According to the Richmond Times Dispatch, the Virginia Retirement System, VRS, bought 71,900 shares of Star Scientific over a three month period of time.
Last year, the Virginia Retirement System purchased – and sold at a loss — 71,900 shares of Star Scientific stock over a three-month period, VRS head Robert P. Schultze confirmed to the Richmond Times-Dispatch Friday.
Schultze said the $58 billion pension system found no evidence that the governor or any member of his administration influenced its purchase and sale of the Star stock. He said it was the result of decisions made by a VRS investment team using a computer trading program to assess stocks.
VRS made the investment Aug. 28, 2012, a day the stock closed at $3.99 a share. Over the next three months it was sold off in three separate transactions: on October 2, when shares closed at $3.14, and on October 3 when shares closed at $3.23.
The remainder of the VRS holding in Star stock was sold on November 15, a day the stock closed at $1.61. That was three days after Star disclosed a $5 million settlement on its tobacco patent infringement lawsuit with R.J. Reynolds that was significantly less than investors expected.
Does anyone else smell a rat? I don’t believe for one minute the mighty VRS is investing in turd companies like Star Scientific whose major product is a vitamin supplement with tobacco as one of its ingredients. Someone needs to check closer. Mr. Schultze needs to call for nothing less than a full investigation. Star Scientific has been a beleaguered company, yet its CEO, Jonnie Williams, has given hundreds of thousands of dollars to Republican candidates and elected officials, hoping to curry favor and to gain business advantage. In dealing with Governor Bob McDonnell, it apparently worked.
The favoritism apparently doesn’t stop with Gov. McDonnell. Williams also contributed heavily to the campaign of candidate Jerry Kilgore who challenged Tim Kaine in 2005. As a matter of fact, Kilgore is his attorney as we speak. How convenient. It leads me to believe that they are all thick as thieves down there in God’s country on the James.
How did VRS get involved with Star Scientific? More from the Richmond Times Dispatch:
The $289,000 Star Scientific purchase and resulting $87,581 loss is barely a drop in the financial bucket for VRS. It manages a trust fund that relies on investment income as well as contributions from government employers and their workers to assure long-term security of their pensions.
The retirement system relies on an internal staff of investment professionals to manage more than one-third of its assets, while contracting with stock market managers to oversee the rest. In the fiscal year that ended June 30, VRS showed an 11.8-percent return on its investments.
But the VRS decision to invest in a small, struggling company that had lost millions over the last 10 years – including $22.8 million in 2012 and nearly $38 million in 2011 – has caught the attention of investigators, state lawmakers, and pension beneficiaries.
“I will definitely check into it,” said Sen. John Watkins, R-Powhatan, a member of the Senate Finance Committee who has led reforms of the VRS to improve its financial standing after heavy market losses in the 2009 recession. “That’s a concern.”
Sen. A. Donald McEachin, D-Henrico, said he was “alarmed that VRS would invest in a corporation that was so troubled and risk money for retirees in such a fashion. And I am troubled by the fact that this was going on at the same time the governor was receiving favors from Jonnie Williams.”
Schultze said the Star Scientific transactions were among those handled by a small group of investment professionals at VRS who review the recommendations of an automated computer program designed to identify public equity stocks that could be traded at a profit to the pension system.
He said the manager of the five-member team was interviewed this week and asked if he had talked to anyone from the governor’s office or administration when the decisions were made.
“He said no, he had never talked to anyone,” Schultze said. “He said, ‘I was just watching the computer printout.’ ”
And I call BULLSHIT. Too many Virginians are relying on that money from the VRS pension to keep them from eating cat food in their old age. VRS is a good pension fund, especially when compared to many other state pension funds. It has had its problems, mainly because the General assembly has failed to fully fund it, but it profits by comparison. Let us not forget that the General Assembly used the fund as an ATM and deferred millions of dollars in contributions from municipalities around the state.
Despite everything, this past year VRS has earned just under 12% return on its investments.
Its time to run Jonnie Williams out of town. It’s time for Governor McDonnell to govern and stop the slush treatment for his benefactors. He obviously wouldn’t know conflict of interest if it were sitting on the end of his nose.
Bob McDonnell is bringing a scandal a day. Talk about the gift that keeps on giving. Today the press admitted that his wife had cosmetic dentistry free of charge. These people sure have a sense of entitlement.
The Virginia GA needs to overhaul its ethics laws the instant the session convenes this winter.
This VRS business is serious. I don’t believe for an instant that the selection of Star Scientific was random. The chickens are coming home to roost.
