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E3-20230407-JV-NF-ORI
 Contents

Cover
Title Page
Copyright
Dedication
Epigraph

Introduction: A New Gilded Age

PART I: HOW THEY MAKE THEIR MONEY

1 Other People’s Money, and How They Use It: The Tactics of Private
Equity
2 Ending Homeownership as We Know It: Private Equity in Housing
3 Profiting off Bankruptcy: Private Equity in Retail
4 Deadly Care: Private Equity in Nursing Homes
5 Making It All Worse: Private Equity in Health Care
6 This Time Will Be Different: Private Equity in Finance
7 Captive Audience: Private Equity in Prisons

PART II: HOW THEY GET THEIR WAY

8 Suing Their Own Customers: Private Equity in the Courts
9 Privatizing the Public Sector: Private Equity in Local Government
10 The Industry’s Strongest Advocates: Private Equity in Congress

PART III: HOW TO STOP THEM

11 What We Must Do
 12 An Agenda for Reform

Acknowledgments
Discover More
Notes
About the Author
Praise for Plunder
Explore book giveaways, sneak peeks, deals, and more.

Tap here to learn more.

To Mom
WE MUST BREAK THE MONEY TRUST OR THE MONEY
TRUST WILL BREAK US.

—LOUIS BRANDEIS, Other People’s Money and How the Bankers Use It
 INTRODUCTION
A New Gilded Age

Private equity surrounds you. When you visit a doctor or pay a student loan, buy
life insurance or rent an apartment, pump gas or fill a prescription, you may—
wittingly or not—be supporting a private equity firm. These firms, with obscure
names like Blackstone, Carlyle, and KKR, are actually some of the largest
employers in America and hold assets that rival those of small countries. Yet few
people understand what these firms are or how they work. This is unfortunate
because private equity firms, which buy and sell so many businesses you know,
explain innumerable modern economic mysteries. They explain, in part, why
your doctor’s bill is so expensive and why your veterinary clinic seems to be in
decline. They explain why so many stores are understaffed or closing altogether.
They explain why there are ever fewer companies in America and why those that
remain are selling ever lower-quality products. In fact, despite their relative
anonymity, private equity firms are poised to reshape America in this decade the
way in which Big Tech did in the last decade and in which subprime lenders did
in the decade before that. And as we will explore, they’re doing it all with the
government’s help.
Consider the pillaging of HCR ManorCare, which was once the second-
1
largest nursing home chain in America. In 2007, a private equity firm, the
Carlyle Group, bought ManorCare for a little over $6 billion, most of which was
borrowed money that ManorCare, not Carlyle, would have to pay back. As the
nursing home chain’s new owner, Carlyle sold nearly all of ManorCare’s real
estate and quickly recovered the money that it put into the purchase. But the
move forced ManorCare to pay nearly half a billion dollars a year in rent to
occupy buildings it once owned. Moreover, Carlyle extracted over $80 million in
transaction and advisory fees that ManorCare paid for the privilege of being
bought and owned by Carlyle. These sorts of payments made Carlyle’s founders
 2
billionaires many times over. But they drained ManorCare of the money it
3
needed to operate and care for its residents.
As a result of these financial machinations, ManorCare was forced to lay off
4
hundreds of workers and institute various cost-cutting programs. Health code
violations spiked. And an unknowable number of residents suffered. The
daughter of one resident told the Washington Post that “my mom would call us
every day crying when she was in there. It was dirty—like a run-down motel.
5
Roaches and ants all over the place.” Such cost cutting eviscerated the business,
6
and in 2018, the company filed for bankruptcy with over $7 billion in debt. Yet
despite the bankruptcy, the deal was almost certainly profitable for Carlyle. It
recovered the money it invested through the sale of the real estate and made
7
millions more in various fees. That the business itself collapsed was, in a sense,
immaterial to Carlyle. (In statements to the Post, ManorCare denied that the
quality of its care had declined, while Carlyle claimed that changes in how
Medicare paid nursing homes, not its own actions, caused the chain’s
bankruptcy.)
Moreover, Carlyle managed to avoid legal liability for the consequences of its
actions. For instance, the family of one resident, Annie Salley, sued Carlyle after
8
she died in an understaffed facility. Though she struggled to go to the restroom
by herself, Salley was nevertheless forced to do so and fell and hit her head on a
bathroom fixture. Afterward, nursing home staff reportedly failed to order a head
scan and failed to report her to a doctor, even though in the days that followed,
Salley showed confusion, vomited, and thrashed around. Salley eventually died
of subdural hematoma—bleeding around the brain—and doctors found that
blood had pushed her brain fully to one side of her head. Yet when Salley’s
family sued for wrongful death, Carlyle managed to get the case against it
dismissed. As a private equity firm, Carlyle explained, it did not technically own
ManorCare. Rather, Carlyle merely advised a series of investment funds—funds
9
with names like Carlyle Partners V MC, L.P.—that did. In essence, Carlyle
performed a legal disappearing act, and the court dismissed the Salley family’s
10
case against the firm. Carlyle would not be held responsible for Salley’s death,
or for the sordid sorry outcomes that resulted from its plunder of ManorCare.
THE STORY OF ManorCare and Carlyle is both common and confounding. The
leaders of this industry, including Carlyle, but also Blackstone, KKR, Apollo,
Warburg Pincus, Bain, and many other smaller firms are, at best, only vaguely
known to most Americans. But their companies fill and shape our lives. If you
rented an apartment, you may have done so through a company owned by
Blackstone. If you visited a doctor or rode in an ambulance, you may have been
billed by a company owned by KKR. If you bought insurance, you may have
done so through Apollo, or if you paid your student loans, you might have done
so through a Platinum Equity company. If you bought contacts, pet food, slacks,
or a new dress, you may ultimately have paid KKR, BC Partners, Leonard Green
11
& Partners, or Sycamore Partners. In some municipalities, the very water you
drink has been provided by private equity. The industry is quite literally right in
front of you. The font used in this book is owned and licensed by a private
12
equity portfolio company.
Today, the industry owns more businesses than all those listed on US stock
13
exchanges combined. KKR’s portfolio companies employ over 800,000
14 15 16
people; Carlyle’s 650,000; and Blackstone’s 550,000. Considered together,
they would be the third-, fourth-, and fifth-largest employers in America, behind
17
only Walmart and Amazon.
Yet, few of us have heard of these firms, let alone understand how they work.
In a sense, their business is simple. Private equity firms invest a little of their
own money, a lot of investors’ money, and a whole lot of borrowed money to
buy up companies (typically making them the sole, or private owner, hence the
name). They then use various tactics to extract money from those companies,
with an eye toward reselling them for a profit a few years later. Some of the
companies that private equity firms buy go on to great success. But many others
collapse or limp along, gutted of the assets that made them worth buying in the
first place.
The basic business model of private equity firms often leads to disasters like
that at ManorCare for three fundamental reasons. First, private equity firms
typically buy businesses only for the short term. Second, they often load up the
companies they buy with debt and extract onerous fees. And third, they insulate
18
themselves from the consequences, both legal and financial, of their actions.
This leads to a practice of extraction, rather than investment, of destruction,
rather than creation. While not every company owned by private equity firms
goes bankrupt, the chance of disaster meaningfully increases under their
19
ownership.
Consider the following: J.Crew. Neiman Marcus. Toys “R” Us. Sears. 24
Hour Fitness. Aeropostale. American Apparel. Brookstone. Charlotte Russe.
Claire’s. David’s Bridal. Deadspin. Fairway. Gymboree. Hertz. KB Toys. Linens
’n Things. Mervyn’s. Mattress Firm. Musicland. Nine West. Payless ShoeSource.
RadioShack. Shopko. Sports Authority. Rockport. True Religion. Wickes
Furniture. The list goes on. All these companies went bankrupt after private
20
equity firms bought them. Some were restructured, often by firing workers or
abandoning retirees’ pension obligations. Many simply no longer exist. These
bankruptcies, as we will see, are the consequence of private equity’s business
model. As we will see, though these liquidations and restructurings are usually
bad for consumers and workers, counterintuitively, companies’ bankruptcies may
be desirable, even profitable, for their private equity owners.
The collapse of so many well-known companies is distressing by itself. But
more than the failure of specific businesses, private equity helps to explain how
whole industries and ways of life are being transformed. With its reliance on
debt and fees and its focus on short-term profits, private equity is part of the
reason why the quality of care at your dentist’s office is going down and why
your doctor seems perennially overbooked. It’s part of the reason why so many
people die in prisons and in nursing homes, why it’s so hard to buy a house, and
why so many companies are suing their own customers. These aren’t unhappy
accidents: they are fundamental to the industry’s business model.
Moreover, private equity helps to explain our ever-widening economic
inequality. These firms take money from productive companies, their employees,
and their customers and redistribute it to themselves. Typically, they load up the
businesses they buy with debt and often impose fees on their companies for the
privilege of being owned by them. The result of this wealth transfer is that the
leaders of the largest private equity firms are some of the richest people in
America: the cofounders of KKR, Apollo, and Blackstone are worth $7 billion,
21
$9 billion, and $29 billion, respectively. Their wealth is more than the gross
22
domestic product of some countries and an order of magnitude greater than
that of the merely absurdly rich. While the CEO of the investment bank JP
Morgan made a little over $80 million in 2021, the CEO of the private equity
23
firm Blackstone made over ten times that: $1 billion.
As the chapters in this book explain, private equity firms also hasten the
“financialization” of the American economy through the increased power of
banks and other financial institutions over companies that make and sell useful
products and tangible goods. Today, the finance industry gets a quarter of all
24
corporate profits, up from a tenth in the “greed is good” 1980s. At the same
time, it employs just 5 percent of the country’s workforce and largely fails to
deliver a useful product for many Americans: a quarter of households, for
25
instance, don’t have access to a bank account. By controlling the operation of
companies in the rest of the economy, private equity hastens this trend toward
financial control.
The predatory practices of private equity exacerbate inequality and eviscerate
our economy by taking money from productive businesses and giving it to
largely unproductive ones. But private equity firms have done more, by taking
on much of the work in lending to big businesses that was once the domain of
investment banks before the financial crisis of 2007. In other words, private
equity firms you may not have heard of—Blackstone, Apollo, and so forth—are
replacing the investment banks you probably know: Goldman Sachs, JP Morgan,
and others. These private equity firms are taking on much of the work of the
very institutions that precipitated the Great Recession and are now doing so with
vastly less oversight—if such a thing were possible—than the investment banks
faced before that crisis.

THAT SOME BUSINESSES may be rapacious or even dangerous is concerning yet

unsurprising. The new and important point—and the subject of this book—is
that the stunning success of private equity is all happening with the support of
the government, whose various arms—from courts and Congress to the
executive branch, states, and localities—have not only allowed private equity to
grow and dominate but have actively encouraged it. This is unsurprising, in part,
26
because the industry has given hundreds of millions of dollars to politicians
and has welcomed untold senior government officials into its employment after
their careers in public service came to an end. These have included
 • Timothy Geithner, former treasury secretary under President Obama,
27
now president of Warburg Pincus
• Jacob Lew, another former Obama treasury secretary, now a managing
28
partner at Lindsay Goldberg
• Newt Gingrich, former Speaker of the House, now a strategic partner at
29
JAM Capital
• Paul Ryan, another former Speaker of the House, now a partner at
30
Solamere Capital
• David Petraeus, former general and CIA director, now chairman of the
31
KKR Global Institute
• Leon Panetta, former secretary of defense, now an adviser at Cerberus
32
Capital Management
• Kelly Ayotte and Evan Bayh, former senators and now director of
33
Blackstone and senior adviser to Apollo, respectively
Other luminaries in the private equity–government complex include former
34 35
vice president Dan Quayle; generals Barry R. McCaffrey and Anthony Zinni;
former cabinet members James Baker, John F. Kelly, Dan Coats, and John Snow;
former FCC chairmen William Kennard, Julius Genachowski, and Ajit Pai; and
36
former SEC chairmen Arthur Levitt and Jay Clayton, among so many others.
As a cause and effect of this cross-pollination, the government has been
extraordinarily solicitous of private equity firms. Whole private equity–owned
businesses have been built based on getting government money. Where
regulations stood in the way of these companies, they have been removed. As
described in future chapters, Fannie Mae helped private equity firms buy up
foreclosed homes and flip them into rentals. Local police departments helped
private equity–owned companies buy prison phone, food, and health care
operations and gut their quality of care. Courts helped private equity firms
slough off pension obligations, and federal regulators helped them access 401(k)
funds. Cities sold their own water systems to private equity–owned firms, and
Congress gave them billions of dollars.
 What is perhaps most ironic is that those who have the most to lose from
private equity are enabling it. Pension funds—the investments of unions and
middle-class workers—are some of private equity’s largest investors. Private
equity firms then use the money of these funds to buy companies in which they
often cut wages and abandon pension obligations. Extraordinarily, we appear to
be creating the tools of our own destruction.

WE CAN STOP the industry’s worst abuses. But we have to act now. Policies by
the Federal Reserve before and during the pandemic to lower interest rates made
it vastly easier for private equity firms to buy up companies. While many
businesses struggled during the pandemic, private equity spent $1.2 trillion in
37
2021—over $500 billion more than it spent the year before—to buy them up.
Meanwhile, deregulation by the Trump administration allowed private equity to
access potentially trillions more dollars in people’s 401(k) accounts, including,
possibly, yours. This will give the industry vastly more money with which to buy
up companies.
Yet, despite its size, we can stop the ever-outward movement of the industry.
We can do so because we’ve done it before. Today’s private equity industry
bears a striking resemblance to the great “money trusts” that Louis Brandeis
denounced a century ago in his book Other People’s Money and How the
Bankers Use It. Then, as now, financiers captured productive companies with the
38
savings of others. Then, as now, they gutted their portfolio companies,
39
extracted fees, and forced partnerships among their various businesses. And
then, as now, the financiers—often ignorant of the actual operations of the
companies they bought—arrested the development of their businesses. As
private equity firms buy companies across the disparate industries of health care,
construction, retail, and leisure, so it is today.
But then—and perhaps now—people organized to break the great trusts of
their time, including the money trusts. The government banned anticompetitive
acquisitions and “interlocking directorates” between competing companies. It
created the Federal Trade Commission and investigated, and eventually
destroyed, monopolies in steel, sugar, tobacco, and elsewhere. We can do so
again, and this book endeavors to show us how.
The chapters that follow proceed in three parts.
 Part I explains how private equity firms make their money: both their tactics
of extraction and their businesses of focus, from mobile homes and nursing
facilities to retailers and prisons. A recurring theme of these chapters is that,
surprisingly, private equity firms buy businesses that target the very poor, rather
than the very rich, because, in a sense, these customers have no recourse when
quality falls and prices rise.
Part II explains how the industry has advanced its agenda across virtually
every arm of government, from Congress and courts to regulators and localities.
As these chapters describe, sometimes private equity firms have lobbied directly
to change laws and regulations: for instance, to fight rent control laws or to
preserve tax advantages. At other times, the industry has benefited from larger
trends over several decades: the reshaping of antitrust law, for instance, or the
rise of forced arbitration.
Part III explains how we can stop the industry’s worst excesses. These
chapters offer a specific agenda for what we must accomplish and a path for how
we might effect change—through litigation, regulation, and state and local
legislation—at a time of extraordinary political dysfunction.
To the arguments thus far, and those to come, a world-weary reader may offer
three skeptical replies.
First, the skeptic may say, “for better or worse, private equity is just an
extreme form of free-market capitalism.” The debt that private equity forces onto
companies, and the short deadlines it demands for profits, force sluggish
companies to reform and demand the survival of the fittest. Or so the argument
goes. As the chapters that follow show, private equity firms do not offer simply
an extreme version of capitalism but, rather, something much darker: a twining
of big business and big government that finds profits by creating and exploiting
legal gaps and obscure government programs. When forced to actually run
businesses, private equity firms often show surprising ineptitude. Their
executives’ talents often come not from operating the levers of business but from
the levers of power: securing financing, identifying regulatory holes, and
creating them when they don’t exist. Capitalists and socialists, and everyone in
between, should all be united in their concern over this business philosophy.
Second, the skeptic may ask, “Yes, private equity is bad, but is it
meaningfully different from other parts of the finance industry?” Yes, it is.
Hedge funds might short businesses. Investment banks may create ruinous
bubbles. But private equity firms can do both and more. Because their business
model—which requires short-term thinking, leverage and extractive fees, and
escape from liability—produces uniquely bad outcomes, they are uniquely
worthy of your attention.
Third, the skeptic may say, “Yes, private equity is uniquely bad, but it is
inevitable, or at least irremediable.” And this is the most important point of the
book, namely, that we can stop this from happening. We do indeed live in a
second Gilded Age, a time of gaping inequality and aching political dysfunction.
But a century ago, we rejected immiserating poverty and politics in favor of
populist and progressive reforms: unions, suffrage, antitrust, worker and
environmental protections, and graduated taxation. We can do so again. We just
need the collective will to act.
And that is the final message of this book, a message of hope. Private equity
is part of the larger financialization of our economy, and perhaps its worst
exemplar. It was created with the active support of our government, and as the
pages that follow show, it has transformed whole industries and upended lives.
But if we created private equity, we can also contain it. I am here to tell you that
we can write our own future. A better world is possible. The following chapters
show us how.
 PART I
HOW THEY MAKE THEIR MONEY
 CHAPTER ONE

