FOR IMMEDIATE RELEASE
Contact: Jeff Hauser, [email protected]
Venture Capitalist and Maryland Democratic Delegate Michael Steed is set to speak at an event on election technology this Thursday during the Democratic Convention in Chicago. But Steed’s history of looting union members’ pockets through shady stock buyback schemes means he should have no place in the Harris-Walz Democratic party.
Revolving Door Project can connect interested reporters with Damon Silvers,* who witnessed Steed’s malfeasance firsthand.
In 1991, Steed became the head of investments at the Union Labor Life Insurance Company (ULLICO), which provided insurance to and managed pension funds for the members of several AFL-CIO unions. Steed quickly began to steer ULLICO pension funds into high-risk investments, especially those led by his friend and associate Gary Winnick, a former junk-bond trader and protege of securities fraudster Michael Milken.
In 1997, Steed put $7.6 million of ULLICO’s funds into Winnick’s new, high-risk telecommunications startup Global Crossing Ltd., even though Winnick had never worked in telecoms before, much less run a telecom company. Steed joined Global Crossing’s board shortly afterward.
Global Crossing became a hot stock at the peak of the dot-com bubble, which in turn made ULLICO itself far more valuable. In response, ULLICO began floating its stock price and allowing stock buybacks, which made millions for executives like Steed — but not for the actual unions the firm was supposed to serve.
Steed also benefited from a 1998 scheme allowing ULLICO executives to buy new ULLICO shares at an artificially low price, then sell them back to the company at the far-higher market price. Effectively, Steed and his associates benefitted from the liquidity of hardworking union pension investors. Then in December 1999, mere months before the bubble burst, Steed left ULLICO to go work for Winnick’s own private equity firm.
Global Crossing Ltd.’s stock collapsed in 2000, but the remaining ULLICO executives used even more stock buyback schemes to sell the firm even more inflated shares of its own stock, all while ULLICO’s finances were crumbling and union pensioners were left out to dry. This apparent self-dealing drew the attention of the national AFL-CIO, the press, and Congress. They ousted all of the ULLICO executives and sued them, recovered nearly all of the ill-gotten money — all except that of Steed, who had left the firm a few months before the crash. Steed has never returned the profits he reaped from union funds.
Today, Steed’s venture capital firm Paladin Capital Group — which he co-founded with fellow ULLICO veteran Mark Maloney, who also never returned his plunder — exploits the revolving door in the military-industrial complex to snag lucrative cybersecurity contracts. Paladin’s investment strategy appears to be modeled on the “access capitalism” of the private equity firm Carlyle Group, with which Steed partnered on a military contractor investment at ULLICO. Paladin runs a “Strategic Advisory Group” of recently-departed former government officials, who provide the firm with a “great information advantage,” in Steed’s own words.
President Joe Biden’s inaugural National Cyber Director Chris Inglis revolved into the administration in 2021 from a job as Paladin’s managing partner, and revolved back out in 2023 to a role on the Strategic Advisory Group. Similarly, Inglis’ hand-chosen successor Kemba Warden now runs Paladin’s in-house think tank.
There should be no room for hucksters and influence profiteers like Steed, who line their pockets with union pensioners’ hard-earned money, in a Harris-led Democratic Party. (Not to mention, no room for men who’ve called Ronald Reagan “a good man” and an “incredibly smart” President who made “great decisions” about his Cabinet appointees, as Steed did, and have attributed the fall of the Berlin Wall to Reagan’s military spending, as Steed has.)
It is past time for Steed to return the profits he took while failing the labor movement. And it is exactly the right time for Harris to embrace strong protections for union retirees as part of her anti-ripoff economic agenda.
* For purposes of identification only, Damon Silvers’ past organizational affiliations include having served as Policy Director and Special Counsel, AFL-CIO and Counsel to the Chairman of ULLICO during the post-Georgine period.
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