Presidential candidate Elizabeth Warren and freshman Rep. Alexandria Ocasio-Cortez are taking aim at Treasury Secretary Steve Mnuchin over decisions he made while on the board of directors for Sears along with his college roommate and Sears CEO Eddie Lampert.
Mnuchin, who roomed with Lampert at Yale, was a member of the Sears board of directors until December of 2016 when then-President-elect Donald Trump picked him to join his cabinet as Treasury Secretary.
Lampert led Sears from 2013 to 2018, closing more than 3,500 stores, shedding all of the company’s most valuable assets and laying off thousands of workers at the former retail giant that was the Amazon of its day. Sears filed for bankruptcy in October of 2018, and Lampert bought the company through an affiliate of his hedge fund, ESL Investments, saving it from total liquidation.
Warren and Ocasio-Cortez sent a letter to Mnuchin on Thursday, asking a series questions about Mnuchin’s involvement in Lampert’s decision, and fired off a series of tweets explaining their intent, accusing .
The questions for Mnuchin read:
- While you served on the board of directors for Sears Holdings Corporation and ESL investments, how did you advise Lampert and other Sears leaders on:
a. Lampert’s decision to buy back nearly $6 billion worth of Sears stock between 2005 and 2010 and take “an ax to the company’s operating expense[s] and capital
expense[s]” in the process?
b. Lampert’s decision to load Sears with large amounts of debt, leaving the company with a net debt-to-equity ratio of 1.48 by 2013?
c. Lampert’s decision to “repeatedly [spin] off major assets to shareholders” “beginning in 2011 and 20 12” at the expense of the business?
d. Lampert’s decision to “split off 235 of Sears’s most profitable stores and 31 other Sears real-estate holdings, selling it to a publicly traded real-estate investment
trust (REIT) called Seritage Growth Properties for $2.7 billion,” leaving Sears in a precarious financial state?
e. Other cost-cutting decisions that led to over 3,500 store closures and 20,000 job losses?
- As a board member for the PBGC, did you participate in any discussions or decisions regarding Sears’ underfunded pension plans? Did any member of Sears’ senior
leadership, including Lampert and other current or former members of the board of directors, communicate with you, or attempt to communicate with you, about the PBGC decision? If so, please provide copies of that communication.
- In your January 10, 2017 ethics agreement, you stated that for one year you would “not participate personally and substantially in any particular matter involving specific parties in which” you knew that Sears Holdings, Inc., “is a party or represents a party.”
a. Have you sought or received any waivers from this agreement?
b. Have you sought any advice from the Treasury Department’s Designated Agency Ethics Official regarding decisions related to Sears, and if so, have you followed this advice?
c. Since the one-year deadline has passed, have you been involved in any Treasury or PBGC actions related to Sears or Lampert? If so, please describe these actions.
Before @StevenMnuchin1 became Treasury Secretary, he was on the board of @Sears, where he helped gut the company and fire thousands of employees. Now, @AOC and I have some tough questions for him. pic.twitter.com/hS25rPOsYa
— Elizabeth Warren (@SenWarren) May 23, 2019
Washington is supposed to work for everyone. Instead, the rich & powerful like @StevenMnuchin1 & Eddie Lampert use it to become even more rich & powerful, while workers are left holding the bag. This is the DC swamp at its worst. https://t.co/qEbIL9JAM8
— Elizabeth Warren (@SenWarren) May 23, 2019
Warren and Ocasio-Cortez’s letter comes after Sears filed a lawsuit against Lampert, Mnuchin and other past board members alleging they stole billions from the company and employees who didn’t get a severance package.
The suit alleges that Lampert “caused more than $2 billion of assets to be transferred to himself and Sears’ other shareholders and beyond the reach of Sears’ creditors.”
The suit was brought on by Sears’ creditors on behalf of Sears, and alleges: “In an effort to create a false record to cover up their asset stripping, at Lampert’s personal direction, Sears employees repeatedly produced financial plans reflecting fanciful, bad-faith predictions that the company would experience an immediate and dramatic turn-around from deep and mounting losses to sudden profitability.”
Editor’s note: Is this legitimate or nothing more than a political stunt and an attempt to get President Trump by smearing one of his top cabinet members? Share your thoughts in the comments below.