Romney and Damon

I don’t believe anything Gingrich says, but he seems to have a pretty damning indictment of Romney’s involvement in massive Medicare fraud.

I assume that anything a Republican candidate says is a lie until it’s proven to be true, but if there’s a rebuttal to the Gingrich/Adelson SuperPac ad about Mitt Romney’s involvement in a giant health care fraud I’d sure be interested in hearing it.

Here’s the Forbes story the ad seems to be based on. Democrats are likely to make a fuss about it, too.

If Gingrich had as much money to spend as Romney, he could make a race out of it, especially with the Palin/Cain Republican counter-Establishment now moving in his direction. In the meantime, he’s going to do Romney some damage on his way down. But why didn’t Newt make a fuss about this in the debate?

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

11 thoughts on “Romney and Damon”

  1. Assuming it’s accurate – and I have no particular reason to think these people are trustworthy, but actual falsehood would seem quite a risk – it’s pretty devastating. But it’s seven minutes long, so who’s even going to see it? Certainly not the low-information voters who decide elections, certainly not in the three days that are left, with no more debates, and with perhaps a hundred thousand absentee ballots already cast. Florida, and probably the nomination, seem to be sewn up. I hope someone figures out how to use that story effectively in the fall – though I have little confidence, given how Dubya’s much more obviously checkered history in business and in the exploitation of taxpayers never seemed to resonate.

  2. Does the picture they paint of Romney match with the same man who served to turnaround both the Olympics and MA without taking a salary??? Excuse me, he took $1. This is no breaking scandal. The reason Gingrinch is counting on this is because capitalism has been placed on trial over the past few years. When you consider the source being the same folks who made the last pathetic DNC porn video, you gotta ask if there is a bit more to the story. I, myself could not find much. I am sure we will get the rest of the story soon enough, but hopefully not after it is too late.

    After a few hours of researching I discovered some huge details that are missing from almost everything I could find on the Damon Corp. scandal. I found inside two “scarce” Boston Globe articles. Before we go there, let me clarify that these articles are negative, but they are the only sources of the information mentioned that I could find online.
    It is well known that the BG is no fan of Romney, but with so much on the web about the “Damon scandal”, it is interesting that these details that help to corroborate Romney’s version are missing (I have backups of the doc, just in case). For perspective, it seems that at the time Damon was sold, the common, but questionable bundled billing practices had not yet been determined to be fraudulent. That is, not until after the subsequent industry wide investigations attempting to reduce spending/waste were completed. So, to relate the story as if it were part of the actual scandal is sooo misleading. The fact is, if this had any real teeth, Romney would have never been elected governor in such an left-leaning state, as these very articles were (along with many others) little more than hit pieces during his gubernatorial campaign.
    What we do know is that the federal probe that looked the entire industry over had cast a wide net, yet the feds felt no need to implicate Romney in any way. The board was wise to follow the legal counsel of their lawyers, whatever the actions they took, as they were, apparently, according to law. I am sure the shareholders were particularly grateful about the Damon sale after few years.
    The BG and now NG, as well as OB, DNC, and AFSCME, etc. have to resort to creative implications. They rely on a lack of evidence to THEIR contrary in order to convict political enemies in the court of public opinion (communism 101). Folks, the underlying theme here is , again, “greedy evil capitalists ripping you off”. The only proof you really need is Romney’s wealth and proximity to a problem. Gingrich, what in the HECK is wrong with you playing along with the MSM and DNC??? I hope we Republicans won’t allow ourselves to be useful idiots, too…

    Anyway, here are the most significant tidbits-
    ROMNEY PROFITED ON FIRM LATER TIED TO FRAUD DAMON CORP. FINED AFTER SALE BY BAIN
    Boston Globe issue 10/10/2002 page A1 article by Frank Phillips
    http://www.highbeam.com/doc/1P2-7745902.html#
    “…Damon’s lawyer at the time, Stuart D. Freedman, a partner at Schulte Roth & Zabel, said the board asked his firm to conduct a review in early 1993 of the company’s billing practices. He said the review was done immediately and changes were made. Because he no longer represents Damon, he said he could not provide any details of the changes. Asked why the changes and their potential impact on the company’s revenues were not reported to the SEC, Freedman said: ”Obviously we made a determination” of what the company needed to report. He said he is confident the board acted appropriately.”
    “…A spokeswoman for Corning told the Globe in 1996 that her company knew when it acquired Damon that billing practices used by the laboratory testing company would face scrutiny, but added: ”To the degree of detail, we would have no way of knowing.” At the time of the purchase, the federal government had begun to aggressively review billing at laboratories industry-wide.”
    “…It is not clear whether Corning’s knowledge of the Damon billing fraud affected the sale price. Corning purchased Damon for $391 million. In 1994, Romney told the Globe that the sale yielded him $103,000 profit. His venture capital firm, Bain Capital, had an 8 percent stake in Damon. Romney also earned a 5 percent share of the Bain profit, or $370,000. The fraud was carried out at the company’s subsidiary, Damon Clinical Laboratories. The federal probe did not find evidence of wrongdoing by the board. Besides Isola, Damon’s senior vice president, William Thurston of Salt Lake City, was sentenced to three years’ probation. He is appealing”.

