed money from Gabs & friends? Probably some no and others likely yes.
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Let’s review the companies sited in this story.
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1) Alkermes Inc. and Epix Pharmaceuticals were sued in 2005 by shareholders for corporate fraud, but both suits were dismissed.
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2) Gabrieli was a key investor and board member with VistaCare, but cut his ties in 2002, two years before shareholders levied charges against the company for bogus accounting practices and fraudulently inflating earnings.
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3) Gabrieli invested in PerSeptive, but years before the Framingham-based company paid out $12 million in 1995 to settle stockholders claims that the company reported bogus earnings. The company came under fire again in 2000 when an executive paid a $200,000 fine for insider trading and fraud.
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4) “Gabrieli was an investor in Oclassen in 1992 when 10 patients died during clinical trials of fialuridine, a drug made by the company to treat hepatitis B. Oclassen partnered on the drug with Eli Lilly & Co. before the National Institutes of Health oversaw the deadly trials. The deaths resulted in a flurry of lawsuits against Lilly, the NIH and Oclassen that were settled confidentially with the dead patients families.”
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This is tragic, but what is the insinuation here? Did Gabrieli actually do anything wrong here or did he possibly make an investment that did not turn out as intended. As someone who has dabbled in the market and made some $, my batting is average is good, but nowhere near as good as Gabrieli’s. If it were, perhaps I would be running for governor. God help us! 🙂
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On a serious note, if I or anyone else bought stock in this company and/or any of the others sited this morning, would we somehow be disqualified from higher public office and service? Tragedies happen unfortunately, but Gabrieli is not responsible for this one. Isn’t this is much like Deval being involved with Ameriquest, Texaco, & UAL and saying he was responsible for all of their allegedly “nasty” activities? Is he disqualified for his ties to these companies?
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Gabrieli’s record is overwhelmingly positive. He has made hundreds of investments over the years, the overwhelming majority were successful and a ton were for good causes and results. Yes, Gabrieli made a lot of $, but he has been incredibly generous in sharing that wealth for great causes and those less fortunate.
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In this case, it is a matter of whether Gabrieli made any of the decisions that led to and/or resulted in the negative actions sited in the article (i.e. did he have the authority or power to enact what is noted in the story?). Or did he simply invest money to help get these companies off of the ground and stay afloat to eventually grow and create jobs? He did not have sufficient control based upon my research – end of story although I am sure not the end of insinuations given where we find ourselves on the calendar.
whether you are investing your own money or that of other investors, there are usually contracts involved. The recipient companies that need seed money or expansion dollars are typically chained to these agreements. You want money? Fine, then you sign an agreement to follow these rules and open the doors and books for full audits. Or, you want money? Fine, then you will have three venture cap managers inside watching every step you make so that investment dollars aren’t wasted.
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If Gabbers was providing capital and he was doing it wisely for himself or others, these safeguards should have been in place. Sloppy investing with more concern for profit than accounting practices leads us into the world of Enrons and Ameriquests. So, the real question is whether controls were put into place at the beginning of the investments to prevent the types of abuses mentioned. Real control is at the front end, where it appears Gabs was. To imply that he just tossed in money and had no control afterwards is ridiculous.
Venture capital investing is a world away from you or me just buying stock. There are big dollars involved, and, if the investment is sound, even bigger returns. But venture capitalists have access to all of the records of the companies in which they invest, and they often help manage the company, through seats on the Board of Directors, for example.
…says she “never saw the report”….
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was it in a sealed envelope that she handed to the Globe?
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Ask her to release the Globe to say it was her if it was…..
Cheryl Cronin is a person of impeccable integrity, which is why so many people in public life turn to her when they need legal advice. She is also a loyal Democrat, and has given time and money to the Party for years, largely without compensation. Many of us have worked with her over the years, and we, and our Commonwealth, are far better for it. Just my two cents.
I am hoping this example clarifies my position. Most of these investments involve multiple parties, so in my example I will limit the investors to a total of two. Let’s call them Chris and Bob.
