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I don't understand why people don't see Romney's wealth is based on fraud
Topic Started: Oct 14 2012, 10:36 PM (46 Views)
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Their business model was very simple. Go look at a company and see who the largest shareholder is. Buy just enough shares to have more than that guy. Better yet, put up 5% cash and borrow 95% from a bank for those shares. Then go to the company and say, stop spending money on maintenance, training, marketing, and development, and lay some people off to improve cash flow for a couple months. Then go to the banks and borrow money, say $10,000,000 for one year at 5%. So in one year you have to repay $10,500,000. But give me $3 million of that (30%) as my fee. So now you have $7 million and have to repay $10,500,000, effectively $3.5 million on $7 million, or 50% interest. Then I'll sell my shares and go away, and good luck paying that money back. That's how they operated on every deal. It's fraud because the banks would never have lent the money if they'd known their client would have to repay at 50%. And several of the lenders did eventually claim "unjust enrichment" for Bain in bankruptcy court, a big step when you're talking about a possible future president. The wonder isn't that almost half of the companies went bankrupt or lost money, it's that some of them didn't faced with this loansharking, and the reason for that of course is that Bain sold its shares to the competitors of these companies, and that's pretty much the only reason they didn't all fail. It was the same deal the mafia gives a business, nothing different.
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