OTHER PEOPLE’S MONEY, AND HOW THEY USE

IT
The Tactics of Private Equity

In 2005, Sun Capital bought Shopko for a little over a billion dollars. A regional
retailer like Fred Meyer, Gabe’s, or Bi-Mart, Shopko’s operations were focused
1
primarily in the Midwest. Its first store opened in Green Bay, Wisconsin, in
1962 and began what a commemorative plaque at the site later called “a new era
2
in retailing.” The company’s innovation: putting pharmacies and, later,
3
groceries in their larger stores. Over time, the business expanded to other states,
4
like Minnesota, Michigan, and Iowa. Eventually, it became a regional
institution. “Shopko was at the heart of our community,” said Sarah Godlewski,
5
Wisconsin’s state treasurer. “As a kid my mom would ask me if I needed
anything for school. I would mention different supplies, and she would say, ‘OK,
go put it on your Shopko list.’ It was never a shopping list, it was always a
6
Shopko list.”
Despite its regional importance, in 2019, Shopko filed for bankruptcy and,
7
shortly thereafter, ceased operations entirely. How did this happen? How did a
respected institution flail and eventually fail? The short answer was that a private
8
equity firm bought it. Over nearly fifteen years of ownership, Sun Capital
bankrupted Shopko while making hundreds of millions of dollars for itself. It did
so through a variety of tactics that drained Shopko of assets, locked the chain
into unfavorable deals, denied employees pay, and transferred money that the
retailer needed to modernize and grow. These tactics were surprising—perhaps
even shocking—but they were not unusual, for as the pages below explain, they
are often the means by which private equity firms succeed, even if the very
companies they buy fail.
First, Sun Capital made Shopko sell most of its property. It’s important for a
retailer to own its own stores, if it can: it saves the company from having to pay
rent in good times and gives the company something to borrow against in bad
times. By forcing the chain to give up most of its stores, Sun Capital made
9
Shopko a quick $815 million. But it also saddled Shopko with paying rent on
the very stores it once owned, an expensive and unending obligation. To
compound the problem, Sun Capital locked Shopko into fifteen- and twenty-year
10
leases, which made it hard for Shopko’s management to move stores.
Then Sun Capital began extracting fees. It forced Shopko to borrow nearly
$180 million to pay Sun Capital “dividends”: financial rewards to owners
11
usually given only in good times. It also required Shopko to pay a quarterly $1
million “consulting” fee, and a 1 percent fee on certain large transactions. The
latter fee applied to Shopko’s dividend payments, so that Shopko actually had to
12
pay Sun Capital a fee just for paying Sun Capital. And while Sun Capital was
extracting this money, under its watch, Shopko skirted its tax obligations: in
2019, the Wisconsin Department of Revenue alleged that the company failed to
13
pay over $13 million in sales taxes and penalties. (The Department ultimately
withdrew its claim after reaching an undisclosed settlement with the holding
14
corporation for Shopko’s bankrupted assets.)
Then Sun Capital began layoffs. In December 2018, Shopko announced that
15
it would close thirty-nine stores. In January the next year, Sun Capital pushed
Shopko into bankruptcy and closed an additional thirty-eight. And in March,
unable to find a new buyer, Shopko announced that it was liquidating entirely
and closing its remaining 360 or so locations. At the time, Shopko had fourteen
16
thousand employees: most all of them would lose their jobs.
As Shopko’s employees were fired and the company’s assets liquidated—
even the plaque commemorating the company’s first location was sold—Sun
Capital asked some employees to stay on through the bankruptcy process. But
after they did so, Sun Capital reneged on its promise to pay them severance. “We
risked losing potential job opportunities by sticking around,” one former
17
employee told the Green Bay Press-Gazette. “Then the day we officially found
out about not getting the severance was the last day we were open. It felt like a
18
false promise.” Ultimately, a bankruptcy judge approved $3 million in pay for
nearly four thousand workers, but only after labor organizers filed a class action
lawsuit. And even then, the agreement excluded thousands of employees who
were among the last to work at the company.
The effects of Shopko’s collapse lived on in the company’s former workers.
At a memorial event a year after the bankruptcy, Trina McInerney, tearing up,
explained to the Washington Examiner that “Sun Capital left me jobless, with
nothing.… The devastation was real, the heartbreak was real, having no income,
19
losing your work family, losing your work dignity—all real.” Linda Parker,
who managed several Payless ShoeSource stores housed within Shopkos, said
that she had to take on three part-time jobs that together didn’t make as much as
20
her old one. “Holding Wall Street and private equity and hedge fund
billionaires accountable is crucial,” she said. “It’s just going to get worse. They
feel no empathy for us, they feel no guilt over what they’re doing.… It’s time to
21
take action and do something to stop these horrible business practices.”
But who are these private equity billionaires? Sun Capital is run by two
Wharton classmates, Rodger Krouse and Marc Leder. Both men are worth
hundreds of millions of dollars, though Leder is the public face of the company
and by far the brasher of the two. The New York Post described him as the
22
“Hugh Hefner of the Hamptons” and alleged that he threw parties in which
“guests cavorted nude in the pool and performed sex acts, scantily dressed
Russians danced on platforms and men twirled lit torches to a booming techno
23
beat.” Said one acquaintance, “So many girls think they’re dating him. There
24
are [at] least three that I know of.”
Despite his lavish lifestyle, Leder supports the politics of austerity. Recall
when Mitt Romney declared that “47 percent of the people” would vote for
President Obama “no matter what” because they “believe the government has a
responsibility to care for them, who believe that they are entitled to health care,
25
to food, to housing, to you-name-it.” Romney made that statement at a private
26
fundraiser that Leder hosted in his Boca Raton home. Leder has also given
27 28 29 30
money to David Perdue, Marco Rubio, Jason Chaffetz, Clay Shaw, and
 31
Mitch McConnell, who have all attempted to cut various cables of the social
32
safety net on which so many of Leder’s former employees now rely.
It is important to understand that Shopko is not some fluke, a rare failure in
Sun Capital’s otherwise brilliant investments. In 2005, the firm bought Garden
33
Fresh Restaurant Corporation, but pushed it into bankruptcy in 2016. In 2006,
it bought Marsh Supermarkets, which filed for bankruptcy in 2017. In 2007, Sun
Capital bought a majority stake in Limited Stores, which filed for bankruptcy a
decade later. And in 2008, it bought Gordmans, which went bankrupt in 2017,
but not before Sun Capital forced the company to borrow $45 million to pay in
dividends. And yet despite these failures, Sun Capital continued to prosper,
34
making over $1.4 billion in the most recent year for which it published data.
The point is that Sun Capital’s—and private equity’s—success does not
always depend on the success of the companies they own. Through a range of
tactics described below, they can extract money from the businesses they buy,
whether or not those businesses thrive or die. In this way, the whole industry of
private equity is unnervingly similar to the “money trusts” of the early twentieth
century, when financiers like George F. Baker and J. P. Morgan oversaw
disparate empires of railroads, banks, steel mills, shipping, and insurance
35
companies. In 1914, Louis Brandeis observed that the men of the money trust
“start usually with ignorance of the particular business which they are supposed
36
to direct.” When the Steel Trust was signed into existence, one of the lawyers
present declared that, “[t]hat signature is the last one necessary to put the Steel
industry, on a large scale, into the hands of men who do not know anything about
37
it.” So it is today, as a firm like Sun Capital invests in businesses as diverse as
38 39
an industrial manufacturer, a dermatology network, a chain of barbecue
40 41
restaurants, and a high-end women’s clothing retailer. Like the money trusts
of the Gilded Age, Sun Capital, as with private equity firms, lacks the
institutional skills necessary to manage the operations of such a diverse set of
companies. But it isn’t just that private equity firms lack the knowledge to
improve their companies’ operations; often, they lack the interest. As shortly
explained, their skill frequently comes not in making companies better but in
extracting more money from them.
 Today’s private equity firms bear another similarity to the money trusts of a
century ago, namely, that their power is obtained not, as Brandeis wrote, through
“the possession of extraordinary ability” but through “the savings and quick
42
capital of others.” Which is to say that private equity titans are rarely
themselves masters of running companies but rather geniuses at getting and
spending other people’s money. The difference now is simply a matter of scale.
When the Gilded Age financier George F. Baker, reportedly twice as rich as J. P.
Morgan, died in 1931, he was worth an estimated $1.4 billion in today’s
43
money. Now, Stephen Schwarzman of Blackstone is worth nearly twenty times
44
that.
What accounts for this increase in these men’s wealth is not the quality of
people running private equity firms but the availability of money, which is
largely the decision of the government. In 1979, Congress reduced the capital
gains rate—the tax on money made from investments—and in 1981 did so
45
again. Along the way, the Labor Department permitted pension funds to make
riskier investments, clarifying that while such funds must exercise the caution of
a “prudent man” as a whole, individual speculative purchases “may be entirely
46
proper” under the standard. These two changes allowed a flood of investment
in venture capital and the emerging business of leveraged buyouts. One of the
first was Gibson Greetings. In 1981, a consortium of investors led by former
Nixon treasury secretary William E. Simon bought the company—a
47
manufacturer of greeting cards—for $80 million. Simon and his investors put
up just $1 million of their own money (Simon himself contributed about a third
of that) and borrowed the remaining $79 million. Sixteen months later, they
turned the company public at a valuation of $290 million. In a little over a year,
Simon had made himself $66 million on a $330,000 investment. His astounding
success inspired others. “I didn’t know what a leveraged buyout was,” said
David Rubenstein, the founder of the behemoth Carlyle Group, “but it sounded
48
more attractive than practicing law.”
Between 1979 and 1989, there were some two thousand leveraged buyouts
49
worth $250 million or more, capped at the end of the decade by Kohlberg
Kravis Roberts & Co.’s (later called KKR) $24 billion takeover of RJR
50
Nabisco. During this time, the story of leveraged buyouts was told in tandem
with that of junk bonds: speculative investments that promised high yields but
also high risks of failure. These bonds financed leveraged buyouts and made the
whole industry possible. But by the end of the 1980s, the market collapsed: as
foreshadowed by its very name, a number of junk bond–financed buyouts
prominently failed. Drexel Burnham Lambert, the investment firm that powered
much of the junk bond industry, imploded, and several of its most prominent
51
bankers were criminally prosecuted. Meanwhile, hundreds of savings and loan
associations (S&Ls), which had been primary purchasers of junk bonds, were
52
closed, with the subsequent bailout costing taxpayers over $100 billion.
But leveraged buyouts didn’t die after this first frenzy; they were simply
rebranded as “private equity.” After a fallow period in the early 1990s, firms in
53 54
this renamed business bought big companies like Snapple, Burger King,
55 56 57 58
Houghton Mifflin, Harrah’s Entertainment, MGM, and Toys “R” Us. The
industry found new sources of money: in 2006, KKR was the first firm to take
itself public, followed by Blackstone, Apollo, and Carlyle. Countries like Russia
and Saudi Arabia created “sovereign wealth funds” to invest their oil fortunes in
private equity. And a secondary market developed, so that institutions that
invested with private equity companies could in turn sell those investments to
others. Shorn of its rougher public associations with junk bonds, S&Ls, and
59
Drexel Burnham Lambert, this “superior form of capitalism,” as the former
leader of Yale’s endowment once described it, entered a new golden age.
The Great Recession briefly depressed private equity, and the 2012
presidential campaign scoured some of the gilding off the industry, such that its
leading firms no longer even describe themselves primarily in terms of private
equity. Blackstone generically calls itself “a leading global investment
60
business,” while Apollo claims simply to be an “alternative asset management
61
business.” But whatever its reputation, after each crisis, private equity emerged
more powerful than before. In fact, while the COVID-19 pandemic was a
disaster for most Americans, it was a boon to private equity. Private equity firms
need borrowed money to buy companies, the interest rates for which are
determined in large part by the Federal Reserve. At the outset of the pandemic,
the Fed’s chairman, Jerome Powell (himself a private equity alum), helped drive
interest rates to nearly zero. As a result, and coupled with the pandemic struggles
of many ordinary businesses, private equity spent an astounding $1.2 trillion on
 62
acquisitions in 2021, or about one-twentieth of gross domestic product of the
63
entire country. KKR’s “assets under management”—the money it controls to
64
invest—grew 87 percent that year, to $471 billion. Blackstone’s rose to nearly
65
twice that: $881 billion. These are stores of wealth bigger than the economies
of many countries. And they are big enough to change the world.

THE CHAPTERS THAT follow describe how private equity spends its money, how it
transforms industries, and how the arms of the government helped at every step.
But before examining the details, it is important to understand the larger matter
of just how private equity works, for while the term private equity is frequently
used, its meaning is rarely understood.
Private equity firms are different from investment banks, which originally
centered on helping other businesses buy one another or issue stock. They are
also different from hedge funds, which tend to buy and sell public securities,
such as stocks and bonds. Rather than buying individual securities, private
equity firms buy whole companies. And rather than doing so on behalf of other
businesses, they do so for themselves. The line between different kinds of
financial institutions is porous: firms that call themselves hedge funds sometimes
engage in private equity, and as a future chapter explains, private equity firms
are increasingly taking on the business of investment banks. Nevertheless, the
general division is that while banks and hedge funds tend to invest in companies,
private equity firms tend to buy them.
Private equity firms’ basic business model is simple. In a typical case, a
private equity firm—or, more accurately, a legally separate fund that the firm
66
controls—buys a company. The separate fund helps to insulate the firm from
liability, as we saw with ManorCare, and is generally the sole, or private, owner
of the company, hence the “private” in private equity. Through a series of
operational and financial changes, the private equity firm works to make the
company more valuable and, after a few years, tries to sell it or take it public at a
profit.
To make its business model work, the private equity firm needs money,
which it gets from three sources. The firm itself contributes a small percentage
of the funds needed to buy the company, while the firm’s investors—pension
funds, sovereign wealth funds, wealthy individuals, and the like—provide some
of the rest necessary for the acquisition. The firm then leverages all those assets
(hence the “leveraged” in leveraged buyout) to borrow most of the money it
needs from banks and other lenders. Crucially, the responsibility for paying back
the money the firm borrows sits not with the firm itself but with the company it
buys. Thus, if the company fails, the private equity firm loses only its small
initial investment. But why would the company agree to take on this debt? And
why would banks and other investors lend this money in the first place?
Executives at the acquired company may agree to borrow money because they
stand to make a great deal from the sale to a private equity firm. With the
prospect of a windfall, they may authorize borrowing that, ordinarily, they might
not. As for the banks and lenders, when interest rates are low, they are often
willing to make riskier loans in an effort to make more than inflation.
Furthermore, lenders are often able to “syndicate” their loans to others, meaning
that those who make loans often are not responsible for getting that money back.
But while private equity firms stand to lose only a little if their investments
fail, they stand to make enormous sums if they succeed. As mentioned above,
firms make their purchases through legally separate funds, each of which has
money, provided by investors, with which to buy companies. Private equity
firms are typically entitled to 2 percent of that money every year, no matter how
well or poorly their funds do. This means, for instance, that a firm with a billion-
dollar fund is guaranteed to make $20 million—2 percent—every year, even if
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its investments fail. On top of this, a firm usually takes 20 percent of the fund’s
profits once it clears a certain hurdle, often an 8 percent rate of return.
As private equity experts Eileen Appelbaum and Rosemary Batt have
explained, there are three fundamental problems with the business model just
68
described. First, because private equity firms own the companies they buy for
just a few years, they must extract money from them exceedingly fast; there’s
simply not much reason for them to consider the long-term health of the
companies they buy. Second, because private equity firms invest little of their
own money but receive an outsized share of potential profits, they are
encouraged to take huge risks. In practice, this means loading companies up with
debt and extracting onerous fees. And third, partly because legally separate
funds technically own the companies, private equity firms are rarely held
responsible for the debts and actions of the companies they run. These facts of
short-term, high-risk, and low-consequence ownership explain why private
equity firms’ efforts to make companies profitable so often prove disastrous for
everyone except the private equity firms themselves.
But how exactly does a private equity firm make money? In theory, it should
make a company’s operations more efficient by bringing in new management
and modern business practices. This may be so for the small and midsized
companies that private equity firms acquire, which are often run by families or
first-time entrepreneurs. But it is rarely so for big companies, whose professional
managers are schooled in best practices and experienced in running large
organizations; in other words, there is only so much need for outside assistance.
Instead of offering better management, firms often use a range of tactics
described below—leasebacks, dividend recaps, strategic bankruptcies, rollups,
forced partnerships, tax avoidance, and layoffs—to extract money from
businesses. These tactics are endemic to the industry and fundamental to the way
it operates.

LEASEBACKS
After Sun Capital bought Shopko in 2005, it forced the company to sell most of
its stores and lease in perpetuity the property that it once owned. This leaseback
tactic is a great source of revenue for private equity because it allows the firm to
post a quick profit and often take a transaction fee along the way. But it is often
devastating for the underlying company, which is permanently shorn of assets.
And it is particularly hard for businesses in cyclical industries. As mentioned,
owning property saves companies from having to pay rent and gives them
69
something to borrow against in bad times. Without assets, and burdened with
an ongoing expense, companies that merely survive when demand waxes may
die when it wanes.
There is a darker purpose to leasebacks too. A few decades ago, private
equity firms began buying nursing homes, and today they own between 5 and 11
70
percent of all facilities in America. To save money, these firms often gut
homes’ quality of care. Studies have found that after private equity firms buy
nursing homes, average nursing and staff hours fall while violations of industry
71
protocols increase. Hospital readmission rates—the pace at which residents are
sent back to hospitals within thirty days of discharge—also rise, a sign of
72
declining care. As a result, more than twenty thousand people are estimated to
73
have died due to private equity firms’ ownership of such homes.
 And this is where leasebacks come in. After buying nursing homes, private
equity firms often sell their underlying assets and separately incorporate each
74
facility in a nursing home chain. This means that if there is negligence in one
facility—if a resident dies needlessly—that resident’s family often can only
recover assets from that facility. And because that facility no longer owns its
own property, there often aren’t many assets to recover. The result is that nursing
home residents are needlessly dying and families are failing to get damages, and
because of sale-leasebacks, there is little legal incentive for private equity firms
to ever change their ways.

DIVIDEND RECAPS
Private equity firms use dividend recapitalizations, or recaps, to take companies’
borrowed money and give it to themselves. Ordinarily, a company’s shareholders
will take an occasional cut of its profits, called a dividend, as a reward for the
risks of ownership. They usually do so when times are good and the company
can afford to shed the money. Private equity firms are different. They often force
the companies they own to borrow money, in good times or in bad, to pay
themselves. It’s like using someone else’s credit card to pay yourself. And like
using someone else’s credit card, the practice often damages the company’s
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credit rating.
Consider the case of Hertz. When the rental car company filed for bankruptcy
76
in 2020, Axios described it as “a Frankenstein of financial engineering.”
Fifteen years earlier, the private equity firm Clayton, Dubilier & Rice (CD&R)
had led a consortium of investors to buy the company from Ford for $14.8
billion, nearly half of which was debt. Clayton quickly forced Hertz to borrow
an additional $1 billion to pay it a dividend. By loading Hertz up with debt,
Clayton and its coinvestors managed to make much of their initial money back
77
while substantially retaining control of the company. But in the opinion of
observers, after Hertz disastrously overpaid for its acquisition of rivals Thrifty
and Dollar under CD&R’s watch, the private equity firm sold its remaining stake
78
in the company in 2013. Hertz limped along for a number of years, but
burdened in part by the debt that CD&R had forced upon it, the company filed
for bankruptcy. When it did, Hertz owed over $24 billion, with barely $1 billion
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in cash on hand.
Stories like Hertz’s are not uncommon. But if private equity firms own the
companies they force to borrow money, don’t they ultimately have to pay the
loans back, one way or another? Not necessarily. Recall that private equity firms
buy companies with heaps of other people’s money. In other words, these firms
control companies while making only modest investments themselves. Dividend
recaps are a way for private equity firms to make back their investments—
eliminating all risk—while still controlling the companies they buy. That’s what
Sycamore Partners did when it forced Staples to give it a $1 billion dividend
80
recap. The office supply store then had to pay $130 million a year on interest
81
payments alone. That fact was almost immaterial to Sycamore, however, given
that it made back through the recap most of what it paid to buy the company.
Dividend recaps can be devastating. The retailer Payless ShoeSource, lab
testing company Trident USA, and urinalysis firm Millennium Health, for
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instance, all went bankrupt after being forced to make recaps. After the
hospital chain Prospect Medical Holdings was forced to pay its private equity
owner $457 million in 2018, it closed five facilities and fired over one thousand
employees. And after the Environmental Protection Agency alleged that the
medical device sterilization company Sterigenics was potentially emitting toxic
carcinogens around its suburban Illinois production facility, a flood of lawsuits
83
followed. According to plaintiffs, however, Sterigenics had shoveled over $1
billion in dividend recapitalizations to its private equity owners in the years
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before so that the company would have less money to pay to its victims.
Hundreds of cases against the company remain ongoing.
Unfortunately, the federal government’s actions to stave off the worst
economic effects of the pandemic may have made recaps easier. By driving
interest rates down at the outset of the COVID-19 pandemic, the Federal
Reserve made it cheaper for private equity–owned companies to borrow money.
The effect was that in the second half of 2020, in the midst of a global recession,
private equity firms forced the companies they owned to borrow an astonishing
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$27 billion to pay for dividend recaps or debt restructurings. Reflecting later
on this trend, Davide Scigliuzzo of Bloomberg wrote that “[i]t looks likely
billionaires and private equity firms will keep loading up companies with debt to
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turn them into dividend-paying ATMs.” Jim Baker of the Private Equity
Stakeholder Project, which researches and publicizes abuses in the industry,
added that these recaps “do nothing to help private equity–owned companies and
87
only put those companies at greater risk.”

STRATEGIC BANKRUPTCIES
Private equity firms sometimes push the companies they own into bankruptcy to
avoid paying debts to their employees, retirees, and creditors. Such seemed to be
the case with Sun Capital and Marsh Supermarkets, which Sun Capital bought in
2006. Marsh, a regional institution in Indiana, was the kind of place where
generations of employees could spend decades working. It was also something
of an innovator: in the 1970s, it was the first grocery store in the world to use a
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barcode scanner (the first purchase was a pack of gum).
As reported by Peter Whoriskey of the Washington Post, when Sun Capital
bought Marsh, it did not bring any particular expertise in the grocery industry to
the purchase. Amy Gerken, a former assistant manager at a Marsh Supermarket,
told the Post that Sun Capital “didn’t really know how grocery stores work.
We’d joke about them being on a yacht without even knowing what a UPC code
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is.” But Sun Capital did execute some of its now-familiar tactics. For instance,
it forced Marsh to sell many of its stores for $260 million and then had the
grocer lease back the stores it once owned. It also collected transaction fees from
Marsh for selling various assets, on top of a $1 million annual management fee
for the privilege of being owned by the firm.
At the same time, Sun Capital was unable or unwilling to make the
investments necessary for Marsh to succeed. Perhaps this is because Marsh’s
property was reportedly worth more than the cash Sun Capital paid for the
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company, making the survival of the business a pleasant but ultimately
unnecessary proposition. Instead, Sun Capital pushed the company into
bankruptcy. When Marsh filed for bankruptcy, it owed $62 million in pension
fund obligations to its warehouse workers, plus millions more to its store
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employees. (A separate pension for Marsh’s most senior executives remained
fully funded.) Through bankruptcy, Sun Capital was able to heave Marsh’s
unfunded pension obligations onto a government agency, the Pension Benefit
Guaranty Corporation, or PBGC, which pays a portion of promised benefits for
retirees when pension funds become insolvent. In Marsh’s case, the PBGC was
able to pay nearly the entirety of the store employees’ pension obligations but
92
not the warehouse workers’, whose benefits were cut by a quarter. “They did
everyone dirty,” Kilby Baker, a retired warehouse worker, told the Post. “We all
gave up wage increases so we could have a better pension. Then they just took it
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away from us.” Said another worker who had been with the company since
1967: “If I lose my pension, what am I going to do? Who’s going to hire a 75-
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year-old man?”
Marsh was not an isolated incident. In 2005, Sun Capital bought Indalex, an
aluminum parts manufacturer. After taking a multimillion-dollar dividend for
itself, the firm forced Indalex into bankruptcy and pushed the pensions of
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thousands of employees onto the PBGC and taxpayers. Similarly, in 2006, Sun
Capital bought Powermate, a manufacturer of electric generators. Two years
later, it pushed Powermate into bankruptcy too, and the PBGC was forced to pay
the underfunded pensions of some six hundred employees. Sun Capital did the
same with Fluid Routing Systems and the restaurant chain Friendly’s, and both
times it improbably managed to keep running the companies after bankruptcy.
The whole thing is “pension laundering,” Joshua Gotbaum, the former director
of the PBGC, claimed to the Post. “What we’ve seen is that financial firms
essentially take the money and run, leaving their employees and the PBGC
96
holding the bag.” All of which is to say that Sun Capital and others used the
bankruptcy system to slough off the obligations to employees that they did not
97
want to pay, while continuing to extract money for themselves.

FORCED PARTNERSHIPS
Private equity firms can also extract money by forcing the companies they buy
into arranged marriages with other businesses in their portfolio. For instance, in
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2012, Sycamore Partners bought the midmarket women’s clothier Talbots. At
the time of its acquisition, Talbots had sold smart, preppy women’s clothes for
over sixty years, having developed its initial specialty selling to women moving
99
to the suburbs after World War II. For women “looking for classic styles at
100
affordable prices,” as the New York Times put it, Talbots was an institution.
After Sycamore bought the company, however, it executed some now-familiar
101
tactics. It cut the company’s staff and narrowed its product selection. It gutted
Talbot’s assets by selling the company’s credit card receivables: that is, its
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promise of future payments. It made over half a billion dollars for itself.
(Sycamore’s managing director declined to comment to the Wall Street Journal
on his firm’s tactics.)
As relevant here, Sycamore also forced Talbots to work with MGF Sourcing
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Holdings, a supply agent it owned. In the clothing industry, supply agents
broker transactions between factories and retailers. By forcing Talbots to use
MGF Sourcing, Sycamore ensured that it would make money on the clothes that
Talbots bought, whether or not it was ultimately able to sell them. The
arrangement created a perverse incentive for Sycamore to push Talbots to buy
clothes it didn’t need, and by 2021, the company had a junk rating of CCC–,
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indicating a high risk of default.
Sycamore was accused of using this tactic to push another retailer into
bankruptcy. In 2013, it took a minority stake in the teen retailer Aeropostale and
offered the company a substantial loan in exchange for, among other things,
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using MGF as its supply agent. But after negotiating the deal, Sycamore
imposed harsh new payment terms through MGF. As subsequently alleged by
Aeropostale, Sycamore’s true purpose was to push the company into bankruptcy,
which Sycamore could then purchase at a discount. And Sycamore’s tactics—for
instance, demanding full payment on the delivery of goods, an unusual practice
in the clothing industry—successfully disrupted the company’s supply chain and
cost Aeropostale an alleged $25 million per year.
Sycamore denied the allegation, and ultimately, a judge rejected
Aeropostale’s argument that Sycamore purposefully pushed the company into
106
bankruptcy to buy it at a discount. But whether Sycamore intentionally tried
to sabotage the company or not, the effect was the same: Aeropostale filed for
bankruptcy in March 2016, about a month after MGF began making its
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demands, and ultimately, the company was forced to close over one hundred
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stores.

