Frist lied about "blind trusts"

[chomerics]

From WaPo today. . .

Letters Show Frist Notified Of Stocks in 'Blind' Trusts

Documents Contradict Comments on Holdings

By Jeffrey H. Birnbaum

Washington Post Staff Writer

Monday, October 24, 2005; A01

Senate Majority Leader Bill Frist (R-Tenn.) was given considerable information about his stake in his family's hospital company, according to records that are at odds with his past statements that he did not know what was in his stock holdings.

Managers of the trusts that Frist once described as "totally blind," regularly informed him when they added new shares of HCA Inc. or other assets to his holdings, according to the documents.

Since 2001, the trustees have written to Frist and the Senate 15 times detailing the sale of assets from or the contribution of assets to trusts of Frist and his family. The letters included notice of the addition of HCA shares worth $500,000 to $1 million in 2001 and HCA stock worth $750,000 to $1.5 million in 2002. The trust agreements require the trustees to inform Frist and the Senate whenever assets are added or sold.

The letters seem to undermine one of the major arguments the senator has used throughout his political career to rebut criticism of his ownership in HCA: that the stock was held in blind trusts beyond his control and that he had little idea of the extent of those holdings.

The extent of Frist's knowledge of the inner workings of his trusts and his family's health care company is related to a recently launched federal investigation of possible insider trading involving the liquidation this summer of Frist's HCA stock. Within weeks of Frist's decision to sell his holdings in June, HCA shares fell sharply because of a weak earnings report. Frist has said he possessed only publicly available and not "insider" information about the company when he directed the sale and, therefore, did nothing wrong.

Last week, Frist told reporters that he is "absolutely confident in the outcome" of the inquiries by the Justice Department and the Securities and Exchange Commission because he "acted properly at every point." He declined to address specifics about the investigations but said he is providing information as quickly and fully as possible.

Frist, a heart-surgeon-turned-politician, has been actively involved in shaping national health care legislation, including passage of the Medicare prescription drug benefit, while maintaining a major financial interest in his family-founded health care business.

Two watchdog organizations -- Citizens for Responsibility and Ethics in Washington and the Foundation for Taxpayer and Consumer Rights -- filed complaints with the Senate Select Committee on Ethics this yearcharging Frist with having a conflict of interest and questioning why he sold his shares after a decade of saying he did not need to.

Frist and his family have a dozen federal trust accounts, which are essentially piles of stock controlled by professional money managers. Under the terms of his "qualified" trust agreements set up in 2000, Frist is barred from contacting the managers except under specific circumstances. The managers, however, are required to contact him when the funds they control undergo certain changes -- an arrangement similar to those of several other senators.

In January 2003, after winning election as majority leader, Frist was asked on CNBC whether his HCA holdings made it difficult for him to push for changes in Medicare, a federal health program for seniors that added to the hospital company's revenue.

"I think really for our viewers it should be understood that I put this into a blind trust," Frist replied. "So as far as I know, I own no HCA stock." He added that the trust was "totally blind. I have no control."

Two weeks before that interview, M. Kirk Scobey Jr., a Frist trustee, informed the senator in writing that one of his trusts had received HCA stock valued at between $15,000 and $50,000.

"He [Frist] could have been more exact in his comments," said Bob Stevenson, spokesman for Frist. Stevenson added that Frist might better have said he did not know to what extent he owned HCA shares.

Kathleen Clark, a law professor at Washington University in St. Louis, said she was surprised that Frist had ever claimed before this summer's liquidation that he might have owned no HCA stock. "Did he say that? What was he thinking of?" she asked. "How did he know to tell the trustee to sell it [his HCA stake] if he didn't know that he had it in the first place?"

Disclosures by the trustees to the Senate and to Frist indicate that Frist and his family probably owned a great deal of HCA stock at the time. When Frist's federal trusts were created in late 2000, the trustees disclosed that one trust alone contained between $5 million and $25 million in HCA shares and that each of seven other trusts held more than $1 million of the stock.

Frist was notified in November 2002 that 14,781 HCA shares had been sold from one of his trusts. But he was not told that all of his HCA shares had been disposed of until this summer -- after he had directed his trustees to sell them all, the documents show.

Questions about his HCA holdings have been a staple of Frist's public life. The Nashville-based company, the country's largest chain of for-profit hospitals, was founded in 1968 by Frist's father, Thomas F. Frist, his brother, Thomas F. Frist Jr., and Jack C. Massey, the former owner of Kentucky Fried Chicken. Its stock made up the majority of Frist's wealth and was used to help him secure some of the financing for his first Senate campaign.

