Lawsuit: Illinois governor managed personal investments while in office News
Lawsuit: Illinois governor managed personal investments while in office

Illinois Governor Bruce Rauner [official website] participated in meetings involving his share of a $67.5 million settlement shortly after taking office in 2015, according to a newly-unsealed lawsuit [complaint] on Tuesday.

Rauner claims to have no day-to-day involvement in his investments and publicly declared before taking office that he would give up his control [AP report] over his wealth management.

The lawsuit alleges that Rauner invested $5 million as a limited partner in Kirkpatrick Capital to acquire a minority share in United Shore Financial Services, a private mortgage lender. Rauner turned his $5 million investment into $20 million, with the help of two separate disputes, one between United Shore and Kirkpatrick Capital and the other a personal claim by Herrald Kirkpatrick, that led to the $67.5 million settlement.

The current dispute involves the allocation of the settlement proceeds. The suit alleges that the governor’s $15 million gain “apparently is not enough for Rauner,” as he seeks to cut Kirkpatrick from the proceeds of the settlement in private arbitration, despite not being a named party in the initial disputes. Rauner claims that the settlement agreement’s language stating that “[t]he aggregate purchase price … for the Units shall be Sixty-Seven Million Five Hundread Dollars” establishes that none of the settlement proceeds are allocable to Kirkpatrick’s personal claim.

According to the lawsuit, the two men met to discuss the settlement proceeds in May 2015 on the patio of the governor’s mansion and then again in September at the exclusive Chicago Club. If the allegations are true, governor Rauner was conducting private business from the Governor’s mansion while in office, which could implicate several conflicts of interest issues.

Kirkpatrick asks the court to uphold the original agreement as to the allocation of the settlement agreement and to award reasonable attorneys fees. Rauner has denied Kirkpatrick’s claims and rejects Kirkpatrick’s descriptions of their meetings and conversations.

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