TAX AVOIDANCE
Private equity firms, their investors, and their executives also use a number of
tactics to avoid paying taxes. Many of these tactics are legal, but some are not.
Most famously, there is the carried interest loophole.
Most private equity firms are paid on the 2-and-20 model: a 2 percent annual
fixed fee on all the money it invests and 20 percent of all profits above a certain
threshold. The United States taxes money made from investments—so-called
capital gains—at a lower level than money made through ordinary labor, whether
at a factory or in an office. The distinction is ambiguous and unfair, but even
more so, private equity firms have convinced the IRS that their 20 percent
income should be taxed at the lower capital gains rate than at the higher ordinary
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income rate. This means that many private equity executives often pay a
lower effective tax rate than the retail employees, secretaries, and factory
workers they employ. But the industry as a whole has fought hard, and
successfully, to defend this imbalance.
Private equity firms use so-called management fee waivers to give more of
their income this preferential treatment. Here, private equity firms waive some
or all of their 2 percent management fee (which is taxed at a higher rate) in
exchange for a priority claim on the profits earned (which is taxed at a lower
rate). Through a variety of tactics, however, the firms virtually guarantee that
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they will make this money back. Some of the biggest firms—KKR, Apollo,
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and TPG Capital—used these fee-waiver provisions. Many of these schemes
might violate the spirit, if not the letter, of the law. The IRS investigated fee
waivers during the Obama administration but very little came of it. An audit of
Thoma Bravo for use of the tactic, for instance, took four years and resulted in
no actual adjustments to the company’s tax returns. In 2015, the Obama
administration proposed regulations to bar the most aggressive forms of fee
waivers. But nothing came of that either: the regulations were never finalized.
Ultimately, both of President Obama’s treasury secretaries—Tim Geithner and
Jack Lew—left the government to work for private equity firms.
More daringly, private equity firms use offshoring tactics to reduce the tax
obligations on themselves and their investors. For instance, most public
corporations must, in theory, pay the federal corporate tax rate on their income.
There is an exception, however, for companies that make most of their money
through dividends, interest, or capital gains. Private equity firms are active
businesses, but they try to get this preferential treatment by establishing blocker
112
corporations in offshore tax havens. The income due to the private equity firm
instead goes to the blocker corporation, which pays the low local corporate tax
rate. The blocker corporation then pays the money to the private equity firm as
dividends or interest, on which the private equity firm pays a lower rate in the
United States than it otherwise would. While this tax arbitrage lowers the
effective rate paid by the private equity firm, it does nothing to improve the
operational efficiency of the companies it owns and gives tax revenues to haven
nations that would ordinarily go to the United States.
Finally, at least some private equity executives engage in ordinary tax
evasion. For instance, Robert Smith, the cofounder of Vista Equity Partners, is
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worth an estimated $8 billion and was number 125 on the Forbes 2020 list of
114
wealthiest Americans. That same year, however, Smith admitted to evading
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more than $200 million in income taxes over fifteen years. As part of his
agreement with the government, Smith disclosed that he funneled money into
hidden or undeclared bank accounts in Belize, Nevis, Switzerland, and the
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British Virgin Islands. He also revealed that he paid a Houston lawyer
$800,000 to maintain a false paper trail for these accounts (the lawyer died by
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suicide the day before his own trial was to begin). Smith negotiated a plea
deal to avoid prison time—an astonishing feat given that he evaded paying $200
million in taxes—but his business partner was not so fortunate. The United
States charged Vista Equity cofounder Robert Brockman with hiding an
extraordinary $2 billion in income from the IRS. (Brockman, who had been ill
for several years, died before trial.)

ROLLUPS
Private equity firms also make money by rolling up small companies in given
industries to merge or otherwise control them. For instance, as described in later
chapters, firms have bought up local medical practices, with a focus on
specialties like dermatology, anesthesiology, and obstetrics and gynecology, all
of which offer opportunities for specialty services and large out-of-pocket
payments. With such market power, private equity firms may be able to raise
prices and cut care for patients. Doctors in private equity–owned dermatology
practices, for instance, complained that they were pressured to meet quotas for
procedures, sell acne creams and antiaging goods, and make expensive
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referrals. Others complained that they were forced to have unsupervised
physician assistants deliver services that doctors ordinarily would provide.
Outside of physicians’ offices, private equity firms are rolling up dentist
practices, drug treatment centers, hospitals, board game companies, portable
toilet providers, mobile home parks, and veterinary clinics, among many others.
By buying up these companies, private equity firms can achieve some
operational efficiencies by using common suppliers or services to reduce costs.
But they can also use their increased market power to charge more and give less.
Consider the case of cheerleading competitions. Varsity Brands is the
country’s leading organizer of these events. As alleged in a class action
complaint, between 2015 and 2018, Varsity bought its three largest rivals, all of
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which are now owned by Varsity, which in turn is owned by Bain Capital. By
controlling 90 percent of the cheerleading competition market, Varsity gained
control over the sport’s governing body and now decides which events entitle
winners to participate in the country’s premier competitions. Varsity also
allegedly increased participation fees and made money by, for instance, forcing
competitors to wear only Varsity-approved uniforms and equipment and stay
only in Varsity-approved hotels. “Cheerleading uniform prices have gone
through the roof,” one local gym owner complained to the Federal Trade
Commission. “Competition costs are so high that many athletes have to quit the
120
sport.” Varsity and Bain largely deny the allegations of the class action
121
complaint, and the lawsuit remains ongoing.
Or consider the example of veterinary clinics. Today, just six private equity
firms own over five thousand practices or over 10 percent of the whole
122
industry. The result: lower job satisfaction and lower quality of care. Back in
2005, over three-quarters of surveyed veterinarians would recommend the
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profession. Ten years later, that percentage fell to less than half. After
PetSmart, which both sold pets and cared for them, was acquired by a private
equity firm, an employee said that he “left this company in early 2015 after
being bought by BC Partners. The whole company focus shifted from pets and
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its employees to making money.” Another veterinarian said, “It’s pet-icide…
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the systematic destruction of pets by corporations for profit.” In other words,
by buying up companies, combining them, and reducing competition, private
equity firms are able to raise prices, lower wages, and increase profits for
themselves. Whether such rollups specifically violate the antitrust laws, the
effects, as described, are apparent in all these and many other industries.

OPERATIONAL EFFICIENCIES: LAYOFFS, PRICE HIKES, AND QUALITY CUTS

The fundamental promise of private equity is that, through professional
management and superior insight, firms can bring operational efficiencies to
underperforming companies. But what are those operational efficiencies?
In practice, they are often layoffs. After KKR, Bain, and Vornado Realty
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Trust bought Toys “R” Us in 2005, the company fired thousands of workers.
This isn’t to say that the actual work of the company shrank: employees said that
the company just required those who remained to take on the tasks of their
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former coworkers. “The amount of work was—you couldn’t do it,” one
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former employee told Retail Dive. “In the end, I lost my career, my
retirement, and my financial stability that took me 29 years to build up. At the
age of 60 I’m still not able to find a full-time job 18 months after my store
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closed.” Ultimately, Toys “R” Us’s private equity owners liquidated the entire
company and fired thirty-three thousand employees.
Toys “R” Us is far from exceptional. Over the past decade, nearly six
hundred thousand people working for retail companies owned by private equity
firms have been laid off, at a time when the industry added over one million
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jobs. In large companies, 10 percent of employees tend to lose their jobs
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within two years of a private equity firm’s acquisition.
At the same time, private equity firms often cut the quality of the products
their companies sell. For instance, Eileen Appelbaum and Rosemary Batt explain
that after Catterton Partners bought the company in 2005, it shut down the
company’s plant in Oakland. The move cost 230 employees their jobs and
increased the amount of time between when cookies were baked and when they
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reached retailers. Suppliers complained that their packages were no longer
properly sealed: “One of my last loads, I got a pallet of Taffy cookies and they
were all open. Unsealed,” a former driver for the company told the New York
133
Times. And the company reportedly changed its recipes and started using
cheaper ingredients. “Our cookies turned to crap,” said a former employee.
134
“They were nowhere near as good as they used to be.”
With products like cookies, consumers can choose what and whether to buy.
But consider the case of a literally captive audience. As described in Chapter 7,
private equity–owned companies make over $40 billion in revenue a year
providing services to prisons, where customers—inmates—have little choice but
135
to accept the services they’re offered. The three largest prison phone
companies, for instance, are all private equity owned and have charged as much
 136
as $25 for a fifteen-minute call. Two of the largest prison medical care
providers are owned by private equity firms and together have been sued about
137
1,500 times over just five years for allegedly inadequate patient care. And
several prison cafeteria companies are private equity owned too. One in
particular has been accused of serving meals with maggots, potatoes with
138
“crunchy dirt,” and moldy apple crisp and pancakes.
More generally, from retail to snacks to prison services, the idea of
“operational efficiencies” belies a certain arrogance in the private equity
industry, the idea that in three to seven years, well-educated dilettantes can run a
company better than those who’ve often spent a lifetime doing so. “What they
thought was that people who live here are stupid, and that’s the way they treated
us,” a former employee of Payless ShoeSource told the New York Times, after the
139
shoe seller was bought by Alden Global Capital. “It didn’t matter how great
you were in your field or what other stuff you had done, it was, ‘You live in
140
Kansas, so you’re an idiot.’” This arrogance—forged in business schools,
sharpened by industry conferences and its own propaganda—allows private
equity to convince the world, and perhaps itself, that it really is a “superior form
of capitalism” and to disguise the ways it really makes its money.

LEASEBACKS. DIVIDEND RECAPS. Bankruptcies. Forced partnerships. Tax

avoidance. Rollups. Layoffs. These are the tools by which private equity makes
its money. Dangerous in any hands, they are especially so for an industry that, by
its very design, is encouraged to think short term and take huge risks, while
sharing little financial responsibility if those risks fail to pay off.
Given this, you may wonder: Are all companies that private equity firms buy
doomed to failure? Certainly not. Some companies acquired by private equity
grow and prosper, and the industry’s advocates point to these successes as
evidence of private equity’s virtues. But while private equity doesn’t doom a
company to failure, the chance of failure dramatically increases. Roughly one in
five large companies acquired through leveraged buyouts go bankrupt in a
141
decade. This is vastly more than the roughly 2 percent of comparable
companies not acquired by private equity firms that do. And even among the
many companies that survive, private equity often changes their cultures, from
ones focused on the long term to the short, from investment to extraction, and
from responsibility to recklessness and, at times, lawlessness.
When private equity firms are appropriately restrained—that is, when they do
not act like private equity firms—they can actually do real good. Recall the three
fundamental flaws in the industry: firms invest for the short term, they load
companies up with debt and extract fees, and they insulate themselves from the
financial and legal consequences of their actions. When private equity firms do
good, when they improve the performance of the companies they acquire and not
just reap financial benefits for themselves, it is usually the result of fixing one or
more of these flaws.
Look at Blue Wolf Capital and the Caddo River mill. Blue Wolf is a smaller
private equity firm that acquires middle-market businesses in a handful of
industries. Unlike most of its competitors, it welcomes engagement with labor,
declaring on its website that “forging a constructive relationship between
employees and management isn’t just good for business—it’s the right thing to
142
do.” In 2017, Blue Wolf and a consortium of investors bought the abandoned
Caddo River lumber mill in Glenwood, Arkansas. The mill had closed in 2010—
143
a victim of the Great Recession and collapsing housing prices —and its failure
144
meant that in a town of just 2,500 people, hundreds lost their jobs. In 2017,
Blue Wolf’s consortium helped to revive the mill, paying to restore its
145
infrastructure. They reportedly spent millions of dollars on new equipment
and, in reopening, hired over one hundred workers who were paid, on average,
over sixteen dollars an hour. Retirees from the plant’s earlier iteration were
rehired: one former employee, who had worked at the mill for a quarter century
before it first closed, told the Arkansas Democrat-Gazette that getting the call to
146
return was “one of the best days of my life.” “You could feel the excitement
in town,” another former worker said. “With it closed for so long, people just
147
didn’t think it would be cranked back up again.”
The reopening had ripple effects. City Cafe, which had been closed for years,
briefly reopened, where the proprietor hoped that a $7.99 buffet would attract
148
returning millworkers. And the leaders of Blue Wolf showed personal, even
emotional investment. Charles Miller, a partner at the firm, said that “I’ve told
anyone who wants to hear it that other than meeting my wife and having my
149
children, this is my greatest accomplishment.”
 In short, what made Blue Wolf different was that it eschewed most of the
fundamental problems of private equity. It bought the company entirely with its
own and investors’ money rather than, as is so often the case, by loading the mill
150
up with debt. This meant that the business could afford to invest in its own
operations, rather than service its loans. After reviving the plant, the firm sold its
151
stake to Conifex Timber for $258 million. But again, unlike so many private
equity firms, it remained invested in the project. Though it sold its ownership
stake, it remained Conifex’s largest minority shareholder and took two seats on
the company’s board. This meant that it had an incentive to think beyond its
short period of official ownership and was invested in the business’s long-term
future. Success was not guaranteed—during an economic downturn, the mill had
152
to cut down to a single shift —but the business is now owned by a new timber
153 154
company, which employs over 150 people at the mill.
These differences changed the perspective of Blue Wolf and, in turn, changed
the Caddo River timber mill. All of which is to say that investment—risking
money to help businesses grow and prosper—is necessary and helpful. Problems
occur when private equity turns from investment to extraction.
The leading private equity firms—Blackstone, Apollo, KKR, and the Carlyle
Group and hundreds of other, smaller players such as TPG, Vista Equity, Thoma
Bravo, Sun Capital, and Platinum Equity—are all different. Some are more
extractive, others less so. Some invest for a quick payout; others are more
patient. An indictment against one is not necessarily an indictment against all.
But they are all bound, to a greater or lesser degree, by a common business
model that is fundamentally dangerous. And each has tens of billions of dollars,
often more, to effect its agenda.
Perhaps the tactics and the successes and failures of these companies would
be less frightening—eddies in the great river of capitalism—were it not for the
populations that private equity firms make their money from. These firms focus
much of their labor on extracting money from industries that target the most
vulnerable people: single-family rental properties, nursing homes, and prison
services, among others. It is to these industries, and the lessons they teach us
about private equity’s tactics, that we now turn.
 CHAPTER TWO

ENDING HOMEOWNERSHIP AS WE KNOW IT

Private Equity in Housing

Stephen Schwarzman’s seventieth birthday party was, in a word, spectacular.

The CEO of the private equity firm Blackstone had spent a year and a reported
$10 million to plan the affair, with help from the same company that did events
for Calvin Klein, Madonna, and the billionaire David Koch’s own seventieth
celebration.
Coming as it did shortly after the 2016 election, the party was something of a
refuge for a subset of the American elite. “The world is an uncertain place, a lot
of people are unhappy with a lot of other people, there are a lot of things that
people are upset about,” Howard Marks, the cochairman of Oaktree Capital
Management, told Bloomberg. “So it’s nice to have an evening where
1
everybody’s happy, harmonious, and upbeat.”
Harmonious indeed. The six hundred guests included leaders of business,
fashion, and art, three cabinet secretaries, and literal and figurative royalty:
Princess Firyal of Jordan came, as did the president’s daughter and son-in-law,
2
Ivanka Trump and Jared Kushner. President Trump himself, a close friend of
Schwarzman’s and a neighbor—his Mar-a-Lago estate was less than two miles
from Schwarzman’s in Palm Beach—was unable to attend, though the men were
already in frequent contact.
Schwarzman’s invitations promised what a reporter called “an exotic
3
journey,” which in practice meant a goulash of different cultural homages.
Schwarzman hired actors—some to wear traditional Japanese dress, others
Mongolian, along with real camels—to greet guests as they arrived at his fifteen-
thousand-square-foot mansion. A balcony of trapeze artists performed as friends
4
and colleagues crossed over what were ordinarily the estate’s tennis courts.
Dinner itself was hosted in a specially constructed Chinese temple, where
Schwarzman’s birthday cake, sculpted to resemble the temple, was served.
After dinner, guests were led to yet another temple, where Gwen Stefani and
5
the cast of Jersey Boys performed. Stefani sang “Happy Birthday” and danced
6
(presumably a little awkwardly) with Schwarzman himself. The evening ended
with a fireworks display that etched across the skies of the Intracoastal
7
Waterway. As one guest put it, “it really was the party of the century.”
How did Schwarzman afford to fete himself in this way, welcoming
celebrities to his home and building literal temples to celebrate himself? In part,
the answer lies in housing. Over the past fifteen years, private equity firms like
Schwarzman’s have helped to lead what one commentator called “the biggest
8
land grab since the Manifest Destiny.” In 2011, no landlord in America owned
9
more than a thousand single-family home rental properties. By 2013,
Schwarzman’s firm, Blackstone, bought more than that in a single day, at a cost
of over $100 million. One of Blackstone’s companies, Invitation Homes, became
10
the largest renter of single-family homes in America. More generally, in just
two years, private equity firms and hedge funds bought about 350,000 bank-
11
owned homes and, with the industry’s help, between 2006 and 2017, 5.4
12
million single-family homes transitioned from owner occupied to rentals. Now,
13
nearly a third of all rentals in the United States are single-family homes. These
statistics help to explain how Schwarzman was able to celebrate himself as he
did. And they help to explain how the very nature of homeownership in America
is changing, and how private equity has helped to lead the way.

