Thursday, June 19, 2008

Everquest Scandal Continues

It is being reported this morning that the former CEO of Everquest Financial has turned himself in to the FBI pending an indictment on securities fraud charges. He is likely to be charged for misleading investors involving sub prime mortgage investments.

When this story involving Everquest first broke earlier in the year, I posted that it caused me great concern for our potential US Senate nominee. It was apparent from my research that there may be a "purp walk" for those involved in the Everquest scheme. Everquest was, if you don't remember, a company set up to offload non performing sub prime mortgage investments from Bear Stearn's hedge funds. The company tried to go public in the summer of 2007 but failed when it became apparent what the purpose of the company was. The problem for Gov. Gilmore was, and is, he was the Chairman of the Board of Everquest Financial. It was his responsibility for hiring Ralph Cioffi as CEO. I noted when the Gilmore campaign issued a press release when the story first broke that it was filled with holes. It seemed to be written by someone with no true knowledge of the situation or someone with something to hide.

As I noted some time ago this continues to be a big problem for our candidate. Ignoring it won't make it go away. Now that Cioffi has surrendered to federal authorities, what will he say? It is doubtful he will go down by himself. The Gilmore campaign needs to act quickly and decisively and come clean as to Gov. Gilmore's knowledge of any wrong doing. If accurate, condemn Cioffi for his misdeeds and plead for the Feds to get to the bottom of any illegalities. If there is a problem for Gilmore here it needs to be aired in June not October. Get it out now. The campaign has a tough enough job as it is--don't make it any more difficult.

I know as a good Republican I'm not supposed to say anything bad about our nominee. But I don't think this is speaking ill of the Governor. I had a bad feeling about this and where it was headed. I certainly hope it will go away. Usually that doesn't happen in politics.

Update 12:13 PM:
Just read the indictment of Cioffi and there doesn't seem to be anything there to directly implicate a problem for Gov. Gilmore. There is a bunch of smoke however and my point continues. Put out something from the campaign to come completely clean on his dealings with Everquest Financial. Don't defend it--let everyone know it was a bad deal lead by a CEO trying to cover a collapsing financial situation.

5 comments:

D.J. McGuire said...

Any idea if (and if so, when) the indictment will be made public?

Brandon Bell said...

Today from what I understand.

Passing said...

Might wanna rename it "s-c-a-n-d-a-l"... just a note.

D.J. McGuire said...

I jsut read the indictment (the New York Times has a link to it). It never mentions Everquest.

Not once.

Color me stunned.

Brandon Bell said...

DJ,

I was suprised also. However it appears Cioffi was trying to move assets out of the hedge funds into Everquest. My assumption as of now is Everquest fell apart before he was able to move most of the underperforming assets over to it. It was like Everquest was established to be a life boat but his main boat sank before he was able to get on it. Ironic you can't find any information on Everquest now. Maybe Gov. Gilmore just got lucky.