Grubstakers - Episode 26: David Rubenstein, William Conway, Jr, Daniel A. D'Aniello & The Carlyle Group (Part 2)

Episode Date: July 30, 2018

In part 2 of our 2 part look at the Carlyle Group we explore the lives of the founders a bit further, particularly the active media presence of David Rubenstein. Moving beyond the war profiteering operations that we discussed in the previous ep we look at some of the domestic projects the Carlyle Group has taken on such as HCR Manorcare, Philadelphia Energy Solutions, and the Washington DC branch of the Democratic Socialists of America. Listen to Part 1 first if you haven't yet.

I think we disproportionately stop whites too much. I taught those kids lessons on product development and marketing and they taught me what it was like growing up feeling targeted for your race. I am proud to be gay. I am proud to be a Republican. You know, I went to a tough school in Queens and they used to beat up the little Jewish boys. You know, I love having the support of real billionaires. Hello, welcome back to Grubstakers,

the podcast about billionaires. Sean P. McCarthy here, joined by... Andy Palmer. Yogi Poyol. Steve Jeffers. And we're continuing our conversation about the Carlyle Group, and particularly the... For those of you who missed it, Sean is angry at a person on the internet. And it was revealed that his dad works for the Carlyle Group.

Anyways, we did our last week's episode, trashing the company his dad works for the Carlisle Group. Anyways, we did our last week's episode trashing the company his dad works for, but Sean felt that there was more to say. So we made it a two-part episode. We're recording them together, so we can only assume that since Sean said that, he's been called an ableist reactionary by this guy, Connor Arpwell,

and has subsequently been fired from his job. We're recording these together, but wouldn't it be great if in the intervening week I have been doxxed and fired? Yeah, yeah. So while you're listening to this, I am a lot more angry than I am on this

recording. I'd like to believe that you got doxxed and then fired, then found a new job, and then this one comes out and you get doxxed and then fired, then found a new job, and then this one comes out and you get doxxed and fired. But, you know, it's nothing to do with any sort of vindictive streak that I might have or any sort of petty personality trace. This is about the big movers and shakers in the American economy. And that's what this podcast is about, is about educating people about billionaires. Because, again, especially with the Carlyle Group. And a guy who telegraphs virtue by calling people ableist reactionaries.

There's so much. Who has a dad who works for the Carlyle Group. And sells buttons. And sells DSA-themed buttons for his own profit. I don't even care about the DSA part. I just don't like that he sells buttons. Yeah. Nobody uses that.

Fuck off. It's a pretty lame hustle uh but so this episode will focus a little more on david rubinstein william conway jr um daniel dianalo which are again the three billionaire co-founders of the carlisle groups sean hates this guy online so much that he's decided to get anti-semitic and anti-italian in one episode uh three billionaire co-founders of the Carlyle Group. Forbes has each of them at a net worth of about $3 billion as of July 2018. And so we'll talk a little bit more about their defense stuff and the lobbying work George H.W. Bush has done for them. But what

I want to talk about this episode is their initial public offering of the Carlyle Group in 2012 and how that was just kind of a money-making scam for them. And also two American companies, one called Philadelphia Energy Solutions and one called HCR Manor Care. And so kind of like what we've run through on these private equity episodes is that private equity has destroyed a lot of unions in this country,

destroyed a lot of pensions, destroyed a lot of health care benefits. And we can only cover some of that because— But how do they do it, Sean? How do they commit these crimes and get away with it time and time again? Well, we'll get to that. But partly it is, of course, the carried interest loophole and the preferential tax treatment they get that makes it so profitable and the fact that they're able to, you know, essentially book a profit, even as we'll discuss

in the case of HCR ManorCare, which would eventually go to bankruptcy. They had their profit locked in because of the management fees. But before we get to there, just one petty thing. So there's a story in 2007 where there was like brief movement in Congress to repeal the carried interest loophole. David Rubenstein was a big lobbyist to stop this from happening. And a managing director at Carlyle, not the one in question of this episode, but a different managing director at Carlyle named Bruce Rosenblum. He testified to Congress and he just said this in opposition to eliminating the carried interest loophole. He said, quote, And when you think of Dunkin' Donuts and Burger King, you think of good American jobs with benefits and decent pay

and just really what we want to be building more of in this country while David Rubenstein pays himself $700 million or whatever it was last year. I like how on one hand you have people arguing for creating the next Google and on the other hand you have people like their only two options are create the next google or keep burger king and duncan donuts going and those are like the two business options for america going forward i mean an information database that harnesses all my information and and makes my life worse in the long run or greasy food or that also makes their life worse in the long run oh you're getting burger king ads later but so carlisle group did its ipo its public offering in 2012 and as as of today the firm

has approximately 195 billion dollars in assets under management again one of the biggest if not the biggest private equity firms in the world but another thing I want to just touch on briefly is pension funds. And I think we've kind of talked about this a little bit on some of the other private equity hedge fund episodes. But pension funds are like one of the most unnecessary expenses a company can have. And any way to get rid of them is welcome for the American people. Pension funds, and I'm pulling this statistic off the top of my head, so it might be completely wrong, but I believe they control about $3 trillion in capital in the U.S. through the pension system. But it is a significant amount.