During his first run for the Senate in 1994, Frist was accused of having a "mammoth conflict of interest" by his Democratic opponent, then-Sen. Jim Sasser. Frist promised to put his HCA stock in a blind trust to avoid the problem.

This year, as he contemplated a bid for the White House in 2008 and worried about the appearance of conflicts, Frist abruptly changed tactics, aides said. Rather than defend his stock held in trust, he asked his trustees to sell all his HCA shares.

Stevenson said Frist's concerns involved the perception of a conflict rather than any real conflict of interest. In 1997 and 1999, the ethics committee cleared Frist to participate in Senate debates involving Medicare and health maintenance organizations despite his "substantial" holdings in HCA. The committee did not take into account whether Frist's holdings were in blind trusts in reaching its decisions.

Frist said last week he was not required to set up a blind trust after he went to the Senate, but he wanted to "apply the highest ethical standards I possibly could. I thought, why not raise the bar, why not do a good deed . . . and avoid any appearance of a conflict of interest."

Senate rules prohibit any lawmaker with a blind trust from contacting his trustees unless the ownership of an asset poses a potential conflict of interest "due to the subsequent assumption of duties" by the lawmaker. The lawmaker can then ask the trustees to dispose of the asset.

Frist did not take on any new duties this year. But a Frist adviser said the senator had been thinking about selling his HCA stake from the time he was elected majority leader in 2002. Frist had not known that he could sell his shares until this spring, the adviser asserted, and so went ahead with the sale based on his nearly three-year-old wish.

Staff writer Charles Babington and research editor Lucy Shackelford contributed to this report.

I guess his WH bid could be in peril as well, especially considering how he has lied repeatedly to the American public about his witholdings of HCA.

[Destino]

He never had a chance. His illegal adoption of animals to experiment on while in medical school would make it all too easy to paint the man as cold and creepy.

[Thiebear]

Thats seriously old news that came out when it broke:

Yep, blind means you don't know whats in it.. and this ain't it!

Guh-ilty

[Art Monk Fan]

From what the article says, I see no wrong-doing.

According to the piece, the trust reported to the Senate and Dr. Frist on 15 occassions over the past 5 years on purchases and sales of stocks held in the trust. It further states that this was required by the terms of the trust. With one exception, there is no indication that Dr. Frist was involved in directing the trust to make any purchases or sales, nor that he contacted them.

The one exception was the case of the HCA stock, where he recently contacted them to request that stock to be sold off. According to the piece that is the one case in which Senate rules allow members to contact the trust themselves, to direct it's actions regarding possible conflicts of interest.

It appears to me that Frist had taken enough abuse and wished to remove this possible amunition from his opponents and that was his motivation for requesting the sale. According to the piece, it also appears he requested the sale some time before it actually occurred, though the story gives no reason for the delay.

What is it I'm supposed to see here?

[Predicto]

From what the article says, I see no wrong-doing.

According to the piece, the trust reported to the Senate and Dr. Frist on 15 occassions over the past 5 years on purchases and sales of stocks held in the trust. It further states that this was required by the terms of the trust. With one exception, there is no indication that Dr. Frist was involved in directing the trust to make any purchases or sales, nor that he contacted them.

The one exception was the case of the HCA stock, where he recently contacted them to request that stock to be sold off. According to the piece that is the one case in which Senate rules allow members to contact the trust themselves, to direct it's actions regarding possible conflicts of interest.

It appears to me that Frist had taken enough abuse and wished to remove this possible amunition from his opponents and that was his motivation for requesting the sale. According to the piece, it also appears he requested the sale some time before it actually occurred, though the story gives no reason for the delay.

What is it I'm supposed to see here?

When you see that Frist was notified by the trust, and this was "required by the terms of the trust," what does that tell you?

As a lawyer, it tells me that this was not set up as a blind trust. The only reason that the trust was required to tell him all purchases and sales is because Frist set it up that way. A trust does what you tell it to do.

It means that Frist cannot claim that he did not know what was going on with his investments because they were in a blind trust. They weren't.

He may or may not have done anything illegal, but the defense of having a blind trust for his investments is no longer valid.

[Art Monk Fan]

When you see that Frist was notified by the trust, and this was "required by the terms of the trust," what does that tell you?

As a lawyer, it tells me that this was not set up as a blind trust. The only reason that the trust was required to tell him all purchases and sales is because Frist set it up that way. A trust does what you tell it to do.

