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Details contained in a lawsuit brought against Gov. Bruce Rauner by a former business associate have called into further question the governor’s insistence that he no longer plays a role in his business investments.
Appearing before the Chicago Tribune’s editorial board Monday, Rauner was asked to address an account from former associate Harreld "Kip" Kirkpatrick III describing how the two discussed the business investment on which Kirkpatrick’s case centers.
"No private business was conducted on public property," Rauner told the Tribune during a mini-debate with his rival in the March Republican primary, state Rep. Jeanne Ives of Wheaton. "That issue is a contract dispute, contract dispute. It’s not an investment decision. A contract dispute that stemmed from before I was governor."
Pressed on whether he spoke with Kirkpatrick at all about that dispute, the governor doubled down: "I was not doing private business on state property," he said. "It’s not an investment decision, it’s not about making investments. Not about assets."
Kirkpatrick’s lawsuit was filed last October under court seal, an unusual move that kept its allegations hidden from public view. At the time, Rauner told reporters he had nothing to do with the lawsuit because he had signed "blind trust commitments" before taking office that ceded control of his investments to a New York investment house.
We fact-checked that claim at the time, rating it Half True. Despite the name Rauner used, he hadn’t really set up a blind trust that would have prevented him from managing his money. Rauner instead signed a power of attorney in which the governor retained the authority to handle his investments along with the New York firm.
But the issue flared again in recent days after a Cook County judge removed the lawsuit seal, revealing that Kirkpatrick claimed he and Rauner were fighting over how to divvy up a $67.5 million settlement pot involving a separate legal dispute tied to an investment both had stakes in.
In the lawsuit, Kirkpatrick claimed he met twice with Rauner in 2015 to discuss their differences, including once on the back porch of the governor’s mansion in Springfield. So if Kirkpatrick’s version of events is correct, how then can Rauner claim he has been hands-off with his investments? We decided to take a closer look.
The particulars of the investment spat between Rauner and Kirkpatrick are only peripheral to the credibility questions raised by Rauner’s actions. What is central is an action taken by Rauner just days before he assumed office in 2015 aimed at easing public concerns that his vast wealth might conflict with his actions as governor.
Back then, Rauner, a multimillionaire private equity investor, announced that he had entered into "blind trust commitments" in which he authorized a New York investment house to handle his financial affairs.
The move came against the backdrop of his refusal to release detailed tax records that could clearly show how his money was handled.
The name Rauner gave that instrument was somewhat misleading. He did not enter into a blind trust, which would have required him to cede control over his investments to a third party.
Instead, what Rauner did was sign a power of attorney in which Rauner retained the authority to manage his investments along with the New York firm.
When Kirkpatrick filed his lawsuit in October, Rauner invoked his blind trust commitments to suggest the legal action, including the sealing of the court file, was not his doing and he knew little about it. We rated that Half True because the power of attorney he signed did not preclude him from involvement and, with the file sealed, there was no way to check his claim.
But when the file was unsealed recently, pieces of Rauner’s story began to unravel. For instance, Rauner insisted in October that he was not behind the push to keep the case allegations sealed and out of view.
But filings from Kirkpatrick’s lawyers contradict that claim. They contend that the governor invoked a confidentiality provision in a business agreement with Kirkpatrick to request that the complaint be filed under seal.
What’s more, a report by The Associated Press confirmed one part of the allegations leveled by Kirkpatrick: Rauner’s state-paid scheduler had arranged a meeting between the governor and Kirkpatrick on May 11, 2015, at the executive mansion in Springfield.
Rauner spokeswoman Rachel Bold did not respond directly when we reached out to the governor’s office last week to clarify whether he still denied speaking with Kirkpatrick or whether he simply disputed Kirkpatrick’s account of their meeting.
"This is a contract dispute that stems from before Governor Rauner took office," she wrote in an email. "The governor is seeking to enforce the terms of that contract. Court filings dispute Mr. Kirkpatrick’s allegations, including his characterizations of any conversations."
Bold added that the governor "is not involved in day-to-day investment decisions." She responded almost word-for-word again Monday when we reached out for clarification following Rauner’s remarks at the Tribune.
Rauner said, "No private business was conducted on public property."
At its core, the question raised by the lawsuit against Rauner is simple to address. He has claimed from his first days as governor that he would have no involvement in managing an investment portfolio worth hundreds of millions of dollars to avoid any appearance of a conflict of interest.
Kirkpatrick’s lawsuit contends Rauner violated that pledge. In defending himself, Rauner has appeared evasive and is now attempting to parse the difference between personal involvement with an investment and personal involvement with a contract dispute stemming from an investment.
It is a distinction without a difference. Rauner is being disingenuous and obtuse, and we rate his statement as False.
Bruce Rauner, Chicago Tribune Editorial Board endorsement session, streamed via Facebook, Jan. 29, 2018
Email interviews with Rachel Bold, Rauner spokeswoman, Jan. 24 and Jan. 29, 2018
Private business meeting on Rauner’s calendar, The Associated Press, Jan. 25, 2018
Rauner’s lawyers accuse ex-business partner of ‘pattern of self-dealing,’ Chicago Sun-Times, Jan. 26, 2018
Lawsuit: 300% profit on $5M investment ‘apparently not enough for Rauner,’ Chicago Sun-Times, Jan. 24, 2018
Cook County judge orders lawsuit against Rauner ‘made open to the public,’ Chicago Sun-Times, Jan. 19, 2018
Rauner’s "blind trust" procedures don’t excuse lawsuit secrecy, PolitiFact Illinois, Oct. 27, 2017
Gov. Bruce Rauner denies he made request to keep legal battle secret, Chicago Sun-Times, Oct. 20, 2017
Rauner fights to keep lawsuit sealed as he seeks to have it dismissed, Chicago Sun-Times, Oct. 19, 2017
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