As his presidential campaign ramps up, former Florida governor Jeb Bush will probably rue the day he ever heard of the now-bankrupt fiber-panel manufacturer InnoVida and its chief executive officer, Claudio Osorio.
On February 18, 2011, Florida-based InnoVida uploaded a YouTube video titled “A New Day for Haiti,” purportedly showing how the company was building homes and shelters for victims of that country’s horrific earthquake.
About a year earlier, the U.S. government’s Overseas Private Investment Corporation gave a $3.3 million loan to the company to build and operate a panel-manufacturing facility in Haiti.
“This project is an immediate and long-term response to Haiti’s economic and humanitarian crisis,” OPIC documents declared. “In January 2010, a powerful earthquake devastated Haiti’s infrastructure reducing the capital, Port-au-Prince, to rubble, and displacing millions of Haitians. This project will provide immediate affordable pre-fabricated housing opportunities for these displaced individuals. In addition, the project’s sponsor will construct a housing manufacturing facility that will produce disaster[-] and pest-resistant, energy-efficient and sustainable housing and building solutions. The project’s housing construction and manufacturing activities will result in 37 new jobs for Haitians, who will receive both in-country and foreign training for ongoing operations.”
At the time, InnoVida’s Osorio proudly announced: “Our partnership with OPIC is accelerating our ability to help the earthquake victims. InnoVida’s technology will be very helpful to Haiti’s long-term recovery plan through the utilization of local labor and rapid deployment of permanent structures that not only provide a better quality of life but also can withstand earthquakes, floods and hurricane-force winds.”
There was just one problem: The OPIC money never went to any projects in Haiti. In 2013, Osorio pled guilty to two counts of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
The FBI and the U.S. Attorney for Southern Florida issued a joint statement saying that “Osorio used the OPIC loan proceeds to repay investors and for his and his co-conspirators’ personal benefit and to further the fraud scheme.” In March 2011, a Haitian news website reported that “Osorio has made no progress on his pledge to build a community of InnoVida ‘cabins’ in Haiti, where tens of thousands still live in tents and other make-shift shelters.” None of the home construction or assembly depicted in InnoVida’s YouTube video occurred in Haiti.
The Washington Post put an article about Jeb Bush’s ties to InnoVida on page A1 on Monday. The article was careful to state that “there is no evidence that Bush had any knowledge of the fraud.” The law-enforcement cases against the company mentioned Bush only in passing, describing him as out of the loop, basically a prop used to enhance the company’s stature. A 2012 Securities and Exchange Commission lawsuit against the company, Osorio, and company CFO Craig Toll said that “to add an air of legitimacy to InnoVida, Osorio recruited a high-profile board of directors for InnoVida that included a former governor of Florida.”
Osorio’s lawyer, Humberto Dominguez, told the Post that “Bush had nothing to do with the scheme” and that Bush had been brought in only for his business connections. One of the company’s investors, Christopher Korge, told the paper that he was “impressed with Bush’s response” once serious questions of Osorio’s dishonesty were brought to his attention.
According to a legal statement in U.S. bankruptcy court, Bush, on September 19, 2010, “severed all ties” to InnoVida, “expressing concerns over Debtors’ governance and urging the Debtors to adopt more professional transparent business practices, including obtaining audits by a national accounting firm.” This was about nine months after the company received the OPIC loan.
Still, Bush’s relationship with the company was relatively long and lucrative. According to the bankruptcy-court filing, from December 5, 2007, to September 16, 2010, InnoVida and Miami Worldwide Partners, an entity affiliated with the Osorios, collectively disbursed $468,901.71 in payments and expenses to Jeb Bush & Associates, the former governor’s consulting firm.
In March 2013, Jeb Bush & Associates paid $270,000.00 to Soneet R. Kapila, the trustee attempting to return money to InnoVida investors who were defrauded. Bush’s firm admitted no wrongdoing, and asserted that it merely “provided services in good faith for reasonably equivalent value.” The bankruptcy filing said the firm reached the agreement “in order to avoid the expense and uncertainty of litigation, to facilitate the Trustee’s timely conclusion of the Chapter 7 proceedings, and to enhance the funds payable to creditors.”
The legal documents paint a picture of Bush remaining out of the loop on all of the fraudulent activities of Osorio and the company, asking questions about the lack of audited financial documents, and then cutting ties when his questions weren’t answered adequately and investors raised questions about Osorio’s honesty.
But obliviousness to a business partner’s crimes isn’t a great look for an aspiring president. And it’s painfully easy to picture a future Republican rival, the DNC, or American Bridge PAC running an attack ad against Bush with the entirely accurate statement that “Jeb Bush spent years on the corporate board of a company that took government money and promised to help Haitian earthquake victims . . . and then turned around and spent it on themselves.”
In an April 2014 article looking at Bush’s work on corporate boards after he finished his second term as governor, the New York Times reported that “Bush left public office seven years ago with a net worth of $1.3 million and an unapologetic determination to expand his wealth, telling friends that his finances had suffered during his time in government.”
That’s a dangerous spot for a political figure to be in. The better a company’s reputation is, the less it needs the perceived legitimacy and glamour a retired lawmaker can provide. The companies most eager to be affiliated with a prominent former elected official — and most willing to pay top dollar for the privilege — are the ones most likely to need that perception of authenticity and trust. A company that’s hell-bent on associating itself with a prominent public official might want that connection to distract from other, more questionable aspects of its operations.
Bush’s foes are also likely to claim that the InnoVida mess is part of a pattern, and to dredge up his long-ago business dealings in Florida’s real-estate market, including one incident that also involved a business partner charged with committing fraud.
In 1985, Bush was paid $75,000 by Miguel Recarey, CEO of a company called International Medical Centers, Inc., for real-estate work — but Recarey also asked Bush to contact the Department of Health and Human Services over an application to renew a waiver. (Jeb Bush’s father, George H. W. Bush, was vice president at the time.) Margaret Heckler, who was HHS secretary in 1985, told the Huffington Post in 2012 that Jeb Bush contacted her; Bush said he spoke to a lower-level official. Recarey was indicted on a slew of charges, including bribery, fraud, and false statements concerning Medicare payments received by his company. He fled the United States in October 1987 and remains a fugitive.
Obviously, none of Jeb Bush’s past business dealings proved significant enough to derail his gubernatorial bids in 1994 or 1998. And the idea of Osorio causing headaches for a potential GOP presidential candidate is ironic, in light of the fact that he and his wife were high-level Democratic-party fundraisers. The pair had hosted fundraisers for both Clintons and both Obamas, and in fact lamented to the Wall Street Journal that they had a bad experience at the 2008 Democratic National Convention:
Amarilis Osorio and her husband, Claudio, a Miami Beach, Fla., entrepreneur, decided at the last minute to attend the convention. The couple held a fund-raiser at their house earlier this month with Sen. Obama’s wife, Michelle, and raised $400,000. “We had to fly commercial — a private jet was too expensive,” said Ms. Osorio. “And our hotel room is dreadful.”
In 2013, the Clinton Foundation returned a $22,000 donation from Osorio.
— Jim Geraghty writes the Campaign Spot on NRO.