OLYMPIC CORRUPTION

05.14.12

Romney’s Shady Connections From Salt Lake Olympics Still Paying Off

In 2003, David Simmons pleaded guilty on federal tax charges related to the Olympic bribery scandal, but that hasn't stopped Mitt Romney from taking his money, reports Wayne Barrett. Plus, more on Mitt's trips to the Mormon Church to discuss same-sex marriage.

In his quest for the White House, Mitt Romney has repeatedly made the case that he is a better manager than its current occupant. When his tenure at the helm of Bain Capital came under fire in the primaries, he shifted to stressing his rescue of the 2002 Winter Olympics in Salt Lake City. Those games had been nearly destroyed by a wide-ranging bribery scandal, and as Romney recounted in his 2004 memoir, Turnaround, he was the CEO brought in after the brouhaha who cleaned it up.

Although no one disputes that the Salt Lake Games were a managerial success that revived his public career, some of the contacts Romney made during that time were key figures in the scandal, yet he remains connected to some of them, and continues to receive their sizable campaign donations. The closeness of these bonds calls into question Romney’s ethical compass.

Last month, The Daily Beast recounted the tale of one circle of Romney donors tied to a tainted Olympic contractor who has given more than a million dollars in campaign donations. After being granted immunity by prosecutors, the contractor, Sead Dizdarevic, admitted making $131,000 in cash payments to Romney’s predecessors. The cash was used, at least in part, to subsidize the IOC gifts. Yet it was Romney, not his indicted predecessors, who awarded Dizdarevic the hospitality deal that’s made him the ticket king of the Olympics to this day.

But Dizdarevic is hardly the only Romney donor with disturbing Olympic ties. David Simmons also testified in the 2003 federal trial of Romney’s predecessors, in a case that was ultimately dismissed. But unlike Dizdarevic, Simmons pleaded guilty to a federal tax misdemeanor as part of a cooperation agreement that allowed him to avoid a multi-count felony indictment.

According to the Salt Lake Tribune, the guilty plea was connected to Simmons giving a fake job to John Kim, the son of a critical IOC member, to qualify him for a sham visa, and then submitting fraudulent tax and immigration filings to cover up the alleged conspiracy.

Since that time, Simmons and his family have given more than $317,000 to Romney and affiliated campaigns, and business associates of the family have added nearly $160,000 more. Simmons and his wife, Melinda, donated $32,100 themselves, going back to 2006.

“There are things that make your job easier and things that make your job harder,” Romney told reporters who asked about Simmons.

In addition, one Simmons brother provided Romney’s 2008 campaign with a private plane and another led the energy discussion at a policy roundtable fundraiser for Romney in Washington last February. A company whose board of directors consisted entirely of Simmons’s father, all six of the Simmons siblings, and the spouse of one sibling, each one of whom has donated to Romney, was directly implicated in the Olympics scam that led to David Simmons’s guilty plea.

The Romney campaign did not respond to requests for comment on this story.

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The Simmons-engineered hiring of Kim was such a cornerstone of the federal case that the government put two other witnesses on during the trial to nail down the details and tried to extradite Kim, who was indicted on 17 counts (PDF) tied to the job and did six months in a Bulgarian cell rather than appear in a U.S. courthouse.

Kim’s father, Kim Un Yong, the South Korean representative on the IOC and a powerhouse member of its executive board, received a “most serious” reprimand from the IOC for his Salt Lake conduct, and was later convicted in Korean courts of embezzling $3.3 million from sports organizations and taking $779,000 in bribes from former Olympic officials. When he was recommended for expulsion (PDF) from the IOC in 2005, the Ethics Commission decision cited Salt Lake as a partial rationale, saying that the IOC executive board considered his actions then “contrary to IOC ethics.” (Two months before the IOC was to consider his expulsion, Kim Un Yong resigned his position.)

In addition to the job for John, the elder Kim’s daughter, a modestly successful pianist, was paid $5,000 to perform as part of the Utah Symphony. Kim also reportedly got the Salt Lake committee to pay $15,802 to the University of Utah to cover tuition for the daughter of a Russian recording-company executive who’d issued a CD of another performance by Kim’s pianist daughter.

