How did Penny Pritzker, sister of IL gubernatorial candidate J.B., advance her family’s financial interests through the rise of Barack Obama when she was Secretary of Commerce? What other of Obama’s Chicago buddies benefited during his administration? "Clinton Cash" author, Peter Schweizer, joins Dan and Amy to discuss his new book, "Secret Empires".
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Proft: Top of the morning, Dan and Amy, and let's get right to it, because we've got a guy whose book in 2016 really changed the nature of the 2016 Presidential Election, of course the New York Times Best Seller "Clinton Cash" is the book I'm referring to. We're STILL litigating and talking about the cases, the business dealings that Peter Schweizer documented in "Clinton Cash"; think, for example, Uranium One. We're still asking questions, the American people are still asking questions, about whether Federal law enforcement will start getting answers to some of the questions that were raised in Peter Schweizer's book. He's got a new book out that's equally compelling, and it's bipartisan in nature, the political ruling class. It's called "Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends", and there are some particularly interesting stories of business dealings from some household names in politics, how you go in with a certain amount of cash and you come out of office with exponentially more, or even you continue to accrue it while in office and it goes largely unreported...but not by Peter Schweizer. Also, he's got a very interesting case study that's particularly relevant to Illinois...and we'll start there. Peter Schweizer, thanks so much for joining us, appreciate it. Schweizer: Hey, it's great to be back on with you, thanks for having me! Proft: Really fascinated by your book, this is some really good reporting, investigating and then reporting, and translating it into a format that's very accessible. I want to start with "A real estate mogul goes to Washington", and we're not talking about Trump, we're talking about Penny Pritzker. And as you undoubtedly know, Peter, we've got another heir to the Hyatt fortune running for office in Illinois, named JB Pritzker, and so Penny's experience as Secretary of Commerce, and her relationship with Barack Obama, it couldn't be more TIMELY for our gubernatorial election this year. But, help us distill how Penny Pritzker advanced her family's financial interests, and her financial interests, throughout the rise of Barack Obama and then including when she was Secretary of Commerce. Schweizer: Well I tell you, it's massive conflicts of interest, and sort of things that if Trump were to engage in, there would be massive outrage. That's not to say that we shouldn't watch what Trump is doing, but in the case of Pritzker, it was so overt and obvious! Just to pick a very simple one, she started a real estate investment firm, PSP, while she was in Washington DC in the Obama Administration, and one of their key business fixtures was leasing office properties to the Federal government, including the Commerce Department when she was Commerce Secretary! That's a huge conflict of interest. Some of the real estate investments, buildings, that she purchased were then leased by entities like the National League of Cities, National League of Counties, who were actively lobbying the Commerce Department, and were also receiving grants from the Commerce Department. So, this is Ethics 101, and you know, you have these tentacles of financial ties and government power that overlapped, that really went largely undetected during her tenure as Commerce Secretary. Proft: The other thing about this, too, is this whole big show that politicians, particularly those that come to the table with a lot of wealth like Penny Pritzker did, make of divesting themselves from their financial interests. You report that, really, it was a little bit of...of kind of press release politics. It was a show of divesting from some companies that were not as material to her financial interests as some of the big ones. Schweizer: That's exactly right, and then there were just really simple...you know, breaches of what I would call the Ethical Code. I mean, for example, one of the things that was claimed in her Ethics filings is that she was not going to be involved AT ALL with her businesses, she was going to have an arms'-length relationship and not manage it. And yet there are accounts of her as Commerce Secretary going and having "brown bag lunches" at the companies that she was supposed to be having nothing to do with. And conducting, you know, meetings and seminars and things, actually at those companies. You know, another overt thing that was very troubling while she was Commerce