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Let’s assume that Bob is the sole investor in a real estate enterprise until he runs into some cash flow problems in 1991. Without an infusion of some cash and some management expertise, Bob’s firm will very likely go under and have to go out of business or file for bankruptcy protection. While doing some research, Chris thinks Bob’s enterprise has some potential, thinks he can help keep Bob afloat/turn things around, and contacts him. In exchange for a 30% stake in the enterprise, Chris pumps in an equivalent level of cash into the venture. Chris allows Bob to maintain day-to-day operations of the firm, but does make some suggestions that would in his opinion likely make the firm more successful and profitable. They reduce the most important of these suggestions to writing (i.e. a contract) and agree that they will be enacted as part of the business plan until/if he & Bob agree to change the plan and/or Chris cashes out. With that 30%, Bob follows these suggestions and hires some people (i.e. jobs), pays his bills, makes some repairs, is a positive presence in the community, increases advertising etc. The next two plus years prove to be very profitable. Chris decides to cash out his 30% for a nice profit in early 1994.
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Three years after Chris cashes out (i.e. 1997), Bob lays off some workers, cuts some corners, and runs into some trouble with the law as it pertains to the enterprise.
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Question: Does Chris deserve some – certainly not all, only some – of the credit for the jobs created from 1991 to early 1994.
Answer: Yes
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Question: Is Chris at all responsible (legally, ethically, morally) for the problems encountered and created by Bob in 1997 (i.e. three years after Chris departure physically and financially)? Answer: No
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Now I recognize that this is an over-simplification, but let’s look at the “real world” examples sited in today’s Herald. In most cases and in lieu of proof, Chris Gabrieli was no longer involved with the companies when their problems were encountered/created as he had moved on – similar to the example outlined above.
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So let’s ask some questions.
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1) Was Gabrieli still an active investor when the companies in question did what is sited in the article? If no, then end of story. If yes, what did he do about it and when did he do it?
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2) Was Gabrieli in a position of control where the actions sited were the result of his decisions, recommendations, and/or maneuvers made by Chris and his team? If answer is no, then end of story.
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I hope that this helps. I’ll try to check in occasionally over the weekend to answer any replies or questions. Best, SSG
I’ve got to hand it to you. You’ve got the pitch down pat. Problem is, if that is what Gabs does with investments, even in your scenario, it’s for short term gains. If he doesn’t put something in place to change the culture and the management, then he’s not solving the business problem. He’s in the business of making temporary changes for profit without a vision for the future of the company. I would not want to see MA government managed in that way. Imagine him leaving office, taking no responsibility for what happens after he’s gone and putting nothing in place to prevent future problems. No thanks.
So you’d prefer to see the company in my example go out of business in 1991 and not create those jobs?
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The problem with your assumption is that you assume that all of the “bad acts” outlined in the Herald occurred while Gabrieli was still actively invested. The truth and reality are that he was not an active investor in most of these cases and/or he did not have managerial discretion.
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Venture capital by definition is not always long term in nature. It is start-ups, it is bail outs, it can be a bit speculative, it comes with high risk and it can come with very high reward if successful. My example pointed out a fictional company that went off the beaten path after “Chris'” departure. In most of Chris Gabrieli’s real life cases, the outcome was positive for everyone – the company, the community, the workers, and yes even Chris, etc. Additionally the time horizon of these investments likely varied depending upon a bunch of variable (e.g. IRR, Projected Cash Flow, Capitalization Rates, Management, Economic Outlook, etc.) This is not Mitt Romney laying off thousands at his discretion to squeeze every last penny out of an investment – even if it met ruining thousands of lives. Not all venture capital and capitalists are bad. You need to learn to love not only the jobs, but the people and businesses that create them. Sound familiar? That’s one of Deval’s lines and it’s a very good one. It is also true.
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Gabrieli is a guy whose commitment to causes near and dear to his heart – both for profit and not for profit – is virtually unmatched. He is not all about profits. He is also about generosity, giving back, charity, and integrity. Deval is a great story – don’t think I don’t like and respect him and how far he has come, I do – and he has my vote in November if he can win on the 19th, but his record of commitment to date as it pertains to causes (e.g. jobs, those less fortunate, education, etc.) affecting Massachusetts cannot hold a candle to Gabrieli’s. It is not even close. Regardless of the outcome on the 19th, I hope that this gap closes subsequent to the election. I know Gabrieli will still be here and contributing – both his time and $ – to the community regardless if he wins or loses this election. I hope we can say the same about Deval Patrick as well.