RI Loses Money on Point Judith Investment, Raimondo Continues to Make Money
Thursday, April 28, 2016
The Rhode Island pension system has lost 1.1 percent of its investment into a venture capital fund that Governor Gina Raimondo helped create -- and while the state has been losing money, Raimondo continues to earn hundreds of thousands in fees. Regardless of the fund's performance, Raimondo and others in the fund earn 2.5 percent annually.
"Gina Raimondo redefines venture capital 'success.' If doing well for yourself is the definition of success, then Raimondo meets and exceeds the benchmark," said former SEC lawyer and Forbes columnist Edward Siedle, who penned a column under the same verbiage on Wednesday for Forbes.
"As of September 30, the fund performance was .3% positive, which is dismal. I knew we were at the critical moment it would slip into the negative," said Siedle. "That proved correct with these latest numbers released."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAbout the Fund
The actual fund named "Point Judith Venture Fund II" raised $74,910,000 in 2006 according to SEC documents. Raimondo owns some substantial interest and continues to derive income from the fund. The State of Rhode Island invested $5 million in 2006, according to State Investment Commission.
According to Rhode Island Financial disclosure forms, Raimondo continues to have ownership in the fund and earns her portion of the management fee. And according to a report released this week by the Rhode Island State Investment Commission, the fund's internal rate of return as of December 31, 2015 is -1.1%.
"Is she a successful venture capitalist? No," said Siedle. "Had Rhode Island invested that money in the stock market during that time, they would have gotten close to 7% T-bills would have even been 1.2%."
Related Slideshow: RI Public Pension Reform: Wall Street’s License To Steal
See the key findings from Forbes' columnist Edward Siedle, who unveiled his investigative report into the RI pension system, "License to Steal," in October 2013.
"The Employee Retirement System of Rhode Island has secretly agreed to permit hedge fund managers to keep the state pension in the dark regarding how its assets are being invested; to grant mystery hedge fund investors a license to steal, or profit at its expense using inside information; and to engage in potentially illegal nondisclosure practices," said Siedle.
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