It is multiple trillions of capital. hedge funds have come up with, and David Sirota, the journalist, talks about this a fair bit, is that they essentially lobby government officials, like they were doing this in New Jersey. David Sirota wrote a story on this. They gave campaign contributions to, you know, New Jersey Republican Party, Chris Christie, and, you know, the manager of the New Jersey Pension Fund. And in exchange, the New Jersey Pension fund started investing in private equity and hedge funds and then started paying way more money in fees because as we mentioned you know private equity and hedge funds usually do this 2 and 20 where they charge 2 fee for all assets under management 20 of the profits above a certain level and they usually don't even beat the s&p 500 so it is like what really yeah most private equity and most hedge funds do not beat the S&P 500. So it is like... What? Really? Yeah, most private equity and most hedge funds

do not beat the S&P 500 after fees. So what you're saying is that the Gambino family was probably actually better for the workers. There is, if you listen to the podcast Crime Town, it's about the mafia in Rhode Island, and they have this great quote from some guy there being like, well, you know, at least when the mafia ran Rhode Island,

they actually put some money back in the community community whereas now wall street and the financials just take all the money out of it and it is like i watched this john gaudi documentary a few weeks ago and like you know when gaudi was that was just the movie gaudi yeah he looked a lot like john travolta but um uh but when you know gi was arrested or sorry when Gotti was convicted there were like a thousand plus people protesting uh in in New York and like flipping over cars and shit right and when Gotti was first acquitted you know in um uh what is it Teflon Dom right when Gotti was first acquitted you know in his Brooklyn neighborhood uh there were like you know lots of cheering people and like uh celebrate himself up as like a local Robin Hood.

Right. And so it's like, yeah, obviously the mafia is, you know, rent seeking and extracting. But it is an interesting contrast, whereas like the mafia was at least smart enough to put some of their stolen money back into the community. Whereas, you know, Wall Street and private equity and stuff, they extract money and then they just put it into their own birthday parties. Well, what's fascinating is that there's been the decline of the mob since probably the early 90s, about when Gotti fell. But a lot of these schemes that you run into with private equity and stuff are basically mob schemes, but through a legitimate company and with some loophole that they were able to lobby for. Right. Like, you know, skimming off of pensions is a classic mob scheme, but now

they're able to do it through their government connections. It's like how Napster was illegal, but Spotify's the same thing, but it's legal. Yeah. I think Tony Soprano's problem was he didn't hire enough lobbyists. But so, yes, we mentioned the pension funds. And then from the New Yorker...

Also, he couldn't stop beating up his connection in the assembly because he fucked his former gama. Spoiler alerts, man. Come on. Not all of us have seen it. The key lesson of David Rubenstein is don't beat up politicians who cuck you which is why he still has a good working relationship with barack obama for now uh but so i could have kept his marriage if he just kept his belt in his pants and didn't use it to

beat the hell out of but uh so just to get to uh back to the pension funds real quick according to the new yorker in 2009 carllyle's profile included $1.5 billion investment from the New York State Pension Fund. And then Andrew Cuomo, current governor, was the state attorney general that year. And he did an investigation and found that the money had been obtained in part through improper payments to middlemen by the Carlyle affiliate. So again, you know, all of these private equity and hedge funds, they certainly do lobbying, but sometimes they do outright bribery

to get public pension funds to invest with them. And the irony is, of course, private equity destroys pension funds for other workers, and in many cases, in almost every case, returns less money to the actual pension fund. So it's just kind of a ridiculous thing. But Carlisle... It's the beginning of a strong career of Andrew Cuomo's

in squashing corruption wherever it rears its ugly head. Yeah. There will be no more mismanagement of funds under a Cuomo administration. He shut down the Moreland Commission because he realized someone else under a Cuomo administration. He shut down the Moreland Commission because he realized someone else was going to use their brandished reputation as an anti-corruption enforcer to run for governor.

He had to cut that shit out early. But Carlisle, they did not admit wrongdoing, but they paid a $20 million fine in that particular case. But so I guess we should just talk a little bit more about David Rubenstein then we'll get to the other two founders. David Rubenstein,

just like random facts about him that I found. Apparently in 2007, he bought one of just 17 surviving 13th century copies of the Magna Carta. Right, right. That's from Forbes.

He bought it for $24.5 million from Ross Perot. Oh, really? I didn't know Perot had it before him. Perot had to stand up on a stepladder to complete the sale. But yeah, so he bought, he's like a history buff. He makes like, David Rubenstein,

he's like a history buff. He makes a lot of like charitable investments. Apparently he spent spent half of the costs of rehabilitating the Washington Monument. It was just David Rubinstein's little philanthropy thing. He says this in a couple

speeches. I don't know if he's joking, but apparently he toured... Is washing the Washington Monument... Is that just a euphemism for jerking it? It is now. He toured the Washington Monument with like a congressional panel or something, and he says in speeches that when they weren't looking, he wrote his name in pen near the top of it.

Oh my God, really? Which, again, I don't know if he's joking, but I wouldn't put it past him. When he talks about buying the Magna Carta and a few other of those documents, one of the stories I saw, he's talking about it, and he basically says, you can look up those documents online, and you might look at them and then move on, but when you see it in person, it really makes you think. And it's like, buddy, you get the same. You can see it online and think.

Those aren't mutually exclusive things. I think that when you see it in person, you get the same, you can see it online and think, those aren't mutually exclusive things. I think that when you see it in person, you think, wow, I'm really rich. I own this and only I can look at it if I want. I like the idea of David Rubenstein looking at the Magna Carta and being like, wow, all these limits on the king's power do not apply to me.

Yeah, it's just like, how do I reverse this? What's this Charter of the Force bullshit? But yeah, so in addition to the Magna Carta, he also... Am I one of the barons? Okay, now how do I find loopholes in this where I can profit? I own the document, but I don't own the book. Ah, there he is. Curious interest.

