Sunday, October 26th, 2014

How factual is the 'King of Bain' video?

The anti-Mitt Romney "King of Bain" video interviewed former employees of companies owned by Bain Capital.
The anti-Mitt Romney "King of Bain" video interviewed former employees of companies owned by Bain Capital.

The Super PAC Winning the Future went to town on Mitt Romney with its 28-minute video, "King of Bain: When Mitt Romney Came to Town." But how closely did the lengthy attack ad stick to the facts?

Apparently not closely enough for Newt Gingrich, the beneficiary of the Super PAC, as long as there’s no coordination between the two. On Jan. 13, 2012, Gingrich told a crowd in Orlando that "I am calling on this super PAC – I cannot coordinate with them and I cannot communicate directly, but I can speak out as a citizen as I'm talking to you -- I call on them to either edit out every single mistake or to pull the entire film," he said.

PolitiFact’s own reviews found that the film’s accuracy was mixed at best. Here’s a cheat sheet summarizing what we’ve rated so far.

• The video says Romney and Bain Capital drove KB Toys into bankruptcy by loading it up with debt.

"Romney and Bain bought the 80-year-old company in 2000, loaded KB Toys with millions in debt, then used the money to repurchase Bain stock," the video said. "The debt was too staggering. By 2004, 365 stores had closed." The clear implication is that Romney and Bain were responsible for the toy company's demise.
   
But Bain Capital bought KB Toys in 2000, after Romney retired. He wouldn't have been involved in financial decisions, although he would have profited from them. The company did choose to take on debt, buy stock and pay investors a dividend, even as the toy store chain struggled to find its niche in a volatile industry.
   
However, toy industry analysts agree that it was far more than debt that drove KB Toys into bankruptcy court. It was a troubled company before Bain bought it, and Bain wasn't able to fix it. Did more debt hurt? Probably. But to blame Romney and Bain for the chain's downfall is to ignore critical facts that would give a different impression. We rated this claim Mostly False.

• The video says Romney’s and Bain Capital’s profits from KB Toys, which later went out of business, were "described by the Boston Herald as ‘disgusting.’"

This is a classic case of attributing a quote to a newspaper that the paper never said.

"Mitt Romney and Bain saw a 900 percent return on their investment" in KB Toys, the video says. "Romney and Bain’s profits at the expense of 15,000 jobs was described by the Boston Herald as ‘disgusting.’" The on-screen visual emphasizes the point, showing the text, "‘disgusting profits,’ Boston Herald, 9/17/2009."
   
That suggests the comment came from a Herald editorial or columnist. So we looked back at the article the video referenced, a news story headlined, "KB Toys worker blasts Bain for execs' payout."

The article quoted an angry former employee -- not a newspaper expressing outrage in its own voice, which is what the voice-over suggests. We rated the statement Mostly False.

• The video says Mitt Romney has 15 homes.

An unidentified former employee of a company bought by Bain recalls the hardship -- including losing her home -- that followed the firm’s acquisition. "That hurts so bad to leave my home because of one man that's got 15 homes," the woman says.

But Romney doesn’t own 15 homes.

We found three properties that appear to be residences currently owned by Mitt Romney or his wife. The couple has a home in La Jolla, Calif., an affluent ocean front neighborhood adjoining San Diego, Calif., that they bought in 2008 for $12 million. There’s a condominium in Ann Romney’s name in Belmont, Mass., assessed at $773,000. And there’s a 2.3-acre home and property in Wolfeboro, N.H., on Lake Winnipesaukee, assessed at $4.3 million, not including outbuildings assessed at $2.5 million.

So the Romney family owns three houses collectively valued at nearly $20 million, but the Romneys don't own anything close to 15 homes. We rated the statement False.

• The video says Romney is "tearing down his 3,000-square-foot house to build an 11,000-square-foot house."

When the news of a proposed Romney family house expansion in La Jolla, Calif., came out last summer, it became something of a media sensation. Vanity Fair published a list of things that "could fit inside Mitt Romney’s new house," including a Memphis-area Enterprise-Rent-A-Car facility, Jennifer Aniston’s old house and "the world’s largest whale."

But there’s a bit of disagreement over two issues -- the square footage involved, and whether the project is actually going forward.

When the San Diego Union-Tribune first reported the proposed renovation on Aug. 21, 2011, it cited a permit application Romney had filed with the City of San Diego to bulldoze the existing, 3,009-square-foot, single-story home and replace it with a new, two-story, 11,062-square-foot structure.

But that description has been contested by Romney himself, in an interview with New Hampshire Union Leader publisher Joseph W. McQuaid on Aug. 29, 2011. McQuaid wrote: "It's not accurate, Romney said, simply. The application he made, two years ago, was to double the living space by turning one story into two. The 'quadrupling'' was a measurement of added nonliving space, including a basement and garage."

We checked with real estate experts and concluded that there is no uniform way to measure square footage, so we thought it was reasonable for the video to use the figures cited in the permit application.

As for the question of timing, the Union-Tribune reported in a Jan. 2, 2012, article that city officials described the plans as being "on hold." Most important is that an environmental review needs to take place -- and a real estate agent who is representing nearby homes said that’s no piece of cake.

So while there’s no sign that the Romneys have backed off their tear-down plan, it also isn’t imminent, and it still faces practical hurdles. So the video’s suggestion that a tear-down is under way or about to start is incorrect.

On balance, we rated the statement Mostly True.