Tags: ocasio-cortez | elizabeth warren | mnuchin | sears | bankruptcy

Ocasio-Cortez, Elizabeth Warren Question Mnuchin Ties to Sears Bankruptcy

(Jonathan Weiss/Dreamstime)

By    |   Thursday, 23 May 2019 02:41 PM

Democratic U.S. lawmakers Elizabeth Warren and Alexandria Ocasio-Cortez asked Treasury Secretary Steven Mnuchin about his involvement in “dubious financial engineering and other managerial decisions” that they allege led to the bankruptcy of Sears and big job losses.

Mnuchin served on Sears’ board until Dec. 2016 and is the former college roommate Eddie Lampert, whose hedge fund, ESL Investments, purchased Sears in 2005, according to statement from Sen. Warren, D-Mass., and Rep. Ocasio-Cortez, D-N.Y.

In a four-page letter sent Thursday morning, Warren and Ocasio-Cortez asked Mnuchin a series of questions about his advisory role in Lampert’s decisions.

In a video on Twitter announcing the letter to Mnuchin, Ocasio-Cortez criticized the secretary as “a walking example" of what happens when rich and powerful people put other rich and powerful people into power.

“Eddie Lampert put his friend Steven Mnuchin on the Sears Board and then he drove the company into the ground,” Ocasio-Cortez said in the video.

Workers “deserve a Treasury secretary who fights for them,” Warren said in the video, “not someone who spent a decade raking in cash for himself at the expense of hundreds of thousands of Sears employees.”

Mnuchin has been Treasury chief for more than two years, but his investments before that remain of interest to some lawmakers. Mnuchin is the wealthiest Treasury secretary in recent history and had to divest himself of 43 business investments to avoid conflicts of interest when he took the job.

Last month, Mnuchin was named as a defendant in a lawsuit filed by the bankrupt estate of Sears Holdings Corp. The complaint alleges that he and other investors improperly transferred $2 billion of the company’s assets beyond the reach of creditors in the years leading up to Sears’ bankruptcy.

The lawsuit was filed by the restructuring team winding down Sears’ bankruptcy estate and suing on behalf of creditors, many of whom blame Lampert for the retailer’s downfall.

It followed the billionaire’s $5.2 billion purchase in February of most Sears assets, including the DieHard and Kenmore brands, after a bankruptcy auction.

The complaint seeks the repayment of “billions of dollars of value looted from Sears,” including while it was in what Lampert would later call a “death spiral” where it sold core assets to meet daily expenses with no real plan for becoming profitable.

“Had defendants not taken these improper and illegal actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy filing,” the complaint said.

Sears filed for Chapter 11 protection in October after a prolonged decline under Lampert marked by large losses, scant investment and lost market share to retailers such as Walmart Inc, Home Depot Inc and Amazon.com Inc.

Others sued include ESL President Kunal Kamlani; Bruce Berkowitz and his Fairholme Capital Management, which was a large Sears shareholder; and Seritage Growth Properties, which took over 266 of Sears’ best stores in a 2015 spinoff.

Mnuchin, a college roommate of Lampert’s at Yale University, had been a director at Sears and ESL, and previously worked with Lampert at Goldman Sachs.

In a statement on behalf of ESL, Lampert and Kalmani, ESL said it vigorously disputed the lawsuit, calling the allegations “misleading or just flat wrong,” and saying all transactions were done in good faith and for shareholders’ benefit.

Lampert created Sears Holdings through the 2005 merger of Sears, Roebuck & Co and Kmart Holdings Corp.

Material from Bloomberg and Reuters were used in this report.

© 2019 Newsmax Finance. All rights reserved.

   
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Democratic U.S. lawmakers Elizabeth Warren and Alexandria Ocasio-Cortez asked Treasury Secretary Steven Mnuchin about his involvement in “dubious financial engineering and other managerial decisions” that they allege led to the bankruptcy of Sears and big job losses.
ocasio-cortez, elizabeth warren, mnuchin, sears, bankruptcy
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2019-41-23
Thursday, 23 May 2019 02:41 PM
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