But so he also bought one of the signed copies signed by abraham lincoln of the emancipation proclamation uh which in fact he loaned to barack obama how do i reverse this one like he it's forbidden reading for burger king employees nobody who works at dunkin donuts can read the emancipation Proclamation because they might get ideas about how America is supposed to function. Reading's a privilege here at Dunkin', so you've got to earn it. If you want to go read, you go work at Google. But so, yes, he also loaned his copy of the Emancipation Proclamation

to Barack Obama during the Obama presidency, and Obama displayed it in the Oval Office for a time. So again, you know, he's... That's pretty cool. Right. Well, he's maintained his relationships on both sides of the aisle. As we mentioned, George Bush Sr. is... I'm glad that a famous historical American document has to be loaned to the president

and display president in his office. How the first historically black American president has to ask a white dude ask a rich white guy if he can display the Emancipation Proclamation in the

White House. Abraham Lincoln while he was writing and signing it he was like someday this will be sold to the man who bought it using money he got by planning the 9-11 attacks. Just the way I'm intending it. I was like, what the fuck are you talking about?

What's 9-11? What's a plane? Oh, you'll find out. And then he walks into the sunset you know what let's just tell people he got shot right right right because this is way too weird uh lincoln's last words before walking into the theater that night were you know i have some questions about tower seven what's a tower? David Rubenstein has had just some fun quotes.

He said, quote, I did not come from a wealthy or college educated family, but I had the good luck to have two parents who provided me the most important ingredient for a successful life. Unconditional love and support and um later uh washington lobbying contracts with saudi arabia he talks about his family not being like wealthy or college educated but it really feels more like he's being like those losers they raised me but fuck them like it seems less

like he's like you know working class and more like those two people were bums. They could never afford the Magna Carta. I also like how self-congratulatory it always is when someone talks about how great their parents raised them and how that allowed them to have more stuff than other people. Right, right, right. I mean, they worked hard, but I'm fucking running shit. Thanks to their love. Yeah like the i got a bunch of things like you know the seven billion people on the planet who are not billionaires uh they did not have unconditional love and support from

their parents didn't love them um oh and another thing david rubenstein has said is that he was once offered the opportunity to meet mark zuckerberg before he dropped out of harvard but decided against it he says this is his single greatest investment regret and i like the idea of david rubenstein getting a phone call telling him to cancel his meeting with mark zuckerberg i like the notion of mark after that was like i just want more friends. Yeah, I was going to say, do you really regret not meeting Mark Zuckerberg? Yeah, right, right.

It sounds like a terrible afternoon. That sounds like a dude that wants to fuck Mark Zuckerberg. He missed out on a chance of Mark Zuckerberg telling him how a Holocaust denial comes from a good place. Oh, and Stephen, you'll love this one. Rubenstein, so he's received a lot of criticism regarding the carried interest loophole, which we've mentioned a fair bit. But Rubenstein led the fight to prevent it from being repealed in 2008. And then, of course, Trump has basically solidified the carried interest loophole where these

people in finance and private equity hedge funds are paying about half the tax rate as everybody else pays. But so Rubenstein tells Charlie Rose in 2012, quote, our bigger problem isn't carried interest. Our bigger problem is the $1 trillion annual deficit and the $16 trillion of debt we have. Wow. That's right. Oh, didn't he, I don't know if you're going to get to this, but the American Enterprise Institute, was it Rubin who made a donation?

It was the other, Danielle D'Analo made a $20 million donation to the American Enterprise Institute, of course, the conservative think tank. And in exchange, he got a building named after him where, you know, I guess the factual feminist videos will be recorded now or something from based mom, Christina Hoff Summers. But anyways, I guess... I have no idea what any of that meant.

Christina Hoff Summers is like one of those anti-feminist women you see online and she was very popular in Gamergate where she was like you know these aren't attacks on female journalists uh uh people are just sick of uh SJWs putting their politics in video games so a lot of the 4chan people called her based mom and it's just kind of funny where like you know a subversive web culture uh pushes up and promotes uh this woman paid by dark money to launder the evils of billionaires and say global warming isn't happening um based uh but so um uh rubenstein has also he he has a gulfstream private jet a g550

which i don't know if it's better than a g6 or not we should start learning like since we're researching billionaires we need to learn what all the gulf streams are uh but we can compare them based on their gulf streams yeah i'm into it but uh according to this forbes article rubenstein has a busy lifestyle and uh he travels on his private golf stream 250 days a year what's the number again a golf stream g550 okay 250 days a year yes where's he going he's he's going to the polar bears to laugh at them yeah you don't own the magna Carta Those are okay sized It's hard to swim all that distant Isn't it Mr. Polar Bear

You can stand up in these Ken Langone Had a story about his first private jet And how his dad had to duck down And he asked his dad What do you think of this private jet And he says I like the ones where you can stand up And then like

The button to that story is like I have a much bigger private jet and he says i like the ones where you can stand up and then like the button to that story is like i have a much bigger private jet now what charming people um but so in that same forbes article uh rubenstein just gives a revealing quote he says quote i am on 30 some non-profit boards which i love and to which i give a lot of money, but the networking is helpful to my firm. I can help build the firm because of the contacts I make. So it is interesting just how billionaires launder their philanthropy. If you're on that much corporate welfare, you should be severely restricted in what you can buy

with those welfare checks. Just a side note, I'm having trouble differentiating between the goldstream g500 the images and the goldstream g550 because i thought it would be pretty different like the ti83 graphing calculator versus the ti89 obviously but maybe it's just because i don't fly these things i can't i can't differentiate well once you get your pilot's license you'll be able to figure out the difference one thing that david also said is that he doesn't golf or doesn't drink, so he doesn't spend time at bars,

so he's got enough time to be a part of these philanthropic groups. And it's like, buddy, you could golf and drink, and you would still have time to do this. You can't pretend that golfing and drinking would take up that much time out of your life. I mean, he has paid several hundred million dollars a year to do basically nothing, to fly around the world and do his little bloomberg talk show and promote his philanthropy and like you know as we mentioned he's a chairman of the smithsonian institute a chairman of the kennedy center for performing arts um and you know he's he's really kind of i guess he also

gave like a million to the national zoo in 2011 to promote panda procreation. What? Really? Yeah, just that kind of shit. I like that a priority for him was making sure pandas fuck. Well, he has said, quote, he says he finds an analogy between private equity and sex saying, quote, you realize there were certain things you shouldn't do, but the urge is there and you can't resist. Wow. So no wonder the pandas are having so much problems breeding

if they are taking the David Rubenstein school of how to have sex, which involves... I'd say, in terms of David Rubenstein, it's probably like, you know, private equity is just like sex. I have a court date for both because of both. Uh, private equity. Cut that out.