According to court testimony, Salt Lake Organizing Committee (SLOC) president Tom Welch asked Simmons to hire Kim to secure his father’s support for Utah’s bid. Simmons also used fake contracts and phony invoices to conceal the fact that the SLOC and others were reimbursing him for the $118,000 in salary Simmons’s company, Keystone Communications, was paying Kim. He continued paying Kim long after Kim ended his initial appearances at Keystone’s New York office (stacks of checks were finally sent to Kim’s home). Simmons even signed falsified immigration documents for Kim. He deducted Kim’s salary as a Keystone business expense though he was fully reimbursed for it through these sham agreements.

The government used Simmons to authenticate 11 overt acts in the racketeering indictment of Welch and his deputy. Prosecutor Richard Wiedis told the judge that “the actions taken by members of the conspiracy that worked in the Keystone office, specifically Mr. Simmons” could have led to what he called “a wide-ranging conspiracy immigration fraud charge.”

After several meetings with FBI agents, Simmons decided that he “didn’t relish the idea” of facing felony tax and immigration fraud. The plea agreement, according to the Salt Lake Tribune, “included a government promise not to prosecute him for two potential felonies for submitting false information” to the INS and the Department of Labor “about Kim’s employment status” to secure a green card.

During five extensive and often candid Daily Beast interviews, Simmons pointed out that he went to the feds voluntarily, but he also conceded that the agents told him at one point to go home “and think about” particulars they thought he was withholding from them. As he later testified, “the pieces all fell together in my mind.” Simmons conceded at trial that he was “confronting either being prosecuted” or taking the plea.

Shortly after Simmons pleaded guilty in August 1999, Mitt Romney held a press conference to discuss his first six months as head of the Salt Lake committee.

Romney couldn’t have been surprised by the questions about Simmons at his press conference. Simmons had been hammered in news stories since January. His was the first conviction in a scandal that would produce two others, as well as the expulsion of ten IOC members. Simmons was the well-known scion of one of Utah’s most prominent Mormon families, and Romney had befriended two of his brothers while at Harvard in the '70s.

Romney nonetheless declined to say a word about the plea. “There are things that make your job easier and things that make your job harder,” Romney declared, suggesting that this fit the latter category. He justified his refusal to comment by claiming he didn’t want “to interfere with or be seen as interfering with this investigation.”

“I’m told,” he confided to the Salt Lake press corps, “that we as a community are more focused on the scandal than the country at large.”

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When David Simmons was orchestrating the Kim scam in the early 1990s, he was also the president of Simmons Family Inc., which controlled the family’s interests in radio stations it had been acquiring since 1977. Keystone was majority owned by the Simmons family, while SFI was entirely a family entity. That’s why, David says now, he had SFI cover the Kim costs, immediately removing them from the balance sheets of a company that had partners and directors who weren’t family members. This decision, however, drew an entity owned by his father, Roy, his mother, Elizabeth, and five siblings into the alleged conspiracy.

In fact, David Simmons testified that he told his father, the chair of the SFI board and a member of Keystone’s, that he was using both to pay Kim’s salary before he did it. Simmons says he “honestly can’t recall” if he told his siblings then, but insists that he ultimately did “voluntarily tell the entire family” everything, even writing a letter about elements of it while others “were delivered verbally.” The brothers and sisters were all, he said, “very sympathetic.” Their decision to leave him in charge of the family’s radio and other properties seems to indicates that they had no real issues with his handling of Kim, as do our interviews with members of the family.

Yet, every month, SFI had immediately repaid Keystone every cent that it had paid Kim. So, when David launched his full court press on Welch to reimburse him for Kim’s six-figure salary payments, he did so on behalf of his family, the secret benefactors of the son of an IOC vice president. And when Welch and Simmons worked out their complex set of schemes to repay Keystone, the cash wound up coming back to Simmons and his father, mother, and siblings through circuitous corporate and other routes.

