Over the weekend, New York Magazine published an excerpt from John Heliemann and Mark Halperin’s new book, Game Change. The excerpt, “Saint Elizabeth and the Ego Monster,” centered on the downfall of John Edwards’ presidential campaign.
When the “Ego Monster’s” campaign unraveled after losing the Iowa caucuses, Edwards moved to broker a deal with Barack Obama where Edwards would agree to be Vice President in an effort to finally crush Hillary Clinton. He would later try to finagle the Attorney General spot from Obama on the eve of the South Carolina primary. The rest is, of course, history. Edwards ended up with nothing and his political career is beyond ruins.
What strikes me about this portion of the story is who Edwards’ emissary was between the Edwards and Obama camps. The man who ferried the message back and forth was Leo Hindery, with the help of Tom Daschle. It is stunning that Leo Hindery plays such a large role in Democrat politics. He’s showered Democrats for years with truck loads of cash, so to an extent it makes sense, but it is how Hindery got the cash he uses to buy access that is disturbing and under-reported.
Hindery, the former Chief Executive Officer of Global Crossing and a strong supporter of the Democrat Party, has been linked to highly questionable, undisclosed stock trades. The trades, which netted Hindery hundreds of thousands of dollars, were made at a time when Global Crossing barred its officers from trading company shares. While Hindery made off like a bandit, many were left penniless.
Leo Hindery Is One Of The Biggest Donors To The Democrat Party, Having Contributed More Than $2 Million Since 1999
Since 1999, Leo Hindery Has Contributed Over $2 Million To Democrat Candidates, Leadership PACs And Party Committees. (Center For Responsive Politics Website)
Former Global Crossing CEO Leo Hindery’s Tenure With Company Was Marked By Falling Corporate Profits
Known As A “Take-Charge Executive And A Veteran Deal Maker,” Leo Hindery Sought To Restructure Global Crossing After A Review Of The Corporation’s Assets. “Global Crossing Ltd. is close to selling its local phone business to Citizens Communications Co. for about $3.6 billion in cash and is in serious discussions to sell its GlobalCenter Inc. Web-hosting business to rival Exodus Communications Inc. for about $6 billion to $7 billion in Exodus stock, according to people familiar with the matters. . . . The two transactions, if completed, would be a significant restructuring of Global Crossing, which in March named Leo Hindery, former chief executive of AT&T Corp.’s cable-TV and Internet unit, as its CEO after the departure of Robert Annunziata. Investors have expected big changes at Global Crossing under Mr. Hindery, a take-charge executive known as a veteran deal maker. Mr. Hindery said shortly after taking over that he would oversee a strategic review of Global Crossing’s assets.” (Nikhil Deogun, et al., “Global Crossing Weighs Sale Of 2 Units,” The Wall Street Journal, 6/12/00)
Under Leo Hindery’s Stewardship, Global Crossing Stock Plummeted By Almost 60 Percent. “While Mr. Hindery had success with GlobalCenter, his touch doesn’t seem to have worked on Global Crossing, which was trading at about $56 when he assumed the CEO slot. Since then, Global Crossing shares have plunged 57%.” (Deborah Solomon And Nikhil Deogun, “Global Crossing CEO Is Likely To Resign, Only Seven Months After Taking The Post,” The Wall Street Journal, 10/11/00)
Hindery Guided Global Crossing From A Net Income Of $10 Million To A Net Loss Of $365 Million. “Global Crossing posted a net loss of $365 million, or 62 cents a share, on revenue of $918.4 million. In the year-ago period, the company reported net income of $9.97 million on revenue of $190 million, and a loss of one cent a share.” (Deborah Solomon, “Global Crossing Results Beat Forecasts On A Narrower-Than-Expected Loss,” The Wall Street Journal, 8/2/00)
At The Time That Global Crossing Announced A Net Loss Of $365 Million, Hindery Predicted A “Cash Flow Positive” Within Two Years—About The Amount Of Time It Took The Company To File For Chapter 11 Bankruptcy Protection. “Leo Hindery Jr., Global Crossing’s chief executive, said the company ‘expects to be cash-flow positive’ within two years. The recent sale of the company’s local phone business should help the telecom upstart focus on its core business, Mr. Hindery said. ‘We now have in place all the capital and resources’ to run the business, he said.” (Deborah Solomon, “Global Crossing Results Beat Forecasts On A Narrower-Than-Expected Loss,” The Wall Street Journal, 8/2/00)