Yogi. Got it. No, don't private equity is just, enhance it. Uh, private equity is just like sex. It gets easier when they don't have pensions or health care benefits.

We're meant to talk about what he's a board member of. This is a list of it. It's the Kennedy Center, the Smithsonian Institution, Council on Foreign Relations, Harvard Corporation, National Gallery of Art, University of Chicago. Just play someone from the documentary who does the same list. Memorial Sloan Kettering Cancer Center, hopkins medicine lincoln center for the performing arts institute for advanced study duke university and two of these that i found very interesting was the institute for advanced study uh because essentially it's like hey you're smart we're gonna put you in a place and you guys can uh hang out and learn and figure out some shit

wait who's in the institute of advanced study uh this is this Study? He's a board member of that group. Who's in this? Oh, because that was like the thing that Einstein created, the Princeton Institute of Advanced Study. I'm sure he's there because of merit. I like the idea of like a guy who's only worth like $100 million who has to go to the Institute for Intermediate Study. But so Rubenstein, I also,

what if like it came out that like Rubenstein like funded- It was started by Wernher von Braun. Rubenstein like gave several million to Popular Mechanics Magazine to debunk 9-11 truth. Like, no, it can melt steel beams. Come on, stop asking questions um but so uh he was uh david rubinstein was a picketed by the working families party of new york uh because of the carried interest loophole and i guess he was giving some sort of speech of like the civil disobedience efforts of like gandhi and martin luther king and these protesters interrupted him and he said at the time quote when history is written and people talk about the great protests

i don't think that this will be in this category so yes when people uh talk about the great protests they will not remember uh when they asked him to pay a little bit more in taxes one thing i want to mention about the board members is the Council of Foreign Relations. It's a public policy think tank. If you look on the Wikipedia, there's a controversy part, and there's a few links that are now disappeared for some reason. I don't know.

Whatever the big lottery was, you can't find anymore. There's an oops, something went wrong link that shows up, which is another example of how corporations that have billions of dollars can clean the internet of their filth uh and so just one other thing before we move on from the rubenstein quote so so uh one other thing before sean does is one other thing it looks like the gulfstream 550 uh is was their newest uh top level jet um but it is now being replaced in terms of top levellevel jets by the Gulfstream

500 and the Gulfstream 600, which are being introduced this year. So if Rubenstein wants to stay hot with the billionaires, he is going to have to trade up to a better private jet. To a better private jet. It looks like

G500 is $43.5 million. G600 is $43.5 million. G600 is $54.5 million. So if you want, oh wait, $57.9 million. That was $24.9 million. Refresh check Craigslist. Yeah. Can we do eBay?

So one last thing on the David Rubenstein quote before we move on is on June 8th, this is according to New Yorker, Rubenstein was giving we move on is on June 8th is according to New Yorker. Rubenstein was giving. Sell me this pen. There we go. On June 8th, I believe, of 2007, Rubenstein was giving an address to the supporters of the Economics Club at the Phillips Collection. And his cell phone rang and he left the stage. I like the idea of somebody saying the operation is canceled and hanging up but uh according to the new yorker his

cell phone rang and he left the stage and so in 2007 this was in the middle of like the last time the senate uh tried to close the carried interest loophole it passed the house um and uh or i think 2008 excuse me it passed the house but then it got stuck in the senate and so um uh in june 8th of that year rubenstein gets this uh cell phone call he leaves the stage and then he comes back on the stage uh he returns and says quote that was a senator that one call just saved us on carried interest. Wow. And he denies saying this, but basically the carried interest loophole got to like 57 or 58 senators, but they could never get to the filibuster-proof 60. And of course,

they would never want to remove the filibuster to end carried interest loophole. To end a system where about 30% of the population and select states can stop anything from advancing for the rest of the country. But so I guess we can move on to a couple of just interesting investments that the Carlyle Group has. Well, I guess we should first talk about the IPO that the Carlyle Group did in 2012. So David Rubenstein himself said that the reason they did this initial public offering in 2012 was he wanted to liquefy his holdings or make his holdings more liquid because

as we mentioned, he has about a $3 billion net worth. And most of that comes because the three partners have or had about a 50% stake in Carlyle Group. They've since sold some of it, but they still have significant stakes. And then, of course, managing directors also have equity stakes in the firm. But David Rubenstein wants to do this IPO to liquefy his holdings. And the Carlyle Group IPO is very interesting. And I just get this New York Times quote here. The New York Times wrote in 2012 that it is quite possible that the Carlyle Group, the private equity firm that is preparing to go public is proposing the most shareholder unfriendly court corporate governance

structure in modern history um so basically uh as per the um uh shareholder rules and such uh carlisle shareholders have no ability to elect the directors um they have uh no ability there's going to be no oversight of compensation. That's all going to be set in-house. Carlisle, according to the New York Times, Carlisle does not even intend to hold annual meetings of stockholders given that the shareholders have no voting rights.