Secretary, her company, PSP, actually gets the head of the real estate arm of the government's General Services Administration to quit his job and come work for HER, again raising all kinds of questions. So, you know, this is...this is a problem, an issue...certainly in the Era of Trump, but it didn't start with Trump, and the bottom line is that we have to sort of get rid of the notion that people who are very wealthy, are NOT going to be interested in cutting corners while they're in office (Proft: Absolutely!). It's ultimately not an issue, it's ultimately not an issue of money, they don't do it because of the money. They do it because they feel entitled, they do it because they feel that they can get away with it, and they do it because they feel like the rules shouldn't apply to them. Just because somebody has money, doesn't mean that they're not going to do things to cut corners and violate ethics rules. Proft: Such a great point. SUCH a great point. Jacobson: Yeah. And JB Pritzker was jealous that his sister Penny rose to the level of, you know, Secretary of Commerce, but what other friends did President Barack Obama help out? Schweizer: That's a great question! There's a friend, that a lot of people in the country don't know, he's better known in Chicago, and that's Marty Nesbitt. (Proft: Oh yeah. Jacobson: Oh yeah, Marty!) And so, you know, when Barack Obama is re-elected in 2012, Marty Nesbitt starts an investment fund called Vistria, and it has in the corporate documents the purpose of Vistria is to invest in, quote unquote, "Highly regulated industries". Now, that's a great business model...if you happen to be best friends with the "Regulator in Chief", which would be the President of the United States, and what you find with Vistria, you find with other entities as well, with people that are close to Barack Obama, that they engage in what I call "Smash and Grab". Barack Obama would go in and Smash a company, say that he didn't think it was a good company that's serving customers well, Smash it with regulations, that would drive down the valuations, down to pennies on the dollar. And then, a friend would swoop in and buy it on the cheap, only to then have the regulatory wait-listed. And in the case of Marty Nesbitt and Vistria, the classic example is the University of Phoenix, which is, you know, a for-profit college. The Obama Administration said "We don't like this school, so we're going to not allow the Pentagon to use GI Bill money to let soldiers attend that school." You can imagine what happened to the stock price, it went down from something like $100 a share down to like $3 a share, at which point Marty Nesbitt swooped in and bought it, bought it for pennies on the dollar. Only after that did the Obama Administration say "You know what? We think that we WILL allow GI dollars to flow back to that school." (Jacobson: It's criminal!) You see that pattern, you see that pattern over and over again. Proft: Wow, yeah and even when they don't swoop in and buy it, they swoop in as consultants to, you know, to...help, yes, fix it, to get regulatory relief...I mean, so it's the same...that, this is like...that, that trick is as old as Chicago Lobbyists. But, I mean, it's great to document specific examples of this. I also want to get to this story...tell us the story of "Scranton Joe"! His son, Hunter Biden, and John Kerry's stepson, Christopher Hines, get together and partner with a Ukrainian natural gas company! Schweizer: Yeah, this is one of the reasons I call the book "Secret Empires", is that you look at a guy like Joe Biden, he'll say "Well look, you know, my family doesn't have any money, look at my financial disclosure!" But what's done is the deals are funneled through your adult kids, and you don't have to disclose the assets and income of your adult kids. So, in the case of Joe Biden, and his son Hunter Biden, and Chris Hines, and a guy named Devin Archer, who is a longtime Kerry aide, they're doing deals with people from Ukraine to China. In the case of Ukraine, there's an oligarch named Igor Kolomoisky, who is a notorious oligarch. Now, you know, if you know anything about Ukraine, oligarchs can be bad enough, but if you're the most NOTORIOUS of the oligarchs, that's saying something! And that's who Igor Kolomoisky is. This guy puts Hunter Biden on the payroll of his energy company, to help him on "Compliance Matters", whatever that means. And of course, we don't know how much he made, but you can imagine it was a pretty penny for, you know, Hunter Biden to take a job like this. But, here's where it gets interesting! So, Kolomoisky, among owning an energy company, also owns a bank. Joe Biden, Hunter's father, Vice President of the United States, is responsible for the flow