Money money money trips up Edwards’ message

Since his stint as the Democrats’ vice presidential candidate in 2004, the tension between Edwards’ private life and his politics has been growing. In recent years, Edwards, 54, has adopted a more populist tone at the same time he’s taken on more of the accoutrements of wealth.

That tension may be one reason that Edwards has struggled against Sens. Hillary Clinton of New York and Barack Obama of Illinois.

“I think it does hurt him, because it calls into question his sincerity,” said former South Carolina Democratic Party Chairman Dick Hartpootlian, who backs Obama. “If you base your campaign on where you come from, the haircut, the corporate portfolio, all that is inconsistent with that.”

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As a lawyer, Edwards went for the big payoffs, making millions suing doctors, hospitals and corporations and building a net worth he’s reported at about $30 million. Edwards wasn’t an anti-poverty lawyer, and he did little pro bono work. He didn’t emphasize fighting poverty when he ran as a moderate in 1998, defeating Republican Sen. Lauch Faircloth, or during his six years in the Senate.

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But since his Senate election, he’s traded up to progressively tonier residences: a $3.8 million house near Embassy Row in Washington, a $5.2 million house in Georgetown and finally a $6 million house, which includes a full-size indoor basketball court, built in 2005 outside Chapel Hill.

Edwards also took a part-time consulting job with Fortress Investment Group of New York in October 2005. Fortress raises money from wealthy individuals and institutions, pools the cash in private equity or hedge funds and invests it in alternative ways – buying public companies and taking them private, for instance – to beat usual market returns.

With $43 billion under management, including $16 million of Edwards’ personal fortune, Fortress is among the major firms in its class. While Fortress was incorporated in Delaware, its hedge funds were incorporated in the Cayman Islands, allowing partners and investors to avoid or defer paying taxes. That’s a practice that Edwards frequently has criticized.

If John Edwards really cared about working people

Clinton’s campaign responded by targeting Edwards’ previous consulting work for a hedge fund that owned a sub-prime lender.

“If John Edwards really cared about working people, he wouldn’t have taken a $500,000 salary from a hedge fund that is foreclosing on working people around the country,” said Clinton campaign spokeswoman Hilarie Grey. “Sen. Edwards should spend his time talking about how he’s going to help those people instead of launching ridiculous attacks against Sen. Clinton.”

Edwards worked part-time for Fortress Investment Group, getting paid $479,512. The former North Carolina senator redirected roughly $16 million invested in the fund after learning that two sub-prime mortgage companies it owned had sued to foreclose on 34 New Orleans homeowners. Edwards also used his own money to start a fund to help those homeowners.

He has said he won’t create a similar fund for homeowners elsewhere who were sued by the lenders.

Las Vegas Sun 11/16/07
http://www.lasvegassun.com/sunbin/stories/nevada/2007/nov/16/111610804.html

Fortress job a political liability for Edwards

Yet at the same time, Edwards was also working for an industry that symbolized the overprivileged: a hedge fund, a partnership that specializes in high-return investments for the richest and most exclusive of clients. The firm, Fortress Investment Group LLC, hired Edwards in October 2005, several months after the poverty center opened, to help develop investment opportunities worldwide and offer strategic advice on global economic issues, according to a statement issued by Fortress in October 2005.

Edwards said in an interview that as he explored career options he talked with numerous firms, including Goldman Sachs, and decided to work as a part-time consultant to learn more about capital markets and to make money. Fortress did not return repeated calls for comment.

Edwards also said his role at Fortress was as an adviser, not a decision-maker.

“It was just being a consultant on the phone,” he said. “They would call and ask what I saw happening in Washington, sort of macro view of what was happening in Washington with the economy. What I saw happening in the world. Those were the kinds of things we talked about.”

He earned nearly $480,000 as a consultant in 2006, and stopped his work there by the end of that year; he still has about $16 million of his reported net worth of $30 million invested in Fortress funds. Employees at the hedge fund have given more than $150,000 in campaign contributions to Edwards, making the partnership one of his largest sources of funds.