Why bother? Oh, wow, really? Yeah. But which I guess... Wait, that's the only reason they have those meetings is because they have voting power usually? Well, yeah, it's a place, public companies, it's a place for shareholders to express concerns about things that the company has done. Right, right.

And it is actually, I think, kind of wise that they are not having these meetings because for the podcast, I would have bought one share and gone there and asked about what happened at Tower 7. They would have been like witch tower seven uh but so it's it's just interesting where and a lot of other private equity firms including the blackstone group if they're like oh you got one share we have to tell them uh the blackstone group apollo global management among others have similar things and then the one thing that carlisle uh tried to do that was too far is they wanted to force all shareholder class action lawsuits into arbitration. And if you're not familiar with arbitration,

it's basically like, okay, you sign this contract and you can no longer go to the courts. We'll just resolve everything in-house, which surprisingly enough tends to favor the company more often than the court system does. But so there was actually a lot of pushback against that and a lot of allegations that it might be illegal but the supreme court has actually upheld some of these ridiculous arbitration clauses in the past but they eventually backed off of this

arbitration clause however if you own shares in the carlisle company you have no input into the direction you are just helping david rubinstein fucking liquefy his money so he can buy more Magna Cardas. What you're saying is it's potentially a large pump and dump company? I don't think I'm saying that. What I'm really saying is... Sell me this pen. Is that what you're saying? Yes, that's what I'm saying.

And just like another thing about the IPO from Business Insider, it kind of goes through private equity and why IPOs are kind of ridiculous for them. Again, the Blackstone Group has done an IPO as well. It's essentially a way for them to cash out. But the three ways to get economic exposure to a private equity fund is to be an investor in the fund, number one, or two, be a manager of one of the funds, in which case you're essentially, if you're in the category number two, a manager of one of the funds, you are guaranteed profits because you get these, as we mentioned, management fees, two and twenties and all that. And even if a company you take over goes bankrupt,

you've already locked in profit so you're totally fine or the option number three is to buy publicly traded equity and the thing is when you're buying a publicly traded equity in one of these companies you are essentially last in line to get any profit so it is kind of a ridiculous deal it's like a bread line of bullshit right there's according to Business Insiders, there are incredibly effective mechanisms set up to capture as much of the value for the managers before it gets to you. So this

IPO was essentially a way for David Rubenstein to launder his money, and he's been very successful at it. And he's also kind of laundered his reputation as a philanthropist who interviews Bush and Clinton and donates all this money to the arts and this kind of shit reputation as a philanthropist who you know interviews bush and clinton and uh you know donates all this money to the arts and this kind of shit and scrawls his name on the washington

monument it's crazy because like when you look at the philanthropy with the bigger picture of everything he's done it seems less like i want to help the world and more like oh i caused a lot of pain i probably should give back wait so sean you said he laundered his image as a philanthropist like he had a dirty image as a philanthropist and then he ran it through some legitimate companies and now now he's he's gotten above the board reputation as a philanthropist um uh so yeah that's what he's saying andy you got a problem with that so i guess not. I want to talk about two companies that the Carlisle Group has been involved with. And again, if you haven't listened to our previous episode, well, that's kind of important for this one. But that kind of talks about their…

9-11 Incorporated. That talks about some of their initial investments in the defense industry. But another thing they did, as we mentioned, George Bush Sr. came on board… Mahan and McAdams. George Bush Sr. came on board. Mahan and McAdams. George Bush Sr. came on board the Carlyle Group in 1998, and since then they've been very secretive about saying how much they are actually paying him

to do things. But one of the things he did was lobby for them in South Korea, and the documentary Iron Triangle makes the argument that George Bush Sr. helped get them some contacts in South Korea. And then with their influence just in terms of general lobbying, the Asian financial crisis happened in, I believe, 97, 98.

And South Korea had to be bailed out by the IMF, the International Monetary Fund. And as a condition for this IMF bailout, they made South Korea change its laws so that banks, the Korean banks, could be majority foreign ownership. Oh, really? Yeah. And so... After he left the presidency, he was working for Carlyle and made several swings through East Asia and going to Thailand, going to South Korea and other places, sort of looking

for investment opportunities for Carlyle. And Carlyle finally settled on South Korea. And then the way that overlaps with policy is during the Asia crisis, the International Monetary Fund came in with this rescue package for South Korea that the United States backed. And the US used the IMF crisis to push through deregulation and changes in rules around foreign ownership, the changes that they'd been unable to press through, you know, maybe 25 or 30 years of trade policy. Okay, so I'll say that unlike last episode, where the clips explained it better than Sean, I think this time Sean explained it way better than the clips. Yeah, I think you'd be good.

Let's hope, Sean. Yeah, the clips don't have enough ableist slurs. And that's what I add to the analysis. But yeah, so Carlyle would invest about a billion dollars in Core Am Bank, Korean, I don't know, Korean American Bank. I'm not sure exactly but it is interesting where uh their connection uh from paying george hw bush allowed them to set up shop in korea and then allowed them to lobby to get the imf to uh impose conditions on uh suffering south koreans

in the financial crisis that would be greatly financially beneficial to them and also a george a george w bush carlisle put him on the business uh put him on the board of uh carter air sorry cater air in 1990 cater air yeah is it cutter air cutter air uh c-a-t-E-R, Air. C-A-T-E-R? Yeah, it was a Texas-based... Oh, yeah, so it was a Texas-based company. It was a really well-catered airline. It was a Texas... Yeah, Cater Air. It was a Texas-based company

that provided in-flight meals for passengers. Oh, yeah, that makes sense. It provided... It really is right there on the back. Yeah, right, right. It provided last meals for the people George W. Bush would go on to execute. Bush was able to insider trade on his knowledge as to what the menu options would be for the people he would be putting to death. The people in that airplane were paid crisis actors, and they weren't very good crisis actors, so they put them in the one where they get killed.