The FBI also told Simmons that SFI’s third-party payments on Kim’s behalf were required under immigration laws to be disclosed to the Department of Labor and weren’t. Had Simmons refused to cooperate, SFI, Roy’s approval of the Kim deal, and the family’s apparent broader knowledge of this scheme would presumably have been at the center of any case against him.

The first signs of a Simmons family tie to Romney occurred in the 1994 race against Ted Kennedy. Roy Simmons gave two small donations totaling $500. Two days after the first of his father’s contributions, oldest son Matthew Simmons gave $1,000. That May, another son, Harris, donated $250, and in October, L.E. Simmons, a Texas oil-investment executive like brother Matthew, contributed $1,000.

Matthew, who died in 2010, and L.E., who declined to talk to the Daily Beast, were in Boston when Romney went to Harvard business and law schools in 1971. Matthew graduated from Harvard Business School in 1967, but taught there, sought a doctorate there, and ran a small equity firm in Boston until he and L.E., a 1972 business-school grad, moved to Texas to start their own energy-investment business in 1974. David Simmons says he thinks that both brothers “met Mitt when they were in Boston at the same time,” and that they had “a friendly relationship” with him.

It was Matthew who loaned Romney his private plane and served with L.E. on the campaign’s Texas finance committee during the 2008 race. Matthew and his immediate family donated $36,598 to Romney, and employees of his company, Simmons & Co. International, added $29,850.

L.E. Simmons, his wife, Virginia, and their kids have given $214,200. Others at Simmons’s investment firm, SCF Partners, have added $31,600, and donors from four companies tied to SCF have given $30,600. Simmons’ daughter Virginia worked in the Romney campaign in 2011, when she and every other member of L.E. Simmons’s family joined key Romney insiders and donated $12,500 to Tim Pawlenty after he endorsed Romney. In 2010, Romney attended Virginia’s Houston wedding.

In the 2008 campaign, L.E. hosted two major Texas events for Romney—at his home and the Houston Hilton—and this February he spearheaded the energy panel at a Beltway campaign-policy fundraiser. Last October, he co-hosted an Oklahoma fundraiser with oilman and sometimes Simmons partner Harold Hamm and other champions of the Keystone Pipeline.

SCF was one of the private-equity funds selected to manage a $200 million initial pool raised by Solamere Capital, the controversial investment firm that includes Romney’s son Tagg and campaign-finance director Spencer Zwick. Ann Romney jumpstarted the fund with a $10 million investment.

Harris Simmons replaced his father as CEO of Zions Bank in 1990, with Roy remaining chair of the bank’s board and brother L.E. Simmons also serving as a director and major shareholder. A director of Keystone as well, he, his wife, and Matthew were the only family members to give to Romney’s 2002 race for Massachusetts governor. Harris and his wife have donated $10,600 to Romney, and employees at the bank gave $30,055. Zions hosted a book party for its clients when Romney’s Turnaround was published in 2005 and bought books in bulk.

The two Simmons sisters, Julia Watkins and Elizabeth Hoke, gave a combined $17,300, when their families are included. Both said in Daily Beast interviews that they recalled next to nothing about Kim’s hiring. Watkins insisted that her brother didn’t “do anything knowingly wrong“ or “illegal,” and Hoke called the federal prosecution “a witch hunt.” Actually, the Bush administration appealed the initial 2001 dismissal of the Welch case, trying it while Watkins’s son Peter worked in the White House and Matthew Simmons was the president’s top energy adviser.

The Simmons family wealth is so tied to the church that each of its Utah businesses was initially purchased from a Mormon-owned, for-profit entity. Zions Bank was created by Brigham Young in 1873 and sold to Roy Simmons in 1960; SFI acquired its first radio station from church-owned Bonneville in 1977, and Keystone bought the satellite business from Bonneville in 1986. David Simmons called this “coincidental.”