After he joined the presidential race, Edwards’s involvement with Fortress became a political liability. Fortress had invested a portion of its assets in subprime mortgage lenders who recently began foreclosing on homeowners around the country, including some Hurricane Katrina victims, the poor people Edwards’s poverty center was set up to help.
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When the Fortress investments were revealed in the Wall Street Journal in August, Edwards responded by divesting his Fortress portfolio of funds tied to subprime mortgages. He also helped the Association of Community Organizations for Reform Now, or ACORN, a nonprofit organization helping low- and moderate-income families, launch a Louisiana Home Rescue Fund. He provided much of the $100,000 in seed money for the program, which gave loans and grants to families whose houses were foreclosed on by lenders, including in some case ones with ties to Fortress.

Still, Edwards sounded defiant when he was asked whether he regrets the work for Fortress.

“I don’t apologize,” he said. “Nobody ever gave me anything. I worked my rear end off, and I’ve been able to have some good luck and success in my life. I want everybody in this country to have this chance. I wanted my kids to have a better life. My parents wanted me and my brother and sister to have a better life. There’s nothing wrong with that. That’s America.”

Boston Globe 11/15/07
http://www.boston.com/news/nation/articles/2007/11/15/a_dark_diagnosis_reaffirmed_a_commitment/?page=6

Edwards is for Revolution tomorrow morning

Former senator John Edwards, D-N.C., has already been in attack mode for some time. “I’m with you, brother,” he declared when an audience member called for “a revolution tomorrow morning,” Jeff Zeleny reports in The New York Times. “With Mrs. Clinton taking heavy fire from Democratic and Republican candidates alike, Mr. Edwards is trying to recast the race, brushing aside questions about his fund-raising (trailing Mrs. Clinton and Mr. Obama on that front, he is accepting public financing) and poll numbers (his early strength in Iowa has eroded as those two rivals have lavished time and money here) to assert that only he can assure a Democratic victory next November,” Zeleny writes.

But if Edwards doesn’t get his clear shot at Clinton, he may wind up helping Obama, Peter Canellos writes in The Boston Globe. “Edwards might be making some headway if this were a two-person race, Edwards against Clinton. But it’s not, and Obama, who has maintained a [John} Kerry-like posture, is ready to reap any of the votes that Edwards succeeds in peeling away from Clinton.”

Just don’t ask Edwards about those foreclosures tied to Fortress Investments: He told a Nevada Public Radio interviewer that such questions amount to a “personal attack.” “This, by the way, is not on the issues. This is a personal attack,” Edwards said. “These questions are all being planted by somebody. I’m through — I’ve said enough about that. What’s your next question?”

ABC The Note 11/6/07
http://abcnews.go.com/Politics/TheNote/Story?id=3105288&page=2

Iowa voters sour on Edwards

Several other voters at Obama appearances in Waterloo and Independence said Obama became their favorite after souring on John Edwards. Edwards led in many Iowa polls in the spring and summer with his populist message but voters said he plummeted in sincerity with his $400 haircut and his ties to subprime mortgage companies in the national foreclosure debacle.Julie Falcon, 49, a federal natural resources worker whose votes have swung from Ronald Reagan in 1980 to John Kerry in 2004, wrote a note during Obama’s speech in Independence that said, “So far out of the others I have seen, he is by far the best of the three,” referring to Obama, Clinton, and Edwards.

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Rex and Nell Boyd, both 55, who own their own window sales and installation business, came 90 miles from Belmont to hear Obama in Waterloo. They once favored Edwards. “I liked the way Obama answered the black man [in the audience] on criminal justice,” Nell said. The couple spend their spare time teaching youth canoe and kayak skills and helping build theater sets at the local high school. “He said poverty drives crime and the fix is education,” Rex said. “But parents have to do their part, too.”

Boston Globe 10/16/07
http://www.boston.com/news/nation/articles/2007/10/16/how_obama_is_playing_in_iowa/

Edwards Slams Top Clinton Strategist’s Ties to Blackwater

In a scathing attack, Democratic presidential candidate John Edwards went after front-runner Sen. Hillary Clinton, D-N.Y., Friday, calling her a “corporate Democrat,” comparing top Clinton campaign strategist Mark Penn to former Bush aide Karl Rove and assailing Penn’s ties to Blackwater USA, the embattled private firm of military contractors accused by the Iraqi government of firing upon and killing 11 unarmed Iraqi civilians last month.

snip: Edwards said that he thinks “it is important for Iowa caucus-goers to understand the choices they have in this election. And it is the reason I continue to say we don’t want to replace a group of corporate Republicans with a group of corporate Democrats. I think it is important for caucus-goers to see this choice.”

