If you’re like me, you’ve often wondered: How do so many politicians strike it rich when they only make a salary?
Well, a seasoned politician in Montana has provided the answer.
Aspiring Democratic presidential candidate and former Governor Brian Schweitzer is showing us exactly how to get rich without breaking a sweat.
While in office, Schweitzer apparently saw promise in the mining business… and he decided to join the fun. Soon after leaving the Governor’s mansion, he targeted Montana’s largest mining company, Stillwater Mining Company (SWC), which produces palladium and platinum.
Schweitzer launched a massive propaganda campaign against Stillwater, claiming mismanagement by the Stillwater Board of Directors and, specifically, their longtime CEO, Frank McAllister. Schweitzer teamed up with a New York hedge fund, the Clinton Group, and – through public denouncements and intimidation – forced the Board of Directors to fire McAllister.
By then, Schweitzer was unemployed, and he became part-time Chairman of the Board of Stillwater. He was paid a salary of $188,000, but that was only the beginning of the booty.
Schweitzer now owns 39,703 shares of Stillwater Mining that, at Tuesday’s closing price of $16.71, are worth around $663,437. Not a bad haul for someone who’d never run a mining company, and has zero experience or training in geology, metallurgy, or mining engineering – three disciplines crucial to running a successful mining company.
But Schweitzer wasn’t satisfied yet.
Following an almost identical playbook, he placed a call to Glenn Dobbs, the CEO of Mines Management, Inc. (MGN), on Monday, March 24.
Back when he was Governor, Schweitzer had met with Dobbs and learned about the Montanore Deposit – Mines Management’s large, underground copper and silver deposit near Libby, Montana.
Over the phone, Dobbs was told that Schweitzer and a partner, Francis (Frank) Duval, had formed a new company called Optima, Inc. Under that name, Schweitzer had bought some mining claims over the 14,000-foot tunnel into MGN’s Montanore Deposit.
Schweitzer informed Dobbs that, unless Mines Management paid Optima $500,000 per year for the next four years, plus six million shares of Mines Management stock (representing 21% of the company and valued at approximately $10 million), he and his partners intended to generate controversy around the Montanore Project.
It’s worth noting here that Frank Duval and his wife have signed several consent decrees with the Securities and Exchange Commission to refrain from fraudulent securities activities. On top of that, Optima’s only assets were Schweitzer’s Rolodex and his media contacts.
When asked about his interaction with Schweitzer, Dobbs said, “It was an extortion call. They were going to announce to the world the lie that we didn’t have access to the project. They would create controversy and depress our share price… It’s really gutter-type gangsterism.”
When Dobbs didn’t acquiesce, Schweitzer put his PR push into high gear. Last week, Schweitzer began calling media outlets throughout Montana to tell his story. The result has been a roughly 40% decline in MGN’s share price and a decline in market capitalization (the value that the financial markets place on the company) of about $12.5 million.
Dobbs said that this is more than enough to justify a class-action lawsuit by Mines Management’s shareholders against Schweitzer, Duval, and other partners in Optima, Inc.
The initial lawsuit will be filed by the company itself, and shareholders – many of whom have lost a significant portion of their retirement savings – will have the opportunity to join in a class.
Dobbs said, “It’s a shame when people in whom the public have placed their trust become as desperate as to align themselves with known scoundrels and become one of them. Schweitzer and the Duval family clearly formed Optima for the sole purpose of trying to take advantage of the hard work and financial resources of hardworking people for their own self-enrichment.”
Of course, Dobbs is right. Yet there you have it… the playbook that shows how politicians get rich. And Brian Schweitzer’s scheme is just one small example. On Capitol Hill, Congressmen execute similar plans on a significantly grander scale. So if you want to get rich without all the work, pack up and head to D.C.
This commentary originally appeared at WallStreetDaily.com and is reprinted here with permission.
Photo credit: Center for American Progress (Flickr)