But so there's two American companies that I particularly want to talk about with regard to the Carlyle Group. And the first is called Philadelphia Energy Solutions. So Philadelphia Energy Solutions... They're able to harness the power of riding. It was a joint venture between, this is according to Reuters, a joint venture between the Carlyle Group and Energy Transfer Partners. And basically, they took over a 335,000 oil barrel per day refinery on the south side of Philadelphia. But then they forced employees to contribute more to their health plan and suspended pension contributions in, I believe, September 2016, I believe. So they suspend pension contributions.

They make employees contribute more to their health care, essentially cutting benefits. And this is all, well, as we know, the way private equity works, paying themselves hundreds of millions of dollars in management fees, racking up debt for the corporate entity, these kinds of things, these kind of ridiculous tactics. And so the United Steelworkers, which was the union who represented the employees there, on June 30, 2017, they threatened to strike. They say that these benefit cuts are ridiculous. We will strike. And lo and behold, January 2018, Philadelphia Energy Solutions files for Chapter 11 bankruptcy.

And we've kind of talked a bit about this in the Paul Singer episode, the Steve Schwartzman episode, but bankruptcy courts are a way that private equity, among others, are able to wipe out unions, wipe out pensions, wipe out health care. And so it is just a pretty clear direct relationship where a union is saying no you are not going to cut our benefits and make us pay for your fucking uh gulf stream or whatever the fuck and they're like okay we'll just take you to bankruptcy court and we will wipe you out and we already have a profit locked in so when we talk about the carlisle group they they do a lot of evil stuff in terms of war profiteering and military industrial complex but they also do the more general evil stuff on the domestic side of private equity uh and that

philadelphia energy solutions is a good example of that wow what fucking scum yeah but uh you know you gotta uh buy a uh seven hundred thousand dollar condo in washington dc somehow and uh i mean it's just finance it's nothing personal yeah that is quote finance and uh um the other uh company that i wanted to talk about for a bit here is uh i mean destroying pension funds is a recognized disability and I think trying to frame it as a bad thing shows your deep reactionary sentiments you know if you're opposed to the destruction of disability benefits you're ableist really the ableist thing is implying that people can't survive without disability benefits are you saying that disabled people would require disability benefits?

But, yes, so it is just like the way the private equity industry works, and we've hit this point a lot, but we hope people understand when they hear the words private equity, you might as well be saying, you know, vulture, blood-sucking vampire who has destroyed the middle class in America and helped us get to a situation where we're about six and a half percent of private sector workers have a union down from 33 some percent. But so the other big kind of company we looked at with Carlisle is called HCR Manor Care. Manor? Manor Care.

HCR Manor Care. Could you put another three minutes with that? HCR Manor Care. No, let's go through this. We pronounce every individual syllable. Manor Care. Remember when we thought we'd do a three-parter on this?

So HCR Man-ar-care was another Carlisle... I'll take the man. It was a Carlisle investment property, and the Service Employees International Union, SEIU, one of the biggest unions in the United States, protested in 2007 and 2008 because they knew the Carlyle Group was coming in and they know essentially what private equity does. So Carlyle Group comes in to HCR Manor Care in 2007, 2008.

David Rubenstein, he speaks to a conference about these pickets, and he says, quote, He personally fires the first rubber bullets. The troops love him because he puts himself up at the front lines. Front lines, yeah. It's pay to play. David Rubenstein appears before the protesters and tears up an original copy of the Magna Carta in front of them and says,

you have no protections. If they let me do this to a priceless document guaranteeing the rights of nobility, what do you think they'll allow me to do to you? And then This Is America plays on loudspeakers.

So David Rubenstein says, quote, the SEIU is not happy that 60,000 workers at the company aren't unionized. SEIU had, like, a small union presence there, but the company wasn't majority union workers. He says, they're campaigning and saying the healthcare will not be

adequate. That isn't true, in my view. It's really an effort to increase unionization and not so much to worry about patients' health care. And so, of course, Private Equity and David Rubenstein and the Carlyle Group come in and they thwart off the union. And the way that they decide to increase health care access or whatever bullshit, the way they decide to increase patients healthcare is uh by fraudulently overbilling medicare at least 1200 times uh and providing treatments that uh various patients didn't need and that were in many cases dangerous for their health and they were in fact sued by the department of justice in 2015 for this. And faced steep consequences.

All right. So according to the Department of Justice, the federal officials said that they found more than 1,200 false claims filed by HCR between October 2006 and May 2012. During that time, the government said Medicare issued issued more than six billion in payments to man or care much of which was fraudulent and so basically again from this doj complaint this seems like a conundrum that would be like raised by some god figure in the 50s Man or care? You must choose. Well, I love men, but I need the care.

Oh, God. Do not pause, mortal. I choose care. I choose care. It is done. Man or care set up the triage facilities at Ground Zero. A completely unrelated coincidence. They just happened to be ready to facilities at Ground Zero. A completely unrelated coincidence. They just happened to be ready to go at the time.

But so, and again, we were talking about kind of the mafia. This is literally, if you watch the pilot of The Sopranos, this is the Medicare fraud scheme they come up with where they get a guy who owes them money to bill Medicare for services never provided or for unnecessary services. So this is like David Rubenstein's private equity innovation magic, is to come in and just cook the books at a company and make it completely fraudulent.

