Close Ties to Goldman Enrich Romney’s Public and Private Lives

Todd Heisler/The New York Times

Goldman Sachs employees have contributed at least $367,000 to Mitt Romney's campaign.

By NICHOLAS CONFESSORE, PETER LATTMAN and KEVIN ROOSE

When Bain Capital sought to raise money in 1989 for a fast-growing office-supply company named Staples, Mitt Romney, Bain’s founder, called upon a trusted business partner: Goldman Sachs, whose bankers led the company’s initial public offering.

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When Mr. Romney became governor of Massachusetts, his blind trust gave Goldman much of his wealth to manage, a fortune now estimated to be as much as $250 million.

And as Mr. Romney mounts his second bid for the presidency, Goldman is coming through again: Its employees have contributed at least $367,000 to his campaign, making the firm Mr. Romney’s largest single source of campaign money through the end of September.

No other company is so closely intertwined with Mr. Romney’s public and private lives except Bain itself. And in recent days, Mr. Romney’s ties to Goldman Sachs have lashed another lightning rod to a campaign already fending off withering attacks on his career as a buyout specialist, thrusting the privileges of the Wall Street elite to the forefront of the Republican nominating battle.

Newt Gingrich, whose allies have spent millions of dollars on advertisements painting Mr. Romney as a heartless “vulture capitalist,” seized on Mr. Romney’s Goldman ties at Thursday’s Republican debate in Florida, suggesting that he had profited through Goldman on banks that had foreclosed on Floridians. And as the fight over regulation of financial firms spills onto the campaign trail, Mr. Romney’s support for the industry — he has called for repeal of the Dodd-Frank legislation tightening oversight of Wall Street — may draw more fire.

Mr. Romney’s positions and pedigree have helped draw to his side major donors in the financial world. The securities and investment industry has given more money to Mr. Romney than any other industry, according to the Center for Responsive Politics, and some of its leading figures have donated millions of dollars to Restore Our Future, the “super PAC” bolstering Mr. Romney’s campaign. Goldman employees are also the biggest source of donations to Free & Strong America PAC, a group Mr. Romney founded but no longer controls.

But Mr. Romney’s personal finances are particularly entwined with Goldman.

His federal financial disclosure statements show Mr. Romney and his wife, their blind trusts and their family foundation to be prodigious consumers of the bank’s services. In 2011, Mr. Romney’s blind trust and the couple’s retirement accounts held as much as $36.7 million in at least two dozen Goldman investment vehicles, earning as much as $3 million a year in income. Mrs. Romney’s trust had at least $10.2 million in Goldman funds — possibly much more — earning as much as $6.2 million.

Tax returns released by the campaign this week also highlighted some of the privileges Mr. Romney enjoyed as a friend of Goldman: In May 1999, a few months after he left Bain to run the Salt Lake City Olympics, Goldman allowed Mr. Romney to buy at least 7,000 Goldman shares during the firm’s lucrative initial public offering — a generous allotment even among Goldman clients, according to people with knowledge of the deal. When Mr. Romney’s trusts sold the shares in December 2010, a few months before he formed his presidential exploratory committee for the 2012 race, they returned a profit of $750,000.

A spokeswoman for Goldman declined to comment, as did a spokeswoman for Mr. Romney.

Investing with Goldman was not without risks: Like other Goldman clients, the Romneys invested money in a family of funds known as Whitehall, which placed highly leveraged bets on office buildings, casinos and hotels. Some Whitehall deals collapsed during the financial crisis, saddling Mr. Romney and its other investors with big losses.

And some of the attacks on Mr. Romney have overreached. While Mr. Gingrich charged on Thursday that his rival did business with a firm that “was explicitly foreclosing on Floridians,” that is not accurate: The family’s holdings include a Goldman fund that, like other investment funds, has invested partly in mortgage-backed securities. Goldman sold its mortgage servicing arm, Litton Loan Servicing, last year.

But other elements of Mr. Romney’s personal and business ties to Goldman may prove more controversial. Bain’s mid-1990s acquisition of Dade Behring, a medical device maker with factories in Florida, has become a totem of the economic upheaval that private equity can inflict. Goldman invested in the acquisition, which brought the bank $120 million and Bain $242 million — but led to the layoffs of hundreds of workers in Miami. Democrats hammered Mr. Romney over the deal this week.

When Mr. Romney was building Bain into one of the world’s premier private equity firms, Goldman’s bankers clamored for Bain business, and won assignments advising or financing an array of Bain deals, including Bain’s 1997 $800 million buyout of Sealy, the nation’s largest mattress company, which it later sold.

As Mr. Romney amassed his fortune, Goldman also offered up the services of an elite Boston-based team in the bank’s private wealth management unit. The relationship gave him access to Goldman’s exclusive investment funds, including private equity vehicles known as Goldman Sachs Capital Partners.

Mr. Romney is far from Goldman’s largest client — some investors have billions of dollars at the firm — but his political connections and founding role at Bain have elevated his importance there. His Goldman investments are handled by Jim Donovan, who has built one of the largest-producing businesses in Goldman’s private wealth management unit, managing several billion dollars for the firm’s individual clients.

Goldman gave Mr. Romney’s trusts access to the bank’s own exclusive investment funds and helped him execute an aggressive and complex tax-deferral strategy known as an “exchange fund” in 2002. (Since 2003, most of Mr. Romney’s money has been held in blind trusts, meaning that he no longer makes many of his own investment decisions.) According to tax returns released this week, the family’s three principal trusts earned more than $9 million from various Goldman Sachs investment vehicles in 2010.

Floyd Norris, Michael Barbaro and Kitty Bennett contributed reporting.