Roob Files Election Challenge To Wallace's Petitions

Apparently the train wreck known as Mitch Roob, who totally turned the Family & Social Services Administration upside down in his successful effort to steer hundreds of millions of dollars to his former employer, ACS, has reappeared to derail the gubernatorial campaign of Jim Wallace. WRTV is reporting that Roob, who left as head of the Indiana Economic Development Corporation last year, filed a challenge to the petitions filed by Wallace's campaign in an effort to get him tossed from the Republican primary ballot:

A former longtime aide to Gov. Mitch Daniels is challenging GOP businessman Jim Wallace's qualifications to run for governor.

Mitch Roob filed a challenge with the Indiana Elections Division on Thursday afternoon charging that Wallace had not collected enough signatures from certified voters to run against U.S. Rep. Mike Pence in May's Republican primary.

Roob formerly served as Daniels' economic development chief and human services secretary.

Wallace came up 14 signatures short of the 500 needed in Indiana's 7th District last week. The Indiana Elections Commission is scheduled to hear the Wallace challenge next Friday.

The four-member panel is also set to hear more than two dozen challenges to Republican presidential contender Rick Santorum's appearance on the May ballot. Santorum came up 8 signatures short in the 7th District.

Like the challenge to Santorum's presidential ballot petitions, questions over the number of valid signatures filed with Wallace's petitions arose in Marion County in which the 7th District is located. Typically, a candidate files the petitions and as long as there are a sufficient number of signatures on the petitions, it is presumed the candidate has satisfied the requirement, except in Marion County. Here, a Republican-appointed, county-paid employee scoured the petitions filed by both the campaigns of Santorum and Wallace to ascertain if all of the signatures on the petitions were voters residing in the 7th District. Most, but not all, of Marion County's voters reside in the 7th District. The government elections employee, Cindy Mowery, did the work that normally falls to an opposing candidate's campaign to marshal evidence and lodge a challenge against an opponent's candidacy.

Santorum has questioned Marion County’s decision to throw out 49 signatures. But Cindy Mowery, Republican member of Marion County Board of Voter Registration, said the signatures are still invalid.

“I don’t think any of these signatures that they brought in matter,” Mowery said. As of Monday afternoon, Mowery said she had not done a thorough review of the signatures, but she said she talked with Santorum campaign lawyers in the morning and based on their arguments decided the county’s earlier decision to disqualify him for the ballot would likely stand.

Roob didn't have to go down to the Clerk's office and review those petitions himself; he relied on the information Mowery furnished to him. That's not how the process is suppose to work. That's tantamount to a judge gathering evidence and announcing the findings of that evidence without a party having to do that work themselves before filing a lawsuit.

Remember when Marion Co. Clerk Beth White learned that Patrice Abduallah had used an address on his statement of candidacy that was located outside the 15th District he represented on the City-County Council? She notified him by letter of the problem, but she did not announce the discrepancy publicly or otherwise put others on notice so they could file a complaint against his candidacy. When people like myself complained about her lack of candor, White said as the county's chief elections officer she had no right or legal obligation to challenge the sufficiency of Abduallah's statement of candidacy. Yet Cindy Mowery is scrutinizing the petitions of some Republican candidates like Santorum and Wallace and publicly declaring them insufficient. What gives? Does anyone care? In 2008, Barack Obama was able to file petitions containing hundreds of forged signatures on his Indiana ballot petitions and nobody even noticed. The Indianapolis Star is still sticking to its blackout order on coverage of that story broken by the South Bend Tribune and Howey Politics.

Big Bucks Flowing Into Governor's Race

U.S. Rep. Mike Pence has raised more than $5 million in his bid to succeed Gov. Mitch Daniels compared to $1.7 million raised by his likely Democratic opponent, former House Speaker John Gregg. Pence's campaign financial disclosure statements show he has $3.7 million on hand to spend, while Gregg has more than $1.2 million. It looks like Pence's campaign is proving very costly to run, even if he does have a big money advantage over Gregg. His opponent had a more sharply worded response to Pence's money advantage according to the Star's Mary Beth Schneider:

"If you're a sitting member of probably the most unpopular elected body in the United States, you'd need more money to get people to vote for you. You've got to get the stink off of you," Gregg said. "It's going to take a lot of cash to scrub that congressional whiff off of him."