The church remains one of Zions’ largest customers, with Zions even handling the electronic transfers to missionaries at 285 missions. When Roy Simmons died in 2006, the four top Mormon lay leaders—including the church president and prophet Gordon Hinckley, whose son worked at the bank, as well as Hinckley’s two first counselors and the president of the Quorum of the Twelve Apostles—attended the funeral.

David Simmons told us that he only got involved in the Kim scams “as a good community citizen.” He said at his sentencing hearing that he initially “felt honored to be asked” to help with the Olympic bid and claimed that he was told, “Salt Lake needs you to do this.” As insistent as he was in Daily Beast interviews that his family companies didn’t benefit from the Games, an August 2000 public offering for SFI, which was renamed Simmons Media Group (SMG), flatly said: “We believe that Salt Lake City is an attractive radio station market because it will host the Winter Olympic Games of 2002.” In fact, SMG went on a buying spree before the Olympics, expanding greatly its Utah radio holdings.

Simmons conceded that SMG also acquired Utah’s largest travel agency in 2000 that was, according to news accounts, looking to “take advantage of expected new skiing business sparked by Salt Lake winning the 2002 Winter Olympics.” SMG also bought a billboard company whose signs, according to the SEC filing, “are within direct line of sight of Interstate 15,” the main highway connecting the Olympic venues. Simmons ridiculed any notion that these pre-Olympic actions were inspired by what he called “the three-week benefit” of the games, but every pre- and post-economic analysis of the games found that they produced a long-term bonanza for Utah tourism and economic development (PDF).

A year after Salt Lake won the bid in 1995, David Simmons sold the Keystone satellite business to France Telecom (FT) at a price celebrated in local business stories. Simmons acknowledges that “the only company that really had any ability of providing direct services” for the Salt Lake Games “would have been Keystone,” which was headquartered there. Not only was FT interested in the Salt Lake Games, its new Globecast subsidiary, formed after the Keystone acquisition, actually won the 2002 Olympic business, positioning itself to become the premier satellite-services company for international sports events.

A top Keystone executive who asked not to be identified said that Simmons, who was so involved with Salt Lake’s bid effort he trekked to the 1991 IOC selection meeting in Birmingham, England, “stepped up” to do the Kim hiring in part because the Olympics would benefit Keystone, making the acquisition more attractive to France Telecom, which had purchased a minority interest in 1993. Simmons said he didn’t think “there was a direct relationship” between the Salt Lake Games and the purchase “in FT’s mind,” but “I think they thought it would be interesting.”

As for Zions, The American Banker did a 1997 story headlined “Utah Banks See Golden Opportunity in 2002 Olympics” and quoted Harris as saying that “everybody realizes the impact will be enormous” and will establish the Salt Lake area “as a destination resort.”

David Simmons explains his family’s generosity to Romney—several times its puny donations to Bush ($17,249) and Jon Huntsman ($7,500)—by pointing to Romney’s efforts to “save” the Olympics: “After that terrible event in which I’ll forever wish I was not involved, I was incredibly grateful for what he did.”

What’s also clear, though, is that a family whose businesses targeted and benefited from the Olympics, including one Simmons who committed a crime to get the Games to Salt Lake and a family company that facilitated that crime, has lined up since at the Romney campaign kitty. The family’s salutes to Romney, David’s in particular, also show how little Romney rocked the Salt Lake boat, still a hero to the man that embodies the scandal.

The Dizdarevic and Simmons donations to Romney over the years add up to $1.5 million, all of it connected directly or indirectly to contributors at the heart of a scandal that the noted IOC investigator Dick Pound said in his memoir “could have meant the end” of the international committee. It was a giant worldwide barrage of horrific headlines that continued for years. Yet, it simultaneously was Romney’s claim to fame, his ticket to the governor’s mansion in Massachusetts. Now, it has taken on a distant, blurry cast, as if all that matters is that he ran good Games. But if presidential campaigns are character tests, Romney’s starts in Salt Lake.

Research assistance provided by Jillian Anthony, Irina Ivanova, Clarissa León, Nicole Marsh, and Kyle Roerink.