It means that Frist cannot claim that he did not know what was going on with his investments because they were in a blind trust. They weren't.

He may or may not have done anything illegal, but the defense of having a blind trust for his investments is no longer valid.

So in a blind trust, he has no reporting at all and has no idea how much, if any, money the trust is earning for him? They would not report any sales, purchases, or other moves at all?

[Predicto]

So in a blind trust, he has no reporting at all and has no idea how much, if any, money the trust is earning for him? They would not report any sales, purchases, or other moves at all?

They would report return on investment and such, but they would not report specific sales or purchases. If they do, it's not blind anymore. The whole point is to insulate you from conflicts of interest in legislation you draft. If you know that you just bought a bunch of DuPont stock, you might be more in favor of a government plan to rebuild a DuPont plant that just got Katrina'ed.

[wskin44]

"I think really for our viewers it should be understood that I put this into a blind trust," Frist replied. "So as far as I know, I own no HCA stock." He added that the trust was "totally blind. I have no control."

Two weeks before that interview, M. Kirk Scobey Jr., a Frist trustee, informed the senator in writing that one of his trusts had received HCA stock valued at between $15,000 and $50,000.

"He [Frist] could have been more exact in his comments," said Bob Stevenson, spokesman for Frist.

:doh: Yea he could have been more exact in his comments alright. He could have just admitted that he lied.

I'll have to remember that one the next time I'm totally wrong about something: "I should have been more exact in my comments" and then I'll just change everything I said.

[Art Monk Fan]

They would report return on investment and such, but they would not report specific sales or purchases. If they do, it's not blind anymore. The whole point is to insulate you from conflicts of interest in legislation you draft. If you know that you just bought a bunch of DuPont stock, you might be more in favor of a government plan to rebuild a DuPont plant that just got Katrina'ed.

Then I don't understand the Senate rule allowing members to contact their trust in cases of possible conflict of interest.

If you don't know what they've bought, sold, or are currenlty holding, how do you know when or if to contact them about a conflict?

In which case you'd have to contact them before every debate and vote, placing you in even greater contact with your "blind" trust than Frist is being accused of.

Either a "blind" trust is allowed to report to you, or the rule makes no sense.

I understood the "blind" trust to mean Frist was not allowed to direct the actions of the trust unless a conflict arose neccessitating a sale -- as with the HCA stock. The reporting function in this trust seems to have been put in place to make sure the actions of the trust were on the public record of the Senate.

[Art Monk Fan]

"I think really for our viewers it should be understood that I put this into a blind trust," Frist replied. "So as far as I know, I own no HCA stock." He added that the trust was "totally blind. I have no control."

Two weeks before that interview, M. Kirk Scobey Jr., a Frist trustee, informed the senator in writing that one of his trusts had received HCA stock valued at between $15,000 and $50,000.

"He [Frist] could have been more exact in his comments," said Bob Stevenson, spokesman for Frist.

:doh: Yea he could have been more exact in his comments alright. He could have just admitted that he lied.

I'll have to remember that one the next time I'm totally wrong about something: "I should have been more exact in my comments" and then I'll just change everything I said.

In the quotes above Frist says the trust is totally "blind" and goes on to define what he means by this: "I have no control."

In order to say he is lying, you must assume he's read the letter detailing the actions of the trust. Is it possible he received a statement that he didn't closely scrutinize?

I'm not saying he didn't lie, I just don't see where it's clear as crystal that he did.

[Predicto]

I have to admit that I am not up on Senate rules or even the details of this particular situation. I was just commenting on what a "blind trust" is and why this was not one.

There are also types of trust where you get to know what the investments are but you can't direct what the trust does, like a "spendthrift" trust, but they are not blind trusts.

[wskin44]

I could be wrong (in which case I will issue a more exact comment) but I thought that a blind trust meant that the office holder does not know what stocks and investments that are held in his portfolio. All he sees is a total value and a total return.

[zoony]

The Repubs have the wrong Tennessee Senator as their presidential hopeful.

It SHOULD be Fred Thompson. That guy rocks.

.....

[Destino]

In the quotes above Frist says the trust is totally "blind" and goes on to define what he means by this: "I have no control."

You are right that he starts by saying the money is in a blind trust, but when he goes on to define it he says more then "I have no control". He states "So as far as I know, I own no HCA stock." and after that he says "I have no control". He clearly implied that the trust was blind in the way predicto defined it.