Pence, unlike Gregg, faces a well-financed primary opponent. Businessman Jim Wallace has raised more than $1 million, most of which came in a form of a loan from the candidate. Wallace has more than $786,000 on hand. Libertarian Rupert Boneham's nontraditional, third party candidacy has raised only $16,000 to date. Boneham begins the race with very high name recognition due to his successful appearance as a "Survivor" contestant.

It really bothers me how campaigns are becoming increasingly expensive, and the major party candidates are relying more and more on a handful of very wealthy individuals to finance their campaigns. Many of Pence's large donations are coming from people who don't even live in Indiana. It doesn't offer much hope to the discontented masses that their voices will be heard by those elected to office. Last year's Indianapolis mayor's race cost close to $9 million. At the pace the gubernatorial candidates are going, the cost of this year's governor's race will break all-time records. Pence is already out-pacing Daniels' record-setting fundraising from his first campaign for governor.

Jim Wallace Filming New Campaign Ad

I ran into businessman Jim Wallace on Mass Avenue today while returning from lunch and had a friendly chat with him. Wallace was in the midst of filming a new TV spot for his 2012 GOP gubernatorial campaign. Like Gov. Mitch Daniels, Wallace loves riding his motorcycle. There are lots of motorcycle racing fans in town this weekend for the running of this weekend's MotoGP race at the Indianapolis Motor Speedway.

First Wallace Ad Hits The Airwaves

GOP gubernatorial candidate Jim Wallace hits the airwaves with his first ad. It seems to hint that he sees the Washington experience of U.S. Rep. Mike Pence as his opponent's Achilles' heel. Pence may just bolster that argument if he foolishly supports Boehner's plan to raise the national debt limit without first addressing Washington's appetite for taxing and spending.

Pence's Insulting Campaign Strategy

U.S. Rep. Mike Pence officially kicked off his campaign for governor last month, but he has decided he won't discuss what he'll do if he's elected governor until after he secures the Republican nomination next May. His GOP primary opponent cause that strategy insulting, and I couldn't agree more. From the AP's Tom Lobianco:

Hoosiers used to the big ideas of Gov. Mitch Daniels time in office may find themselves a tad parched as they wait for ideas from the early front-runner in the race to succeed him in November 2012.

Rep. Mike Pence leads a small pack of candidates for governor handily in campaign cash and enjoys the status of being the Republican establishment candidate in a GOP-dominated state.

But one of his first campaign promises, made the day before he kicked off his campaign last month, was that he won't talk policy until after the May 2012 Republican primary -- which he's widely expected to win.

"I was insulted," said Fishers businessman Jim Wallace, who is challenging Pence for the Republican nomination. "I think that presumes voters don't care or don't know that there should be a serious discussion."

Pence spokesman Matt Lloyd won't comment, and the Pence campaign won't release the names of Republicans who are working on his policy team and advising him on state issues. But the campaign isn't lacking for experience: Chris Atkins, Daniels' former budget aide, is running Pence's policy operation.

Pence's lack of transparency about his plans if elected governor and who is helping him craft his policy positions instill no public confidence in him. This is rather strange behavior from a man who has had no shortage of opinions about how badly he thinks this country has been governed by the Washington decision-makers during his long tenure in Congress and prior to that as a radio talk show host. Pence's only saving is that his likely Democratic opponent, career politician/State House lobbyist John Gregg, is equally avoiding discussing his plans if elected governor. Gregg continues to run for governor as an exploratory candidate rather than make his candidacy official. He claims to be on "a statewide listening tour."

Wallace Says Federal Takeover Of Business' Major Investor No Problem

The federal government has taken over the controlling shareholder of the business GOP gubernatorial candidate James Wallace founded, TWG Capital, to help recover tens of millions of dollars it owes the SBA, but he says the federal takeover poses no problems to his business. The Star's John Russell has Wallace's reaction to a story first reported by the Chicago Sun-Times, which has been closely tracking developments concerning Cardinal Growth because of its financial ties to former Chicago Mayor Richard Daley's son, Patrick:

Just a few months after launching a campaign for the Republican nomination for governor, strongly touting his business experience, James Wallace is facing an unclear future for his company, TWG Capital of Indianapolis.