IT ALL BEGAN in 2007, when the housing market collapsed. Over the previous
years, low-interest loans and the rise of a “shadow” banking system that issued,
bundled, and sold risky mortgages led to huge increases in housing purchases
and prices. Like all manias, the system depended upon there always being
another buyer, one willing to pay more for a house than the last. And eventually,
the music stopped.
 In a matter of months, communities like Bakersfield, California; Reno,
14
Nevada; and Cape Coral, Florida, were transformed. In Las Vegas, one in
twenty homes went into foreclosure. In Tampa, a single judge might have three
15
thousand foreclosure cases on her docket at any given time. And in Stockton,
California, white notices on empty houses bore the messages, “This is a bank-
16
owned property” and “Bank-owned: no trespassing.” “Whenever you see a
brown lawn, it’s a foreclosure,” a local activist told the Guardian as he drove
17
down suburban streets. “Look, three in a row.”
As the housing crisis metastasized into a broader banking crisis, the economy
18
was fundamentally shaken. Nearly nine million people lost their jobs. Roughly
19
as many lost their homes. And those who stayed in their houses often did so
with mortgages demanding more than their properties were worth.
In the face of this calamity, one institution, more than practically any other,
was actually positioned to address it: Fannie Mae. Unlike most centers of power
in Washington, Fannie Mae’s headquarters at the time sat far from downtown, in
an enormous colonial revival building whose brick façade was more reminiscent
of a college campus than an ordinary office building. And unlike most centers of
power in Washington, Fannie Mae was not technically a government agency but
rather an independent government-sponsored entity that operated with the
implicit financial backing of the United States. Chartered by Congress during the
Great Depression, Fannie’s purpose then and now was to stabilize the housing
market, by buying up individual mortgages from banks, bundling (or
“securitizing”) them, and selling them to investors. In buying mortgages, Fannie
gave money to banks to issue more loans, which in turn gave more people the
chance to buy homes. Over eight decades, under various configurations with the
government, Fannie and its sidekick agency Freddie Mac (which was created to
spur competition within the mortgage securitization industry) grew enormously,
and by 2008, the two owned or guaranteed about half of America’s $12 trillion
20
mortgage market.
Fannie and Freddie, almost alone among American institutions, actually had
the power to keep people in their homes, by reducing the principal on the
millions of mortgages they owned or guaranteed. Doing so would have cut
homeowners’ monthly bills and, for those whose mortgages were larger than
their homes were worth, made it rational for them to stay. Doing so would have
also reduced the ripple effect of foreclosures, in which the value of whole
neighborhoods fell when a few homes in it were dispossessed.
In fact, the Obama administration did propose a modest version of this idea.
Under its Principal Reduction Alternative program, the federal government
offered financial incentives to investors to reduce the total amount owed on the
21
mortgages they held. And the Treasury Department offered to extend the
22
program to Fannie and Freddie. But stunningly, Edward DeMarco, the acting
director of the agency overseeing both, refused. DeMarco looked like the man he
was—a career civil servant—and at congressional hearings, the sharp gaze of his
blue, bird-like eyes pierced his rimless glasses. Over and over, DeMarco refused
to accept the Principal Reduction Alternative program for the Federal Housing
Finance Agency, or FHFA, which oversaw Fannie and Freddie, arguing that to
23
do otherwise would constitute a grave “moral hazard.” This was a confusion of
the term. Helping homeowners would create a moral hazard only if people knew
that buying a home was a risky investment (historically, it had not been) and if
they expected a government bailout when their investment soured (there was no
reason for them to expect this). But it was clear from DeMarco’s public
statements that he had a deeper, almost emotional reaction against principal
reduction. “Fundamentally, principal forgiveness rewrites a contract,” he told the
Senate. And rewriting a contract, he said, “risks creating a longer-term view by
24
investors that the mortgage contract is less secure than ever before.”
Treasury Secretary Timothy Geithner publicly implored DeMarco to act,
estimating that principal reduction during the housing crisis could help up to five
25
hundred thousand homeowners and save taxpayers up to $1 billion. A petition
on Change.org called him the “single largest obstacle to meaningful economic
26
recovery.” Paul Krugman demanded his resignation. But it was to no avail.
Through the entirety of the Great Recession, DeMarco and the FHFA refused to
implement the principal reduction program, saying that its “anticipated benefits
27
do not outweigh the costs and risks.”
DeMarco went even further, not only refusing to implement principal
reduction in his institution but working hard to force others from doing the same
in theirs. In particular, local governments in some of the communities hit hardest
by the recession considered a radical step: seizing underwater home loans
through eminent domain and then helping homeowners refinance those loans at
 28
lower prices. DeMarco and his agency acted quickly and took the
extraordinary step of using the Federal Register—the official public record of the
federal government—to threaten the municipalities. The FHFA said that it had
“significant concerns” about the use of eminent domain to reduce mortgage
principals and that “action may be necessary” to “avoid a risk to safe and sound
29
operations at its regulated entities and to avoid taxpayer expense.” The FHFA
invited public criticism of the cities’ proposals, which organizations like the
Americans for Prosperity Foundation (created by Charles and David Koch) were
happy to provide. DeMarco and his allies ultimately prevailed. Just one city—
Richmond, California—got close to using eminent domain, and even there the
progressive mayor was ultimately stymied. No municipality ever reduced
homeowners’ principals through eminent domain.
There’s little point in speculating about DeMarco’s motivations during this
time. Like all of us, he was perhaps moved by a mixture of genuine belief and
personal interest: after leaving the FHFA, DeMarco became president of the
Housing Policy Council, a lobbying organization for America’s mortgage
30
lenders and servicers. His precise motivation is irrelevant because the outcome
was the same: tens of thousands of people likely lost their homes because the
FHFA failed to act boldly, when boldness was needed most.
But while DeMarco and the FHFA were hostile to reducing homeowners’
principals, there was one group to whom they showed tremendous solicitude:
large investors and, in particular, private equity firms. With the collapse of the
housing market, millions of Americans lost their homes, and Fannie and Freddie
found themselves owning many of them. Rather than reselling these homes to
31 32
families, potentially at a loss, the FHFA and Federal Reserve hoped that
these houses could be flipped into rental properties, properties that investors, not
individuals, could buy. In explaining this position, Ben Bernanke, the chairman
of the Federal Reserve, surmised that creditors could potentially make more
money by renting rather than selling properties. Bernanke suggested that
“involuntary renters” could benefit by buying the homes they rented, though
33
offered little sense as to how, exactly, that would happen.
And this is where private equity enters the story. Historically, single-family
homes had not been a part of private equity firms’ portfolios: they were too
disparate and too small to make much money. But bought in bulk, homes
presented an opportunity. Private equity firms could convert the houses into
rental properties and then derive a steady cash flow with which to pay the debt
used to purchase them. Moreover, homeowners, turned into home renters, were
something of a captive audience. While a person might leave a studio or one-
bedroom apartment with relative ease, a family could move from a home only
with great difficulty. The financial crisis—and the solicitous attitude of Fannie
Mae and its regulator—were thus an enormous opportunity for private equity
firms. And they acted accordingly.
In 2012, the FHFA launched a series of auctions of foreclosed homes, with
34
the intention that the purchased houses be converted into rental properties.
Investors developed new software that estimated the best purchases based on a
neighborhood’s schools, crime, and nearness to transit, as well as possible
maintenance costs. Such software allowed investors to participate in thousands
35
of auctions and identify those properties likely to make the most money.
Additionally, by selling the properties in bundles, the FHFA precluded
individual homeowners and likely all but the largest and most sophisticated
36
institutional investors from participating. And that is precisely what happened.
In the FHFA’s first round of auctions, Colony Capital, a private equity firm run
by Tom Barrack (a close friend of Donald Trump’s who chaired his inaugural
37
committee), bought 970 properties in California, Arizona, and Nevada.
Barrack later called his investment strategy “the greatest thing I’ve ever done in
38
my professional life.”
Barrack had reason to be jubilant. Buyers for Barrack’s Colony and Stephen
39
Schwarzman’s Invitation Homes, along with their peers, fanned across
America to purchase dozens and hundreds of houses at a time. At times, the
fevered activity felt like it was from another century. At the Gwinnett County
courthouse in Georgia, for instance, buyers paid for foreclosed homes on the
spot, and Colony’s employees brought an actual box full of cashier’s checks—$3
40
million in total—to the courthouse steps. “Game on,” said Colony’s bidder as
41
the auction began.
Fannie’s solicitous support for the single-family home rental industry didn’t
stop with its pilot project. In 2012, Fannie entered into a joint partnership with
Barrack’s Colony to operate, lease, and manage a portfolio of over a thousand
42
homes, primarily in Arizona, California, and Nevada. Colony agreed to pay
Fannie $35 million, and in exchange, Fannie agreed to give Colony 20 percent or
43
more of the cash flow generated from the properties. Colony said that it
expected to make a million dollars a month from the deal.
Fannie Mae was especially kind to Stephen Schwarzman’s firm Blackstone
and its portfolio company, Invitation Homes. In 2017, Fannie agreed to “secure”
a $1 billion loan for Invitation. Under the deal, Invitation borrowed the
enormous sum from Wells Fargo, and Fannie in turn agreed to pay Wells Fargo if
44
Invitation ever defaulted. There was little obvious reason for Fannie—which
operates with the implicit financial backing of the government—to enter into the
45
deal, and a consortium of 136 nonprofits opposed it. But it proceeded,
nevertheless, allowing Invitation to borrow money at a lower rate and thus
acquire more houses to rent. In other words, having refused to do all it could to
help people keep their homes, Fannie was now using all its powers to help
private equity firms buy those homes up.
Ultimately, the magnitude of these companies’ acquisitions was astounding.
As mentioned above, in just two years, private equity firms and hedge funds
bought about 350,000 bank-owned homes, and by 2015, the number of single-
46
family home rentals had grown by nearly three million. “We recognized the
unique opportunity created by the housing crisis,” an executive from Barrack’s
47
company triumphantly declared, “and acted upon it in a bold way.”

WHAT WAS IT like to live in one of the hundreds of thousands of homes converted
into rental properties by Invitation Homes, Colony, and other private equity–
48
owned firms? In a word: hard.
For one thing, living in a single-family home rental tended to get more
expensive each year, given that such homes were often excluded from local rent
control laws. In Los Angeles, more than three-quarters of surveyed residents of
rental homes reported rent increases, which averaged over $2,000 annually, or
49
roughly 9 percent more than the year before. In large cities—often those that
had been hardest hit by the Great Recession—the increases were even larger: 9.3
50
percent in Las Vegas, 10.6 percent in Tucson, 12.2 percent in Phoenix. To the
working-class families that lived in these homes, these were devastating
increases: “For me to work 12–14 hour days and barely have enough to pay
increasing rents to a multi-billion dollar Wall Street giant, it’s like sharecropping
51
all over again,” said a tenant of one of Colony’s subsidiaries.
Moreover, rent captured only part of the cost of living in these homes.
Companies like Invitation and Colony loaded up tenants with fees to extract
more money from them. Invitation, for instance, charged utility expenses back to
52
renters, as well as a $9.95 conveyance fee for each bill. It added landscaping
fees, pool fees, pet fees, and “smart lock” fees.
Many of these were legal, but some may not have been: class action lawsuits
in Texas and California alleged that Blackstone’s Invitation charged illegal,
53
excessive late fees to its residents. As of December 2022, the Texas case
remains ongoing, but the court in California declined to certify the class of
plaintiffs and dismissed the action. It did so in part because the lead plaintiff had
signed his lease with Invitation’s predecessor companies, which Invitation
54
absorbed through various acquisitions. In other words, the companies’ various
mergers with one another had the incidental effect of insulating them from
liability for their alleged past wrongdoing.
Despite all these expenses, tenants weren’t getting much in return. Private
equity landlords often placed the burden of maintaining their properties on their
residents, either in ordinary lease agreements or in dodgy rent-to-own
55
programs. In such programs, tenants were given the option to buy the
properties they rented. But in return, the tenants, not the landlords, were required
to make major repairs. It’s hard to track the scope of these efforts, but
anecdotally, the New York Times reports that “few rent-to-own agreements end in
actual purchases,” and in fact, rent-to-own arrangements are illegal in some
56
states.
When tenants fell behind on their expenses, they faced firms’ aggressive and
slapdash tactics for collecting money, which ranged from degrading to
devastating. Among other things, tenants complained that debt collectors placed
menacing phone calls and ruined their credit. After one tenant fell behind on
rent, Invitation Homes wrapped caution tape around their house, presumably to
57
shame the tenant into payment. Another found herself bouncing between
Waypoint (owned by Blackstone and Colony at various times) and its debt
collector over a previously unknown—and potentially erroneous—$8,000
 58
charge. Neither would take responsibility for correcting the debt, and as a
59
result, “[n]obody would rent to me,” the tenant said. “I had to find a co-signer
to help me buy a house because they ruined my credit from that $8,000
60
charge.”
And when collections didn’t work, there were evictions. Lots of them. A
study by the Federal Reserve Bank of Atlanta found that, in a single year,
Colony sent eviction notices to nearly one-third of its tenants around the city, far
61
more than any other company. Corporate landlords—those that owned fifteen
or more homes in Fulton County—were 68 percent more likely than smaller
property owners to file eviction notices, even controlling for property, tenant,
62
and neighborhood characteristics. In some zip codes, over 40 percent of all
rental households got an eviction notice, and over 15 percent received a
judgment or were forcibly removed. African Americans and women were
especially likely to be evicted.
Yet such evictions may have been preferable for some residents of private
equity–owned homes, for many of those who stayed faced threats to their health.
There was, for instance, the problem of lead, which, when exposed to children,
can cause cognitive deficiencies, developmental delays, reduced academic
performance, seizures, coma, and death. Researchers in Detroit found that
children living in homes owned by large investors (those with fifty or more
properties) were significantly more likely to have elevated concentrations of lead
63
in their blood than were other children. There was also the problem of mold,
64
which, indoors, can induce asthma attacks. Thirteen percent of surveyed
65
residents in Los Angeles, for instance, complained of mold in their building.
Here, the story of Monica Lisboa is instructive because it illustrates both the
health problems in these buildings and how private equity–owned companies
66
responded. In 2013, Lisboa rented an apartment in Florida operated by the
private equity–owned Colony American Homes. As alleged in her subsequent
lawsuit, when Lisboa and her family moved in, she noted a “musty odor” that
she assumed would fade with time. It did not, however, and over the months and
years that followed the smell grew more intense. Lisboa and her son began to
experience rashes, nausea, itchy eyes, headaches, vomiting, and trouble
breathing.
 Eventually, Lisboa found significant patches of black mold in the property,
67
which she reported to Colony, but which she alleged Colony ignored. Lisboa
then paid for her own do-it-yourself mold test, which revealed toxic levels of
black mold spores. This finally prompted Colony to hire its own testing
company, but when Lisboa sought the results, the testing company said that
Colony had instructed it not to release them. Instead, Colony itself allegedly told
her that the test results showed that there was no mold on the property. If
Lisboa’s complaint is accurate, either the testing company had grievously erred,
or Colony was lying to Lisboa.
Not trusting Colony, Lisboa reported she paid for yet another test—this one
by a professional—who confirmed that there were, indeed, toxic levels of mold
68
on the property. As all this was happening, Lisboa’s son had a seizure and had
to be hospitalized. There, the doctor said that her son’s health issues were caused
by toxic mold exposure. But incredibly, while Lisboa and her son were at the
hospital, she said she received a phone call: it was Colony, inquiring about her
rent payment.
Eventually, according to her complaint, Lisboa and her children had to flee
69
the property to protect themselves. Yet even after they left, and even after
Colony was put on notice of the dangerous mold levels in the house, Colony
filed an eviction against Lisboa. Colony largely denied Lisboa’s allegations, but
the ultimate truth of the matter was never resolved: the company settled the case
out of court without any admission of wrongdoing.
Lisboa’s story is illustrative because it shows how apparent corporate neglect
can lead to crises and how distant companies can ignore those crises to their
tenants’ detriment. Neglect was endemic to the private equity business model,
whose focus on short-term profits necessitated abandoning the long-term care of
its properties and residents. Or as one resident of another private equity–owned
home put it, “Living in a Waypoint property has been an actual nightmare. No
70
family should have to pay to live like this.”

LOOKING MORE BROADLY, it’s worth asking whether private equity firms are
actually worse than other landlords. Most of us remember when a building super
never returned our calls or refused to repair a sink. These mom-and-pop
landlords are not saints; quite the opposite. But private equity firms have
something that smaller landlords do not: billions of dollars. And they have put
71
that money to use lobbying against broader tenant protections.
For instance, in 2014, Starwood Waypoint Homes, alongside Blackstone’s
Invitation Homes, created the National Rental Home Council, whose agenda
72
included plans to fight further control initiatives. A few years later, Blackstone
and Invitation spent millions of dollars to defeat Proposition 10 in California,
which would have allowed localities to decide whether rent stabilization laws
should extend to single-family homes. The law, if passed, would have been
transformative, as about 45 percent of residents in California rent their properties
and about a quarter of tenants nationally spend more than half their income on
73
rent. Extending tenant protections to single-family homes—or even giving
cities the opportunity to do so—would have been a crucial respite for these
people. But naturally, this posed a threat to the business model of private equity
firms and the companies they owned. And so, Schwarzman’s Blackstone and its
portfolio company, Invitation Homes, contributed nearly $7 million to oppose
74 75
the measure. Much of this money went to the No on Prop 10 PAC, whose ads
featured a narrator proclaiming, over pictures of concerned California residents,
that the proposition would put “unelected bureaucrats in charge of what you can
and can’t do with your own home” and would make housing “even more
76
expensive for renters.” Opponents of Proposition 10 spent $72 million
77
campaigning against it, more than double what its supporters spent in its favor.
Unsurprisingly, the proposition failed.
This sort of influence—the scale of money spent, the focus and organization
of the group that spent it—simply would not be possible among more dispersed
owners. By concentrating economic power, private equity firms centralized their
political power and codified their influence to the detriment of the many tenants
who were giving them money in rent and fees every month. Moreover, private
equity firms’ power—the power that comes from their size—is only growing. In
2016, Tom Barrack’s Colony American Homes merged with Starwood
Waypoint. The merged company in turn was bought by Blackstone’s Invitation
78
Homes in 2017, forming a behemoth single-family home rental operation.
Blackstone took Invitation public that year and then, in 2021, bought another
79
home rental company for $6 billion. The result was that more homes were
being turned into rentals, and those rentals were owned by ever-larger and more
powerful companies.
Private equity firms also got in the business of not just buying single-family
home rentals themselves but of also providing the financing for smaller investors
80
to do the same. KKR invested in a company that financed home flippers.
Blackstone, meanwhile, created a program to lend to smaller landlords to buy up
81
single-family homes and rent them. This gave Blackstone an opportunity to
profit off of rented homes, even those they did not own. And these programs
ensured that more homes would be rentals and that there would be more
institutional owners—big and small—naturally allied with one another to protect
their incomes, often at the expense of their tenants.
There is another sense in which private equity owners were worse than mom-
and-pop landlords, namely, that by their very scale, they managed to transform
the nature of housing in America. As mentioned above, between 2006 and 2017,
5.4 million single-family homes transitioned from owner-occupied units to
82
rentals. Single-family home rentals now account for more than half of the
83
national rental market. And now, investors buy one in seven homes for sale in
84
large metropolitan cities. Private equity firms account for only a fraction of
these sales: for instance, Invitation Homes, previously owned by Blackstone,
85
owns about seventy-five thousand houses. But while private equity firms are
responsible for only a minority of purchases, they are the crucial innovators and
partners with the government in spurring this broader trend.
It is also important to understand where this is happening. Cities hit hardest
86
by the Great Recession saw the largest increase in rentals. In fact, private
equity firms concentrated their acquisitions not just on specific cities but on
87
specific neighborhoods or what one executive called “strike zones.” In one
Atlanta zip code, for instance, Blackstone’s Invitation Homes bought 90 percent
88
of the homes sold over a year and a half. This should be no surprise: these
were the places where Fannie Mae owned foreclosed homes, which Fannie
auctioned off to investors in the process that started the entire rental boom. But it
meant that the people who lost the most during the Recession were the ones who
regained the least in the years that followed. In fact, according to one credit
rating agency, Colony’s tenants were typically former homeowners themselves,
people who could no longer afford a home but who often retained some ties to
89
the neighborhood. By concentrating their purchases—by exercising control
over local markets—private equity firms made it difficult for people to leave. Or
as Jennifer St. Denis, a single mother and renter in Atlanta, told the Mercury
News, “At this point I’m stuck in a renting pattern because rent increases keep
90
going up and moving out is expensive.” She noted that Invitation owned most
of the homes in the area that she would want to live in anyway.
The effect was that, quite simply, fewer people own homes. In the early
2000s, over 70 percent of households owned their own houses. Today, that
91
number is around 63 percent, levels not last seen since the 1980s. For African
American and other minority communities, the percentage is vastly lower: Black
homeownership rates, for instance, have returned to what they were in the
92
1960s. The change is also particularly dramatic among young people. In 1960,
44 percent of people aged twenty to thirty-four owned a home. In 2017, barely a
93
quarter did. This is not a change in preferences—two-thirds of renters said that
94
they would own a home if they could —but a change in means. “It’s creating a
greater divide between the haves and have-nots,” one analyst told Vox.
95
“Homeowners are getting sizable wealth gain. Renters are getting left out.”

A RECURRING DEFENSE of private equity is that its use of debt and its short-term
focus necessitate excellence and that the sheer intelligence of its leaders
improves outcomes for companies. But the industry’s foray into aspects of the
housing market suggests otherwise. Consider the case of the private equity firm
Fortress and its rollup of the mortgage-servicing industry. Mortgage servicers
are, in essence, debt collectors: they ensure that homeowners pay their
mortgages and pursue foreclosures when they don’t. It’s an appealing industry
for private equity, as it provides a steady cash flow and a captive audience, given
that mortgages are often sold from one company to another, and borrowers have
no real ability to choose their servicer. Lone Star Capital, Bayview Asset
Management, Selene Investment Partners, and Fortress Investment Group all
96
bought up mortgages to service, either directly or through portfolio companies.
 Fortress is instructive here. In 2006, just before the housing crisis, the firm
97
bought a mortgage servicing company, which it renamed Nationstar.
Consistent with private equity’s model of short-term success, Nationstar’s—and
Fortress’s—strategy was one of aggressive expansion, and in the years after the
Great Recession, the company bought billions of dollars of mortgages that others
no longer wanted to service. It bought whole companies like Greenlight
98 99
Financial Services and Residential Capital and over $200 billion worth of
100
mortgages from Bank of America. By 2020, it serviced three million loans,
101
with an unpaid principal of about $500 billion. It was the largest nonbank
mortgage servicer in the United States and the third largest mortgage servicer
overall.
But this aggressive growth, intrinsic to the private equity business model,
came at a price: Nationstar struggled with the basic tasks of servicing its
mortgages, a fact alleged over and over in media reports and in lawsuits. In
2016, for instance, the New York Times reported that Nationstar repeatedly lost
102
customers’ files and recorded inaccurate information for others. According to
the Times, Nationstar often failed to detect its own errors until after foreclosure
processes had already begun. (Nationstar’s CEO, Jay Bray, defended the
company’s actions, saying that “[w]e are proud of the work we’ve done to
103
improve the customer experience.”) The following year, the inspector general
for the Great Recession bank bailout reported on Nationstar’s failure to properly
administer the government’s Home Affordable Modification Program, or HAMP,
which helped struggling borrowers to reduce the principal on their mortgages.
“Nationstar has one of the worst track record[s] in HAMP,” the inspector general
104
wrote. The company’s rule violations “have been widespread spanning
multiple quarters. Nationstar has shown little improvement and, even appears to
105
be getting worse.” Among other things, the inspector general found that
Nationstar wrongfully denied homeowners’ admission into HAMP, wrongfully
kicked other homeowners out, and reported homeowners as delinquent on their
mortgages, when, in fact, they were not.
The errors got more serious. In 2020, without admitting wrongdoing,
Nationstar settled lawsuits with all fifty states, the District of Columbia, and the
Consumer Financial Protection Bureau to resolve allegations of the company’s
 106
widespread abuse and incompetence. According to the bureau, it was as if
Nationstar failed nearly every aspect of the mortgage servicing industry. The
company allegedly foreclosed on borrowers, even after explicitly promising it
would not, while the borrowers’ loan modifications were under review. It failed
to pay people’s property taxes on time, and as a result, borrowers faced late
penalties. It required borrowers to pay for private mortgage insurance longer
than they needed to. And it unilaterally—and improperly—increased borrowers’
monthly payments. Heartbreakingly, as alleged, Nationstar even foreclosed on
some borrowers whose payments were impermissibly increased.
Rather than litigate, Nationstar settled with the federal and state governments
107
and agreed to pay $73 million to more than forty thousand homeowners. In a
separate settlement, the company agreed with the Department of Justice to give
over $40 million to another twenty thousand borrowers whose accounts were
108
mishandled during their personal bankruptcies.
But these fines couldn’t undo the damage that Nationstar—and Fortress—
caused. In Texas, Normie and Derrick Brown got a temporary restraining order
109
against Nationstar to avoid what they believed was a wrongful foreclosure.
But Nationstar proceeded with the foreclosure anyway and held an auction for
the house even before the court’s restraining order was set to expire. Nationstar
removed the case to federal court and closed on the sale before the new judge
could rule. The Browns lost their house. “You think all you have to do is show
them where they did you wrong, and basically justice will prevail,” Mr. Brown
110
told the New York Times. “That wasn’t the case.”
Why did Nationstar make so many mistakes? Why was it sued by all fifty
states and the federal government? The simplest answer is the most likely:
because of its aggressive acquisition campaign, Nationstar apparently didn’t
have time to properly manage the thousands of mortgages it bought. This
worked fine for its private equity owner Fortress: having bought the company in
2006 for $450 million, it sold the business in 2018—when it still held a nearly
111
70 percent stake—for $3.8 billion. But this growth was a disaster for the
literally tens of thousands of people who were harmed, and sometimes
devastated, by the company’s apparent mismanagement. And this growth was
inherent in the business model of Fortress and others, which frequently depended
on quickly buying and rolling up companies. Disasters such as private equity
acquisition of Nationstar and the resulting fiasco undercut the narrative that
private equity owners, through incentives or sheer intelligence, make companies
and customers better.