In addition to his role as a top campaign consultant to the Clinton campaign, Mark Penn is the worldwide president and CEO of Burson-Marsteller. The firm’s lobbying subsidiary BKSH helped Blackwater’s top executive, Erik Prince, prepare for his congressional testimony this week.

snip: His rhetoric against “corporate Democrats” notwithstanding, Edwards, it should be noted, has his own senior strategist with corporate clients, Harrison Hickman, one of the principals in the Global Strategy Group. Global Strategy Group’s client list (LINK http://www.globalstrategygroup.com/main.cfm?actionId=globalShowStaticContent&screenKey=cmpClients&categoryKey=clientsClientList&s=gsg) includes Lukoil and General Electric, companies that have done work in Iraq; Oxycontin manufacturer Purdue Pharma; and ABC News.

snip: Earlier in the campaign season, Edwards came under fire for having worked for Fortress Investments, a hedge fund tied to offshore tax shelters and subprime lending, practices Edwards has decried. He has redirected part of the $16 million he has invested with Fortress out of a fund that holds ownership in subprime lender Nationstar Mortgage. Edwards also set up a Louisiana Home Rescue Fund to help New Orleans families upon whose homes Nationstar had foreclosed.

ABC News

http://abcnews.go.com/Politics/story?id=3694881&page=1

Iowa a ‘Whirlpool’ for Edwards

Dennis Parrott spearheaded Edwards’ Jasper County efforts in 2004, but these days, he can’t decide between the self- described mill worker’s son and rival Barack Obama. He is not alone.

“John’s gotten very far left, more left than I’d like to see him,” said Parrott, who prefers yesterday’s genial centrist to the elbow-throwing liberal he sees today. “Maybe it’s the hedge funds, the expensive haircut, the expensive house. That’s where I’m having a problem.”

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Celsi had supported Edwards, even blogged for him, largely because of his “anti- poverty, two-Americas platform.” Then she heard reports of lavish living and “couldn’t reconcile it in my head.” Now, she said, she will caucus for Clinton.

Edwards’ widely derided $400 haircut and 28,000-square-foot mansion have raised eyebrows and questions alike. But perhaps more significant here is his connection to a hedge fund that invested a small amount in Whirlpool Corp. stock as the manufacturer was planning to close Newton’s Maytag plant.

Edwards earned $480,000 in 2006 working as a part-time senior advisor to Fortress Investment Group, a New York-based hedge fund that caters to select high-income investors and invests globally, his campaign aides have said.

On March 31, 2006, the hedge fund owned 9,867 shares of Whirlpool stock, according to documents filed with the Securities and Exchange Commission. The same day, Whirlpool announced it had finalized the deal to buy Maytag.

Less than two months later, Whirlpool announced that it would close Maytag plants in Iowa, Illinois and Arkansas. SEC filings from March 31, 2007, show that Fortress had purchased more than 74,000 additional Whirlpool shares after the deal to buy Maytag closed.

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Edwards no longer advises the hedge fund, but he and his wife, Elizabeth, still have $16 million in Fortress holdings. The fund is also a rich source of campaign money for the candidate — at least $233,000 in donations from executives and other employees of Fortress and their relatives, a review of his campaign finance reports shows.

Los Angeles Times 9/30/07
http://www.latimes.com/news/nationworld/nation/la-na-edwards30sep30,0,4910907.story?coll=la-home-nation

State of the states: The final countdown

Sunday’s deadline for third-quarter fundraising reports was the dominating theme in the key early states this week. In the frantic final countown, candidates are either raising money or raising questions about why they aren’t raising money.

That was the case for John Edwards, whose presence in New Hampshire this week — usually not a top locale for bringing in cash — prompted questions about whether he’s resigned to a lackluster fundraising report for this quarter.

Edwards also got a grilling in Iowa over his ties to sub-prime mortgage lenders that have been linked to 107 home foreclosures in the state.

snip: Edwards linked with 107 Iowa home foreclosures

Former North Carolina Sen. John Edwards had to answer some tough questions this week about his relationship with sub-prime mortgage lenders that foreclosed upon 107 Iowa homeowners while he was a consultant for the equity company.

