The article about the business background of Virginia gubernatorial candidate Terence R. McAuliffe incorrectly said that McAuliffe described himself as a huckster in his autobiography. McAuliffe described himself as a hustler in the book.
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Va. Candidate McAuliffe Has History of Mixing Business, Politics
McAuliffe formed the partnership in the early 1990s with the pension fund of the International Brotherhood of Electrical Workers to develop a commercial property and apartments in central Florida. The deal began with McAuliffe's relationship with Jack Moore, treasurer of the union's political action committee, who oversaw donations of close to $2.5 million to Democrats in 1996. McAuliffe asked Moore to invest.
The pension fund put up virtually all the money -- about $40 million compared with McAuliffe's $100 -- even though McAuliffe would own a 50 percent share in the partnership. This detail would become a point of contention in a lawsuit filed against the fund trustees by the Department of Labor, which regulates the management of pension funds and which determined that it had not been a good investment for the electrical workers. In 2001, after two years of litigation, the trustees, including Moore, settled in U.S. District Court.
In the end, the pension fund sold its share to McAuliffe and made a profit. McAuliffe unloaded the apartments and then renovated the commercial strip and sold it for $39.7 million, a far greater return for McAuliffe than for the union.
He said that even though his initial investment was tiny, he was the "sweat equity" partner -- the one who found the deal, put it together and managed it for years without making money. And it's not his fault, he said, that the pension managers chose to sell before bigger profits came.
McAuliffe also noted that he transformed a downtrodden shopping center into what is now a vibrant mall. Along the way, the project created hundreds of construction jobs, he said.
Richard Swann of Orlando, McAuliffe's father-in-law and lawyer on several Florida land deals, said he has never met a smarter businessman with a more uncanny sense for when to invest. In 2000, McAuliffe sold his stake in the home-building company because he predicted that the real estate bubble would soon burst, Swann said. More recently, McAuliffe put much of his portfolio in municipal bonds (most of them in Virginia, public records show), because of his sense that stocks were heading down.
"He's very prescient and just has a good sense and a good instinct as to value and a sense of timing," Swann said.
Making a Fortune
At a recent debate, one of McAuliffe's opponents, Moran, took a swipe by criticizing investors in Global Crossing who "walked away with millions, leaving their employees up the pole without pensions."
It was an early attempt to portray McAuliffe's business career as a liability. And the portrait could resonate because McAuliffe has made a fortune investing -- sometimes in companies that went bust, laid off thousands and drained investors' and employees' savings.
Already, some view McAuliffe's energy and sales pitch with skepticism.
"He seems to me like a guy with [attention deficit disorder] who's overdosed on caffeine," said Katherine Clark, a past chairman of the Northern Virginia Technology Council and co-founder of a Reston technology company. "He's a bit fiery. He's a lot of things. I think that people . . . might think he's a slick-talking sales guy."
McAuliffe's tendency to exaggerate his successes adds to that perception. Describing the apartments he purchased with the union fund, McAuliffe said he "went through every apartment myself, like 1,600 of them, to make sure the toilets worked" -- but then added: "Well, I didn't go through 1,600. But I went through every property exhaustively. Sure I did! I owned them!"