This article first appeared on Feb. 4, 2020, on the website of dfmworkers.org.
On a sweltering July afternoon last year, Sen. Elizabeth Warren unveiled proposed legislation aimed at making hedge funds and private equity firms more transparent and accountable.
Less than two weeks later, Alden Global Capital co-founder Randall Smith gave $50,000 to Donald Trump’s “Trump Victory” fund. The same day, his wife Barbara gave exactly the same amount.
Both provided Alden’s office in Manhattan’s Lipstick Building as their address.
It’s also arguably the most secretive news chain owner in the country. As a privately held “vulture” hedge fund, we don’t know who Alden’s investors are. Its funds are based in tax secrecy havens like the Cayman Islands and Delaware.
As Nicholas Shaxson, author of “The Finance Curse: How Global Finance is Making Us All Poorer,” recently told DFMworkers.org, Alden is “about the most opaque” hedge fund he’s ever seen.
It’s not clear whether the Smiths have met President Trump. They reside in a West Palm Beach mansion a few miles north of Trump’s Mar-A-Lago, and they own around a dozen other mansions — two in the Hamptons and the rest scattered around West Palm Beach. (Randall Smith started making these purchases in 2013, a year after he acquired the Digital First Media newspaper chain, spending $57 million on 16 mansions. Florida real estate records show he has since sold a couple of them.)
Following the money
The Smiths’ donations, as is customary these days with large contributions, were made to “Trump Victory,” a joint fundraising committee that under new campaign finance laws provides a convenient way to circumvent contribution limits.
To put it simply, the 2014 US Supreme Court ruling in McCutcheon v. FEC allows larger aggregate contributions to candidates as long as a certain cut of the money is diverted to the party. As The Sunlight Foundation reports, “In the majority opinion in McCutcheon, Justice Samuel Alito dismissed concerns that joint fundraising committees would be used to solicit massive checks for individual candidates as ‘wild hypotheticals.’”
Except that’s exactly what’s happened ever since.
The Smiths’ $100,000 came in the form of two $50,000 contributions to Trump Victory. This was then divvied up between the Trump campaign and the Republican National Committee, with a note on the Federal Election Commission’s site that the RNC cut came from “Trump Victory.” The total of $5600 each from Barbara and Randall Smith that ended up in “Trump For President” is the maximum allowed by law for an individual candidate, so the rest went to the RNC.
Of course, nothing restricts the RNC from campaigning on Trump’s behalf.
The screenshots below show where the Smiths’ contributions ended up, as listed on OpenSecrets.org:
These were large contributions for the Smiths, and this was the first time Randall Smith had given to any campaign or party since 2017, according to FEC records.
While solidly Republican, the Smiths’ previous donations were typically in the $2000 range, though back in 2012 Randall did give $19,750 and $30,800 to two Republican committees.
Alden co-founder Heath Freeman doesn’t show any political contributions in the FEC’s database.
Christopher Minnetian, president of Randall Smith’s “family investment firm,” Smith Management LLC, gave $10,800 to the Trump campaign for the 2016 election. (Minnetian was Alden’s pick for the board of Tribune Publishing after the hedge fund took a 32 percent stake in the publisher of the Chicago Tribune, Baltimore Sun and other papers.)
Timing is everything
So what prompted the Smiths to shell out $100,000 to the president and his party in August?
At the time, private equity firms were beginning to react to Warren’s legislation, and they weren’t happy about it.
The U.S. Chamber of Commerce declared the act would cost 6.2 million jobs.
Trump supporter and Labor Secretary nominee Andy Puzder wrote in the Wall Street Journal that “The senator is trying to set private equity up as a boogeyman to fear. Nothing could be further from the truth. Private equity is an overwhelmingly positive component of the free-enterprise system. It generates value for investors while creating jobs and wealth for a broad spectrum of individuals and entities.”
I should note here that I, together with reporter Evan Brandt of the Pottstown (PA) Mercury spoke at a press conference about The Stop Wall Street Looting Act. We described Alden’s gutting of its newspapers and the disastrous effects this had on communities served by the Digital First Media chain (officially known as MNG Enterprises).
The week the Smiths made their donations to Trump was also the week the Gannett and GateHouse newspaper chains merged, a bitter pill for Alden because its own takeover of Gannett was thwarted earlier in the year.
It’s hard to say what prompted this sudden interest in the president’s 2020 race considering Smith didn’t donate at all to Trump’s 2016 efforts. In fact, he seemed to support “anyone but Trump,” giving only a few smaller donations to Marco Rubio and Paul Ryan.
Could it be that Smith, like Puzder, fears that legislators’ efforts to make private equity more transparent are actually a conspiracy to “punish the successful?”
Puzder maintains that private equity’s goal is “always growth and value creation, not bankruptcy.”
But Alden’s track record — whether it takes over newspapers, shoe stores or pharmacies — proves otherwise.
The money for the attempted acquisition of Gannett — and now, Alden’s $9.2 million purchase of stock in the Lee Enterprises chain last month — didn’t come from Smith or Freeman’s pockets. It was stripped directly from Digital First newspapers via two subsidiaries created by Alden: Strategic Investment Opportunities LLC and MNG Investment Holdings LLC. Hundreds of millions of dollars have been siphoned from the papers while newsrooms struggle with only a quarter of previous staffing levels and offices are sold out from under them.
This is not “growth and value creation.”
Instead, Alden’s “wealth extraction” strategy is expanding throughout the newspaper industry.
Now that it’s bought up a third of Tribune Publishing, Alden has finagled two board seats and within weeks, the company implemented mass buyouts.
Then on Monday, we learned that Tribune CEO Tim Knight is stepping down “in a sign that the Chicago Tribune may be moving closer to the apocalypse,” as Chicago media analyst Robert Feder put it.
And so one has to wonder — what benefits would another four years of Trump provide Alden? Because there certainly must be benefits — based on their record of the past seven years, Alden’s founders never conduct transactions that don’t personally benefit them.