And so again, just from this DOJ complaint, HCR Manor Care's corporate offices developed a scheme to provide excess care in order to qualify for the, quote, ultra-high rate Medicare pays to particularly needy patients. The company then pressured rehab therapists and facility administration to reach unreasonable reimbursement metrics, which led to patients being subject to needless and potentially harmful treatments. And then the suit also claimed that patients were kept in skilled nursing facilities

longer than was medically required, and that HCR threatened to terminate employees who did not administer and bill for unnecessary treatments and again this is just textbook fraud and the kind of thing that you might expect to be avoided if you had an actual union at the company right so of course david rubenstein's bullshit about how they don't care about health care. They just want to increase union roles. Well, it looks like you don't really care about health care either, you fucking scum-sucking asshole. Yeah, and you too, Connor and DC. Fuck you and your buttons.

Your stupid face. What if every employee laid off by Carlisle Group gets a free DSA button? They get half off Connor's buttons. That's how they identify who was fired and who's at the company still. But so, HCR Manor Care, partly because of... I just have to say that these schemes being carried out by massive international conglomerates instead of local mafia like it's over for the little guy

that's seen in the sopranos where they're trying to like squeeze uh starbucks fake starbucks fake starbucks shop and like they just can't because corporate checks the books every night yeah yeah um but yeah so uh because partly because of this hcr manor care had to file chapter 11 bankruptcy uh but as part of their bankruptcy they paid their fucking ceo 116 million dollars and uh even though um uh because of the bankruptcy carlisle was supposed to get uh wiped out uh according to the new york post carlisle was still able to bank a profit on this deal because of the way private equity is structured. Yeah, so according to New York Post, it will... How is private equity structured?

It will escape the investment with a profit thanks to a dividend in the wake of the real estate sale leaseback deal. And so we've kind of mentioned some of these dividends, but a lot of the management fees are built in to pay out to the private equity owner as soon as any part of the company is sold out, sold off. But yes, so. So, okay. So putting this in dumb guy language, if you're Carlisle, you buy the company and then you charge it management fees, basically draining it and then get rid of it? Yeah, I mean, it's so there's a few different ways of doing it. But like, yes, primarily the way private equity operates is cutting costs.

So they go in and suddenly they can bill this company management fees now that they control it. And they can also run up debt on its books. So particularly if they raise leverage to buy the company, they just transfer that debt over to their books. And then there's a few different ways. Usually they just try to cut costs, particularly wages and benefits are the big way to cut costs. And then they either sell it out or sell it off. Or if it's a private company, they take it public and sell it off or if it's a private company they take it public and sell it off that way but also essentially bankruptcy court is another tool in their arsenal because if say there's a union that resists their plans to cut benefits at their oil refinery they can drag it through

bankruptcy court and destroy them that way but it's the fact that they have you know these debts transferred off their books and the management fees locked in that they kind of guarantee a profit before they've even done anything. So it's like if they succeed, great. If they don't, they're still fine. But it's usually built to destroy the companies. I mean, it seems right. Well, like there's cases where they have like some sort of turnaround, you know, again, like Dunkin Donuts or they were involved in like Hertz. But these aren't like good jobs for Americans or whatever other benefit you want to say. It's financial engineering

and it's subsidized by the carried interest loophole and the capital gains tax rate. And it's just really been part of the reason that hollowed out the middle class and created all those Trump voters. But we should talk before we run out of time about the other two co-founders. We focused pretty primarily on David Rubenstein because he is the public face. He gives fucking TEDx talks where he talks about you don't need money

to be a philanthropist. What? Which is like, you know what? I will give him credit for being perfectly appropriate for a TED talk. Yeah, right, right. Because that is the kind of meaningless bullshit that they love there.

What I've learned about giving away money is that you don't need money to give away money. I've learned you don't need to bust to actually have sex. You can just dry hump for a bit. But yeah. I mean, that one's true.

Ableist much? Ableist against the people who don't bust during sex don't knock dry humping sean i mean like you switched david to connor for like 20 minutes and you didn't even know it um but so the other two uh so david rubenstein as we mentioned you know public face he goes on tv a lot he goes on charlie or he went on charlie rose before charlie rose got caught doing the bad thing but uh uh the other two founders of the car the co-founders of the carlisle group in addition to steve norris who sold off his stake in 95 but the other two billionaires are a little um uh more secretive there's not as much information about them online but which is a tragedy yes um but it

is just something where it's like you know if if you're going to like profit off war you know profiteering maybe it's smarter to keep a low profile i don't particularly know uh you'll have talk was like you can cause a war in iraq without buying off politicians you don't have to be rich to change U.S. foreign policy and make it more aggressive to benefit your own investment portfolio. Commit 9-11. You don't need to learn how to land. That's his TED Talk.

You don't need an airplane for a 9-11. You know 9-11 was carried out for just like 20 grand or something, right? Like, you just get a few of your friends. You go in together. You can carry out. But with our innovation, you can 9-11 for $10,000, $5,000. Six easy payments of $3,499. The audience gives him a standing ovation.

Hi, I'm Billy Mays here with 9-11 it it pans to the audience and they were all people who were supposedly killed on 9-11 they are really fucking with us right now um but so uh before we run out of time i just want to talk a little bit about the two other co-founders and what is known about them uh william conway jr and daniel d'anilo uh starting with william conway jr he's also they're all worth about three billion according to forbes uh he was born in 1949 in lowell massachusetts he got an undergrad degree from dart Dartmouth in 1971, MBA from University of Chicago Business School. Oh, he plays basketball.

