Lawsuit: Rauner met over personal business while in office
CHICAGO — Illinois Gov. Bruce Rauner participated in meetings about his cut of a $67.5 million settlement months after taking office in 2015 despite declaring publicly that he’d give up control of his personal wealth management to avoid conflicts of interest, a newly-unsealed lawsuit alleged Tuesday.
The lawsuit filed in Cook County centers on a settlement the former venture capitalist reached with ex-investment partner Harreld “Kip” Kirkpatrick III but was unhappy about. The investment in a Michigan-based mortgage company earned $15 million for the Republican governor, but that “apparently is not enough for Rauner,” according to the lawsuit.
Rauner spokeswoman Rachel Bold told The Associated Press Tuesday that the governor “disputes Mr. Kirkpatrick’s allegations, including Mr. Kirkpatrick’s characterizations of any conversations.”
Kirkpatrick, who once ran as a Democratic candidate for state treasurer, is a co-chief executive of Chicago-based private equity firm Vistria Group.
The meetings between Kirkpatrick and Rauner took place in May 2015 on the patio of the governor’s mansion and in September of that year at the exclusive Chicago Club, according to the lawsuit. The complaint was filed in October, but heavily redacted.
Kirkpatrick specifically kept Rauner informed throughout the litigation regarding his objectives in terms of a return on Rauner’s investment and the allocation of the settlement proceeds. At an in-person meeting in Springfield, Illinois, on May 11, 2015, on the back porch of the Governor’s mansion, Kirkpatrick laid out his expectations regarding the return to Kirkpatrick Capital from a settlement and the allocation of the settlement. These expectations were updated and communicated at a second in-person meeting between Rauner and Kirkpatrick at the Chicago Club on the evening of September 15, 2015. At neither meeting did Rauner object to the proposed allocation of the settlement proceeds, nor the return on his investment he would receive. […]
Rauner’s total proceeds from the United Shore investment were approximately $20 million, with $15 million of that being profit.
In the summer of 2017, after receiving all payments due to him, Rauner filed a demand for arbitration before the American Arbitration Association that the settlement agreement precludes Kirkpatrick Capital’s allocation of the United Shore settlement proceeds and claiming that Kirkpatrick and the Kirkpatrick Capital breached and interfered with the LPA.
Upon taking office in January 2015, Rauner vowed to put his investments and assets in a blind trust to avoid conflicts of interest. Day-to-day management decisions in such cases usually fall to an independent adviser.
When asked about the lawsuit in October, Rauner told reporters he couldn’t comment on business disputes and that all his investments and assets were in a trust he didn’t control.
Word of the lawsuit immediately drew criticism from Rauner’s political opponents in the March 20 primary.
Rauner, who’s seeking a second term, is widely considered one of the most vulnerable governors nationwide.
His wealth and business record have come up often on the campaign trail, particularly with two businessmen Democrats among the six vying for a chance to unseat him.
“Bruce Rauner is allegedly conducting private business out of the governors’ mansion and then openly lying about it to the public,” said Galia Slayen, a spokeswoman for candidate J.B. Pritkzer, a Hyatt Hotel heir. “It is no wonder this failed governor tried to keep this lawsuit sealed, but now that it’s public, it is time for Bruce Rauner to tell voters the truth.”
Read the lawsuit here.
–Associated Press; with Staff reports