Nothing makes me angrier than for poltics to mess with MY money. When VRS is involved, then I sit up and take notice and I am furious.
Every state employee and every municipal employee and every teacher past and present needs to demand a criminal investigation of Star Scientific’s involvement with VRS.
Did the first lady have cosmetic dental work?
http://www.washingtonpost.com/local/virginia-politics/investigators-reportedly-looking-into-whether-va-first-lady-got-free-dental-work/2013/07/18/d53e5646-efdf-11e2-bed3-b9b6fe264871_story.html
This is the vacation house that Ken Cuccinelli forgets about.
He and his family vacationed there at least three times.
I think I would remember such a lush vacation.
http://www.roanoke.com/news/dancasey/1946940-12/just-2-forgettable-vacations-for-ken-cuccinelli.html
Just2forgettablevacations…..
Why would anyone ingest a tobacco-based nutritional supplement? That’s the craziest piece of all of this.
Yea, that part of it simply blows me away. Common sense and all that. As a person who has disabilities from smoking…I find this entire situation just unfathomable.
The access this Williams clown had to position and opportunity is totally amazing. Surely these elected officials have to know it is wrong.
12% is not a bad return. And depending on when the Star Scientific stock was bought and sold, that might have been a good buy. The story turns dark if it turns out that someone in the Executive Branch (or close to it) suggested that VRS make that purchase. However, in the atmosphere we have today, I think if that had happened we would have heard about it at a pretty high decibel level.
I can’t see why VRS would buy a company that had been losing millions of dollars for a couple of years. I am not cutting them any slack.
I would fire whoever made that investment in a NY minute. This is a very financially troubled company and it has been for some time.
Star Scientific Inc. is a controversial Virginia-based company that has moved from tobacco to dietary supplement manufacturing. As Williams, the company’s CEO since 1999, gave gifts and campaign cash to McDonnell, the governor and his wife helped to promote the company’s scientifically-unproven supplements.
Check out how the stocks have done over the past 5 years.
https://www.google.com/finance?q=NASDAQ%3ASTSI&sq=star%20scientific&sp=1&ei=ZJTqUZjyAbG90QG0iAE
I see at the end of the article that VRS sold at a loss. Too bad.
This is an outrage. The governor is playing games with employee retirement funds and exposing Virginia taxpayers to considerable risk.
It is time for the governor to resign from his office immediately. He has betrayed the public trust. He is unfit for public office. He disgraces himself, his family, his party and his office.
Wouldn’t you rather he stick around so he keeps drawing attention to the questionable ethics of both him and Cuccinelli?
@Cindy Brookshire
It does sound crazy, but tobacco has an alkaloid found to work as an anti-imflammatory and also with thyroid diseases. I can remember growing up learning in Boy Scouts that after a snake bite and poision extracted, slap a leaf on the punctures to reduce inflammation and also interacts to reduce effects of any remaining venom. Its for the most part no longer a major player in medical practice, but still active in “natural” medicine.
Starry – I don’t think there is any evidence that the Governor had anything to do with the VRS purchase of Star Scientific shares. These pension funds are often managed by people at some distance removed using computer-driven trading programs. I agree that if it were shown that the Star holdings were influenced by someone in the state government carrying water for the amazing Mr. J. Williams, that would be a bad thing. But this story doesn’t have that element.
@ Moon: I think the Governor’s issues are helping, not hurting Cuccinelli. The Governor’s family involvement with Star makes KC’s entanglements look modest by comparison and deflects inquiry into what the AG’s relationship was to this groupie (i.e., Williams).
You might be right. It isn’t over yet though. It might be for McDonnell. I am still very skeptical about the VRS and Star Scientific. I can’t see why they wouldn’t have done their homework about a failing company. The buy and sell was in something like August of 2012. I smell a rat…just waiting for the trail.
I smelled a rat with Helen Dragas also. There was definitely a connection.
Cuccinelli’s issues are less illegal?
Virginia doesn’t seem to have a long list of ethics laws.
Just a lot of preaching about it.
The problem is that the quid pro quo dymanic is so “understood” in politics one doesn’t NEED it be written, it’s just implied and we all know it.
I find it quite odd that VRS would be buying stock when it is priced below $5 per share. Many mutual funds do not touch stock below that threshold, and I would think VRS would follow similar practices. I would really like to know what system they used to pick the stock – and have someone explain the analysis that led them to buy it.
Hi Pat. Have you been on vacation? Your input has been missed.
I agree with you. Something just isn’t right about all of that Star Scientific and VRS stuff.
You could call it a vacation – a limited internet zone. I do not post when I am in some areas.
Well we are glad you are back amongst civilization.