September 24, 2020

Franken’s attacks on ‘Fat Cat’ financiers backfire

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Al FrankenBy Lachlan Markay   The Washington Free Beacon

Minnesota Democrat invested in opponent’s tax-inverting company as son’s private equity firm opens shop in Caymans

Sen. Al Franken (D., Minn.) is hoping to saddle his Republican challenger with Mitt Romney-esque charges of “vulture corporatism,” but his own investment activities, and those of his son, could blunt those attacks with charges of hypocrisy.

Franken’s campaign has scoured public records for evidence that his opponent, investment banker Mike McFadden, has closed business deals that resulted in layoffs.

“‘The Democrats are going to try and nail McFadden as the incarnation of a Wall Street fat cat, as they did with Mitt Romney,” University of Minnesota political scientist Larry Jacobs told Bloomberg.

The Franken campaign points to a 2012 deal in which McFadden’s firm, Lazard Middle Market, organized a merger that relocated the corporate headquarters of Jazz Pharmaceuticals to low-tax Ireland, a move commonly known as a tax inversion.

McFadden says he was not directly involved in striking the deal, but Franken’s campaign has seized on it. “He knew he was helping an American company dodge paying taxes and is just as culpable for this deal as anyone else,” Franken spokeswoman Alexandra Fetissoff said in August.

Tax inversions have become a rallying cry for Democrats looking to penalize companies that seek to reduce their tax burdens and shore up their populist credentials.

However, Franken’s attack is complicated by the fact that he himself was an investor in Lazard’s parent company.

His stake in the company even came by way of a mutual fund billed as “socially responsible.”

Franken says that his stake in the company was small, and that he did not have control over the mutual fund’s specific investment decisions.

McFadden’s campaign insists that Franken is trying “to demonize anyone’s business background that runs for public office.” Franken says he simply objects to McFadden’s chosen line of work.

“Bad for workers, good for workers—no matter what, he got paid,” the comedian-turned-senator quipped.

While that might be an effective election year line—it took its toll on Republicans’ 2012 presidential nominee—an attack on investment banking might also ensnare Franken’s own son.

“Mike McFadden knew what kind of buyer he would attract when he represented a company in a nation known for being an offshore tax haven,” Franken declared in one of his salvos against McFadden’s business career.

Franken was referring to Ireland. However, a more notorious tax haven, the Cayman Islands, enjoy the business of private equity firm Cohesive Capital Partners.

Joseph Franken, the senator’s son, is a senior associate at the firm, according to his LinkedIn profile.

Documents filed with the Securities and Exchange Commission show that Cohesive has two private equity funds that, while headquartered in New York City, are incorporated in the Cayman Islands.

According to the Wall Street Journal, the Caymans are “a favorite destination for private-equity managers to locate new partnerships, mostly because foreign investors can participate while avoiding some U.S. tax entanglements.”

One of Cohesive’s funds, Cohesive Capital Partners II (Offshore), L.P., was incorporated this year. The other was formed in 2010.

Franken’s campaign did not respond to a request for comment by press time.

IMAGE: Al FrankenAl Franken / AP

For more on this story go to: http://freebeacon.com/politics/frankens-attacks-on-fat-cat-financiers-backfire/

EDITOR: Don’t you just love this ‘notorious’ adjective – “Franken was referring to Ireland. However, a more notorious tax haven, the Cayman Islands, enjoy the business of private equity firm Cohesive Capital Partners.” – Journalism at its ‘finest!’ Pity the writer doesn’t do more research.

 

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