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.
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, 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. Stemberg was one of the speakers who praised 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 scrutinised in the next few days. Yet there is apparently nothing to damn the Republican rival, or instantly back up the claims of Allred or the ex-wife of Staples founder, Tom Stemberg, that Romney gave misleading evidence to ensure she could not win a better settlement.
In the original deal, she was awarded nearly 500,000 Staples shares, which she sold soon after for $2.25 each. Just a year later the company was floated publicly – and the price soared to $19.
In 1991, two years after the public offering, she hauled her ex-husband back into court to claim she deserved more, and Romney was called as a witness. He had not testified at the first divorce case.
She and Allred claimed his evidence showed he was trying to help his friend from having to pay out more by telling the court the stocks were overvalued at the time of the deal and she got a ‘fair price’.
While his evidence released this afternoon confirms he said this, it also crucially shows he genuinely initially believed that Staples, which launched only a year before the divorce, was an extremely risky investment
‘I didn’t think it was a very good idea,’ he said of the company, according to the transcript.
Once he got the plan, however, ‘I was impressed with the quality of the thinking and the thoroughness of the plan and arranged for a meeting with Tom Stemberg and his managers.’
Lawyers for Stemberg’s wife questioned whether the stock should have had a higher value before she sold her shares in 1987.
Under a plan approved by 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. She 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 Romney said he backed the deal to give 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 Romney insisted the board’s decision was made ‘in the best interests of the company’s shareholders.’
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.
He 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 Mrs 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,’ Romney said, according to the transcript.
And, at the end of his three days of testimony, 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 he 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 Mr Stemberg and Romney, who testifies that he had lunch with the Staples CEO on the day of the hearing.
Romney added that he doubted the future success of the office supply stores and only created one class of shares as a ‘favor’ to Stemberg because he ‘needed a settlement with his wife’.
The testimony was unsealed in a Canton, Massachusetts court on Thursday after attorneys – including for Mr Stemberg and Romney – did not object to their release.
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.
But in another knock for Allred, the judge did not lift a gagging order on her client Maureen Stemberg, meaning she is unable to speak about Romney or his conduct through the proceedings.
Romney’s lawyer had said he would happily allow the transcripts to be released, leaving them open to interpretation. Allred said outside court it would take ‘a few hours at least’ to get the documents.
Allred demanded the gagging order against her client be lifted so she could speak about 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,’ Allred said. ‘She needs to be able to speak.’
She 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 Mrs Stemberg should file her own modification to the gagging order, rather than it be dealt with today, meaning she cannot yet speak out.
‘Now everybody can see these transcripts, but they don’t mean much unless my client can talk about it,’ Allred said outside the court, adding: ‘I think the voters have a right to know everything about Governor Romney.’
Whether the furore simply centres around the demands of a bitter ex-wife has yet to be seen – but Maureen Stemberg has not kept her low opinion of Romney quiet.
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 Romney and promises all ‘will very soon be revealed’.
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’ and brands the presidential hopeful ‘deplorable’.
The self-confessed 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
She 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 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 Romney and President Obama are neck-and-neck two weeks ahead of the election and Allred’s claims may be perceived as the latest round in a tit-for-tat battle between supporters of the two candidates.