of US aid dollars to the Ukraine, and that aid is funneled through PrivatBank, which is owned by Kolomoysky, who again, is paying Hunter Biden large sums of money. US taxpayer dollars disappear in Kolomoysky's bank, more than a billion dollars, and a lot of people in the Ukraine believe that Kolomoysky himself siphoned that money off. Now here's where it gets interesting. When Donald Trump was inaugurated in January of 2017, in the last days of the Obama Administration, where was Joe Biden? He wasn't in Washington DC, he wasn't in Scranton, PA. He was in the Ukraine, and he was working to eliminate an investigation of Igor Kolomoysky, who of course is the oligarch that was paying his son. (Proft: Unbelievable!) Dirty dirty stuff, just dirty dirty stuff! Proft: So, the Vice President's son, at the time he's Vice President...the Secretary of State's son...at least in part of the time that he was the Secretary of State, John's stepson, John Kerry...and they're in bed with this Ukrainian...corrupt Ukrainian oligarch and sending billions of dollars of American money, taxpayer money, to cement the relations...I mean, this is the kind of remarkable stuff in this book, you almost think this is like a John LeCarre novel, but it's not, and it's well-documented. I want to get to another example, let's go to the Republican side; Mitch McConnell and Elaine Chao...of course, a Cabinet Secretary before, a Cabinet Secretary again...and how their net worth has gone from as little as $3M 15 years ago to as much as $36.5M today, (Jacobson: How did that happen?) well part of it I know is Elaine Chao comes from wealth, a family shipping company, but connect the dots for us on that explosion in net worth. Schweizer: Yeah, I mean, China figures large in this book, because China has basically embarked on a strategy, and they'll say this openly; a strategy of seeking favors from American political leaders by doing lucrative deals with their families. And that's certainly the case with Mitch McConnell. Mitch McConnell, as you said, married to Elaine Chao, the Transportation Secretary in the Trump Administration...her father launched a shipping business, but the shipping business didn't really take off until 1993, when then-Senator Mitch McConnell, who had just married Elaine, and his father-in-law go to Beijing, China. The trip is not an official government trip, it's not a government delegation...they are there as guests of the China State Shipbuilding Corporation, CSSC, which as the name implies, is wholly owned by the Chinese government. And they basically say to McConnell and Chao "We will set you up in a major way in the shipping business...we will build your ships, we will finance the construction of those ships, we will provide crews for those ships, we will provide contracts for you to ship government-owned companies' goods around the Pacific." And they say they're in, and of course the rest is history. They make a fortune, the relationship is so close between this family and the Chinese government that Elaine Chao's father and sister joined the Board of Directors of CSSC Holdings, which is one of the largest military contractors in Beijing, China. And so, they're getting rich courtesy of the help of the Chinese government. Mitch McConnell's Senate career...something very interesting happens. He was a very critical voice against China when it came to human rights, military expansion, trade issues. Then when the deal was struck, he started to change, and today, he nary has a bad word to say about the Chinese Government, and I would argue it's precisely because he knows that the family fortunes are tied up with the good graces of the Chinese Government. And that net worth increase you mentioned comes almost entirely because James Chao, the father-in-law, made a gift of between $5M and $25M to Senator Mitch McConnell, so you know, who wouldn't wish to have in-laws like THAT, right? Proft: Yeah, and you know, McConnell's been very skeptical, openly, of Trump's, you know, trade policy with respect to China, and the point is, even if Mitch McConnell was a free marketeer, it doesn't matter because of this relationship and his financial interests, he's hopelessly conflicted in his pronouncements in this area. I mean, if we could, if we...I mean, this is why this is so great, we didn't even have time to get to "The Princelings of Chicago" and Mayor Daley, former Mayor Daley's deals with the Russians and the Chinese, which is why you need to get this book. "Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends", this is just great stuff, important stuff. Peter Schweizer, the author of "Clinton Cash" is the author of this book. Peter, thanks so much for joining us, appreciate it. Schweizer: I enjoyed it, thanks a lot.