How ‘Blind’ Is Governor Rick Scott’s Blind Trust, Really?

The last poll I saw concerning the U.S. Senate race in Florida between Democratic incumbent Bill Nelson and current Republican Governor Rick Scott had Governor Batboy slightly ahead. It is, of course, Too Early To Call anything definitive about the race but, given the fact that Scott oversaw the largest Medicaid fraud case in U.S. history, we can conclude that any story concerning possible financial shenanigans by Scott is prima facie worthy of belief, and the Miami Herald dropped a whopper on Wednesday.

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Continental Structural Plastics, a Michigan-based company that supplies lightweight plastic components to the automotive industry, sold for $825 million on Jan. 3, 2017 to a Japanese conglomerate. The company, bought by Scott in 2005 for an undisclosed price, was one of the largest assets in the millionaire governor’s portfolio.

Documents filed with the U.S. Securities and Exchange Commission, the Japanese Financial Services Agency, and the Florida Commission on Ethics — and reviewed by the Herald/Times — show that Scott and his family controlled 66.7 percent of CSP at the time it was sold, a transaction that Scott did not have to report on his annual financial disclosure form filed June 29.

Since becoming governor, Scott has shielded his assets from public scrutiny by using a blind trust and a series of privately held partnerships in his name and the name of his wife, Ann Scott. As the wealthiest governor in Florida history with a net worth of $232 million, Scott’s latest report that his net worth rose by $83 million in a single year was notable even for him.

At issue is a so-called “blind trust” in which the governor allegedly parked his not inconsiderable assets at the time of his election. (As the Herald points out, he is the only elected official to take advantage of a Florida law that allows this.) The Herald wonders how well this particular blind trust can see.

The assets in Scott’s trust are supposed to be blind to him, and managed by an independent trustee. He was to have no knowledge of transactions within the trust and make no decisions regarding it. But for years, the Herald/Times reported in 2014, Scott’s family bought and sold assets that mirror those held by Scott’s blind trust and had them managed by the same team of financial advisers who worked on Scott’s investments before he became governor.

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So how “blind” was that trust to the governor? We don’t know.

Scott’s son-in-law, Jeremy Kandah, served as a non-voting member of the board of directors of CSP in 2014 and 2015, the Sun-Sentinel reported last year. (Kandah has since been divorced from Scott’s daughter, Jordan, according to records in Texas, where Kandah lives.)

Scott’s longtime financial adviser, Gregory D. Scott, was also a longtime member of the CSP board.

Was the governor aware of those connections? We don’t know.

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Meanwhile, the trust seems to be making a beeline for profits fairly well. The Herald explained what it does know at the moment, including:

▪ The sale of CSP to a subsidiary of Teijin for $825 million was announced in September 2016 and completed Jan. 3, 2017. The company makes lightweight automotive plastics, a product in increasing demand in an era of tightening emissions standards requiring lighter vehicles that get better gas mileage. It had reported annual sales of $600 million.

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▪ In September 2016, Teijin filed a disclosure with Japanese regulatory officials that, translated into English, shows that a company known as RLSI-CSP owned 66.7 percent of the plastics company when the agreement to sell the company to a subsidiary of Teijin Ltd. was completed.

▪ In 2014, when Scott disclosed the assets of his blind trust and created a new one, he reported that the value of RLSI-CSP had risen to $43.8 million and was the largest asset in his portfolio. Disclosure documents filed by G. Scott Capital Partners, the Scott family investment manager, report in 2014 that RLSI-CSP was valued at a $120 million. Scott’s share in 2014 was 35.8 percent.

The Herald got this comment from Scott’s spokesman, McKinley Lewis: “The governor has no knowledge of anything that is bought or changed in the trust.”

Rick Scott’s life is full of wonderful surprises.

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