Reading Edward Siedle’s recent Forbes column, which is the text of a speech that he gave to a “Rally for Pension Justice,” involving the Rhode Island Retired Teachers Association, one can’t help but wonder why his claim isn’t more widely known around the state:
In 2007, Rhode Island current governor and former state treasurer, Gina Raimondo was a co-founder and partner in a very small local venture capital firm with very little money under management and a very short investment track record.
Miraculously, Gina succeeded in convincing the $8 billion state pension to invest $5 million in a brand new fund her nascent, unproven firm was offering called the Point Judith Venture Fund II.
According to Siedle, that one deal grew Point Judith’s portfolio by 33%, but the state considered the investment reasonable because the firm “had a billionaire hedge fund investor in New York backstopping” it. Then, the state gave Point Judith a 2.5% fee, even though the sales presentation only asked for 2%, which is the industry standard.
There’s more. Per Siedle, Point Judith gave Raimondo an ownership interest in the pension investment, with a $125,000 minimum payout per year, no matter how the fund did. That revelation puts a much different light on the annual story we hear about Point Judith extending its contract with the pension fund without the state’s consent due to secret provisions allowing its investors to do so.
How is this not a regularly revisited investigative story in the Rhode Island press? Granted Siedle was talking to a very interested crowd and telling them something sure to keep their interest, but he’s a credible guy in this area. After all, the article appeared in Forbes.
Maybe the layers of secrecy and PR professionals, combined with the specialized knowledge to investigate it, move this down local reporters’ to-do list, especially given the flagging journalism industry, which can afford fewer and fewer specialized investigators. (I’ll admit to being unable to devote time to the story, myself.) Whatever the mechanism, though, it seems as if a healthy civic environment would somehow get this story into the awareness of more Rhode Islanders.
There’s something very similar between this story and the conspicuously timed clean-out of the JCLS offices just as the Speaker of the House is under fire for that agency’s activities. That’s easier to speculate about, though, because white-collar schemes aren’t as easily understood.