While The Company’s Profits Collapsed, Hindery Made Highly Questionable, Undisclosed Trades In Global Crossing Stock
A Private Partnership Owned By Leo Hindery Traded Company Stock While He Was Leading Global Crossing. “A private investment partnership that was majority-owned by Leo J. Hindery Jr. made a half-dozen undisclosed trades in Global Crossing Ltd. shares after Mr. Hindery became a director and the chief executive officer of that company. The partnership’s trades in Global Crossing stock were made at a time when the company was still a highflier trading at around $50 a share.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
The Sale Of Global Crossing Stock By Hindery’s Investment Partnership May Have Violated The Rules Of The Securities And Exchange Commission. “The March 3, 2000, sale by LJH of 15,000 shares raises a question about whether Mr. Hindery, because of his interest in LJH, may have violated an SEC rule that requires a director or officer who buys a company’s stock and then sells it within six months to disgorge his profits to the company, securities lawyers said.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Hindery’s Trades Were A Breach Of SEC Rules. “A spokeswoman for Global Crossing, which filed for Chapter 11 bankruptcy protection in January, declined to comment on the partnership. But an official said the partnership’s trades were made at a time when the company barred its officers or directors from buying or selling Global Crossing shares. If the partnership’s trades were considered for legal purposes to have been made by Mr. Hindery, then they might have breached the rules of the Securities and Exchange Commission, which requires company officers and directors to hold stock for at least six months.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
At The Time Of His Trades, Hindery Was Receiving Almost A Million-Dollar Base Salary From Global Crossing And The Company Was Paying $20,000 A Month In Rent For Hindery’s Luxury New York Apartment. “Next came Leo Hindery, a former Denver cable executive who had been heading a Global Crossing subsidiary. Hindery was to receive a base salary of $995,000 and 2 million stock options, plus Global Crossing agreed to pay $20,000 a month rent on his New York City apartment. Hindery left after seven months. As part of his severance agreement, Global Crossing continues to pay Hindery’s rent plus $1 million a year through end of this year.” (Al Lewis, “Global Crossing’s Revolving Door Pure Platinum,” The Denver Post, 2/17/02)
Hindery Owned As Much As 90 Percent Of The Private Investment Partnership That Bought And Sold Global Crossing Stock. “The trades were made by LJH Partners LP, a partnership in which Mr. Hindery is a limited partner. Although there are about a dozen limited partners, Mr. Hindery’s ownership has often exceeded 90% since May 1999, when LJH began. Trading by LJH in Global Crossing shares began in December 1999, soon after Mr. Hindery became chairman of its GlobalCenter Inc. Internet-services unit. The partnership made a half-dozen purchases and sales of stock before Mr. Hindery became CEO of Global Crossing on March 2, 2000, and another half-dozen afterward.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
In Three Months, Hindery’s Investment Partnership Earned Almost A Quarter Of A Million Dollars From Its Global Crossing Trades. “According to people who have viewed the partnership’s trading records, the partnership sold shares on March 3, 2000, netting a profit of more than $150,000, and then bought additional shares in the following weeks. All told, LJH earned $229,908 from its sales of Global Crossing stock in the first three months of 2000.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Despite The Fact That Hindery Owned As Much As A 90 Percent Interest In The Partnership, The Investment Manager Claims Hindery Was “Unaware” Of The Partnership’s Interest In Global Crossing. “Douglas Luke, who manages LJH, said that he – and not Mr. Hindery – makes all the investment decisions for LJH, including the one to buy and sell Global Crossing in 2000. ‘Leo was unaware we owned any Global Crossing stock,’ he said. Mr. Luke said the Global Crossing trading was ‘de minimus’ in relation to the $200 million portfolio, and was done ‘for short-term capital gains.’ Mr. Luke said he never believed that he or Mr. Hindery had a duty to report the holdings of the LJH portfolio to Global Crossing or the SEC. Mr. Luke said he has personally bought shares in all the companies Mr. Hindery was involved with.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Global Crossing Sources Told The Wall Street Journal That Hindery’s Trades Ceased After The Company’s Lawyers Accidentally Discovered His Undisclosed Trades. “People close to Global Crossing said that the LJH trades ended after company lawyers accidentally received copies of the LJH trading records in April 2000.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Hindery Told Other Global Crossing Executives That, Despite Controlling As Much As 90 Percent Of The Partnership, His Interest In LJH Partners LP Was “So Small As To Make It Insignificant.” “At that time, these people said, they asked Mr. Hindery if the trades needed to be reported, and they were assured by him that his interest in the partnership was so small as to make it insignificant. At that point, these people said, they asked LJH to stop buying and selling Global Crossing stock because, they said, it violated the company’s policy against unauthorized trading by an insider. Mr. Hindery denied he was ever asked any questions about LJH.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Once Global Crossing Discovered Hindery’s Trades, His Partnership Stopped Trading The Company’s Stock And The Investment Group Ultimately Lost More Than $700,000 On Global Crossing Stock. “[T]rading by LJH in Global Crossing stopped in late March, and the partnership ultimately had losses of more than $700,000 when it unloaded the remainder of its holdings in October 2000.” (Laurie P. Cohen, “Hindery Group Made Undisclosed Trades In Then-Valuable Global Crossing Stock,” The Wall Street Journal, 4/18/02)
Despite His Failures At Global Crossing, Hindery Left The Company With Millions Of Dollars In Stock Options, A Huge Salary And A Deluxe New York City Apartment
As Part Of Hindery’s Severance Package, Global Crossing Agreed To Pay Him A Million Dollar Salary And His $20,000 A Month Rent On His New York Apartment. “Next came Leo Hindery, a former Denver cable executive who had been heading a Global Crossing subsidiary. Hindery was to receive a base salary of $995,000 and 2 million stock options, plus Global Crossing agreed to pay $20,000 a month rent on his New York City apartment. Hindery left after seven months. As part of his severance agreement, Global Crossing continues to pay Hindery’s rent plus $1 million a year through end of this year.” (Al Lewis, “Global Crossing’s Revolving Door Pure Platinum,” The Denver Post, 2/17/02)
According To The Wall Street Journal, Hindery Received Almost A Quarter Of A Billion Dollars In Stock Options From Global Crossing. “Leo Hindery Jr. is likely to resign as chief executive officer of Global Crossing Ltd. just seven months after taking the top post at the fast-growing telecommunications company, according to people familiar with the matter. . . . He is expected to make a pretty penny – as much as $247.5 million in stock – from the GlobalCenter sale to Exodus, which is expected to close early next year and was the crowning achievement of his short tenure at Global Crossing.” (Deborah Solomon And Nikhil Deogun, “Global Crossing CEO Is Likely To Resign, Only Seven Months After Taking The Post,” The Wall Street Journal, 10/11/00)
Hindery’s Compensation From Global Crossing Amounted To More Than $100,000 An Hour If The Executive Worked A 50-Hour Week. “Leo Hindery, who resigned as chief executive of Global Crossing Ltd. after less than a year at the worldwide communications network company, will leave about a quarter of a billion dollars richer. That’s more than $100,000 an hour, assuming Hindery worked a 50-hour week since he arrived at Global Crossing on Dec. 6 through today without any time off. Almost all the pay stems from a provision Hindery negotiated in his employment contract when Global Crossing hired him as chief executive of GlobalCenter, its Web-hosting unit. In the event of a sale of the unit, Hindery was guaranteed 5.5 percent of any amount more than $2 billion, according to a proxy statement filed with the Securities and Exchange Commission.” (George Stein, “Global Crossing’s Leo Hindery Will Leave $250 Million Richer,” Bloomberg News, 10/11/00)