FINALLY, PRIVATE EQUITY’S foray into housing illustrates one more aspect of the
industry, namely, its frequent focus on businesses that target poor people. For an
industry built to make money, why target people with the least? Because poor
and working-class people often lack alternatives to what they buy, and this gives
private equity firms the chance to raise prices or cut quality with impunity,
knowing that their customers have few alternatives. Nothing illustrates this more
clearly than private equity firms’ purchase of mobile home parks.
Historically, mobile homes offered pockets of affordability in an increasingly
unaffordable housing market. Over nearly two decades, beginning in 1990, the
112
United States actually lost four million units of low-cost housing. By 2019,
however, the median home was unaffordable to the average worker in three-
113
fourths of the country. In this environment, mobile homes offered a rare
escape from these crushing expenses: used units could cost as little as $10,000,
114
and residents generally made less than $50,000 a year. Fannie Mae called
them “one of the few sources of naturally occurring affordable housing” in
115
America.
But mobile homes weren’t affordable by accident. The industry was
historically run by family businesses that, while far from altruistic, were
generally invested for the long term and free from the demands created by short
investment horizons and heavy debt loads, which enabled them to keep prices
low. But in the last decade, big companies came in, and that started to change.
Already by 2013, investors spent $1.2 billion buying mobile home parks; by
116 117 118
2020, they spent $4.2 billion. Private equity firms like Apollo, Carlyle,
119 120 121 122
Stockbridge Capital, Centerbridge Capital, TPG, Blackstone, and
123
Brookfield Asset Management invested in mobile home parks or bought them
outright. And as these investors came in, costs for residents began to rise: over a
five-year period, the average price of a mobile home increased 35 percent, to
124
more than $61,000.
 These were ideal businesses for private equity. They offered steady cash flow
with little responsibility: unlike apartments or even single-family home rentals,
private equity owners weren’t responsible for the upkeep of the houses
themselves, just the surrounding community. And the costs of that upkeep—
utilities and so forth—could often be pushed onto residents.
Moreover, mobile home owners faced a number of disadvantages relative to
those who owned traditional homes. For one thing, they paid two fees for the
privilege of residence: a mortgage on the property itself and rent for the lot on
which the property sat. For another, they tended to have higher interest rates on
their mortgages, meaning that they had to pay more just to get the same equity in
their homes. And in fact, the very term mobile home was something of a
125
misnomer. Many were attached to concrete foundations and moving them
could cost $10,000 or more. As a result, owners rarely did. Private equity firms
depended on this fact to increase rents and fees without consequence.
Unsurprisingly, these private equity firms often made terrible owners. After
Sunrise Capital Investors bought a park in Akron, Ohio, it tried to double
126
residents’ lot rents. The company’s plans would “economically evict many of
our neighbors,” a resident wrote (residents eventually succeeded in stopping the
127
increase). After TPG bought a community in Urbana, Illinois, one resident
managed to negotiate a payment plan with the property manager. But “[e]ven a
good manager can’t change the company wide policies that are aiming to make
as much money off of all of us as possible,” she told the Private Equity
128
Stakeholder Project. And after Stockbridge Capital bought a park outside
Nashville, neighbors complained that the company failed to pick up couches and
trash left lying in common areas, while it simultaneously threatened eviction for
129
residents who were just six days late in their rent. “They’re almost like
slumlords,” one resident told the Washington Post. “If you point something out,
130
they’re just like… whatever. They just want the rent.” In essence, private
equity firms’ innovation was to realize that, because mobile homes were
anything but mobile, real money could be squeezed from Americans who had
the least.
A particularly wrenching aspect of these increased costs was that they
actually took money from residents in two ways. First, residents paid the lot
rents themselves. Second, by raising lot rents, firms made the homes less
attractive to future buyers, draining the equity that residents had put into their
own houses. In fact, for every $100 increase in rent, homes lost an estimated
131
$10,000 in value. It was an economic pincer move, taking both residents’
income and their wealth.
Importantly, the government helped. In 2016, Fannie Mae helped to provide
$1 billion in financing for Stockbridge Capital’s Yes! Communities. The loan
helped Yes! buy up more mobile homes and, crucially, did not limit how much or
132
how often the company could raise rents on the properties it bought. Two
years later, Fannie Mae provided $200 million in financing for TPG Capital to
133
buy dozens of mobile home parks itself. George McCarthy, an affordable
housing advocate, told National Public Radio that “what’s ironic about it is that
one of the missions of Fannie Mae and Freddie Mac is to help preserve
affordable housing. And they’re doing exactly the opposite by helping investors
come in and make the most affordable housing in the United States less
134
affordable all the time.” To its credit, Fannie subsequently set for itself the
goal of financing more mobile home sales to nonprofits, and adding resident
135
protections to future loans. But the scale of its aspirations was small: it aimed
136
to make just three nonprofit deals in 2022, for instance.
Considering all this, it is helpful to see how private equity ownership worked
in one specific mobile home community: Plaza Del Rey, in Sunnyvale,
California. Sunnyvale sits in the center of Silicon Valley, and its largest
employers include Google, Apple, Lockheed Martin, and Amazon. In 2015—the
year that the Carlyle Group bought Plaza Del Rey—a typical home in the city
137
cost well over $1 million. In such an environment, the mobile home park
offered a pocket of affordability in a community of extraordinary expense, a
place where middle- and working-class people could live and get to nearby jobs.
For four decades, the park was owned by a single family, until 2015, when the
138
granddaughter sold it to Carlyle for over $150 million. Residents already
covered the utilities, property taxes, and cost of upkeep. But within its first year
as owner, Carlyle raised rents 7.5 percent, the largest increase in the park’s forty-
seven-year history. For new residents, Carlyle raised lot rents to $1,600, nearly
139
40 percent more than the park average. This didn’t just hurt people who
moved in: it made it harder for existing owners to sell, eviscerating the equity in
their homes that they might have built up.
 As reported by the Los Angeles Times, residents resisted but were
infuriatingly outmatched. Some collected cans to pay to meet with a lawyer:
after a morning of collection, they raised $46.55: “Enough to pay for a third of
140
an hour with an attorney!” one of them exclaimed. Others protested to the city
council, where one of Carlyle’s managing directors spoke against them. “We are
opposed to rent control in any form and do not believe it furthers the objectives
141
of the city or owners in the long term,” the Carlyle executive exhorted.
The council, perhaps fearful of any action that might dampen investment in
the city (“The city council expressed no interest in helping us,” one resident
142
complained ), never imposed any rent control. But it did facilitate a
negotiation between Carlyle and the residents, the result of which was a nominal
limit on rent increases for those residents who signed on. Yet according to Fred
Kameda, a resident familiar with the deal, the rent that Carlyle could charge for
new lots was unaffected. This meant that residents would still potentially lose
equity in their homes and still struggle to sell them. “Basically we didn’t do a
143
very good job negotiating,” Kameda said. “However we had no—how would
144
you say it—leverage.”
Kameda suspects that Carlyle’s real intention was not simply to raise rents
but to push out residents and transform the whole park into higher-density and
much more profitable housing. Despite Carlyle’s protests to the contrary, there
was some limited evidence to support the theory. Forty miles away, Carlyle had
tried to evict owners in another mobile home park it bought and turn the
145
properties into more profitable rentals. And as part of its deal with Plaza Del
Rey residents, Carlyle negotiated the right to make the first offer on homes that
146
went up for sale, setting itself up to do the same there. If that was Carlyle’s
intention, it never succeeded, though it still managed to make a fabulous profit.
In 2019, four years after buying Plaza Del Rey, Carlyle sold the park to another
investor for $237.4 million. Carlyle managed to make a 58 percent profit on the
147
deal.
Though Carlyle left, the problems didn’t stop for Plaza Del Rey’s residents.
The new owner increased rents for incoming residents to $2,380, rendering
148
homes, according to existing owners, “unsellable.” Residents held protests
and met with Representative Ro Khanna, though the new owner barred TV and
newspapers from covering Khanna’s visit to the residents. “It’s outrageous that
149
they didn’t allow the press to listen to the residents’ concerns,” Khanna said,
adding—perhaps aspirationally—that “we don’t live in an oligarchy where
150
private equity gets to destroy our communities.”
Ultimately, the city imposed a memorandum of understanding that set limits
151
on rate increases for both new and existing owners. But this fell short of an
actual rent stabilization ordinance, which already existed in a half dozen nearby
towns. Instead, residents had to proactively sign the memorandum, and under it,
the new park owner could still substantially increase rates for new mobile home
152
owners.
The whole experience was illustrative. Carlyle was able to turn an
extraordinary profit on an investment, not by making a better company but by
increasing the costs for those least able to pay. Residents protested, but their
protests were largely ineffective, with a local government agonizingly slow to
act. And in large part, residents didn’t move because they couldn’t. By
increasing rents—and making properties less attractive to new buyers—Carlyle
actually made it harder for existing owners to leave.
It was a cruel system, cruel for everyone except Carlyle and its investing
peers. “I think they were carpetbagging scumbags,” one resident said of
153
Carlyle. “They don’t realize that these are peoples’ homes,” said another to a
local news station. She added, poignantly, “We’re not just numbers on a
154
spreadsheet.”

PRIVATE EQUITY FIRMS’ adventures in housing illustrate the industry’s worst

tendencies. They bought up hundreds of thousands of homes, raised prices, and
reduced quality. They did not demonstrate particular skill in administration, as
the follies of Nationstar illustrate. But they did demonstrate enormous political
strength, as shown by their defeat of Proposition 10 in California. Finally, they
targeted, not those with the most money in America, but those with the least.
Nowhere was this clearer than in the case of mobile home parks. And all of this
was accomplished with the active support of the government, whose sponsored
entity, Fannie Mae, helped to start the fevered rush to acquire homes. We seem,
in other words, to be bringing this on ourselves. In so doing, we help to fund the
lives and lifestyles of men like Stephen Schwarzman, whose seventieth birthday
was described earlier. His “party of the century,” with its actors and camels,
singers and temples, was all made possible, in large part, by the housing industry
he helped to transform.
 CHAPTER THREE

PROFITING OFF BANKRUPTCY

Private Equity in Retail

Do you wonder why so many businesses around you are closing and why retail
spaces so often seem unoccupied? The common refrain is that Amazon and other
online sellers have displaced physical stores and rendered them irrelevant. This
is partly true, though it is only part of the story. Another part is that private
equity firms are buying up stores that, collectively, employ millions of people
and are often driving those stores into bankruptcy. Some of this is simple
mismanagement. But some of it is deliberate, for, as the pages below describe,
often these firms win in the bankruptcy process when so many others—the
companies they buy, the creditors they use, and the employees they pay—lose.
All this exacerbates inequality, by shifting money from workers to executives,
and from retailers to financiers. And it’s happening all the time.
The case of Toys “R” Us is illustrative. The children’s superstore looms large
in many of our childhood memories, as it has for generations of grown kids. Its
1
founder, Charles P. Lazarus, started the business in his parents’ bicycle shop as
2
Children’s Bargain Town, a place where parents of the exploding baby boom
could buy cribs and other children’s furniture. Over time, Lazarus realized that
though parents needed to buy cribs just once, they needed to buy toys constantly.
In 1957, he launched the first Toys “R” Us in Rockville, Maryland, with its
trademark backward “R,” written as a child might.
Lazarus built his stores like giant supermarkets, and an early advertisement
promised “unlimited quantities” of toys, with “trailer loads arriving
3
continuously.” Where other businesses had small showrooms and limited
inventory, Toys “R” Us promised to rarely, if ever, run out of the toys that kids
loved. And the company’s early adoption of computer inventory systems
4
allowed it to know what kids wanted before other companies did.
In time, Toys “R” Us became a national icon. Generations of children
remember its advertising jingle, “I don’t wanna grow up, I’m a Toys ‘R’ Us kid,”
or the Super Toy Run on Nickelodeon, where contestants could win a five-
minute shopping spree in the store. In 2001, it opened a giant flagship in Times
Square, with an enormous indoor Ferris wheel, life-sized Barbie Dreamhouse,
5
and twenty-foot animatronic T. rex.
It’s true that Toys “R” Us was slow to adapt to online retailing, and it
committed an unforced error by partnering with Amazon in its first big push into
6
e-commerce. The project helped Amazon learn how to sell products to children,
and Toys inadvertently surrendered its competitive advantage. Nevertheless, the
7
company had over $11 billion in revenue when, in 2005, it was purchased by a
trio of private equity firms: Bain, KKR, and Vornado.
This is where the troubles began. The firms bought Toys “R” Us for over $6
8
billion, most of it with debt that Toys—not its purchasers—would have to pay.
And the cost of servicing that debt was enormous: about half a billion dollars a
9
year on interest alone, not to mention millions in various fees that the company
10
would need to pay its new owners. This sucked money away from the
company that could have been spent making the expensive—and necessary—
transition to online retailing.
At the same time, under the private equity firms’ ownership, the company
bought several competitors, including FAO Schwarz and K-B Toys. For each
acquisition, Toys “R” Us paid the private equity firms a transaction fee, which
11
together totaled over $100 million. On top of this, Toys paid Bain, KKR, and
Vornado regular management fees—costs for the privilege to be owned by them
—and interest on debt that it owed the firms directly. In total, the Private Equity
Stakeholder Project estimates that over thirteen years, Toys “R” Us paid Bain,
12
KKR, and Vornado $464 million.
Along the way, the private equity firms drew down the company’s assets.
Before it was purchased, Toys “R” Us had over $2 billion in cash and cash
equivalents. By 2017, the year of the bankruptcy, it had less than one-sixth
13
that. Ann Marie Reinhart, who worked at Toys for twenty-nine years, said that
 14
the private equity purchase “changed the dynamic of how the store ran.”
According to employees, benefits were cut, as were jobs, and the employees who
remained had to take on more responsibilities. Stores became shabby as the
ordinary work of maintaining a big business—polishing floors, sweeping
15
parking lots, and so forth—grew infrequent. The fans, girders, and lights of the
stores, where dust accumulated, were cleaned less often. And the company fell
behind on its internal information technology, a part of the business where it had
once excelled.
The heavy debt and the flow of cash to the private equity firms made it
impossible for Toys to make necessary changes. In 2014, the company
announced a TRU Transformation initiative, to improve the in-store and online
shopping experience, create exclusive partnerships with toy makers, and reduce
16
costs. But it wasn’t enough, and in 2017, the company filed for Chapter 11
bankruptcy.
At the time, many commentators blamed Amazon. But this was, at best, only
part of the story. Toys’ sales remained steady, even during the Great Recession,
17
and in the year before it filed for bankruptcy, its $11 billion in revenue
18
accounted for an estimated one-fifth of all toy sales in the country. The
problem wasn’t market share; the problem was the debt. By 2017, Toys’ payment
on the interest alone nearly matched its entire operating income: the company
19
had $460 million in operating income and $457 million in interest expenses.
Without money, the company couldn’t make the necessary investments to
compete online, couldn’t hire the best people, and couldn’t keep its stores clean.
In the bankruptcy process, there were clear winners and losers. One of the
winners was the Toys’ CEO, David Brandon, who thrived as the company
struggled. Brandon was an ally of the company’s private equity owners—Bain
20
had previously chosen him to run Domino’s Pizza, another of their investments
—and at Toys “R” Us, he was treated extraordinarily well. As subsequently
alleged by a class of Toys’ creditors, while the CEOs of comparable companies
were typically paid around $1.1 million and the ninetieth percentile were paid
21
$1.56 million, Brandon was paid more than twice that: $3.75 million. He spent
that money well. For a while, he lived in a luxurious building on New York’s
22 23
Billionaire’s Row, in an apartment with a listed rent of $45,000 a month. And
in 2016, he paid over $15 million for a penthouse on the Upper East Side, with
terrace views of Central Park.
As his company collapsed, Brandon sought to secure his financial future. The
challenge, according to subsequent litigants, was that Toys’ lawyers had advised
Brandon that his bonus likely would not be approved once the company filed for
24
bankruptcy. So he ordered that bonuses for himself and other top executives be
25
paid three days before then. Brandon ultimately had the company pay him $2.8
26
million, with similar payouts for other top executives.
Having secured his bonus, Brandon allegedly lied about it. According to
subsequent plaintiffs, Beth Burns, an employee at Babies “R” Us in Nashua,
New Hampshire, wrote to Brandon after her store was selected for closure.
Brandon had promised all of the laid-off employees a severance but then, a week
later, retracted the offer. Burns wrote to Brandon and asked him to “please re-
think your decision to hand out to the Executives and leave your devoted
27
Associates with nothing.” Brandon personally wrote to Burns that “I did want
you to know that there have not been millions of bonuses paid to the executives
28
at our company despite what you may have heard.” Bonuses at the company
were tied to financial performance, he explained, and “based on our performance
the past several years, there have not been—nor will there be—any bonuses paid
to executives or anyone else given the current financial condition of our
29
company.” Brandon, it appeared, was not telling the truth: he was going to be
paid millions of dollars and had spent much energy designing his exit package to
avoid the restrictions of the bankruptcy laws. Having secured his financial
future, Brandon was apparently unwilling to admit as much to his employees.
Beyond Brandon, another winner was Toys’ law firm Kirkland & Ellis, which
30
had established itself as the dominant force in large corporate restructurings. In
bankruptcy, lawyers are often paid first, the assumption being that they would
refuse to work for a failing company without a guarantee that they would be
compensated while doing so. But Kirkland’s fee here was enormous: it made $56
31 32
million for its work or nearly $1,000 an hour. By comparison, according to
the tracking service Payscale, the average retail department supervisor at Toys
33
“R” Us made just $12 per hour.
 The losers in this process were Toys “R” Us’s employees, who got just $2
34
million in severance. The employees, according to one of their lawyers, had
been promised $80 to $100 million in severance pay to work through the busy
35
holiday season, but in bankruptcy, employees were “unsecured creditors” and
had little leverage to demand what they were owed. Ultimately, while the CEO
received a $2.8 million exit package, employees received severance packages
36
amounting to about $60 per person. The money was little more than “schmuck
certificates,” according to one of their lawyers, Jack Raisner: about enough for a
37 38
family meal at Arby’s. “For these people, it was devastating,” he said.
“That’ll pay my phone bill,” Michelle Perez, a mother with two young children,
39
complained to CBS. “This has really shown how the bankruptcy system is
40
broken,” she said.
The final loser in the bankruptcy was Toys “R” Us itself. Toys filed for
Chapter 11 bankruptcy, where companies are meant to rehabilitate themselves by
discharging some of their debts, rather than Chapter 7 bankruptcy, where
companies are shut down and their remaining assets sold to creditors. Toys
initially planned to keep operating and was in negotiations to do so, according to
41
one of the company’s financial advisers. But a hedge fund called Solus Capital
Management owned a key part of Toys “R” Us’s debt. It, along with four other
debt holders, decided that they were better off if Toys liquidated—that is, if it
stopped working entirely and sold itself for parts—than if Toys continued to
operate as a business. The debt holders were able to force the issue and shut the
company down. Solus reportedly made money on the transaction—and thirty-
three thousand people lost their jobs.
How about the private equity firms themselves? KKR claimed to have lost
42
millions of dollars on the deal. But while KKR’s various investors may have
lost money, the firm itself likely profited. An independent analysis by Dan
Primack at Axios estimated that KKR, as well as the other private equity
investors in the deal, all profited through the millions in management and
advisory fees that they bled out from Toys “R” Us over more than a decade of
43
ownership. Subsequent litigation by Toys’ creditors revealed that the firms
44
allegedly received $70 million more than even Primack estimated. In other
words, KKR and its private equity peers likely did well for themselves, despite
protests to the contrary.
At the end of the bankruptcy process, Mary Osman, a former Toys “R” Us
employee in Boardman, Ohio, told activists that “I can’t find another job at my
age—no one will hire me. I dedicated my life to Toys ‘R’ Us and today I’m left
45
with nothing.” Debbie Mizen, a former employee in Youngstown, Ohio, said
that “[a]fter devoting 31 years to a company, I have lost not just my job but my
financial stability. My only option is to work very physically demanding jobs
earning far less than what I worked so hard to achieve.” She added, “I deserve
46
better, and so do my coworkers.”

