The much-hyped release of Mitt Romney’s testimony in the divorce of the former Staples CEO this afternoon has failed to deliver the October Surprise knock-out blow to Romney’s campaign, as promised by celebrity attorney Gloria Allred.
Mitt Romney said during the 1991 hearings that in Staples’ early days, its initial stores performed “far behind our expectations”. He said friends told him that Staples was “a hard place to shop” and employees were “surly”.
However, during his presidential campaign, Mitt Romney has described Staples as a “great American success story” and has taken credit for its growth to a mega-firm employing nearly 90,000 workers.
Tom Stemberg was one of the speakers who praised Mitt Romney last August at the Republican National Convention in Tampa, Florida.
The transcripts of his evidence run to more than 300 pages of complicated financial questioning and will surely be scrutinized in the next few days. Yet there is apparently nothing to damn the Republican rival, or instantly back up the claims of Gloria Allred or the ex-wife of Staples founder, Tom Stemberg, that Mitt Romney gave misleading evidence to ensure she could not win a better settlement.
Under a plan approved by Mitt Romney and other board members in 1988, Maureen Sullivan Stemberg was given 500,000 shares of Staples common stock, then awarded a special “D” class of stock in exchange for those shares. Maureen Sullivan Stemberg sold about half of the shares only to learn that those sold holdings would have been valued higher in a 1989 public offering of Staples stock.
In testimony Mitt Romney said he backed the deal to give Tom Stemberg’s wife a special class of stock “as a favor to Tom. It was something that was done in my opinion, it was initiated as a favor. Tom needed to have a settlement with his wife so that was the genesis of it”.
But Mitt Romney insisted the board’s decision was made “in the best interests of the company’s shareholders”.
Gloria Allred’s October Surprise fails to deliver killer blow to Mitt Romney
Mitt Romney acknowledged at the time that there were no other cases in which a separate class of securities was created for the benefit of one individual. He also said that as an investor through Bain, he had never seen that kind of a device used before.
At first, his venture capital firm Bain, an early investor in Staples, was so underwhelmed by the firm’s performance that it did not plough as much money into the firm as it could have.
Mitt Romney said the initial investment in Staples was $1.5 million and valued the shares at $1.50 to $2 right up until early 1988. The court noted Maureen Sullivan Stemberg negotiated a sale of her shares at $2.25 to $2.48.
“In my opinion that’s a good price to sell the securities at,” Mitt Romney said, according to the transcript.
And, at the end of his three days of testimony, Mitt Romney was asked about his own chance to buy Staples stock before the float – and whether he bought the entire amount he was allowed to.
Crucially Mitt Romney said he did not as he believed there was a chance the company could fail.
A source told the Washington Examiner: “This disproves the Allred allegation completely. He put his money where his mouth was.”
The documents do, however, reveal the close relationship of Tom Stemberg and Mitt Romney, who testifies that he had lunch with the Staples CEO on the day of the hearing.
Mitt Romney added that he doubted the future success of the office supply stores and only created one class of shares as a “favor” to Tom Stemberg because he “needed a settlement with his wife”.
The testimony was unsealed in a Canton, Massachusetts court on Thursday after attorneys – including for Tom Stemberg and Mitt Romney – did not object to their release.
Attorney Gloria Allred has won her battle to have Mitt Romney’s sworn testimony in the bitter divorce of the ex-Staples CEO released to the public – in what is claimed could provide a damaging blow to his campaign.
The Boston Globe filed the application to unseal the records and lift a gagging order on all parties involved after receiving a tip-off that there was “juicy information about Romney” in the documents.
There have been claims that Mitt Romney’s 1991 testimony that Staples’ stock were “overvalued” meant Maureen Stemberg received a poor settlement in the divorce from the company’s former CEO Tom Stemberg.
But Mitt Romney’s lawyer said he would happily allow the court transcripts to be released, leaving them to be left open to interpretation. The documents have yet to be seen by the press.
Gloria Allred, a staunch Barack Obama supporter who promised an “October surprise” for Mitt Romney, arrived at the court in Canton, Massachusetts on Thursday morning with Maureen Sullivan Stemberg, 61.
She demanded a gagging order against her client be lifted so she could speak about Mitt Romney’s conduct through her divorce proceedings, which dragged on between 1987 and 2002.