The company's biggest investor, Chicago venture capital fund Cardinal Growth LP, is being taken over by the federal government after failing to repay $21.4 million in loans from the Small Business Administration.

The ties between the two firms run deep. Cardinal Growth owns about 80 percent of Wallace's company, based on East 75th Street. Both of TWG's board members are principals with Cardinal Growth . . .

Wallace said his Indianapolis company, which provides money to insurance brokerages and agents, is not among the underperforming assets.

He said TWG is solvent, profitable and current on its financial obligations. But it declined to provide financial records to The Indianapolis Star and referred all such questions to the court receiver in Washington, who could not be reached for comment Tuesday.

"We're rather insulated from Cardinal's other portfolio companies, but my understanding is that they had eight or ten other companies, the bulk of which had already been sold, some at a profit, some at a loss, which triggered an audit by the SBA," Wallace said in an interview Tuesday . . .

TWG remains part of the Cardinal operation, as does one other company, a shrimp distributor in California.

Wallace said the overall impact of Cardinal's financial problems would be "pretty minimal" on TWG. He said the receiver could sell Cardinal's stake in TWG to another company. He said TWG was not on the hook to repay the SBA loan.

"We're not at all affected by one of our investors' liquidation," he said.

He added: "But for the hiccup on Cardinal's part, our business is doing fine."

Wallace rolled out his campaign for governor in May, saying his business experience could trump the star power of front-runner Mike Pence.

But some political observers say the business problems could become a campaign issue for Wallace. "Whether or not this financial problem is Wallace's fault, it won't help people from bringing it up," said Andy Downs, assistant professor of political science at Indiana University Purdue University-Fort Wayne.

Wallace, a former Hamilton County Council member, is largely self-funding his campaign. He told The Star last week that his campaign will report about $930,000 in cash on hand later this month.

Russell's story does not seek comment from Wallace on the role Patrick Daley has had with his firm. According to the Sun-Times, Daley has received payments from Cardinal Growth related to its investment in TWG. Daley's financial ties to Cardinal Growth has drawn the scrutiny of federal investigators because the company invested in at least two businesses that that won lucrative contracts with the City of Chicago while his father was mayor.

Big Money Funding Mike Pence Gubernatorial Bid

Mike Pence's gubernatorial committee will report raising upwards of $1.5 million to date. While the quarterly report for his campaign committee is not due to be filed with the Indiana Elections Division until July 15, reports of large contributions raised since he announced his campaign last month give us a hint who he is relying on to bankroll his campaign--mainly large, wealthy contributors. Transfers from his federal congressional committee represented more than $250,000 of the $1.5 million raised. Pence relied on his federal committee to raise money for his gubernatorial bid to skirt a state law that prevented candidates from conducting fundraising activities while the General Assembly was in session this year. After backing out the transfers from his federal committee, he raised more than $630,000 from large contributions of $10,000 or more.

Pence's largest contributions included a pair of $100,000 contributions from billionaire Dean White and Anthony Moravec of Columbus. New Yorker Jeremiah Milbank III gave Pence $50,000. REI Real Estate Services, Stanley Herzog, James Ackerman, Hart Hasten and Fred Klipsch each chipped in $25,000. Fehsenfeld family members contributed $30,000. Pence received contributions of $10,000 to $12,500 from two dozen contributors.

Pence's GOP primary opponent, businessman James Wallace, reportedly has raised $1,000,000. According to reports on file with the Indiana Election Division, Wallace contributed $987,000 of his own money to his campaign. An insurance services company founded by Wallace, TWG Capital, is under scrutiny by the federal government according to recent reports by the Chicago Sun-Times because of capital it received from a Chicago-based venture company. Cardinal Growth owes the Small Business Administration more than $20 million which it borrowed to help fund a number of businesses, including TWG Capital. The federal government has taken control of Cardinal Growth and, according to the Sun-Times, it is seeking to liquidate several of the businesses that received money from Cardinal Growth, including TWG Capital. Cardinal Growth has financial ties to Patrick Daley, son of former Chicago Mayor Richard Daley, which may have helped some companies that received funding from Cardinal Growth land lucrative city contracts while Daley was mayor. The two principals of Cardinal Growth serve on the board of directors for TWG Capital.

