During the time that Gingrich was on its advisory board, Forstmann Little actually strayed from the private-equity deals that had been the mainstay of the firm, making its first venture-capital investments in two telecommunications firms from 1999 to 2001, investing $1 billion in McLeod, a phone service sales company, and $1.5 billion in Nextlink XO, a fiber-optics start-up. Both firms would ultimately go bankrupt during the subsequent dot-com bust — and the investments Forstmann Little made in them would later land the private-equity giant in court.
It’s not certain, of course, whether Gingrich had any direct role in encouraging these specific, ill-fated investments at Forstmann Little. (According to the Times, he attended advisory board meetings twice a year and talked to the firm’s partners about potential health-care investments.) But after its telecom investments went under, a Connecticut pension fund sued Forstmann over the McLeod and NextLink XO investments. A court found the firm guilty of violating some terms of its contract, and it ultimately made a $15 million out-of-court settlement with the pension fund. Then-attorney general Richard Blumental wrote in 2004: “A jury found that the company acted negligently and in bad faith — willfully ignoring its contractual obligations to make highly speculative and spectacularly bad investments.”
I’ve contacted the Gingrich campaign to clarify his involvement, and will update this post if and when I hear back.