“She is apparently the only person in the United States of America – perhaps the world – who cannot speak about Governor Romney,” Gloria Allred said.
“She needs to be able to speak.”
Gloria Allred argued that Maureen Stemberg is “denied her first amendment right” by the court in the “most comprehensive gag order I have ever seen in my 36 years of law”.
Judge Jennifer Ulwick responded that Maureen Stemberg should file her own modification to the gagging order, rather than it be dealt with today, meaning she cannot yet speak out.
The Boston Globe agreed to drop its bid for the dismissal of the gagging order in exchange for the release of Mitt Romney’s testimony.
On Wednesday, sources close to the case claimed that Mitt Romney’s testimony in 1991 meant Maureen Stemberg received a poor divorce payout.
TMZ reported that Mitt Romney, whose hedge fund, Bain Capital, was an investor in Staples before it became a household name, testified in the case that the company was worth virtually nothing.
Mitt Romney said in the hearings that the company’s stock was “overvalued” and that the future did not look good. Later Mitt Romney and Tom Stemberg allegedly cashed in their stock for a huge payout, according to TMZ.
His bitter ex-wife claims this testimony affected how much she got from the settlement.
Gloria Allred with her client Maureen Sullivan Stemberg
Maureen Stemberg was awarded 500,000 shares in the company and later went on to cash in half of these before the company went public – missing out on a huge windfall as stocks soared from $2.25 to $19.
Bain Capital’s $2.5 million investment in Staples turned into a $13 million profit, and Mitt Romney’s decision to back in the company helped secure his reputation as a successful investor.
There is no proof so far that Mitt Romney or Tom Stemberg tried to mislead Maureen Stemberg or the court, and their lawyers said they had no objections to the release of Romney’s testimony.
In court on Wednesday, Jon Albano, the attorney for the Boston Globe, confirmed that the case revolves around Mitt Romney’s 20-year-old financial testimony and his “expert investment advice”.
The court appearances come as a string of online messages have surfaced from a commenter claiming to be Maureen Stemberg, in which she unleashes a scathing attack on Mitt Romney and promises all “will very soon be revealed” – in a possible nod to Gloria Allred’s campaign.
She also refers witheringly to his wife as “Queen Ann” and lambasts both as out of touch.
In a series of unashamedly pro-Obama comments on the Huffington Post, a woman calling herself Maureen Stemberg writes: “He had a lot of bodies hidden in his <<personal and business life>>. Will very soon be revealed. When the door opens he and his team will be heading for the hills. Scary group.”
She claims she was married to “his partner in crime, Mr. Staples” – a close friend and advocate of Mitt Romney – and brands the presidential hopeful “deplorable”.
The self-confessed Barack Obama supporter also describes a time the Romney attended their house for a Christmas party and “tried very hard to be real”.
“I truly do believe he has a fear and dislike for anyone who has less than 99,000,000 [dollars],” she wrote.
“He just can’t relate and obviously Queen Ann is the same.”
A Globe article in 2006 described Maureen Stemberg as living a comfortable lifestyle while demanding that her ex-husband pay her more money.
She “sits in her $5,200 a month, 14th-floor, concierge-at-the-door, elegantly furnished Back Bay apartment and tells you she’s broke”, it wrote.
“She can’t work. She can’t afford a car, her medications, her rent, even the family springer spaniel, J.J., who she just gave away.”
“I’m going to be out on the street,” she said.
“I’ve had a change of circumstances.”
Maureen Stemberg now works as an interior designer based in Charlestown, Massachusetts and has had a couple of reportedly on-off relationships since her divorce.
The online messages and interviews apparently reveal her enduring bitterness about her husband and their divorce, and Mitt Romney’s part in it.
She even featured in a 2008 Lifetime documentary, The Maureen Sullivan Stemberg Story: A Portrait in Courage, in which she gave an “in-depth account … of the interweaving relationships and strange bedfellow that business has made in her life… which include Mitt Romney”.
Polls show Mitt Romney and President Barack Obama are neck-and-neck two weeks ahead of the election and Gloria Allred’s claims may be perceived as the latest round in a tit-for-tat battle between supporters of the two candidates.