On the Democrat side, former House Speaker John Gregg has reportedly raised more than $700,000 by the end of June. No reports are on file yet for him as his committee is currently set up as an exploratory committee. His exploratory committee's first report, which is oddly chaired by Marion Co. Auditor Billie Breaux, will be due by July 15.

UPDATE: James Wallace appeared on Abdul Hakim Shabazz' WXNT show this morning. He says he will report for the quarter contributions of $930,000 that includes contributions from family and friends. The large contribution reports already on file with the Elections Division shows contributions of $987,000 from Wallace in the form of loans. I'm not sure how that comports with what he said on Abdul's show. Shabazz, disappointingly, asked Wallace nothing about the reports in the Sun-Times about the ongoing saga of his company's funding source, Cardinal Growth, and its ties to Patrick Daley.

Venture Fund That Financed Indiana Gubernatorial Candidate's Business Taken Over By Feds

A Chicago venture capital fund that helped finance a company founded by Indiana GOP gubernatorial candidate James Wallace has been taken over by the federal government. Cardinal Growth, which also has financial ties to former Chicago Mayor Richard Daley's son and nephew, owes taxpayers $21.4 million from funds it borrowed from the Small Business Administration, some of which went to Wallace's Indianapolis-based TWG Capital. From the Sun-Times:

A Chicago venture capital fund whose projects paid more than $1.2 million to former Mayor Richard M. Daley’s son has been taken over by the federal government, which says the fund owes taxpayers $21.4 million.

Cardinal Growth L.P. — which was run by attorney and former federal prosecutor Robert Bobb Jr. and accountant Joseph McInerney, a close friend of Daley’s son, Patrick Daley — borrowed nearly $51 million from the U.S. Small Business Administration over the past decade but has been unable to repay $21.4 million, court records show.

U.S. Attorney Patrick Fitzgerald filed the civil lawsuit on behalf of the federal agency on June 15. The SBA is seeking to liquidate Cardinal Growth L.P. because of mounting losses that threaten the fund’s ability to repay the taxpayer money it got from the agency.

The venture capital fund agreed to be liquidated, acknowledging that it has mounting losses.

“There’s been significant write-downs on the portfolio,” says Alan B. Roth, its attorney. “If a company is not performing well, you have to write down its value.’’

A federal judge approved the plan last week, removing Bobb and McInerney as the fund’s general partners and ordering them to turn over their records to the SBA . . .

Cardinal's two principals,  Robert Bobb, Jr. and Joseph McInerney, serve on the board of directors for Wallace's TWG Capital, an insurance services company. According to the Sun-Times, Cardinal received $2 from the SBA for every $1 it raised from private investors to invest a variety of companies, including companies that won lucrative contracts with the City of Chicago. Mayor Daley's son Patrick received money from Cardinal for his assistance in enticing investors to invest in Cardinal. According to an earlier story by the Sun-Times, the federal government was seeking to liquidate some of the businesses financed by Cardinal, including Wallace's TWG Capital. Wallace announced last month that he intended to seek the 2012 gubernatorial nomination of the Republican Party.

GOP Gubernatorial Candidate Tied To Chicago Venture Fund That Made Big Bucks For Daley Son

Businessman James Wallace is the founder of TWG Capital, an insurance services company, and he recently announced his campaign to seek the 2012 Republican gubernatorial nomination in Indiana. According to a story in today's Chicago Sun-Times, TWG Capital received its funding through Chicago-based Cardinal Growth, a company through which former Chicago Mayor Richard Daley's son earned big fees helping raise capital for businesses that won big deals with the City of Chicago. Patrick Daley also has financial ties to Wallace's TWG Capital according to the Sun-Times. Cardinal Growth is now at the center of a federal investigation. From the Sun-Times:

For years, City Hall maintained that Mayor Richard M. Daley’s son, Patrick Daley, had no financial stake in the deal that brought wireless Internet service to city-owned O’Hare Airport and Midway Airport.

But it turns out that the younger Daley still reaped a windfall of $708,999 when Concourse Communications was sold in 2006, less than a year after the Chicago company signed the multimillion-dollar Wi-Fi contract with his father’s administration, company documents obtained by the Chicago Sun-Times show.

Concourse disclosed its investors to the city, as required. Patrick Daley wasn’t one of them.

