NYT Investigation: “Tommy Tuberville’s Financial Fumbles” Raise More Questions About His Judgment, Integrity

Tuberville “Has A History Of Involvement With At Least Three People Who Were Later Convicted Of Financial Fraud In What Were Described As Ponzi Schemes”

A Review Of Tax Records For Tuberville’s Charitable Foundation “Showed That Less Than A Third Of The Money Raised Went To Its Charitable Mission” of Supporting Veterans

The New York Times has a damning investigation today on Alabama Senate candidate Tommy Tuberville’s many “financial fumbles” that raise questions about his judgment and integrity. On the campaign trail, Tuberville has said he wants to be on the Senate “banking finance” committee (those are two separate committees), despite the fact that he “has a history of involvement with at least three people who were later convicted of financial fraud in what were described as Ponzi schemes.” The Times report also found Tuberville runs a questionable veterans’ charity, which tax records showed has extensive “bookkeeping issues” and “less than a third of the money raised went to its charitable mission” to support veterans.

This report follows an earlier story of Tuberville’s deep involvement in a “hedge fund disaster” that defrauded investors, including Alabamians, of millions of dollars and sent his business partner to prison for a decade. While Tuberville has sought to distance himself from the scandal, a review of court records found he “had a broader role” in the company — Tuberville “made introductions to potential investors” and “had business cards identifying himself as managing partner.” The former coach was sued by investors, “who accused him of fraud and violating his fiduciary duty to take care of their investments,” and he was forced to settle in 2013. A former lawyer for his business partner said that “Tuberville knew what was going on” at the time.

“Tommy Tuberville’s strategy has been to dodge the press and avoid public events, and it’s clear from these continued reports on his ties to illegal Ponzi schemes, financial fraud, and a questionable charity that he has an awful lot to hide from Alabama voters,” said DSCC spokesperson Helen Kalla. “Alabamians deserve a Senator who can be trusted to have the judgment and integrity to work for them in Washington, and not run away from basic questions about his shady financial record.”

New York Times: Tommy Tuberville’s Financial Fumbles

By Danny Hakim

October 12, 2020

Key Points:

• Tommy Tuberville, the Republican candidate for Senate in Alabama, is running in large measure on his experience in college football’s Southeastern Conference, known as the S.E.C., where he coached Auburn University. But he has had experience with another S.E.C., the Securities and Exchange Commission, and other financial regulators.

• A review by The New York Times found that Mr. Tuberville… has a history of involvement with at least three people who were later convicted of financial fraud in what were described as Ponzi schemes.

• The Times review included a small charitable foundation created by Mr. Tuberville, finding that its tax records indicated that less than a third of its proceeds went to the veterans’ causes it was set up to advance. The foundation also had bookkeeping issues.

• The review raised questions about Mr. Tuberville’s judgment and financial acumen. While he has said on the campaign trail that he hoped to serve on the “banking finance” committee — the Senate has separate, and prestigious, banking and finance committees — he has at times undercut his own qualifications. In regards to an ill-fated hedge fund venture, he once told a reporter, “I’m not smart enough to understand all the numbers.”

• The Times previously reported on one fraudulent scheme in which Mr. Tuberville was an investor and a 50/50 owner of a financial firm, TS Capital, that was shut down by state and federal regulators. A 2012 complaint from the Commodity Futures Trading Commission said that Mr. Tuberville’s partner, John David Stroud, had trading losses of nearly $1.2 million and misappropriated nearly $2.3 million for “car payments, travel expenses, entertainment and retail purchases.” As one of Mr. Stroud’s lieutenants put it, according to court filings, the firm had “the optics of a Ponzi scheme.”

• Mr. Tuberville has portrayed himself as an unwitting victim of the financial firm. But he made introductions to investors, was kept in the loop on hiring decisions and traveled to New York with Mr. Stroud to meet potential brokers. Mr. Stroud was eventually sentenced to a decade in prison…

• But TS Capital — short for Tuberville and Stroud — was not the only questionable investment opportunity. Mr. Tuberville also invested in GLC Enterprises, which the S.E.C. called “an $80 million Ponzi scheme.”

• Real estate records reviewed by The Times revealed a third transaction in which Mr. Tuberville had business dealings with an individual who later pleaded guilty to fraud.

• In 2004, Mr. Tuberville and his wife bought their home in Santa Rosa Beach, Fla., through a limited liability company setup by a Georgia lawyer named Robert P. Copeland. From at least 2004 to 2009, Mr. Copeland was accused of running what the S.E.C. called “a classic Ponzi scheme” that raised $35 million for real estate transactions, though the money was often pocketed instead. He pleaded guilty in 2009 and was sentenced to more than a decade in prison on a wire fraud charge.

• Another notable venture of Mr. Tuberville’s is a charity he founded in 2014 to aid veterans. A review of five years of the foundation’s tax records showed that less than a third of the money raised went to its charitable mission. (The Better Business Bureau recommends at least 65 percent.)

• “For a very small charity, you have these huge expenses,” said David Nelson, a retired partner at Ernst & Young who has specialized in tax-exempt groups, and who reviewed the foundation’s public filings at The Times’s request. “The other thing that jumped out is that out of the amounts of money they collected, a relatively small amount was being directed to charitable activities,” Mr. Nelson said.

• … the records raised bookkeeping questions, since they showed more than $61,000 of 2018 revenue, roughly twice what the charity reported to the I.R.S. that year.

• Mr. Nelson said the public records showed other signs of sloppiness, including one year when the foundation filed the wrong tax form.

• Mr. Jones, in a more recent ad, says, “An Alabama teacher and parents saving for their children’s education lost everything,” adding, “Tuberville’s partner got 10 years in prison. And Tuberville? You guessed it. He said he didn’t have a clue.”

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