Tuberville dealings include failed hedge fund, charity
Kim Chandler | Hagadone News Network | UPDATED 4 years, 1 month AGO
MONTGOMERY, Ala. (AP) — Tommy Tuberville’s quest for a seat in the U.S. Senate is powered by the reputation he gained as Auburn University’s football coach, where he led the team to an undefeated season.
But in the years since, the Republican has been mired in business failings, a lawsuit and even a questionable charity that raises money but gives very little away.
A hedge fund Tuberville helped start in 2009 was the subject of a criminal investigation in which Tuberville’s business partner pleaded guilty to fraud. Tuberville, who denied wrongdoing, later settled a lawsuit filed by investors who lost millions.
In 2014, Tuberville started the Tommy Tuberville Foundation, which has given only a small portion of its money to charity while spending tens of thousands of dollars to stage annual golf tournaments.
Those financial dealings are now in the spotlight in the closely watched Senate race as Republicans push to recapture the once reliably red state of Alabama. Tuberville, a Trump-backed political newcomer, won the GOP primary by besting former longtime Sen. Jeff Sessions, who failed to reclaim the seat he'd left to become Trump’s attorney general.
Zac McCrary, a Democratic pollster, said Tuberville's financial dealings are important for voters to consider.
“People know who Tuberville is as a football coach, but they don’t really know who he is beyond that, McCrary said. “This purely goes to his judgement, purely goes to his ethics,” McCrary said
The Tuberville Foundation says Tuberville started the organization to help veterans after being inspired by the World War II service of his father.
An Associated Press review of its public tax records showed the foundation reported spending about one-third of the money it raised on charitable giving.
From 2015 to 2017, it raised $231,463 before expenses, but only spent $44,000 on its three biggest charitable programs in those years, according to records. The group’s last publicly available tax return, from 2018, lists all of its $34,000 spending as charity work, although large portions of that appear to be overhead costs.
The 2020 golf tournament held this month at the Auburn University Club listed entry prices from $400 per player to $5,000 for a foursome as a “Gold Star Sponsor." The post-golf activities included a reception and “Time with Tubs.”
Tax forms show the foundation’s 2015 golf tournament brought in nearly $118,000 before expenses but cost $24,000 to put on. Eventually, about $20,000 that year was spent on veterans’ home renovations and program expenses, according to the form.
Tuberville’s campaign and people involved with the nonprofit said the records didn't reflect all the good the charity did because volunteer labor and donated materials were used to refurbish veterans’ homes. The campaign also said the foundation had a dormant period as Tuberville retired from coaching.
“It seems that any criticism of the Foundation, its size, and its work argues that a man who was generous, selfless, and charitable with his own money simply wasn’t generous, selfless, and charitable enough. That is an unfair, arbitrary, and subjective standard that simply cannot be met,” the campaign said in a statement.
Laurie Styron, executive director of CharityWatch, a watchdog group that monitors how nonprofits spend their money, said the filings raise some questions.
“The purpose of a tax-subsidized public charity is not to support one person’s speaking events or golf tournaments. A charity needs to be able to show the public that it is delivering on its mission. The 2015 through 2018 tax filings don’t reflect that. Most expenses have gone towards covering the expenses of golf tournaments and overhead costs,” Styron wrote in an email after reviewing the tax forms.
In 2018, the foundation listed all of its expenses as charity spending, but Styron said some of that was likely overhead expenses such as bank charges of $594, and taxes of $797. The form detailed only $8,000 spent on two programs. However, Tuberville’s campaign produced internal documents indicating more was spent, including $22,627 for a veterans' retreat program.
Al McKellar, who served as foundation president in its early years, said the forms don’t reflect all work. He said the foundation received donations, such as lift chairs, that were installed in veterans’ homes and volunteer labor was used.
“It was never a huge Foundation, but it was designed to make a large impact on the veterans it served,” McKellar said.
The charity is only the latest Tuberville dealing to raise questions. In trying to raise doubts Tuberville's fitness for office, Jones has pointed to Tuberville’s involvement in a failed hedge fund.
Tuberville in 2009 was a partner in a hedge fund that ended in criminal charges against his business partner, John David Stroud. Tuberville also privately settled a civil suit against him filed by investors.
“An Alabama teacher, and parents saving for their children’s education, lost everything. Tuberville’s partner got 10 years in prison. And Tuberville? You guessed it. He said he didn’t have a clue. But he had the money to settle out of court,” the narrator in a Jones ad says.
According to court records, Tuberville began the business partnership with Stroud after being introduced to him. Their joint 50-50 venture was called TS Capital, a reference to their last names.
Tuberville said in a deposition that he had no daily duties with the group. But he had a leased BMW through the company, made introductions and investors said business cards identified Tuberville as managing partner.
In 2013, Stroud pleaded guilty to investment fraud. The Alabama Security Commission said Stroud took investors’ money and used it for personal expenses, unauthorized business and to pay returns to other investors.
Tuberville maintained he was also a victim of Stroud, a view that state regulators agreed with.
“In 2009, Coach Tuberville lent his name to an investment company. It was a big mistake, and he’s paid for it,” a campaign statement read.
“He got conned by Stroud too,” Joe Borg, director of the Securities Commission, said of Tuberville. “From what we could tell, he was unwittingly used to bring folks in.”
Whether Tuberville should've known about Stroud’s crimes was an issue for the civil proceeding filed by investors, Borg said. Tuberville acknowledged in court documents that he didn't adequately vet Stroud before partnering with him.
Tuberville reached a settlement for an undisclosed sum in 2013 after investors sued.
Tuberville also invested in what prosecutors contended was a Ponzi scheme run by a former Georgia football coach Jim Donnan. A jury found Donnan not guilty of financial charges in 2014.