Old Dominion News

As the waves from a 2013 investment scandal begin to once again ripple around his Virginia gubernatorial campaign, Terry McAuliffe’s handlers once again hope to paint him as a “passive investor.”

The Associated Press reported that McAuliffe, a Democrat seeking to regain the office he held from 2014-18, once had investments with the Carlyle Group, which according to the report purchased a California trailer park, raising the rent and causing financial issues for its residents. 

Glenn Youngkin, the company’s former CEO and McAuliffe’s Republican challenger, has taken heat for his link to the private equity firm. McAuliffe spokeswoman Christina Freundlich told AP that McAuliffe hasn’t invested any money with Carlyle since 2014, calling him a “passive investor” with no input in company operations. 

McAuliffe also has been connected to a group of investors with a Rhode Island estate planner who was ultimately charged with scamming investors by stealing the identities of the terminally ill, according to the Washington Post. 

The Democratic candidate also has a history of ties to big donors and lobbyists. According to a 2013 report in the Washington Post, McAuliffe made $47,000 in the deal. The Post noted that court records did not charge McAuliffe with any crimes and Josh Schwerin, a spokesman at the time, said the Democrat had no knowledge of the investments and said he was a “passive investor.”

“Terry was one of hundreds of passive investors several years ago and had no idea about the allegations against the defendant — who, at the time, was widely respected by business leaders and elected officials,” Schwerin told the Post in 2013. “The allegations are horrible and he never would have invested if he knew he was being deceived.”

McAuliffe’s Republican opponent is only beginning to find out how a history in the business world can create choppy seas politically. Macaulay Porter, Youngkin’s spokesman, would not discuss specific Carlyle deals in a recent interview with the Associated Press. 

“As a young man, Glenn joined a small company and over the next 25 years worked his way up to the top of the company, helping to grow it into a hugely successful enterprise that turned good businesses into great businesses, created tens of thousands of jobs, and funded the retirement pensions of police officers, firefighters, and teachers,” Porter told the Associated Press. “Under Glenn’s leadership, The Carlyle Group employed nearly 2,000 people and managed assets totaling nearly four times the size of Virginia’s yearly budget.”  

The Virginia Pilot reported during the same time period that McAuliffe had a stake in the investment scheme by Joseph A. Caramadre, an attorney and accountant who set up annuities with the identities of terminally ill people, bilking insurance companies out of millions of dollars. According to FBI records, Caramadre was sentenced in 2013 to 72 months in federal prison for the scheme. 

It was after McAuliffe’s link to Caramadre became public during his campaign for his first term as governor that his staff started to call him a “passive investor,” according to The Pilot’s report. 

The Richmond Times-Dispatch noted in an op-ed at the time that the “passive investor” defense by the McAuliffe campaign could be a difficult sell, noting that it may be a stretch to believe he was a passive investor in an intricate annuities scam that was being conducted in stealth. The newspaper maintained that either McAuliffe knew and didn’t care, invested in something he had no clue about or jumped in at the urging of friends without conducting due diligence.