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In 1989, Bain Capital purchased controlling interest in Damon Corp., a
medical testing company located in Needham, Massachusetts.
During the time that Bain held its ownership of the company, Mitt
Romney personally sat on the Board of Directors. And during that same
period, Damon Corp. was busy submitting fraudulent reimbursement claims
to Medicare to the tune of millions of dollars charged for unnecessary
blood tests.
According to federal government prosecutors, Damon was misleading
physicians into ordering unnecessary blood tests, assuring the doctors
that the testing would be covered by Medicare.
By the time Damon Corp. pleaded guilty to defrauding the United
States Government of $25 million—and paid a total of $119 million in
what was, at that time, the largest penalty of its kind in Massachusetts
history—Bain was long gone having sold the company in 1993 to
Corning, Inc.
Inasmuch as neither Romney nor Bain was ever implicated in the fraud,
it would be reasonable to conclude that while the illegal activity was
going on under Mr. Romney’s nose, Romney would, himself, bear only some
responsibility for perhaps not being as on top of things as one might
hope for a company’s director to be.
But, according to Romney, such a conclusion would be wrong.
When Mitt Romney was confronted with the matter during his campaign
to become the Governor of Massachusetts, Romney acknowledged that he
did have some awareness of the funky things going on at Damon.
According to
The Deseret News-
More than a decade later, when Romney was in pursuit of the
Massachusetts governorship, his Democratic opponent Shannon O’Brien
accused him of lax oversight at Damon and failing to report the fraud.
Romney replied that he had helped uncover the illegal
activity at Damon, asking the board’s lawyers to investigate. As a
result, he said, the board took “corrective action” before selling the
company in 1993 to Corning Inc.
So, then, the future Governor and candidate for his party’s
nomination to run for the presidency, did fulfill his obligation as a
great American and did report the fraud to the proper authorities,
right?
Apparently not.
According to the court records, “…the Damon executives’ scheme continued throughout Bain’s ownership, and
prosecutors credited Corning, not Romney, with cleaning up the situation.”
But there is an explanation – it turns out that the Damon experience
was a foreshadowing of the Mitt Romney to come as he engaged in one of
his now infamous episodes of flip-flopping.
You see, before Romney indicated that he was involved in conducting
an investigation while he was on the board of directors, he said that
he was completely unaware of any investigation.
Here’s another shocker. While the company eventually went bankrupt,
with thousands losing their jobs, Bain Capital walked away with a $12
million profit—a little over $400,000 of that money ending up in Mitt’s
pocket.
Expect to hear a lot more about this in the coming days as AFSCME has
spent close to one million dollars in advertising buys throughout the
state of Florida to highlight this misadventure.
contact Rick at thepolicypage@gmail.com
Twitter @rickungar
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