TOYS “R” US is just one part of a larger story of enormous advances by private
equity firms into the retail industry. Retailers are attractive targets. They own
their own property, which can be sold and leased back, and have lots of cash
flow, which can be used to pay debts. Collectively, private equity firms have
become some of the biggest employers in the country and now own retailers that
47
employ over 5.8 million people.
The problem is that private equity firms have, by and large, done a poor job
managing these companies or at least keeping their workers employed and paid.
On average, retail companies acquired by private equity experienced a 12
percent drop in employment, and workers’ wages tended to fall even as
48
productivity rose. This has both hurt companies and exacerbated inequality.
This decline is at odds with the overall trend in retailing. While over a ten-
year period, private equity firms and hedge funds were responsible for an
estimated 1.3 million direct and indirect retail job losses, over the same time, the
49
industry as a whole added 1 million jobs. In 2016 and 2017, over 60 percent of
50
the jobs lost in retail were at companies owned by private equity firms. Fully
70 percent of the retail stores that closed in the first quarter of 2019 were owned
51
by such firms.
The businesses they have controlled—and often bankrupted—are ones you
likely recognize: Aeropostale, American Apparel, Charlotte Russe, Fairway,
Gymboree, Hot Topic, J.Crew, Mervyn’s, Neiman Marcus, Nine West, Payless
ShoeSource, PetCo, PetSmart, RadioShack, Sports Authority, Sears, Staples,
52
Talbots—plus dozens more. And these closures affect those people in America
53
with the least power. A quarter of retail workers live at or near the poverty line.
In some sectors, like retail clothing, the vast majority of employees are women,
and a near majority are people of color. As stores close, these people lose their
jobs. Localities lose their tax base, and businesses continue to concentrate.
Private equity firms will be quick to say that this is, in a sense, inevitable.
With the rise of online shopping and Amazon, the argument goes, traditional
retailers are doomed. Not so. Though Amazon is enormous, it occupies only 10
54
percent of overall retail in America, and hundreds of traditional retailers, like
55
Macy’s, Target, and Walmart, have successfully pivoted to e-commerce.
Moreover, these companies have something that Amazon, with the exception of
its Whole Foods subsidiary and various smaller experiments, does not: physical
stores. The combination of on- and offline retailing is something that can help
traditional sellers meaningfully compete with Amazon.
But to make this move to e-commerce, retailers need money, and lots of it, to
build the infrastructure necessary to sell online. Private equity’s business model
makes it difficult to meet this challenge. Acquired companies are often saddled
with debt, which they must service, on top of management and transaction fees
that they may owe to the private equity firms. These costs give retailers little
money to invest in themselves. “You need so much money to keep the stores
open, so much money to keep the inventory flowing,” Marigay McKee, the
former president of Saks Fifth Avenue, told the New York Times. “Most P.E.
56
firms don’t want to make investment before they start seeing the return.” “To
keep up with everybody’s switch to online purchasing, there really needed to be
some big capital investments and changes made,” Elisabeth de Fontenay, a
professor at the Duke University School of Law who specializes in corporate
finance, added to the Times, “and because these companies were so debt strapped
when acquired by private equity firms, they didn’t have capital to make these big
57
shifts.”
Sometimes the problem was simply that private equity firms understaffed
their stores. For instance, after BC Partners bought PetSmart in 2015, it bragged
on its website that it increased the company’s profitability by “improving
58
corporate efficiency.” But in practice, according to employees, this meant
 59
dramatic layoffs, which left stores dangerously understaffed. As detailed by
Vice News, this had a particularly gruesome effect. With too few employees to
transport animals that died at the store, carcasses of dead animals literally piled
up in PetSmart freezers across the country. One employee shared a photo she
said was filled with two months’ worth of dead animals; another employee said
their store had a freezer with ten months’. A third employee said that, for lack of
time, she would simply throw bodies away. “Sometimes I was doing it weekly
because we didn’t have staff to take a vet trip to properly dispose of them so I
60
was instructed to dispose of them myself,” she told Vice. (A spokesman for
PetSmart denied to Vice that the store’s standard of care had declined, while a
law firm representing the company wrote to the publication that “PetSmart holds
the health and well-being of its associates, customers, and pets as its top
61
priority.”)
It wasn’t just the dead bodies. Employees complained that PetSmart regularly
62
denied veterinary care for sick pets because of the cost. According to PETA,
the company even gave bonuses to managers who kept animal care costs low.
One employee told Vice that “I loved PetSmart, but ever Since BC partners took
63
over, they don’t care about animals or employees or their safety.” Another
former employee added, “I ended up getting diagnosed with PTSD—PTSD tied
to animals. I felt immense guilt. I wouldn’t let myself sleep. I felt selfish going
to bed. But at my job, animals passed away so often, you couldn’t do
64
anything.”
At other times, private equity firms simply hired the wrong people. In 2012,
65
Golden Gate Capital and Blum Capital bought the discount shoe seller Payless.
As described in a detailed profile in the New York Times, through a series of
owners, Payless tumbled through bankruptcy three times in four years. Part of
the problem was that for every one dollar in profit Payless made, more than a
dollar went to its private equity owners and another quarter went to its lenders.
This made the company susceptible to crisis when, for instance, a work
slowdown by longshoremen left Payless’s shoes waiting on boats for several
weeks. But part of the problem was who these owners put in charge. After Alden
Global Capital (which describes itself as a hedge fund but engages in private-
equity-like buyouts) bought Payless out of bankruptcy, it installed as CEO, not
an executive from footwear, fashion, or even retail, but an investment banker:
Martin R. Wade III. Payless middle management felt that Wade and his team
treated them with contempt: “They became convinced that, ‘You guys don’t
know what you’re talking about,’” one former midlevel employee told the
66
Times. And yet, despite their inexperience, the new management
enthusiastically pushed its own ideas, such as a plan to buy millions of World
Cup–themed flip-flops. The problem was that the sandals didn’t arrive until after
the World Cup had ended and even then often with flags of countries like
Mexico and Argentina, where Payless had no stores. Ultimately, the company
had to sell the flip-flops at a deep discount. Another idea was to shift quality
inspections from a dedicated facility to individual factories. As a result, Payless
received many shoes that were defective in various ways: size six shoes labeled
as size three, for example. A former employee said that “missing one shoe can
67
wipe out whatever you think you’re saving.” Ultimately, Payless returned to
bankruptcy and closed all its stores in the United States. (In a statement to the
New York Times, Golden Gate Capital said that “[w]hen we exited Payless, we
left it with a right-sized store footprint and meaningful earnings opportunities for
future owners.”)
At other times, private equity firms forced retail stores into partnerships with
some of its other portfolio companies. For instance, as described in an earlier
chapter, Sycamore Partners repeatedly forced the retailers it owned, like Talbots
and Aeropostale, to work with its chosen wholesale supplier. Such “synergies”
may have benefited Sycamore, which stood to make money whether or not its
retailers actually sold their goods. But deprived of the opportunity to choose the
suppliers that offered the best products at the lowest costs, the retailers lost.
These are examples of private equity wrecking the companies they ran by
underinvesting in the retail stores they owned, by playing matchmaker between
portfolio companies, or through sheer mismanagement. But there is a deeper
truth: in many cases, private equity firms want these companies to fail, or to at
least go bankrupt, in order to get rid of unwanted debts. And here, private
equity’s true advantage—its ability to navigate the bankruptcy code—comes into
view. Bankruptcy is an opaque, enormously complex process and one where
great lawyering (though not necessarily great business acumen) is rewarded.
Private equity firms thrive in this part of the law, and they have certainly been
rewarded.
So it was with Friendly’s, the ice cream and diner chain in the American
Northeast. Friendly (the “s” was added in the 1980s), was started as an ice
creamery in Springfield, Massachusetts, by two brothers at the height of the
68
Great Depression. Curtis and Prestley Blake began their business with a $547
loan from their parents and ran the operation as a family affair: their mother
69
made the syrup that was a key ingredient for their coffee-flavored ice cream.
When they closed their shop each evening, one brother would stay through the
night to make ice cream for the following day, while the other would go home
and sleep. The ice cream maker would retire in the morning for a few hours’ rest,
70
then return at noon to begin serving the afternoon customers.
The Blake brothers’ competition across town sold two scoops of ice cream
71
for ten cents, and so the brothers charged a nickel. On their first night in
business, a line formed out the door that kept them operating until midnight.
They sold 552 cones and made $27.
72
Their work paid off: from their first store they expanded to a second and
then to a third. They began offering classic American food—hamburgers and so
forth—in addition to their ice cream offerings, which eventually included their
73
famous Fribble milkshake. When the United States entered World War II, the
brothers closed their shops, saying that they would reopen “when we win the
74
war” and returned in triumph, adding stores in the years and decades that
followed.
In 1979, the Blake brothers, by then in their sixties, sold Friendly to the
75
Hershey chocolate company. Hershey then sold the business to a wealthy
restaurateur, who in turn took the company public in 1997. But the chain
suffered without its original owners: restaurants became shabby, and menus
76
became stale. One writer observed that the restaurants had “deteriorated to the
point where the physical plant itself is downright depressing and as such
overshadows the food and service” and that there was an “apparent disconnect
between the colorful stream of marketing material pumped out from corporate
77
and the reality of each dated Friendly’s location.”
In 2007, Sun Capital, co-led by Marc Leder, bought Friendly’s for $337
78
million. Unsurprisingly for those familiar with Leder and Sun Capital, they
were unable to bring back the spark that once made Friendly’s so successful. In
fact, they made the situation considerably worse, by piling debt onto Friendly’s
 79
that the chain struggled to service and by executing a sale-leaseback on the
80
chain’s headquarters and 160 of its restaurants.
In 2011, Sun Capital finally pushed the company into bankruptcy. Here, the
private equity firm showed its real skill, for while Sun Capital was unable to run
an ice cream chain, it was able to perform an extraordinary sleight of hand that
allowed the firm to keep control of Friendly’s while sloughing off the company’s
pension obligations onto a quasi-government agency.
To start, Friendly’s successfully petitioned to have its case administered in
the Delaware bankruptcy court, a district whose judges were generally
81
predisposed to rule for companies over their creditors in legal disputes.
Ordinarily, Friendly’s would have filed in Massachusetts—it was headquartered
there—but several of its subsidiaries were chartered in Delaware, which gave the
company a sufficient jurisdictional hook to have the whole case managed in this
preferred venue.
Then, Friendly’s lawyers (Kirkland & Ellis, the same firm that represented
Toys “R” Us) convinced the court to expedite the bankruptcy process through a
82
363 sale, named for the relevant section of the bankruptcy code. Usually, a
restructuring bankruptcy builds toward a “plan of reorganization”: a
comprehensive agreement between the company and its creditors about which
debts will be paid and which will be discarded, as the business returns to
normalcy. A 363 sale abandons this plan of reorganization in favor of a quick
auction of some of the business’s assets or, more aggressively, of the entire
business itself. The winner of the auction typically acquires the assets or
business “free and clear” of their outstanding debts.
The auction also largely removes discretion from the bankruptcy court. One
judge complained that in such auctions, “the judge is reduced to a figurehead”
and “might as well leave his or her signature stamp with the debtor’s counsel and
83
go on vacation.” In other words, by successfully proposing a 363 sale,
Friendly’s lawyers were able to take control of the bankruptcy process and
largely choose who would buy the company’s assets.
And here’s where private equity showed its genius. Sun Capital, through
Friendly’s, proposed to sell the business to… itself. One of Sun Capital’s
subsidiaries was Friendly’s owner. But another Sun Capital subsidiary was its
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largest lender and had loaned Friendly’s $152 million, which had blossomed to
 85
$268 million with interest. Another affiliate provided $71 million to keep
Friendly’s in business through bankruptcy (what’s known as debtor-in-
86
possession financing). Sun Capital proposed to reacquire Friendly’s by
forgiving these debts, a tactic known as credit bidding.
The 363 sale allowed for other companies to bid on Friendly’s, but most
everyone else was at a huge disadvantage. Sun Capital was proposing to buy
Friendly’s by forgiving debt—debt that was unlikely to be paid in full—while
other potential buyers would need to pay actual money for the company.
Moreover, Sun Capital was allowed to bid both the principal and interest for the
company, meaning that it paid just $152 million for a possible $268 million bid.
Nobody else could hope to pay so little for so much.
87
And nobody did. The auction for Sun Capital, which was to be held at
88 89
Kirkland & Ellis’s New York office, was canceled for lack of interest. Sun
90
Capital’s affiliate was able to acquire Friendly’s without so much as a fight.
Reading the court documents, there is an absurd sense in which Friendly’s—
and Sun Capital—talk about themselves in the third person, as if they were
completely unrelated. To take one example of many, in an early filing, Friendly’s
lawyers said that a “bidder” already expressed interest in buying Friendly’s, an
encouraging sign and one that might incline the court toward approving
Friendly’s requested auction process. But the lawyers added only in a footnote
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that the bidder was an affiliate of Friendly’s existing owner, Sun Capital. This
wasn’t necessarily dishonest, but the effect was to make it seem like Friendly’s
contemplated a genuine sale to a third party, rather than a reshuffling of Sun
Capital’s ledgers.
But why go through this whole process at all? Why would Friendly’s declare
bankruptcy, just to be sold from one Sun Capital fund to another? The answer
was simple: pensions. At the time of bankruptcy, Friendly’s had $115 million in
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pension liabilities. By selling Friendly’s to one of its affiliates, Sun Capital was
able to reacquire its own company free and clear of those liabilities. Instead, they
were transferred to the Pension Benefit Guaranty Corporation. The PBGC was
chartered by Congress to rescue underfunded pension plans and paid for itself in
93
part through insurance premiums that healthy pension plans paid to it. But it
was always meant as the destination of last resort, not as a convenient sucker for
strategic bankruptcy reorganizations.
 And so the PBGC objected to Friendly’s plan, correctly observing that “each
and every party to this bankruptcy… is an affiliate of Sun Capital Partners,
94
Inc.” The PBGC argued that Sun Capital’s loans to Friendly’s should probably
be treated as equity—that is, further investments by the owner of the company—
rather than as debt. This mattered because in bankruptcy a party can’t credit bid
equity, and if the court granted the motion, Sun Capital would have to wager
cash for the company like most everyone else. The PBGC also requested
procedures that would encourage the winning bidder to assume the obligations
95
of the company’s pension plan. But the court denied both these requests.
The PBGC didn’t bother to make the more aggressive argument that the
entire 363 sale process was invalid here. Such sales require good faith on the
part of the buyer and seller, which can be undermined by collusion between the
96
two. It seems unlikely that the court would have accepted this aggressive
position, given that it rejected the PBGC’s more modest argument that Sun
Capital’s debt should be treated as equity. But it could have been worthwhile to
ask for discovery on whether—and to what extent—Sun Capital’s various
affiliates communicated with each other and with their parent company before,
during, and after the bankruptcy process.
Regardless, Sun Capital was able to reacquire Friendly’s free and clear of its
pension obligations, without spending anything more than the money it lent its
own portfolio company. Pensioners were the obvious losers in this process, who
risked having their payments cut (the PBGC observed over the previous decade
that it had been forced to cut $70 million in benefits to employees after 363 sales
97
by debtors owned or controlled by private equity firms). Pension plans for
more responsible companies lost too: they would have to pay the costs, through
increased premiums to the PBGC, that Sun Capital was unwilling to.
Many of Friendly’s existing employees lost as well. Sixty-three restaurants
98
closed as part of the bankruptcy process, and the Albany Times Union reported
that at the Friendly’s in Latham, New York, employees hugged at the end of their
final shift. While a company spokesperson said that Friendly’s would hire as
many workers as possible, one employee questioned whether there would be
enough open positions to hire the more than twenty coworkers at the Latham
99
shop alone.
Friendly’s itself was also a loser. In 2016, Sun Capital sold the company’s ice
cream manufacturing unit, along with its trademark, to Dean Foods for $155
 100
million. But the core restaurant business never improved. Over the decade, the
company lost nearly 70 percent of its locations, which went from over 500 to
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just 130. Finally, in 2020, Friendly’s fell into bankruptcy again. This time, an
affiliate of a restaurant franchising company agreed to purchase the business for
102
just $2 million.
The final losers were the brothers who started Friendly’s, Curtis and Prestley
Blake. Curtis died at age 102 in 2019; Prestley at 106 in 2021. Both men—the
men who closed their business during World War II until “we win the war”—
lived long enough to see their creation collapse at the hands of Sun Capital. But
Sun Capital’s cofounder Marc Leder demonstrated no comparable patriotism or
seriousness of purpose. When asked about Friendly’s collapse and his arguable
manipulation of the bankruptcy law, he said simply, “We don’t make the
103
rules.”

WHAT SUN CAPITAL accomplished was far from unique. Over fifty companies
owned by private equity firms have pushed their pension plans onto the
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PBGC. But the result in Friendly’s seems almost farcical: why would a court
allow a private equity firm to do-si-do a company from one affiliate to another,
shaking off pension obligations in the process? Some of it may simply be that
private equity firms remain ahead of regulators and courts. Josh Gotbaum, a
former head of the PBGC, complained that “in many cases financial institutions
and financial markets have outstripped both the law’s ability to comprehend
them and bankruptcy courts’ ability to preserve fair treatment of other
105
constituencies in the face of them.”
But much of this may also have to do with private equity firms’ ability to
choose their venue. In 1979, Congress revised the bankruptcy code to give
106
companies wide latitude to choose where to declare bankruptcy. Several
jurisdictions became the courts of choice for distressed companies and the
lawyers who represented them: initially New York and Delaware (where the
Friendly’s case was filed) but increasingly White Plains, Houston, and the
Eastern District of Virginia (where the Toys “R” Us case was filed). Today, more
than 90 percent of the country’s big bankruptcy cases happen in these five
 107
districts. In these jurisdictions, according to UCLA law professor Lynn M.
LoPucki, courts showed solicitude toward large corporations, their financiers,
108
and their lawyers over ordinary lenders. Preferred courts let attorneys charge
higher fees, relaxed conflict of interest standards, and indemnified lawyers and
109
financial advisers from wrongdoing. According to LoPucki, the jobs of
executives, “including those who led their companies into financial disaster,”
were secured, and executives were even allowed bonuses in bankruptcy, on the
110
theory that their skills were never more necessary. This solicitude ultimately
hurt creditors and the bankrupt companies themselves. Firms reorganized in
Delaware failed significantly more often than firms organized elsewhere,
suggesting that lax standards led to reorganization plans that were unrealistic or
impossible to achieve.
A body of academic literature has explored why courts competed like this.
Perhaps judges in these favored districts tried to bring in business to the local
bankruptcy bar by developing the law to favor the executives and lawyers who
111
chose where to file. Perhaps they desired the prestige and challenge that came
with handling the biggest cases with the most talented litigators. Or perhaps
more anodyne personal preferences in the law explain their rulings. Regardless
of the specific motivation, it’s clear that a handful of courts are predisposed to
the sorts of arguments that firms like Sun Capital make. And it’s also clear that
companies like Sun Capital have the ability to choose their court in a way that,
say, criminal defendants cannot.
The accommodation afforded companies filing for bankruptcy can reach
almost absurd proportions. The department store Belk, which was purchased by
the private equity firm Sycamore Partners, substantially completed its
112
bankruptcy—a process that could ordinarily take months —in a single day.
Belk was based in North Carolina and incorporated in Delaware but filed in
Houston by establishing a subsidiary corporation there, forcing the subsidiary
113
into insolvency and bringing the parent business into bankruptcy with it.
Belk’s attorneys—once again, the law firm of Kirkland & Ellis—filed a
reorganization plan the evening of February 23, 2021. The court approved the
plan at 10:08 a.m. the next day, apparently accepting Belk’s argument that it had
already negotiated a settlement with its creditors.
 With an almost literal rubber stamp over the agreement, the court had no real
way to confirm this assertion, or inquire whether, as may well have been the
case, Belk strong-armed its creditors into agreeing to a plan they didn’t know
they could contest. Nor was it able to interrogate the decision by Belk’s board to
allow Sycamore to remain in control of the company (likely it was because the
114
board itself was chosen by Sycamore). Nor did the court control how much in
fees Kirkland extracted through the process: as Professor Lynn LoPucki
explained, the court file approving the bankruptcy had no information about how
much work Kirkland did in preparing the bankruptcy petition. In so doing,
without violating any law, Kirkland essentially bypassed the system for court
approval of bankruptcy attorney fees.
The Office of the US Trustee, the branch of the Department of Justice
charged with ensuring the fair application of the bankruptcy code, objected,
115
arguing that the speed of the whole endeavor violated due process. The court
entered the judgment anyway. It wasn’t corruption, but it wasn’t what Congress
intended with the bankruptcy code, either, and it gave the process—and Belk’s
creditors—short shrift.
This drift in the bankruptcy code helps to explain why so many of the retail
companies that private equity firms bought went bankrupt, namely, that doing so
was a good deal for private equity. It wasn’t exclusively, or even primarily, that
Amazon destroyed their businesses. It was that private equity firms loaded these
companies with debt, made the pivot to online commerce impossible, then found
ways to avoid their creditors through the opaque and shifting bankruptcy
process. And this drift helps to explain the fundamental mystery: how private
equity firms continue to expand and profit in retail, even as the companies they
buy wither and die.

