How Santorum made his millions

Jan. 5 (Bloomberg) -- Former Pennsylvania Senator Rick Santorum describes himself on the campaign trail as a frugal man of faith and limited means.

“I come from a little different background than most Republicans,” he said at a Jan. 2 town-hall meeting in Newton, Iowa, where he recalled playing as a child outside the coal mines in which his grandfather toiled.

Gallery

Gallery

Yet Santorum, 53, has come a long way from those gritty early days to the top tier of the Republican presidential primary race after coming in second to former Massachusetts Governor Mitt Romney in the Jan. 3 Iowa caucuses.

Since his 2006 re-election defeat, the former Pennsylvania lawmaker has gone from being one of the poorer members of the U.S. Senate to earning $1.3 million between January 2010 and August 2011. In 2007, he spent $2 million to buy a 5,000-square foot home in Great Falls, Virginia, according to property records.

Santorum’s financial rise was powered by consulting contracts with fuel producer Consol Energy Inc., faith advocacy group Clapham Group and American Continental Group, a Washington consultancy, as well as media engagements.

“If he’s claiming he’s not an insider, this is the thing that insiders do -- after public office they cash in,” said Kent Cooper, a campaign finance expert and former Federal Elections Commission assistant staff director.

Stock Options

Outside of his employment contracts, Santorum’s greatest financial gain came from $395,414 in director fees and stock options he listed in a recent financial disclosure.

The fees and options came from King of Prussia-based Universal Health Services Inc., a publicly traded health-care management company that was sued in 2010 by the federal government for alleged Medicaid fraud.

Santorum spokesman Matt Beynon didn’t respond to a request for comment.

When Santorum left office after the 2006 defeat, he was earning a $165,200 congressional salary with $32,245 in outside income from book royalties.

His assets, primarily investment funds, were valued at between $20,000 and $125,000. “For the Senate, once you get below a couple million, you’re one of the less wealthy,” said Cooper.

Home in Suburbs

After leaving office, Santorum signed on with a number of outside companies and organizations, bringing in $1.3 million from January 2010 through Aug. 2 of last year, according to disclosure forms. His home in the Washington Virginia suburbs has four bedrooms, five bathrooms and sits on five acres of land.

Santorum listed his assets, including IRA accounts, education savings plans and stock as being worth between $339,000 and $1.3 million. His five rental properties in State College, Pennsylvania, are worth another $500,000 to $1.25 million, according to the disclosure report that allows wide ranges for revealing income and asset values.

He earned $217,385 in income as a senior fellow for the conservative Ethics and Public Policy Center in Washington and $346,152 for columns in the Philadelphia Inquirer and appearances on News Corp.’s Fox and Salem Radio in California. Smaller amounts came from the company consulting agreements, with Consol Energy paying the most at $142,500, during the period from 2010 to Aug. 2, 2011.

He was also hired in 2007 to work in the Washington office of Pittsburgh law firm Eckert Seamans Cherin & Mellott and left in May 2008, according to firm spokeswoman Karen Come. She didn’t disclose a reason for his departure.

Biggest Gain

The $395,414 Santorum brought in from his relationship with Universal Health is his biggest post-Congress monetary gain, other than his employment contracts, according to the Center for Responsive Politics in Washington.

Fellow board member Tony Pantaleoni, a lawyer, said Santorum had a prior relationship with Alan Miller, Universal Health’s chief executive, and that he “came with a lot of knowledge about the health industry,” including regulatory issues in Washington.

“I can recall many times issues would come up and he’d say that ‘you have to be careful of this particular person with these views,’” he said, referring to lawmakers. Pantaleoni said Santorum’s compensation was in line with other board members.

Acute Care Hospitals

Universal Health owns and operates acute care hospitals, behavioral health centers as well as ambulatory centers all across the nation and in Puerto Rico.

According to former Pennsylvania Representative Phil English, a Republican who served with Santorum, the senator has a long history of health-care advocacy. His father was a psychologist in the Veterans Administration system and Santorum made his entry into the political world running on the issue.

A supporter of private health savings accounts, he ran against former Senator Harris Wofford, a Democrat who supported President Bill Clinton’s failed health-care plan. Santorum received $3 million from the health industry during his congressional career, according to the Center for Responsive Politics. Blue Cross Blue Shield is his fourth largest lifetime donor, at $114,790, and Cigna is the 10th, with $68,610.

Santorum was appointed to the UHS board of directors after his 2006 loss.

Fraudulent Claims

The Justice Department accused the company in a 2010 lawsuit of submitting fraudulent reimbursement claims under the Medicaid health-care program for the poor. The government said the company falsely claimed to have provided inpatient psychiatric services to children at a detention facility in Marion, Virginia. Pantaleoni said the case has been settled.

The company has also risked losing certification to receive Medicare reimbursement for medical centers that it owns.

According to a release on the UHS website, the Rancho Springs Medical Center and Inland Valley Regional Medical Center in Riverside County regained their certification in November after the Centers for Medicare and Medicaid Services threatened to terminate their provider agreement in June 2010. The state of California had also threatened to revoke the group’s hospital license.

It wasn’t the first time UHS risked losing certification for one of its facilities. In late September 2008, CMS terminated participation in Medicare for the Two Rivers Psychiatric Hospital in Kansas City. It’s a decision that led to a court appeal and settlement requiring Two Rivers to retain an outside monitor for six months.

Preparing for Run

Santorum resigned from the board June 15, 2011, as he prepared for a presidential run.

Santorum, who has a law degree and master’s of business administration, was first elected to the U.S. House in 1990 from a suburban district outside Pittsburgh. He unseated Democratic Representative Doug Walgren in part by questioning his loyalty to the district because he had moved his family to Washington.

The former senator and his wife, Karen, have seven children, including a 3-year-old daughter with a genetic disease that could shorten her life. The oldest, a daughter, is 20. A son with a fatal birth defect was born in 1996 and died within two hours.

After moving his family to Leesburg, Virginia, Santorum was plagued by his own residency questions.

Tuition Costs

Santorum continued to maintain his home in Penn Hills, Pennsylvania, while charging the school district in Pennsylvania $100,000 in tuition costs for the online education of his children through the Pennsylvania Cyber Charter School from 2001 to 2004, according to the Pittsburgh Post-Gazette. The state of Pennsylvania repaid the district $55,000, according to the paper.

The Leesburg home also figured in a 2006 ethics complaint filed by Melanie Sloan, a former prosecutor and executive director of Citizens for Responsibility and Ethics in Washington.

According to Sloan, Santorum received a preferential $500,000 mortgage on the home from Philadelphia Trust Company, where he didn’t hold any bank accounts. Officers at the company had contributed to Santorum’s re-election campaign.

The Senate Committee on Ethics never responded to Sloan’s complaint and Santorum left office shortly thereafter after losing his seat.

 
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