Companies owned by Fortress Investment Group foreclosed upon the homeowners while Edwards was a consultant, court records show. The company paid Edwards $479,500 for 14 months of work, beginning in October 2005.

Fortress or its subsidiaries has foreclosed on homes in other states, including some in New Orleans. The link between Edwards and the company in the leadoff presidential nominating state is important because it could influence voters. Despite Edwards’ anti-poverty message, some Iowans remain irritated about news reports in March about him building a $5 million home in North Carolina and, in April, his $400 haircut.

Edwards told The Des Moines Register this week that the focus of his public work in the past two years outweighs any questions about his sincerity. During that time, he started a university policy institute in North Carolina to study poverty, conducted humanitarian work overseas and helped organize unions.

snip: Fortress owned Green Tree Servicing and acquired a second sub-prime lender, Nationstar Mortgage , six months before Edwards quite Fortress to run for president. He divested his personal holdings in Nationstar in May after learning of the first foreclosures in New Orleans.

In August, he removed the rest of the roughly $16 million he had invested in Fortress holdings. Edwards also used $100,000 of his own money to begin a charity for New Orleans homeowners after learning that 34 of them faced foreclosure from his former employer’s companies.

Politico

http://www.politico.com/news/stories/0907/6073.html

Iowa subprime foreclosures and John Edwards

A total of 107 Iowa homeowners were foreclosed upon by subprime mortgage companies owned by Fortress Investment Group while Democratic presidential candidate John Edwards was associated with the equity company, court records show.

Fortress foreclosures have occurred in other states, but the Iowa cases bring Edwards’ tie to subprime lending to the leadoff presidential nominating state, where he has staked his political future.

Most Iowa Democratic activists interviewed by The Des Moines Register say the foreclosures by themselves do not undermine Edwards’ anti-poverty message. However, some say he should have known that his tie to Fortress, which paid him $479,500 for 14 months of work, would be scrutinized in the campaign.

Some former Edwards supporters in Iowa say the Fortress link is another reminder of his personal activities and opulent lifestyle, which they find troubling.

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The 107 Iowa foreclosures were filed by Green Tree and Nationstar from October 2005, to Aug. 17, 2007 – the day Edwards pledged to divest his Fortress holdings. During this period, a national subprime mortgage crisis has led to a spike in foreclosures nationally.

Edwards said he did not know about the Iowa foreclosures until his campaign was contacted by the Register.

Edwards said he has no plans to establish a charity for the Iowans with Fortress mortgages because they were not affected by Hurricane Katrina the way borrowers in New Orleans were.

Of the Iowa foreclosures, 60 resulted in Iowans losing their homes; 20 were dismissed; 27 were pending as of last week.

DesMoines Register 9/27/07
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20070927/NEWS09/709270393/1001/NEWS

What about the rest of the country?

EDWARDS’ MISERY MONEY
INVESTS IN N.Y. FORECLOSURE FIRM

WASHINGTON – Presidential candidate John Edwards has invested a big chunk of his personal fortune in a hedge fund tied to subprime lenders foreclosing on the homes of dozens of New Yorkers, The Post has learned.

The 64 homes are scattered across suburban Nassau, Suffolk, Rockland and Putnam counties, according to court records.

The families either have been kicked out of their homes for failure to keep up with mortgage payments or are still fighting foreclosure proceedings in court.

Edwards, who last December formally launched his populist Democratic campaign in New Orleans, promised last month to pull his money out of any fund linked to foreclosures in the flood-ravaged city.

His promise came after The Wall Street Journal reported that subprime lenders tied to Fortress Investment Group were suing 34 New Orleans homeowners in foreclosure proceedings.

Edwards invested a $16 million of his estimated $30 million fortune in Fortress, which has subsidiaries that offered subprime loans.

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In 2005 and 2006, Edwards also earned a hefty $480,000 fee advising Fortress.

Centex Home Equity and Nationstar Mortgage, both Fortress subsidiaries, are listed as plaintiffs in most of the 64 foreclosure proceedings. Fortress acquired both firms in recent years.

New York Post 9/14/07
http://www.nypost.com/seven/09142007/news/nationalnews/edwards_misery_money.htm