COMPANIES’ PREFERENCE FOR certain courts, and those courts’ preference for
certain companies, means that employees must increasingly turn to tools outside
of the bankruptcy process to get fair compensation. And that’s what happened
with Ann Marie Reinhart and Toys “R” Us. As described in the introduction,
Reinhart began working as a part-time cashier in 1988 and joined full-time as a
116
supervisor after both her children entered school. With it, she got health
insurance. “Back then, Toys ‘R’ Us was very good to all of us,” Reinhart told the
117
Progressive. “It let me be the mom that I wanted to be.”
118
Reinhart ultimately worked at the company for twenty-nine years. She
stayed with the company through the frantic holiday rushes. “Almost the entire
119
month of December, I didn’t see my husband,” she said. “He got up early for
work. I would come home and he would be sleeping. Then, he would leave for
120
work and I would be sleeping.” She stayed after an angry customer threw a
Green Power Ranger action figure at her head (she still had a scar). She stayed
when she moved her whole family from Long Island to Durham, North Carolina,
transferring to a new store. But when Toys “R” Us went under, she did too.
After she was laid off, Reinhart became active in the Dead Giraffe Society, a
Facebook group of former Toys “R” Us employees named for the company’s
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mascot, Geoffrey the Giraffe. With the assistance of the organizing group
United for Respect, Reinhart and others began to advocate for better treatment of
the company’s former workers. They met with members of Congress, who, at
their urging, wrote to Bain, KKR, and Vornado and demanded to know why their
122
employees hadn’t been paid severance. They convinced Senators Cory
Booker and Robert Menendez, along with Congressman Bill Pascrell, to protest
123
with them. They held a march through Manhattan, carrying a coffin for the
124
mascot Geoffrey, and rallied outside the penthouse home of the CEO, David
125
Brandon.
But most importantly, they started meeting with the private equity firms’
126
investors. Across a dozen states, they met with fourteen pension funds, and at
their urging the Minnesota State Board of Investment suspended investments in
127
KKR until it investigated the Toys “R” Us employees’ claims. More than any
statement from a member of Congress or bad publicity from a protest, it was this
threat of the loss of money that forced private equity firms to change.
In November 2018, KKR and Bain announced a $20 million settlement fund
128
for former employees. This was nothing compared to the $250 million that the
129
private equity firms that bought Toys received in advisory fees alone.
Payments to the employees ranged from a few hundred dollars to $12,000 per
 130
worker. The settlement wasn’t enough: worker advocates said that former
131
employees were owed more than three times that amount. But KKR and Bain
weren’t legally required to give more, and the settlement occurred outside the
bankruptcy process. In fact, it was ten times the size of what Reinhart and others
were able to get through litigation. In other words, though the settlement wasn’t
enough in employees’ eyes, it was so much more than what they could have
expected through bankruptcy. It showed that outside advocacy and agitation—
quite simply, embarrassing companies into action and threatening their access to
pension fund money—could serve as an interim substitute, however insufficient
and incomplete, for the bankruptcy system.
The announcement of the severance fund “rejuvenated me,” Reinhart said.
“It’s a win for us, and it’s a win for any other retail worker that this happens to in
132
the future.” Though Reinhart and her fellow activists didn’t get what the Toys
“R” Us employees deserved, they got the employees more than they could have
expected and more than they could through litigation alone. In this way, Reinhart
showed a path for how workers might fight for themselves—through protest and
pressure on investors—as private equity firms continue their march across the
retail industry.
Reinhart began to organize more broadly. She trained former employees at
133
Sears, Payless, and Gymboree to fight for their own severance payments. She
advocated in Congress for the Stop Wall Street Looting Act, which would curtail
some of private equity’s worst excesses. And she campaigned for a fifteen-dollar
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minimum wage.
Reinhart lived barely long enough to see her own accomplishment. She
135
struggled to find work with health insurance after she was laid off and for a
time was forced to choose between her asthma medication and her husband’s
136
diabetes medication. Eventually, she went to work at the Belk department
store—ironically, the same store purchased by private equity and put through
137
bankruptcy in a single day.
138
Reinhart died in early 2021 from COVID-19. But before her death, about
139
her organizing, Reinhart said, “Nothing but good has come out of it for me.”
In an obituary in the New York Times, Alison Paolillo, who worked with
 140
Reinhart, said that “[s]he was our voice.… She fought for us.” United for
141
Respect called her “a working class hero of our time.”
 CHAPTER FOUR

DEADLY CARE
Private Equity in Nursing Homes

Perhaps more than any other person, David Rubenstein illustrates private
equity’s entwining of money and power, and how the latter can legitimize how
the former is made. Rubenstein, the cofounder of the Carlyle Group, is now a
billionaire many times over. But he came from modest means. His father worked
for the postal service while his mother stayed at home, and he grew up a
studious, only child, a Jewish kid in Baltimore at a time when the city was
1
rigidly divided along religious and ethnic lines. Though he was a shy boy,
Rubenstein had a knack for making powerful connections. In high school, he
became friends with the star quarterback and found a mentor in a Baltimore
2
judge who ran a boys club. After law school he worked to become a protégé of
3
former Kennedy adviser Ted Sorensen and later worked as legal counsel for
Indiana senator Birch Bayh, who was running in the Democratic primary for
4
president at the time. When Bayh lost, Rubenstein managed to jump over to the
campaign of the man who won the nomination, Jimmy Carter, and became close
5
with one of Carter’s chief advisers, Stuart Eizenstat. Thanks to his connections,
when Carter won, he was appointed deputy domestic policy adviser to the
president. He was twenty-seven.
At the White House, Rubenstein had an almost monk-like aura. Quiet,
6
serious, reluctant to take credit for himself, he worked harder than anyone. He
ate dinner from the vending machines and planned meetings with union leaders,
7
helped to oversee the Democratic party platform, and shaped the federal budget.
A picture in the National Archives shows Rubenstein outside the White House,
wearing a dark suit with wide lapels. His thick black hair swoops down over his
forehead, and he looks past the camera with an awkward smile mixed with
8
concern.
Rubenstein looked forward to a promising future at the White House. But, for
him, tragedy struck: in 1980, Carter lost reelection in a landslide. Rubenstein
was out of a job, a Carter insider in Washington at a time when no one had much
use for such insiders. He struggled to find work—he eventually found a job with
9
a moderately prestigious law firm —and settled into the lifestyle of that common
figure in Washington: the former government official, peddling his wares in
private practice.
But Rubenstein’s quiet, studious persona hid a deeper, burning ambition. He
found himself unsuited to the practice of law and yearned for something more
rewarding, in every sense of the word. In 1987, he and four acquaintances joined
10
together to form an investment firm. They named themselves the Carlyle
11
Group, after the white-marbled New York City hotel. At first, they didn’t know
what their business would be: their initial success was in selling the tax losses of
Native Alaskans to corporations seeking write-offs, the benefit of a government
12
loophole that Congress quickly closed. But in 1989, Rubenstein discovered his
core idea when he hired Frank Carlucci, the former secretary of defense to
13
Ronald Reagan, to serve as the firm’s vice chairman. The diminutive, angular
Carlucci exuded power—he had previously served as national security adviser,
deputy secretary of defense, and deputy director of the CIA—and he brought to
the firm a vast network of connections that Rubenstein and his colleagues
lacked.
One of their first victories with Carlucci was a deal to help Prince Al-Waleed
bin Talal of Saudi Arabia invest $500 million in Citicorp, a coup for Carlyle that
stunned the other, vastly larger and more established institutions of high
14
finance. In another deal, Carlyle bought the airline food service company
Caterair and, at the suggestion of a Republican political operative, brought
George W. Bush, the then flailing son of the current president, George H. W.
15
Bush, on its board. Caterair would later collapse, but the investment proved a
successful one for Carlyle: the elder Bush, apparently convinced by his former
16
secretary of state Jim Baker, later agreed to travel the world on Carlyle’s behalf
17
as a paid speaker.
 What Rubenstein discovered in Carlucci and those who followed was an
alchemy of money and power: by hiring well-connected former government
officials, he could find new deals and new money, as investors wanted to spend
time with these people and learn what they might not from the Wall Street
Journal or New York Times. Over the years, Carlyle built a stable of
extraordinarily powerful figures to work on its behalf: not only former president
George H. W. Bush but also former British prime minister John Major, former
secretary of state James Baker, former White House budget chief Dick Darman,
former SEC chairman Arthur Levitt, and former FCC chairmen William
18
Kennard and Julius Genachowski, among others.
With its connections, Carlyle prospered. Its assets under management—the
19
amount of investor money it controlled—rose from $5 million in 1987 to $14
20 21
billion in 2003 and then to an astounding $376 billion in 2022. The company,
alone or with others, bought and sold Hertz, Dunkin’ Brands, Getty Images, and
22
the consulting firm Booz Allen Hamilton, among many others. And
Rubenstein, the quiet scholar, became rich. He bought the home next to his own
in Bethesda and converted it into a guesthouse. He built a ten-thousand-square-
foot chalet in Colorado and a vacation home big enough for thirty people in
Nantucket (Presidents Biden, Carter, and George H. W. Bush all, at various
23
times, stayed overnight as his guests). By 2021, he was worth over $4
24
billion.
As Rubenstein grew in wealth and stature, he modeled himself as something
of a “thinking man’s” titan of industry. While other billionaires shed their power
suits and, in California, donned jeans and T-shirts, Rubenstein continued to wear
pinstripe suits, Hermes ties, and what a reporter described as a “substantial
25
watch.” He possessed an exceedingly dry, self-deprecating sense of humor and
a level of self-awareness perhaps unexpected from a billionaire (regarding
private equity, he says, “I like to say it’s the highest calling of mankind, but
26 27
nobody agrees” ). He read several books a week and began hosting an
28
interview program on Bloomberg TV and a podcast with the New York
Historical Society.
As he grew older, Rubenstein became a philanthropist, devoting special
attention to patriotic causes. He bought original copies of the Declaration of
Independence and the Emancipation Proclamation and lent them to various
29
museums. He donated millions to repair the Washington Monument and
30
millions more to refurbish Monticello. He became chairman or trustee of the
Kennedy Center, the National Gallery of Art, and the Library of Congress.
He also developed into a fixture in Washington. Photos document his upward
31
trajectory: there he is shaking hands with Paul Ryan. There he is, in a tuxedo,
32
conferring with Dr. Anthony Fauci. There he is standing for a portrait with
33
Sally Field, Mike Pompeo, and, strangely, Big Bird at a Kennedy Center event.
His hair is white now, but he still looks past the camera with that awkward smile
of concern, just as he did as a young Carter staffer forty years before.
All this socializing had a purpose. As previously explained, private equity
firms need lots of money to buy companies. Only a small portion of that money
comes from the firms themselves; a much larger portion comes from investors
who are, figuratively, along for the ride. While others at the firm actually ran the
business, it was Rubenstein’s job to bring that investment money in, which is
what he did by meeting with the very rich, charming them, gossiping with them,
and going around the world to meet them: Rubenstein estimated that he traveled
34
three hundred days a year. By 2017, his last year as co-CEO—he now serves
as cochairman of the board—Carlyle had $195 billion in assets under
35
management, raised from investors like the ones Rubenstein feted. Rubenstein,
with all his networking, cultivated these investors and brought in the money
Carlyle needed to buy companies.
In a deeper sense, all of Rubenstein’s ventures fed into a single, larger
project: creating an aura of respectability for himself and, even more
importantly, for Carlyle. With his now vast network, Rubenstein and the former
government officials he employed assured investors that the money they spent
with Carlyle was safe. And his public philanthropy sent a message that the
money they gave him, if far from charitable, was at least estimable. If a single
firm employed so many former leaders in government, if the leader of the firm
spent so much of his time giving his money away, surely an investment with
them was money well spent.
But how exactly were Carlyle—and Rubenstein—making their money? The
firm made hundreds of deals in a range of industries, but it is worth considering
just one: its acquisition of the nursing home chain HCR ManorCare. The deal is
worth considering because it shows many of the tactics—sale leasebacks and
transaction fees, leverage and layoffs—that Carlyle often used to make money at
the expense of its portfolio companies. And it is worth considering because it
shows how so many of those people with whom Rubenstein met and who gave
his firm money were, knowingly or not, subsidizing what many viewed as the
plunder of the nursing home industry.

NURSING HOMES HAVE a fraught history. They are the descendants of English
almshouses: homes administered by local governments for the very sick, the
very poor, and the very old. Because almshouses took on those people whom
family members would not or could not care for, their operations were,
unsurprisingly, generally shabby. In time, “old age homes” developed as an
alternative in America. Often run by private charities, rather than public
governments, they tended to care for what were then called the “worthy poor”:
36
old people as opposed to, say, drunks. The Social Security Act of 1935
hastened the growth of this private industry by withholding direct payments to
people living in public almshouses, so that these latter facilities could not take
residents’ money. The move decimated the sad almshouse industry, but it had
another, perhaps unintended effect: it created a huge pool of government funds
that could be spent on care for the elderly, one that new, for-profit companies
were eager to access. The Medicare and Medicaid Acts of 1965 expanded this
opportunity when they offered payments directly to institutions willing to care
for the sick and old.
This is how the nursing home industry developed: a jumble of nonprofit and
for-profit institutions vying for the elderly and the government money that
accompanied them. The business went through cycles of reform and regression,
as exposés revealed the squalid conditions of various facilities, which were
alternately shut down, reformed, or forgotten. In the 1990s, cheap money led to
industry consolidation, as individual institutions were rolled up into larger
37
chains. Today in America, there are about fifteen thousand nursing homes who
38
together house about 1.3 million residents.
This is where Rubenstein’s Carlyle Group stepped in. In 2007, Carlyle
bought HCR ManorCare, then the second-largest nursing home chain in
39
America. Carlyle entered the industry at an auspicious time. The country was
aging, and the need for nursing homes was growing. Research in one state found
40
that facilities tended to have between 19 and 22 percent profit margins.
Moreover, ManorCare itself was a sensible investment. The company had
41
operated since the late 1950s and for much of its history ran better-than-
average homes marketed to people who did not need to rely on Medicare or
42
Medicaid for payment. “They’re the cream of the crop in the industry,” one
43
analyst told the Washington Post midway through the company’s history. The
company was profitable the year before Carlyle bought it, and when Carlyle
made the acquisition, an analyst explained that “the basic fundamentals… [of
44
ManorCare] are very good.” Given this—the strength of the industry and the
strength of ManorCare—what happened next was all the more tragic.
As described in the introduction of this book, most of the $6.1 billion that
Carlyle paid for ManorCare—$4.8 billion—was borrowed, while the firm and its
investors put up the remainder. Carlyle’s first major move, in 2010, was to sell
45
ManorCare’s real estate to another investment firm for over $6 billion.
ManorCare then rented back the facilities that it once owned. This was the sale-
leaseback tactic, described in Chapter 1, that is a hallmark of so many private
equity deals. As Peter Whoriskey and Dan Keating of the Washington Post later
recounted, by selling ManorCare’s real estate, Carlyle was able to recover the
46
money that it had put into the deal. In other words, with this sale alone, Carlyle
had basically broken even and still owned an enormous nursing home chain.
But selling ManorCare’s property put a terrible strain on the business.
ManorCare needed real estate to operate, and with the sale, ManorCare was
obligated to pay nearly half a billion dollars a year in rent to occupy the
47
buildings it was already using. On top of this, under the terms of the deal,
ManorCare was still responsible for paying the buildings’ insurance, upkeep, and
property taxes. This meant that ManorCare now had all the obligations of
owning its properties, with all the costs of renting them.
Carlyle extracted money from ManorCare in other ways too, including a $61
48
million transaction fee for buying the business itself. It also took about $27
million over nine years in advisory fees: fees that ManorCare paid for the
privilege of being owned by Carlyle. Like the sale-leaseback, these too are
common tactics of the private equity industry writ large.
 Unsurprisingly, the business suffered. After the sale of its property,
ManorCare made hundreds of layoffs. It instituted cost-cutting programs, and
some of its nursing homes were unable to afford their rent. Health code
violations rose 26 percent between 2013 and 2017, three times faster than at all
other nursing homes.
Despite ManorCare’s cost cutting and the real estate sales that Carlyle
49
directed, by 2018, the company was over $7 billion in debt. Like most private
equity deals, this was debt that ManorCare, not Carlyle, owed, and as mentioned,
Carlyle itself had quickly recouped its own investment in the firm. And so,
without money, the company filed for bankruptcy in 2018 and was ultimately
50
sold to a nonprofit. The speed of this destruction was almost impressive:
ManorCare had operated since the 1950s, and Carlyle drove it into bankruptcy in
barely a decade. But despite the pace of this gutting, Carlyle itself profited from
the project. It made back the money it invested through the sale-leaseback, plus
millions more through transaction and advisory fees. Which is to say that the
firm made money despite the fact that—or perhaps because—it devastated the
business it owned. And it suggests that Carlyle’s investors—the men and women
whom David Rubenstein charmed with his stable of former government officials
—were funding ventures far more destructive and distasteful than they perhaps
even realized.

MANORCARE IS NOT isolated. Rather, it is illustrative of private equity’s larger role

in the nursing home industry. Between 2004 and 2008, four of the five largest
nursing homes—Genesis HealthCare, Golden Living, Sava Senior Care, and
51
ManorCare—were acquired by private equity firms. All of them executed sale-
leaseback agreements like ManorCare. All of them faced similar allegations of
52
mismanagement and abuse. And amazingly, all of them were charged by the
53
Department of Justice for fraud. (Genesis, Golden Living, and Sava paid
settlements ranging from $613,000 to $53 million without admitting
wrongdoing, while the Department of Justice dropped its prosecution of
54
ManorCare. )
The appeal of nursing homes to these firms was obvious. Nursing homes had
lots of cash flow, often coming from reliable government sources like Medicare.
Additionally, nursing homes often had physical assets—buildings and so forth—
that could be sold for profit. The problem was that, as numerous studies
demonstrated, private equity firms ignored the fundamental tenets of work in
nursing homes. In general, nursing homes offer better care the more time
55
caregivers spend with residents and the better trained those caregivers are.
Private equity firms disregarded both these basic elements of care. One study
found that private equity owners, on average, cut the number of staffing hours at
56
nursing homes. This made it more likely that elderly people, left unattended,
could injure themselves, soil themselves, or develop bedsores: all issues that,
unaddressed, could be deadly. Another study found that private equity firms
shifted to lower-skilled workers, relying less on registered nurses, who must
have associate’s or bachelor’s degrees, and more on licensed practical nurses,
57
who need only a simpler, one-year certificate. Perhaps as a result of both
trends, private equity–owned facilities tended, more than others, to rely on
58
antipsychotic drugs to control their residents. Such drugs can make patients
more docile, acting as a crutch when homes are understaffed. But they can also
increase older users’ risk of death and are thus generally disfavored.
The consequences of these actions in aggregate are almost difficult to
comprehend. In 2021, researchers at the Universities of Chicago and
Pennsylvania, as well as New York University, compared the short-term
mortality of residents in homes owned by private equity firms with that of
residents in other facilities. What they found was astounding: private equity
ownership was associated with over twenty thousand premature deaths in
59
nursing homes over twelve years. Such a figure may be hard to absorb, but it is
important to remember that each of those twenty thousand people had, at one
point, family, friends, people whom they loved and who loved them in turn.
Moreover, residents in private equity–owned nursing homes particularly
suffered during the pandemic. A study of facilities in one state found that
residents and staff in such homes were more likely to get COVID-19 and were
more likely to die from it than were those in other for-profit, nonprofit, and
60
public facilities in the state. Around the country, private equity–owned homes
frequently experienced the largest outbreaks in their cities or states, many of
which were particularly acute: at one facility, for instance, nearly three-quarters
61
of patients were infected and eighteen died.
 Outcomes were bad for residents but also for employees. Already, nursing
work is difficult, in part because so many patients need help being lifted or
62
moved, and dangerous, because some patients may be violent. In fact,
registered nurses and nursing assistants have among the most musculoskeletal
injuries of any profession, and nursing assistants in particular are injured more
63
often than are police, correctional officers, and even construction workers. But
with cost cutting, private equity firms exacerbated caregivers’ already difficult
work. In addition to increased risks for COVID, Milly Silva, a union
representative, told Congress that nursing home staff were forced to pay for
64
shampoo and soap for residents when their facilities would not do so. One
caregiver reportedly complained that her facility stopped training its staff as soon
as a private equity firm bought it; another “would break down crying” because
there were just two nursing staff to care for fifty residents during the height of
65
the pandemic. No wonder then that there were, according to Silva,
“astronomical annual turnover rates” in the industry overall: 128 percent
66
nationally and over 300 percent in some institutions.
Finally, despite the harm to residents and workers, private equity–owned
homes actually cost more, not less, for patients and taxpayers. The same
academics who estimated twenty thousand premature deaths found that fees,
lease payments, and interest payments by nursing homes all increased after being
67
bought by private equity firms, while cash on hand declined. Meanwhile, the
amount billed to patients increased by 11 percent. The vast majority—90 percent
68
—of this was paid by taxpayers through Medicare.