Yeah. And he, just from his Wikipedia, I'm sorry for the lazy research, but again, there's not much out there on him. He started his career serving in a variety of positions in corporate finance, commercial lending, and general management. Okay, so finance. Yeah. He worked in finance. looks like sean was wrong just regular stuff sean has to eat his hat his uh his daughter is a rabid

conservative who is bullied by members of the john birch society it's kind of an opposite scenario but so he worked for the first national bank bank of chicago uh and then he worked in uh various uh financial positions at mci communications and i believe yeah he was named cfo in 1984 and then he uh joined uh the carlisle group uh coming from his cfo experience so again it was kind of like we mentioned it was david rubinstein steve norris and then they kind of got these other finance guys to go in with them because they had this idea of a private equity firm that relied on washington lobbying and insider access access capitalism as michael lewis has called it and um the yeah that's kind of the basic overview of william conway jr he's kept his head down he's uh spent his money

and kept his mouth shut which is i guess you know it is like just how you make it in show business right well it is like just to keep to continue the mafia analogy it's kind of like uh the difference between like um uh carlo gambino and john gaudi you know like john gaudi loved the press and he talked to the press and he always kept his fucking face in the papers and that's a good way to put a target on your back whereas you know david rubinstein is like picketed and you know people like recognize that he's an asshole sometimes when he goes out in public but if you saw william conway jr you'd have no idea who the fuck the guy is right even though he's like

murdering people on a much larger scale than Carlo Gambino. Also, he's in a bathrobe shuffling along the streets, murmuring to himself, that's Vincent Gigante. Yes, Vinny the Chin. So, in conclusion, what do we think about these gentlemen, folks? Wait, wait, let me just finish Daniel D'Analo. I think there is a such thing as a good billionaire. Daniel D'Analo is the third co-founder uh he's born in butler pennsylvania um and he like talks about like his uh uh working class upbringing like uh being the

he's a conservative wow yeah so um he uh was like he was also like a financial officer he was at pepsico and twa the airline um he was at Marriott as well, which I guess the other Co-founder was worked at Marriott. So they they met through there, but it was like controversial He gave a 20 million dollar donation to the American Enterprise Institute and in exchange they They named a building after him. And he said of that, according to the Washington Post, he said, quote, it's all about freedom, opportunity, and enterprise.

Those are the watchwords of AEI. So I would think about my life, I would think it in just that way. Freedom, opportunity, and enterprise. And that's how I took Transworld Airlines into the 21st century. The wildly successful 21st century airline, Transworld Airlines.

According to the Washington Post, the donation will allow AIE to expand from 140 staffers in 2009 to 206. And I just like that it's like... AEI. AEI, goddammit. But I do like that it's like, there are hungry people in the world. But you know what would be a better...

And now some of them are getting jobs at AEI. Now some of them are doing presentations on how we need to cut social security because of the impending crisis. All thanks to this man who will have a building named after him and the billionaire misdeeds laundering facility that he helped set up. And this is pretty radical. It's like a job guarantee, only for right-wing think tank but he said according to the washington post that he decided to make the contribution because aei's philosophy mirrors his own which was a way of thinking nurtured in the 1940s and 50s in the coal mining town of butler pennsylvania again coal mining not an area known for union membership. And he said...

All the coals were being mined. He looked up and saw a TWA plane flying over him and thought, one day, I will take that plane out of the air. But yeah, he gives the usual... According to the Washington Post, he says that his father was out of the picture. So he was raised by his grandmother and his mother. He went to work at a fruit market at just nine years old, which shaped his desire to eliminate child labor law restrictions. But he was raised by his grandmother and his mother.

And he just gives kind of like the generic quotes about like, well, I was poor and I worked hard and I got these economic opportunities so that's why I'm funding AIE because they'll do the freedom and give the opportunity god damn it AEI because they'll do the freedom and give the opportunities to the other people they'll introduce other people to the former secretary of state and Reagan's secretary of defense who will set up insider trading defense contracts for them. There are no TWA planes used in 9-11, but they still went bankrupt after 9-11. How much of a hand do you think he had in that one? I didn't know so much terrible things about the Karloff Group, and I feel better for it. I feel like the information that Sean has expunged out of his brain is now in the world.

I think it's okay to be ableist now. I like the idea of as the chairman of the Kennedy Center, David Rubenstein does the secret ceremonies where they give the Lifetime Achievement Awards to crisis actors. This Sandy Hook kid was the youngest to receive the Crisis Actor Award. It's like when they gave Shirley Temple a small academy award for her job. So in conclusion, what have we learned today? Let's review that. Well, I think the Crusader missile did on arrival. That's last week.

We still learned it. It's a two-part episode. That's true. Okay. You want us to never mention shit from the other episode? We're still learning It's a two part episode That's true Okay Okay You want us to never mention shit From the other episode? I'm just saying It's gonna be a long stretch

People won't remember They're gonna remember Okay Many people binge these episodes Okay We've got fans All over the world And they enjoy

All of our episodes We've got three fans I I didn't realize how Carlo group Just to get serious for a moment Sits pretty evenly Between like the world of

Ideological advancement for the right wing Like the American Air Prize Institute And their work with them And also just Domestically crushing unions And then on The third side of it, international weapons development. And then

funding wreckers who will enter socialist organizations and disrupt them. Yeah, it's crazy how cutthroat they are in all avenues of that. Yeah, these guys are the real deal. I learned that while a Gulfstream 550 is

nice, the real pimps have already pre learned that while a Gulfstream 550 is nice, the real pimps have already pre-ordered the Gulfstream 600. I like the idea of there being like a Carlisle group meeting where they're like, this Amber Frost of Chapo Trap House seems dangerous to our interests. Do we have someone who we could go in and take her out? You're telling me she has used ableist slurs in the past. I think we can work with this.

Let's shut down the Medicare for All campaign. Can we wrap this up? Oh man, they got flat screens in the cockpit of the Gulf Stream. And with that, this has been Crump Stakers. Thank you for enjoying our two-part on the Carlisle Group. My name's

Yogi Poliwal. I'm Andy Palmer. I'm Sean McCarthy. I'm Steve Jeffers. David D'Analo, he told the Washington Post that while eating a bowl of pasta and slapping his wife.