The Platinum Parachute That Leo Hindery Received From Global Crossing Was Not His First. “Hindery’s Global Crossing exit won’t be the first time he’s left a job on a golden note. A year ago, Hindery departed from AT&T Corp. where he was president of AT&T Broadband & Internet Services. According to data provided by CDA/Investment, Hindery’s options and stock rights would have been worth $52 million if exercised at the time, Broadcasting & Cable magazine reported. Hindery held AT&T and Liberty Media Group stock then worth $254.4 million, the magazine said.” (George Stein, “Global Crossing’s Leo Hindery Will Leave $250 Million Richer,” Bloomberg News, 10/11/00)
While Leo Hindery Received Millions Upon Leaving Global Crossing, Which He Now Dispenses To Democrat Interests, Employees And Investors Lost Their Entire Life Savings
During Four Crucial Weeks, Global Crossing Prevented Its Employees From Selling Company Shares. “Global Crossing Ltd. prevented its workers from selling company shares or other assets in their 401(k) savings plans for a total of four weeks during December and January, at a time when its fate was increasingly uncertain. While this practice is legal, these so-called lockdowns have become a big issue in the wake of Enron Corp.’s collapse. . . . The Global Crossing disclosure of a lockdown comes as new concerns are emerging about the telecommunications concern’s accounting, following published reports of a letter from a former executive who warned in August about what he described as ‘intentionally misleading’ accounting tactics.” (Dennis K. Berman, “Global Crossing Lockdown Stopped Workers From Protecting Pensions,” The Wall Street Journal, 1/31/02)
A 72-Year Old Former Global Crossing Employee Lost His Severance Just Weeks After He Was Assured That The Company Would Not Declare Bankruptcy. “Ron McMahon, 72, a former Global employee, was promised two years’ severance after he was laid off in July. But the checks stopped coming after the bankruptcy filing and just weeks after McMahon was assured that there would be no bankruptcy. McMahon, and other workers who own Global stock, could also see their now almost worthless shares get virtually wiped out as the company reorganizes. ‘Greed is overshadowing all logic,’ McMahon says.” (Jim Hopkins And Matt Krantz, “Global’s Troubles Shouldn’t Surprise,” USA Today, 2/27/02)
A 42-Year Old Former Truck Driver Lost His Full Social Security Disability Payment In The Global Crossing Debacle. “‘If that guy doesn’t go to jail, there’s no justice,’ said John Burat, a 42-year-old former truck driver in Conshohocken, Pa., who said he poured his full $31,000 Social Security disability payment into Global Crossing stock last year. ‘This is my kid’s education. It just makes me sick to my stomach.’” (Simon Avery, “Global Crossing Head Shows Passion For Making Money, Bending Rules,” The Associated Press, 3/5/02)
A 14-Year Veteran Of Global Crossing And Its Predecessor Was Dragged Into Bankruptcy And Lost Her Medical Benefits When The Company Filed For Chapter 11 Protection. “Renee Hinton says it was hard enough when she was laid off last August from Global Crossing Ltd. after 14 years with the company and its predecessor. But when the former fiber-optic darling declared bankruptcy last month, it dragged the systems manager into bankruptcy, too. Like thousands of other laid-off employees, Ms. Hinton was required to take her severance package in spread-out payments rather than a lump sum. With the company’s bankruptcy filing, those payments stopped. Medical benefits also were terminated.” (Rebecca Blumenstein, Deborah Solomon And Kathy Chen, “Global Crossing Cosseted Executives As Pink Slips Loomed, Stock Fell,” The Wall Street Journal, 2/21/02)
One Project Manager Had Her Expense Reimbursement Check Of $350 Bounce On The Day That Global Crossing Declared Bankruptcy. “‘Ninety-five percent of my contributions went to Global Crossing because they matched what I put in and I believed in what they were saying, that the company would turn around,’ says Amy Ghazle, a 30-year-old former project manager for Global Crossing. ‘Now, I have nothing.’ Ms. Ghazle, a resident of Rochester who came to Global Crossing from Frontier, received only three severance payments after being laid off in November, and cashed out her 401(k) plan last week for $150. A $350 check to reimburse expenses that she received on the day that Global Crossing declared bankruptcy bounced.” (Rebecca Blumenstein, et al., “Global Crossing Cosseted Executives As Pink Slips Loomed, Stock Fell,” The Wall Street Journal, 2/21/02)
And this guy is a powerbroker within the Democrat Party?