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Romney downplays report he profited from firm tied to fraud
Former presidents Bush, Clinton hit campaign trail
By Ron DePasquale, Associated Press, 10/10/02
LAWRENCE, Mass. -- Former President Bush praised Mitt Romney as being a man of integrity as the GOP gubernatorial candidate downplayed a report he benefited from the sale of a medical company that later admitted it had profited from Medicare fraud.
"Mitt Romney takes positions based on integrity. He does not hold a finger into the political winds to see which way they are blowing," Bush said at an appearance with Romney at the New Balance factory here.
In Boston, Democratic gubernatorial candidate Shannon O'Brien challenged Romney to explain what she called contradictions about his role in uncovering fraud at Damon Clinical Laboratories, where he served on the board from 1990 to 1993.
The Boston Globe reported Thursday that Romney made $473,000 from the 1993 sale to Corning Inc. of Damon, whose profits were generated in part by fraudulently billing Medicare for unneeded blood tests. Romney's firm, Bain Capital Inc., tripled its investment in the company and made $7.4 million.
However, Romney said he helped uncover the fraud at Damon and hired an outside law firm to investigate it.
"Mitt Romney's version of the events is in direct conflict with sworn statements by federal prosecutors," O'Brien said Thursday, before joining former President Clinton at a campaign stop. "If Mitt Romney cannot completely explain the contradiction, it will raise serious questions about his candidacy."
In 1996, Damon pleaded guilty to a federal conspiracy charge of defrauding the government of $25 million between 1988 and 1993. The company paid a $119 million fine.
Then-U.S. Attorney Donald Stern called it a case of "corporate greed run amok."
Romney, Bain's co-founder, and Damon's other board members were never implicated in the federal investigation.
"We took action based on what was told to us by the law firm," Romney said in Lawrence, after speaking to several hundred employees at New Balance, an athletic shoe and clothing company.
The Globe report comes days after Romney demanded O'Brien answer questions about her job at a now-bankrupt health care firm whose owner this week pleaded guilty to overcharging Medicaid and Medicare.
O'Brien, who was in charge of marketing and public relations at Community Care Systems Inc., said she had nothing to do with financial dealings at the company, and she denied any wrongdoing.
O'Brien did not raise the Damon sale at an afternoon rally with Clinton at the Boston Teachers' Union's headquarters in Dorchester.
Clinton told the audience that if elected governor O'Brien would be faced with tough economic choices.
"You are electing someone to make hard decisions in a challenging time," he said. "You're going to hire a governor to say 'yes' and say 'no' and it's very important that that governor share your dreams and vision."
O'Brien said Clinton "proved that Democrats could be fiscally responsbile while holding true to our progressive ideal that every American matters."