Democratic Party Ethicist-Terry McAuliffe seems to have forgotten his $18 million windfall.

The Wall Street Jounral ^ | Monday, August 12, 2002 | WSJ Editorial Board

[pittsburgh gop guy]

Who does Democratic National Chairman Terry McAuliffe think he is? Bill Clinton?

Only a man of Mr. Clinton's, er, self-confidence, could believe that he could get away with what Mr. McAuliffe is trying, to lead his party's charge against President Bush on the issue of business ethics. In the sermon he delivered to the Democratic National Committee summer meeting in Las Vegas Saturday, Mr. McAuliffe was so busy attacking the President for manipulating markets and exploiting September 11 that somehow he never mentioned the words Global Crossing.

[Mudboy Slim]

Nothing you've printed devalues a single word in the Wall Street Journal editorial...this was an obvious political payoff by Winnick to McAuliffe--Bill Clinton's best friend and political operative--and to argue otherwise is both futile and inane.

MUD

[Mudboy Slim]

"GX's debt problems became evident in early 2001..."

Evident to the General Public, maybe, but folks with insider knowledge--like Winnick and McAuliffe--knew enough to cash out before Global Crossings' criminal behavior became public knowledge. That is a felony, and both Winnick and McAuliffe deserve to spend a long stint in prison for it!!

MUD

[Tickle Me Pank]

I'm not arguing either way, MS. Simply pointing out how the WSJ has slanted the situation.

[Tickle Me Pank]

He sold his shares two years before GX' started having problems, MS, and months before the stock peaked.

[Mudboy Slim]

"...the WSJ has slanted the situation."

See, TMP, I disagree that "In 1997, at the invitation of CEO Gary Winnick, Mr. McAuliffe made an investment of $100,000 in Global Crossing shortly before it went public. Two years later he sold it for $18 million. Shortly thereafter, Global Crossing made a public announcement of decline in profits and the share price plummeted. It declared bankruptcy last January..." is slanting the situation.

BTW...the situation is even worse than described because that $100,000 McAuliffe invested was given to McAuliffe by Winnick/Global Crossing as a "speaking fee." A $100,000 speaking fee fer Terry McAuliffe back in 1997?!! How many folks had even heard of McAuliffe back in 1997, let alone be willing to pay him $100,000 to talk to their employees?!

MUD

[Tickle Me Pank]

The slant is ...Shortly thereafter.... It was 2 years later.

[Mudboy Slim]

"He sold his shares two years before GX' started having problems, MS, and months before the stock peaked."

I would argue that Global Crossing started have noticeable problems when their stock started its long slide from its peak, which you note is only months after McAuliffe cashed in. It was two years before the company's FRAUD became public knowledge, but it's laughable to think T-Mac and Winnick didn't know this long before you and I did.

MUD

[Mudboy Slim]

"I've got the GX stock prices from inception as well as the first articles in summer of 1999 re: McAuliffe's sales on another box that's down for an upgrade, I'll post that info when I can get to it."

Please bump me up once you find this, and we'll continue our debate...MUD

[LarryLied]

The Canadian Imperial Bank of Commerce (CIBC) took Global Crossing public in 1998 for a 25% stake in the company.. By 2000, all CIBC members had resigned from Global's board of directors and CIBC hedged 47 million GC shares at future dates ending in 2003 at fixed prices between $20 and $64 (US) a share .

CIBC netted over $1 billion in profit.

The hedging was done by Dean C. Kehler, Andrew R. Heyer, and Jay R. Bloom--all of whom had worked with Global Crossing CEO Gary Winnick under Milliken at Drexel in the 1980s.

Had CIBCO sold outright, the stock would have tanked. By using derivatives, other stockholders were not aware insiders were bailing out.

But did MacAuliffe know? Was he told CIBC members were resigning from the board of Global Crossings because they were about to hedge?

[Tickle Me Pank]

Will do, Slim. I really need to get that other box running again, I fear a zapped CPU or mobo.

[Mudboy Slim]

I DO understand yer point, my FRiend. We usedta have a local pseudo-conservative talk radio host from 7-10 whose favorite saying seemed to be "Don't overstate yer case" and he used to cut me off when I'd call in and complain about Clinton's "treason," "raping," and "Conspiracy to Commit Murder." Since he wasn't a FReeper, he wasn't as up to speed on the latest and I came off--allegedly--as overstating my case. However, IMHO, the WSJ did not overstate McAuliffe's insider knowledge on Global Crossing...a timeline of his purchase/sale of stock and the corresponding price history of GX would be helpful, though, in either confirming my suspicions or amending them as required.

If they're gonna bust Martha Stewart's chops for a few hundred thousand dollars, they ought to do the same fer T-Mac.

FReegards...MUD

[Tickle Me Pank]

And I understand yours, Slim. GX' stock slide started slowly in late 1999, so I think the market was reflecting fears of their debt accumulation long before other problems became evident.

Martha's situation is a horse(trade) of a different color - she allegedly sold out 1 day before bad news of a very specific nature (denial of FDA approval) was announced.

Acting on prior knowledge of a specific negative earnings release would qualify as insider trading in GX' case, but there has to be a close proximity time-wise. It's not enough to suggest that T-Mac 'knew' that GX' earning would eventually decline.

I sold my GX in late Fall, 1999, cuz I thought it was overpriced, had peaked, and I'd made enough.

[Mudboy Slim]

"McAuliffe Hired As Global Crossing 'Consultant' (wink wink nudge nudge)"

"In 1997, Winnick hired Terry McAuliffe, Clinton's chief fundraiser, as a consultant. According to the New York Times, the $100,000 he paid McAuliffe turned into an $18 million windfall as McAuliffe's contacts helped Global Crossing's stock climb. In 1999, McAullife set up a golf gave between Clinton and Winnick, which ended with Winnick pledging $1 million for Clinton's presidential library."

I'm not a big fan of using "Mother Jones" as a referenced source, but I do believe it's pertinent that the $100,000 McAuliffe allegedly invested wasn't even his own but was a payoff by Global Crossing and Winnick!!

FReegards...MUD

[LarryLied]

I'm embarrassed to use Mother Jones and The Nation as sources also but those two have been after corporations for decades and know their stuff. They are in the strange position of having to report now on Democrats using corps in a major way. This hit the wires tonight:

Flag Telecom gets subpoenas on Global Crossing, Qwest (Rubin's Citigroup hit too)