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Mitt Romney’s Hedge Fund host Marc Leder part of investigation in Tax Abuse probe

New York (HedgeCo.Net) South Florida gossip columnist Jose Lambiet was the first to connect the dots between the host of Mitt Romney’s now infamous $50,000-a-plate dinner party in Boca Raton and an ongoing investigation being conducted by New York attorney general.

Marc Leder, co-founder of Sun Capital Partners and co-owner of the Philadelphia 76ers, has given nearly $300,000 to Romney and other Republican candidates this year.

The 8 billion dollar private equity fund, Sun Capital Partners, joins Kohlberg Kravis Roberts & Company, TPG Capital, Apollo Global Management, Silver Lake Partners Clayton, Dubilier & Rice, Crestview Partners, H.I.G. Capital, Vestar Capital Partners, Providence Equity Partners and Bain Capital to receive subpoenas in the investigation.

Eric Schneiderman Attorney General of New York is looking into a tax strategy which includes re-investing the management fees into the hedge fund and avoiding being taxed as regular income. This is a common strategy in the industry, and according to an article by the New York Times.

SEC filings show that K.K.R which is also part of the tax investigation converted over $180 million in fees between 2007 and 2009. Bain Capital’s leaked financial statements show that $1 billion in fees were converted to investments, according to NYT, this means a saving of $200 million in federal income tax and $20 million in Medicare taxes.

The political implications of this investigation have not been missed. At the State of the Union address, President Obama announced his Mortgage Crisis unit, and shortly thereafter tapped Eric Schneiderman to chair it. In a sharp criticism of this move a New York Post editorial in January stated that “demonizing financial institutions in populist fashion might help rile up the left — which, no doubt, is what Obama and Schneiderman care about most.

Aaron Wormus
Writer – HedgeCo.net
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