But he still had a stake in Concourse’s success, the company documents show, and profited as a result when the company was sold after winning the city contract.

Daley’s role was as a middleman who lined up investors for Concourse. Among them: M. Blair Hull, the millionaire commodities trader who mounted an unsuccessful campaign for the Democratic Party’s nomination for U.S. Senate in 2004.

On June 27, 2006, nine months after it signed the potentially lucrative city contract for airport Wi-Fi service in Chicago, Concourse was sold — at a 33 percent profit — to Boingo Wireless Inc. for $45 million.

Three days later, Patrick Daley got his first payment as a result of the sale, the documents show — for $164,789.

Over the next 17 months, with Daley now serving in the U.S. Army, he got four more payments resulting from the sale, totaling $544,210, the documents show, for a total of $708,999.

Shortly after Patrick Daley received the last of those payments, his father’s City Hall press secretary, Jacquelyn Heard, told a Sun-Times reporter in a Dec. 3, 2007, interview, that Patrick Daley “has no financial interest with the Wi-Fi contract at O’Hare.”

Exactly how the deal was structured isn’t clear. Neither Patrick Daley nor his father replied to interview requests. But the amount that Patrick Daley was paid was linked to the sale price of the company, a source with knowledge of the arrangement said: The more the company was sold for, the more Patrick Daley would be paid.

The elder Daley — who left office May 16 after deciding not to seek re-election — is now in business with his son. The two Daleys are working out of offices on Michigan Avenue on international business deals.

Patrick Daley’s Wi-Fi windfall was part of $1.2 million he was paid as a result of deals he had with Cardinal Growth, a Chicago venture-capital firm that invested in Concourse and other businesses. Among those businesses was a sewer-inspection company that got millions of dollars in no-bid city-contract extensions.

In addition to Patrick Daley, Cardinal Growth also has had business dealings in which it made payments to two of his cousins, Robert G. Vanecko and Richard J. “R.J.” Vanecko.

According to the Sun-Times, Cardinal Growth borrowed $50 million from the federal government that it used to buy businesses, and it stopped making payments to Daley's son four months after Cardinal Growth received a subpoena from a federal grand jury investigating payments made to Daley relatives that might be related to companies that won city contracts:

Patrick Daley’s payments from the sale of Concourse Communications ended in March 2009 — four months before Cardinal Growth received a subpoena from a federal grand jury investigating his and Robert Vanecko’s roles in the sewer-inspection business.

The sewer company’s president has since been indicted on federal charges that accuse him of minority-contracting fraud. Patrick Daley and Robert Vanecko haven’t been charged with any crime. Nor have Cardinal Growth or its owners been charged with any wrongdoing.

Cardinal Growth is owned by Robert Bobb, who’s a lawyer and former federal prosecutor, and Joseph McInerney, an accountant. The firm has raised millions of dollars from private investors and, with those investments in hand, has been able to borrow $50 million from the U.S. government to use in its projects.

Among the businesses that Bobb and McInerney acquired with that money: Concourse and the sewer company, Municipal Sewer Services.

What's the current tie-in with Wallace? The Sun-Times reports his TWG Capital is among the businesses in which Patrick Daley still has business ties and is among six companies the Small Business Administration is seeking to liquidate to recover $20 million of the $50 million the SBA loaned to Cardinal Growth:

Six of the businesses now are facing forced liquidation by the U.S. Small Business Administration, which is trying to recover $20 million it’s still owed from the $50 million in loans it made to Cardinal Growth . . .

Patrick Daley still has business ties with two companies that have received private and government funding through Cardinal Growth: Certi-Fresh Foods LLC, a shrimp-distribution company in Los Angeles, and TWG Capital, an insurance-services company in Indianapolis. They are among the six Cardinal Growth companies facing forced liquidation by the SBA.

Robert Bobb and Joseph McInerney are listed as the only two members of TWG Capital's board of directors according to the company's website in their roles with Cardinal Growth.  Wallace founded TWG Capital in 2000. It received its first funding from Cardinal Growth in June, 2003 according to the company's website. The Sun-Times reports that Patrick Daley began working for Cardinal Growth one year earlier in 2002. I'm guessing Wallace's ties to the Daley family won't be helpful to his gubernatorial campaign.