[JimboDaMan]

You are right that he starts by saying the money is in a blind trust, but when he goes on to define it he says more then "I have no control". He states "So as far as I know, I own no HCA stock." and after that he says "I have no control". He clearly implied that the trust was blind in the way predicto defined it.

That is the crux of the problem. Dredging up loopholes in Senate rules or the arcane definitions of "blind trust" won't bail the guy out this time. "So far as I know, I own no HCA stock". That statement alone makes him a Big. Fat. Liar. with no room to wiggle out.

[Larry]

From what the article says, I see no wrong-doing.

According to the piece, the trust reported to the Senate and Dr. Frist on 15 occassions over the past 5 years on purchases and sales of stocks held in the trust. It further states that this was required by the terms of the trust. With one exception, there is no indication that Dr. Frist was involved in directing the trust to make any purchases or sales, nor that he contacted them.

The one exception was the case of the HCA stock, where he recently contacted them to request that stock to be sold off. According to the piece that is the one case in which Senate rules allow members to contact the trust themselves, to direct it's actions regarding possible conflicts of interest.

It appears to me that Frist had taken enough abuse and wished to remove this possible amunition from his opponents and that was his motivation for requesting the sale. According to the piece, it also appears he requested the sale some time before it actually occurred, though the story gives no reason for the delay.

What is it I'm supposed to see here?

Well,

1) He said he didn't own any "as far as I know", two weeks after being told in writing of the latest addition to his holdings.

2) The Senate rules allow members to sell off their holdings if new duties would cause conflicts. Frist, at the time, hadn't assumed any new duties.

3) The reason this investigation started, is because Frist's "blind trust" sold off his stock two weeks before the public announcement of a bad earnings statement. Frists's defense against insider trading is that he had neither knowledge nor controll of the trust's holdings.

(And he's a sleazy Republican who diagnoses people by watching videotape, and who thinks you can get AIDS from sweat.)

[@DCGoldPants]

If you took away the people....and placed this alleged crime next to Martha Stewart's one.

Which is worse?

[Soliloquy]

The Repubs have the wrong Tennessee Senator as their presidential hopeful.

It SHOULD be Fred Thompson. That guy rocks.

.....

"This business will get out of control. It will get out of control and we'll be lucky to live through it."

[@DCGoldPants]

Hunt for Red October?

[Art Monk Fan]

Well,

1) He said he didn't own any "as far as I know", two weeks after being told in writing of the latest addition to his holdings.

Which means he was sent a letter he may or may not have opened, may or may not have read, and may or may not have checked in detail.

2) The Senate rules allow members to sell off their holdings if new duties would cause conflicts. Frist, at the time, hadn't assumed any new duties.

I thought it was stated he ordered the sale when he assumed the leadership, but that the sale wasn't made until much later. I've still not seen any reason for the delay.

3) The reason this investigation started, is because Frist's "blind trust" sold off his stock two weeks before the public announcement of a bad earnings statement. Frists's defense against insider trading is that he had neither knowledge nor controll of the trust's holdings.

I haven't seen anywhere that he did have control of the trust's holdings, other than his earlier request to divest HCA holdings, which request seems to have been ignored for some time.

(And he's a sleazy Republican who diagnoses people by watching videotape, and who thinks you can get AIDS from sweat.)

Ad hominem personal attacks aren't becoming.

[chomerics]

Bottom line. . .

Frist lied to the public, then claimed he didn't lie. It's the Republican way, the "Big Lie", and people buy the BS hook line and sinker. I've missed Rush these past few days, but I assume he's ranting about how the "liberal elite" are out to get Frist, not because he lied, but because he's a republican :doh:

Read Andrew Sullivan's blog today. . .

TODAY'S REPUBLICANISM: You can't really parody this exchange between an NYT interviewer and Connie Mack, former Republican senator, and president Bush's point-man on tax reform. The dialogue is about spending and taxes:

NYT: Well, the U.S. government has to get money from somewhere. As a two-term former Republican senator from Florida, where do you suggest we get money from?

Mack: What money?

The money to run this country.

We'll borrow it.

I never understand where all this money comes from.

When the president says we need another $200 billion for Katrina repairs, does he just go and borrow it from the Saudis? In a sense, we do. Maybe the Chinese.

Is that fair to our children? If we keep borrowing at this level, won't the Arabs or the Chinese eventually own this country?

I am not worried about that. We are a huge country producing enormous assets day in and day out. We have great strength, and we have always adjusted to difficulties that faced us, and we will continue to do so.

This is what we're dealing with. Essentially: **** the next generation. And they call that conservatism these days.

He hit the nail on the head with that one.