Terry McAuliffe silent on union-connected loan

Won’t talk despite vow to be transparent

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Terry McAuliffe has promised voters he is committed to transparency, but in the final days of a Virginia governor’s race he leads, the Democrat has steadfastly refused to explain a complicated financial arrangement involving several family trusts and a union-owned insurance and investment company.

SEE ALSO: In final Virginia governor debate, Ken Cuccinelli hits Terry McAuliffe hard

For the arrangement, known in real estate parlance as a covenant not to encumber, Mr. McAuliffe — along with two other trustees for family trusts in his wife’s name — asked a bank for a $750,000 letter of credit “for the benefit of” Union Labor Life Insurance Co., or Ullico, the union-owned company that came under a congressional investigation a decade ago for risky investments.

As part of the deal, new liens or sales contracts could not be placed on the family’s home in McLean, Va., without the bank’s permission, according to land records that The Washington Times located in Fairfax County.

The document was signed by Mr. McAuliffe and his wife as owners of their home property that was used in the transaction.

Mr. McAuliffe’s campaign has refused repeated requests to explain why Ullico was involved in the deal.

The arrangement, however, was made not long after Mr. McAuliffe’s activities as a Democratic fundraiser were under scrutiny as part of a larger Clinton-era donation scandal.

It also was made as Mr. McAuliffe, Ullico and its executives invested money in a telecommunications company called Global Crossing. Mr. McAuliffe invested $100,000 of his own money in 1997 in Global Crossing before the stock was offered publicly, and eventually flipped the stock for a multimillion-dollar windfall before the company failed.

An ad by Mr. McAuliffe’s Republican opponent, state Attorney General Kenneth T. Cuccinelli II, accused the Democrat of “cashing in” on the company’s downfall, saying he made a profit of $18 million. The Associated Press placed his return at about $8 million.

Either way, Ullico wasn’t so lucky and lost heavily on its investments in Global Crossing, leading to a wide-ranging congressional investigation into why the union insurer put workers’ funds at risk.

“He made such a huge amount of money in a such a short period of time with a company that was clearly troubled. And then he got out before it went bankrupt and his friends within the labor movement also made a lot of money,” said Ken Boehm, chairman of the National Legal and Policy Center, who has testified to Congress about Ullico and other union pension deals.

In the end, Mr. Boehm said, it was never clear whether Mr. McAuliffe played a role in getting Ullico to invest in Global Crossing.

The covenant between Mr. McAuliffe and Ullico appears to have escaped notice during a 2003 U.S. House investigation into how the company lost so much money in Global Crossing.

The Times was alerted to the document, sitting in a county records office, by a former labor official and prominent Democrat who was familiar with Ullico’s loan arrangement with McAuliffe.

The Times provided a copy of the land filing to a campaign spokesman who acknowledged receiving it, but did not respond to numerous subsequent inquiries.

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