    DAMON LAWYERS FOUND NO FRAUD ROMNEY SAW ROLE AS WHISTLE-BLOWER
    The Boston Globe (Boston, MA)
    October 25, 2002 | Frank Phillips, Globe Staff
    http://www.highbeam.com/doc/1P2-7751871.html
    “…The law firm Schulte Roth & Zabel of New York recommended that the Damon board change its requisition orders and clarify its policies with doctors, so they do not unknowingly order unneeded blood tests. But the lawyers also said there were differences between the billing practices Damon used and the fraudulent scheme carried out by National Health, and therefore, the lawyers did not consider Damon to have committed any criminal wrongdoing.
    Schulte Roth & Zabel would not provide details of what it found to the Globe. But the minutes suggest the law firm told the board that, compared to National Health, the Damon billing system and its marketing efforts to doctors were decentralized, and therefore the firm was not commiting fraud.
    Romney said the board, based on the advice of lawyer Stuart Freedman of the firm, did not consider the billing problems to be fraudulent. “He told us exactly what to do, and we did exactly what he told us to do,” Romney said during a news conference this week.”
    “…Although Romney said the board uncovered “inappropriate billing” at Damon, neither he nor the board reported the matter to investigators who they knew were investigating the entire industry’s billing practices. The lawyers apparently viewed the changes as not significant enough for the company to report its findings and “corrective action” to shareholders in their annual report or financial statements to the Securities and Exchange Commission.
    Romney aides argue that Damon’s 1992 annual report was sufficient. It informed shareholders that federal inspectors were reviewing the industry’s bill systems and cited the National Health case.”
    Somehow I don’t think this will be available for long. Google and Yahoo showed only highbeam.com as the only site with this article title.

    1. I found inside two “scarce” Boston Globe articles.

      I have backups of the doc, just in case

      Somehow I don’t think this will be available for long. Google and Yahoo showed only highbeam.com as the only site with this article title.

      I never know whether conservatives’ vocal fear of media conspiracies is real or is just cultivation of a culture of victimhood. Needless to say, you’re being absurd. These stories are only available in limited places on the web because the Globe, like other newspapers, tries to monetize its archives. Both articles are available through the Globe archives; I’m sure they can be found through Lexis/Nexis and other sources. None of sources these are necessarily free, to access of course. they’re not “scarce” or liable to disappear; they’re just old, and copyright-protected. Why you’d expect them to show up in many different outlets, I have no idea; why you’d think Highbeam was the only source when the Globe has archives online back to 1980 and Nexis has been creating a database of newspaper stories for forty years, I’ve no idea – not to mention the microfilms that may still exist in every major library in Massachusetts (do newspapers still get put on microfilm?).

      In any case, I don’t know what you find so exculpatory in your quotes. The excerpts you posted show Romney denying wrongdoing, professing ignorance of the scope of the problem, and saying that legal advice was followed and that some mild gestures towards disclosure were made (not that they seem especially commensurate with a problem that eventually cost over $125 million and a jail term). What do you expect him to say? Surely the only possibilities are that he knew, and therefore defrauded both the Government and Corning, or he didn’t know, and maybe should have known?

      Still, thanks for digging up Romney being weasely to the Globe about how much money he made on the deal, it was a nice touch, though:

      Romney told the Globe that the sale yielded him $103,000 profit … Romney also earned a 5 percent share of the Bain profit, or $370,000.

      1. Some economic pedantry and pettifoggery:

        None of sources these are necessarily free, to access of course. they’re not “scarce” or liable to disappear;

        If the price is positive, then the item is necessarily scarce. That’s exactly what identifies scarcity! Notice that clean water is scarce, land is scarce, iphones are scarce, etc., etc. None of the items in my examples are liable to disappear.

      2. Warren Terra: I never know whether conservatives’ vocal fear of media conspiracies is real or is just cultivation of a culture of victimhood…

        What I find most stunning is that the most important scientific fact about the conservative mind is not more widespread.
        Everyone should know this.
        It is hard science backed up with fMRIs:

        According to studies relative hypertrophy of the portion of the brain that processes fear and identifies threats (the amygdala) is correlated with right political orientation/conservatism, whereas having a relatively larger part of the brain that processes conflicting and contradictory information is correlated with left political orientation/liberalism.

        http://en.wikipedia.org/wiki/Biology_and_political_orientation

        This is one of the reasons I often crack a whip at the speculations of political scientists and their predictions of the coming Democratic/Republican majority.
        It’s brain chemistry damn it. God knows the epigenetic influences at work…
        Until that is factored in and figured out no one can possible predict what party will dominate the future.

  3. Needham lab fined $119m for fraud

    The Boston Globe (Boston, MA)
    October 10, 1996 | Kimberly Blanton, Globe Staff

    “…This in no way impacts the quality of the test results,” said Kathryn Littleton, spokeswoman for Corning. She said the company knew that Damon was being subpoenaed at the time of the acquisition and said Corning would assume all the costs of the fraud settlement of the subsidiary. “We knew they would be looked at. But, to the degree of detail, we would have no way of knowing,” she said.

  4. The prior is that the super-rich like Romney don’t need to resort to fraud, since they own the rules. The contrary would be very odd. But then Romney is a very odd person.

  5. I very much doubt that ripping off the government and pocketing $400,000 is a minus in the Republican primary.

  6. Flagkeeper: “Does the picture they paint of Romney match with the same man who served to turnaround both the Olympics and MA without taking a salary??? Excuse me, he took $1.”

    Are you really foolish enough to think that the above-board salary was all that he received?

  7. This is interesting and scary. Newt is making a good case against modern capitalism with his attacks on Romney. Will the cultural conservatives stop supporting laissez-faire capitalism ( at least in theory, let anyone have a weather disaster…) or will the anti capitalist schtick last only till the convention? The leaders will try to re-re-align but if Newt succeeds in tarring Mitt with the “vulture capitalist” (couldn’t have said it better)label, how easy will that be to turn off? The Left has to stop hostility toward small town, Protestant culture (rednecks,etc.) and the Right has to accept that environmentalism is not a commie plot but IF Left and Right libertarian populists joined, it would be unstoppable

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