GIVEN THESE OBVIOUS and deadly failings, one might expect that private equity
firms would taper their investment in nursing homes for fear of regulation or
litigation. But this wasn’t the case. In fact, in 2020, when COVID-19 outbreaks
and deaths in nursing homes were the stuff of national headlines, firms spent
over $1.5 billion buying facilities, an increase of more than $1 billion from the
69
year before.
Why would private equity firms rush into such a deadly business, a business
that firms had a demonstrated history of making worse? Likely in part because
they knew that the government was largely unwilling or unable to police nursing
homes’—and their private equity owners’—worst abuses. The industry is
regulated at both the federal and state level: the federal government sets
minimum standards of care, while states add their own requirements and
typically inspect nursing homes to ensure, in theory at least, that their facilities
70
meet those requirements. Through these inspections, state surveyors issue
“deficiencies”—notices of failures to follow federal or state guidelines—which
are categorized as “harm” or “no harm” depending on whether a resident has
been hurt by the violation. With enough harm deficiencies, a nursing home can
71
be fined and, if repeated, shut down.
The problem is that state regulators often refuse to say that violations harm
72
residents, even when those harms are obvious. This is bad for residents of all
nursing homes but is particularly dangerous for those who live in facilities
owned by private equity firms, where such harm is much more likely to occur.
For instance, Illinois inspectors said that no one was harmed when inadequate
73
housekeeping led to a maggot infestation on a resident’s scrotum. Inspectors in
74
Wisconsin said that no harm resulted when a resident broke a femur. And
inspectors in California said that a resident’s “avoidable” accident, which
75
resulted in “screaming, pain, and [a] broken shinbone,” caused no harm.
Why are regulators so scared to call these incidents of harm what they are?
At a narrow level, nursing homes tend to have many chances to challenge harm
76
deficiency designations, which may discourage inspectors from bothering to
issue designations that will be litigated in court. As one inspector told the New
York Times, “I feel sometimes the things I cite don’t mean anything because it
gets tossed out at the state level.… Sometimes it makes you wonder why we spin
77
our wheels on a problem.” More importantly, when a nursing home does
receive sufficient harm deficiencies and is shut down, it may fall into the hands
of the state government, which may be charged with managing the facility. This
is an expensive and difficult responsibility, which the state may be ill equipped
78
to handle, and as such, there is a strong incentive for surveyors to treat nursing
homes lightly.
At a more general level, inspectors may hold back their harshest judgments
because nursing homes are a force in government. The industry’s primary
advocacy organization has given over $18 million in federal contributions and
spent over $52 million lobbying, including $5 million in the 2022 election cycle
79
alone. Over the years, large, private equity–owned chains like Genesis,
ManorCare, and Golden Living spent millions more on contributions and
80
lobbying. “The nursing home lobby is so well funded,” Charlene Harrington, a
professor at the University of California San Francisco School of Nursing and
expert on nursing homes, told the Intercept, “and it’s so hard to make changes
81
because of these political contributions.” This power is felt in the conciliatory
approach that state regulators have taken toward the industry. Inspectors in
Pennsylvania, for instance, were instructed to be “kinder and gentler” to nursing
homes, while those in Arkansas said that they were discouraged from issuing
82
severe citations. Inspectors in Oklahoma even referred to nursing homes,
83
rather than the patients they serve, as their “clients.” “They’re just not that
84
interested in regulating,” Harrington said in another interview. “And they don’t
85
want to pick a fight with these big companies.” This aversion to action affects
all nursing home residents, but it is particularly concerning for residents of
private equity–owned homes, where there are far greater mortal dangers.
Given this general reluctance by regulators to regulate, the task of protecting
residents has often fallen to plaintiffs’ lawyers like Ernie Tosh. Tosh is a big
man, with a beard and straight, gray hair that goes down to his shoulders. He
listens to Swedish death metal in his leisure time, and in his low, soft voice, he
teases and praises his colleagues and brings detail and profanity to his
commentary on the industry. With some technical skills, Tosh built a database of
nursing home companies on which many other lawyers relied. But more than his
spreadsheets, people value his personality and his easy, warm nature. “Ernie’s
superpower is bringing together people who need to know each other,” one
86
lawyer, Nicole Snapp-Holloway, said. “If you don’t like Ernie, something’s
87
wrong with you.”
Tosh had been suing nursing homes for years, representing residents who’d
been wronged, as well as their families, and who hoped to recover some
damages for the harm that they experienced. In theory, the money that people
like Tosh collected from homes would make it rational for facility owners to
provide decent care. But, unsurprisingly, nursing homes made it exceedingly
 88
hard to get such money. “We can’t get jack shit in a civil case,” Tosh said.
“We’ve been actively litigating nursing home cases for 25 years, and the quality
89
of care has gotten worse. Clearly we are not having an impact.”
Why was this so? For one thing, nursing homes—including private equity–
90
owned homes—conceal their assets through shell and related companies. Like
matryoshka nesting dolls, nursing home chains have built layers of companies on
top of individual nursing homes, obscuring their ultimate owners and making it
harder for plaintiffs to collect money. They also outsource their services to
91
related companies that their parent companies also control. Thus, a nursing
home might have one company for its real estate, another for its staffing, another
for its equipment, and so on. On paper, it would appear that the nursing home
itself is cash strapped, paying most of its money to these related companies. But
ultimately, all of the different companies would be controlled by the same parent
company, which reaps the combined profits as if running the nursing home
directly. Academics found that the use of these shell companies exploded in just
92
a few years. Nearly three-fourths of nursing homes in the United States now
93
use “related parties” to take money from their core nursing homes. “[M]oney is
siphoned out to these related parties,” Ernie Tosh told the New York Times. “The
94
cash flow gets really obscured through the related party transactions.”
Unsurprisingly, facilities that use related companies have, on average, lower
staffing, more complaints, and higher rates of patient injuries than those that do
95
not.
These tactics obscure the assets of nursing homes and make them look poorer
than they really are. By doing so, nursing homes make it harder for plaintiffs to
find those assets and harder for them to win those assets in litigation. The
industry has even said as much. At a 2012 conference for nursing home
executives, a presentation slide titled “Pros of Complex Corporate Structure”
stated that “many plaintiffs’ attorneys will never conduct corporate structure
96
discovery because it’s too expensive and time consuming.” “There’s a game
that’s played, that if you don’t sue the right entities, your family is out of luck,”
one plaintiffs’ lawyer told the Naples Daily News. “You have to then start trying
97
to chase the money.”
 These tactics to hide assets have been extraordinarily successful. For
instance, after plaintiffs in one suit obtained a $110 million verdict against two
private equity–owned nursing homes in Florida, the nursing homes simply
shifted their liabilities to a related company that had no assets, while creating a
98
solvent nursing home chain that was nominally protected from judgment. The
result was that the plaintiffs had a judgment to collect money from a company
that, on paper at least, had none. Despite the seemingly obvious game to avoid
paying, more than a decade after the case began, the litigation remains
99
ongoing.
Nursing homes also get help from the government to stop plaintiffs from
getting damages. For instance, private equity–owned Genesis HealthCare
allegedly required its residents to sign arbitration agreements before coming to
100
their facilities. Under these agreements, residents and their families consented
not to go to court in the case of injury or wrongful death but instead bring their
disputes to arbitrators paid for by Genesis itself. (For its part, Genesis claimed it
merely offered the arbitration agreements, rather than required them.) It should
be no surprise that families recovered less, if at all, when using arbitration. In
fact, the American Association for Justice, a professional organization for
plaintiffs’ lawyers, found that over a five-year period consumers brought just
101
sixty-two cases against nursing homes to the leading arbitration firms. Of
these cases, consumers won monetary awards in just four of them.
In 2016, the Obama administration issued a rule banning the use of
arbitration agreements at nursing homes. But the industry’s lobbying
organization, on whose board sat various representatives of private equity–
102
owned nursing facilities, took swift action. It and a state affiliate in
Mississippi sued to enjoin the rule before it went into effect. Within a few
months, a federal judge ruled in favor of the nursing homes, concluding that the
executive branch lacked the authority to promulgate such a rule. Three years
later, the Trump administration finalized its own rule, largely allowing nursing
103
homes to use arbitration agreements with residents. In essence, this just
reaffirmed what the nursing homes were doing. The next year, a district court
104
upheld the validity of the rule. Given the Supreme Court’s favorable attitude
toward forced arbitration, the outcome was unsurprising, but the decision made
it harder for the Biden administration or any other to contain the use of
arbitration agreements in the future.
But arbitration agreements were just the beginning, as the nursing home
industry’s greatest accomplishment was, in the wake of the pandemic, to create
broad legal immunity for itself. COVID-19 laid bare the inadequacies of so
many nursing homes. According to Lori Smetanka, executive director of the
advocacy organization National Consumer Voice, many facilities had relied on
residents’ family members to provide unpaid care. With the arrival of the
pandemic, those family members were, by and large, unable to visit, a fact that,
according to Smetanka, exposed how so many homes were inadequately staffed.
Suing these homes for negligent COVID-19 infections would have been a
powerful incentive for nursing homes to improve their staffing and quality of
care. But that’s not what happened. Instead, with extraordinary speed, thirty-
eight states enacted liability shields that largely prevented people from suing
nursing homes for deaths and injuries resulting from their handling of the
105
pandemic. Several of these passed at the public urging of the nursing home
industry association’s state affiliates; others presumably passed with their more
subtle support.
Moreover, just three of the laws specifically restricted their scope to harms
resulting from exposure to the coronavirus, according to the National Consumer
Voice. So laws nominally passed to insulate nursing homes from liability for
COVID-related deaths—already a questionable goal—in fact gave them broader
and, in some cases, permanent, protection from lawsuits.
These liability shields have had entirely predictable results. For instance,
when Carol Ballard’s daughter tried to visit her at a facility operated by the
private equity–owned Genesis HealthCare, she found Ballard collapsed on the
106
floor in front of her wheelchair. Ballard had apparently been infected with
COVID-19 and passed away the next day. Ballard wasn’t alone: fully one-third
of residents in the facility died of the virus. Yet there was little that Ballard’s
daughter could do to hold Genesis responsible for the outbreak, as the state’s
governor had signed a broad immunity shield just the day before. Ballard’s
family had no way to hold Genesis accountable, or even to investigate through
litigation if Genesis had been negligent or responsible for the widespread
outbreak in its facility. “Even with a history of these nursing homes having
problems, why was immunity put in place?” Ballard’s daughter asked the
Washington Post. “I’m not looking for money. I’m looking for somebody to be
 107
held accountable.” (A spokesman for Genesis HealthCare told the Post that
“we understand how difficult a time this has been” but that “the experience we
108
have had with our families… has been overwhelmingly positive.”) With broad
immunity, there was little chance that there would ever be such accountability
for the facility or its private equity owner.
The nursing home industry has essentially shielded itself from serious
oversight or litigation, which in turn has made the industry even more attractive
to private equity firms. As Ernie Tosh, the plaintiff’s lawyer, said, “We are just a
109
cost of doing business.” This is evidenced by the fact, as mentioned above,
that private equity investment in nursing homes actually increased during the
pandemic, a time when the industry should have been in greatest peril. But
insulated from liability and the consequences of their own actions, it was also a
time of enormous opportunity for private equity firms.

THE CASE OF Angela Ruckh and Consulate Health Care illustrates how difficult it
is to recover damages from nursing homes, especially those owned by private
equity firms. Consulate, owned by Formation Capital, was a massive nursing
110
home chain with over ten thousand employees in twenty states. It also had a
terrible record of care. In Florida, where Consulate ran one out of every nine
nursing homes, more than half of its facilities had just one or two stars on the
federal government’s five-star rating system. (This was quite an indictment,
111
given that the government’s rating system was notoriously easy to game.)
Ruckh was a nurse with over twenty years’ experience at the time her case
was filed, and for five months in 2011, she worked at two facilities owned by
112
Consulate. As alleged by Ruckh, the conditions in the homes she worked at
were abysmal. The facilities were understaffed, and at one point, according to
her complaint, Ruckh saw a resident with an untreated wound. Beside the
resident was a nurse’s note: “dressing not done—too much to do—not enough
113
time to do it.” At other times, according to Ruckh, residents were denied
114
critical care because they were on Medicaid, which provided less money for
services than did Medicare or private insurance. At least twice, state regulators
found deficiencies with Consulate’s care so serious that they had the opportunity
 115
to shutter the chain. For instance, separate from the incident Ruckh already
described, staff failed to treat a resident’s surgical wound for over two weeks and
116
gave the resident drugs instead when she cried in pain. Another time,
Consulate allegedly failed to report an instance when a patient with severe
dementia was found performing oral sex on another patient. Instead, the
facility’s director of nursing declared the dementia patient to be a consenting
adult. These were far from the only violations, yet the state refused to close any
of Consulate’s facilities.
The private equity–owned Consulate wasn’t just delivering poor-quality care;
it was also committing fraud. In particular, it was overcharging the government
for services that were unnecessary or that never happened. So Ruckh sued under
the False Claims Act, a federal law that empowered whistleblowers to sue for the
misuse of government money: in this case, from Medicare and Medicaid. The
case was complicated, as Consulate disguised the wealth of its nursing homes
117
using many of the tactics described earlier. For instance, it organized its
nursing homes into individual companies making their finances appear shaky,
while paying rent, management, and rehabilitation fees to companies affiliated
118
with Consulate or Formation. Moreover, represented by various elite law
firms—Baker & Hostetler; Akin Gump Strauss Hauer & Feld; and Skadden
119
Arps —the nursing homes moved to dismiss the case and objected to various
discovery motions. This resulted in an enormous delay: the case did not go to
trial until 2017, six years after the litigation began. For over twenty days, a jury
heard about the nursing homes’ alleged fraudulent practices and, after
deliberation, found the homes guilty. The jurors returned a stunning verdict:
nearly $350 million in damages.
Then, something unusual happened. Nearly a year after the trial, the district
court judge vacated the jury’s decision—what’s called “judgment as a matter of
law”—concluding that Ruckh had failed to show that the alleged losses were
material or that the nursing home acted with sufficient knowledge that what it
120
was doing was wrong. The court also found that Ruckh failed to demonstrate
that the nursing homes’ management company was liable for the actions of the
individual homes.
In other words, Consulate and its private equity owners were insulated from
the actions of the individual homes. It was a stunning loss, and Ruckh appealed.
Another year and a half passed, and finally an appellate court largely reversed
 121
the judge’s findings. In the main, it reinstated the jury’s verdict against the
companies, though reduced the damages claim, from nearly $350 million to
122
about $257 million. Ruckh had won, but the time elapsed was extraordinary:
123
it had now been nearly ten years since she had first filed her complaint.
And this is where Ruckh’s story took a turn. Within weeks of the jury’s
verdict being largely reinstated, the private equity–controlled nursing homes
124
declared bankruptcy. And in bankruptcy, the nursing home was able to
discharge almost all the damages that Ruckh had won. In the end, Ruckh and the
Department of Justice settled for just $4.5 million in damages, with three-
125
quarters going back to the government and one-quarter going to Ruckh. It
took ten years, and Ruckh got $1 million for fraud that cost taxpayers $80
126
million. And the private equity company that owned the nursing homes—
Formation—continues to thrive, with $2 billion in assets under management and
127
investments in nearly two dozen companies. Considering all that had been
invested in the case, it was a stunning loss. But it was also a guide. Smetanka of
the National Consumer Voice said, “We’re really worried that this is going to
128
become the playbook for other companies.” Smetanka added that Formation’s
nursing homes weren’t even banned from getting funds from Medicare or
129
Medicaid. For private equity firms, she said, “Their real focus is on going in,
130
getting what they can from the facility, and turning it over.” Formation’s
victory would make it easier for it, and all other private equity firms, to continue
doing just that.

WHAT CAN BE done? The short answer, explained more in Chapter 12, is that
regulators must be made accountable to residents themselves, not the
organization controlling nursing homes. Those who’ve been harmed at facilities
must be allowed to seek justice in court. To help accomplish this, regulators can
require nursing homes to meet minimum staffing requirements and disclose their
ultimate parent owners. State legislatures can repeal their liability shields and
narrow the scope of arbitration agreements, even in the face of a hostile Supreme
Court on the latter issue. And state attorneys general can investigate the worst-
performing homes. But these institutions will act only if people force them to.
And it is worth doing so. As cases like ManorCare and Consulate illustrate,
nursing homes expose private equity’s worst tendencies. With a captive market,
firms can—and reportedly do—gut homes’ assets and eviscerate their quality of
care, resulting in quite literally tens of thousands of deaths. And with a sclerotic
regulatory bureaucracy, firms have little reason to change. Disaster is not
guaranteed, but without oversight, it becomes more likely. These allegations of
mismanagement and neglect put a disquieting color on all the money that David
Rubenstein raised for investments like these and reveal the irony of his quip that
private equity was the “highest calling of mankind.”
 CHAPTER FIVE

MAKING IT ALL WORSE

Private Equity in Health Care

If you are an American, there is an exceedingly good chance that you are
worried about the cost of your health care. About four in ten of us have medical
debt, and about the same number have delayed their own health care for fear of
1
its price. Fully a quarter of Americans say that they or a family member has
skipped medications, cut back on necessary prescription drugs, or delayed
2
buying medicine simply because of their costs. These costs keep rising: the
growth in health care spending in America vastly outpaces inflation and today
3
takes up about a fifth of our entire economy.
There are many reasons for the rising cost of health care in this country. But
one of them is private equity, which spent over $150 billion in 2021—the most
recent year for which there is data—acquiring companies in every part of the
4
industry. By buying and combining competitors, firms have been able to raise
5
prices, lower pay for employees, and decrease the quality of care for patients.
Consider the case of dermatology. The business caters to wealthier clients
who, one might think, would be somewhat insulated from private equity’s
whims. Not so. In less than a decade, private equity firms bought 184
6
dermatology practices and 381 clinics. The results were, at times, disastrous.
For instance, as reported by Heather Perlberg of Bloomberg Businessweek,
after Audax Group bought the dermatology chain Advanced Dermatology and
Cosmetic Surgery, it limited the purchase of basic supplies, which, one doctor
7
alleged, left his office without gauze, antiseptic solution, or even toilet paper.
Audax also allegedly imposed a scorecard system to give offices money when
they met daily and monthly financial quotas. At U.S. Dermatology Partners,
another major private equity–owned dermatology chain, a doctor complained
that the corporate office switched, without consulting medical staff, to a cheaper
8
brand of needles. The needles, the doctor claimed, were unreliable and often
broke off inside patients’ bodies. Elsewhere, firms gamed procedures and
staffing: several practices had to send patients home with open wounds, only to
recall them the next day for stitches, a tactic that allowed the practices to recoup
more from insurers. Other practices, according to doctors and staff, were forced
to rely increasingly on physician assistants over doctors for various tasks, which
resulted in assistants missing potentially deadly skin cancers. Perhaps these
tactics were profitable, but they were not good for patients. As one doctor
observed to Bloomberg, “You can’t serve two masters. You can’t serve patients
9
and investors.” (Audax and Advanced Dermatology Partners declined to
comment to Bloomberg about the article.)
Despite this cost cutting, money did not necessarily flow to doctors. While
10
older physicians could profit by selling their practices to private equity firms,
younger doctors who remained often found that they were overburdened and
underpaid relative to their more senior colleagues. One dermatologist told
MedPage Today that many of his fellow practitioners “have expressed an
11
outright refusal to work for private equity–backed dermatology groups.”
Consequently, job postings now frequently advertise that their offices are “NOT
12
Private Equity” in their titles.
But it’s not just dermatology: all kinds of physician practices are being
bought by private equity firms. Anesthesiology, cardiology, oncology, radiology,
pediatrics, urgent care, mental health, dentistry, obstetrics and gynecology, and
so many others. Private equity firms are buying clinics in these fields and more,
13
and all at an extraordinary pace. While comprehensive statistics are hard to
collect, researchers at the Brookings Institution estimate that private equity firms
have bought over 1,200 clinics across a range of specialties in little more than a
14
decade. Yet even this number considerably understates private equity firms’
role in health care more broadly, as they have bought not just medical practices
but also companies providing pharmaceuticals, medical devices, information
15
technology, insurance, and others. Together, firms have spent more than half a
trillion dollars buying up health care companies around the world in just a
decade.
 Why are private equity firms spending so much in health care? A few
reasons. Many companies in the industry offer steady cash flows through reliable
programs like Medicare and Medicaid. Firms can use these cash flows to pay
down the debts they use to buy businesses. Additionally, many health care
companies have, for better or worse, loyal customers (think about the challenges
of finding an in-network radiology clinic, for instance, or a therapist you like).
As a result, firms can often raise prices or cut services without necessarily losing
business. Finally, many health care companies, which offer similar services
across disparate geographies, are ripe for consolidation through rollups. By
buying competitors, private equity firms make it easier to raise prices and cut
costs without consequence. Such rollups are not unique to private equity, but
private equity firms, with their need for short-term profits and their insulation
from legal consequences, are particularly disposed toward them. And the
consequences of these rollups are vividly on display in two areas: hospitals and
emergency rooms.
Private equity firms have long been attracted to hospitals. In 2004, for
16
instance, Blackstone acquired a majority interest in Vanguard Health Systems,
17
a chain of hospitals in Arizona, California, Illinois, and Texas. In 2006, a
consortium of firms, including KKR and Bain Capital, bought the chain Hospital
18
Corporation of America for $33 billion, in what at the time was the largest
19
leveraged buyout in history. And in 2010, Cerberus created the Steward Health
20
Care Network, which, with over thirty hospitals in nine states and $6.6 billion
21
in annual revenue, became one of the largest hospital chains in the United
22
States. All three companies subsequently rolled up additional hospitals into the
23
companies they acquired. Once they did, the private equity firms executed
many of the tactics that are now familiar. Blackstone did a dividend
recapitalization of Vanguard and then sold it to another company, which
24
subsequently struggled to service the debt. Bain charged over $100 million in
25
management and transaction fees to the Hospital Corporation of America. And
26
Cerberus did a sale-leaseback of Steward’s real estate.
Steward in particular illustrates the consequences of using private equity
tactics on hospitals. As reported by Bloomberg, after Cerberus executed its sale-
 27
leaseback on Steward, the hospital chain sat “on a financial knife’s-edge.” So,
using proprietary software to predict staffing needs, Cerberus fired over five
hundred employees. Predictably, this resulted in a shortage of nurses and other
aides. Staff were frequently forced to work overtime on top of already draining
twelve-hour shifts. And nurses had less time to care for patients. Steward’s
intensive care patients received, on average, four fewer hours of nursing care
every day than did patients at other, similarly sized hospitals. “Frequently, I’m
28
not performing the job up to standard,” one nurse told Bloomberg. “I feel like
29
I’m failing my patients.” But it wasn’t the nurses’ fault: it was Cerberus’s
policies that led to the short-staffing.
Cerberus’s underinvestment led to predictably bad outcomes. Steward had
higher rates of patient falls than other, similarly sized hospitals, as well as higher
rates of infection. One nurse wrote that patients had to wait in hallways when
there were no available beds. Other nurses said that they were forced to work
overtime, even after their twelve-hour shifts ended. When a mouse got trapped in
an electrical transformer at one of Cerberus’s hospitals, the facility was left
without power for thirty-eight hours. To cope with the crisis, hospital workers
had to move COVID-19 patients from their own wing to the main intensive care
unit, where they were separated only by a wheeled privacy screen, a solution so
ineffectual as to be almost insulting. “They’re pretty much all about the money,’’
30
one nurse told Bloomberg about Cerberus. “They made that clear over and
31
over again over the last 10 years. Their M.O. is take care of corporate first.”
This was true: although Steward’s situation was financially precarious, Cerberus
more than made back its investment.
If Cerberus’s—and private equity’s—rollup of hospitals led to dire
consequences, the situation was even worse with emergency medicine.
Emergency care is particularly attractive to private equity because of its
“inelastic” demand: people rarely choose where to get shot, for instance, or when
to have a heart attack. They therefore tend to go to one of several nearby
hospitals. Increasingly, these hospitals are staffed by one of two companies,
Envision and TeamHealth, which are owned by KKR and Blackstone,
32
respectively. Over many years, these companies executed a dramatic rollup
strategy to buy and combine companies that staffed emergency rooms with
doctors. By 2018, about two-thirds of emergency rooms outsourced at least some
 33
of their staffing to a third party, many to companies like Envision and
TeamHealth. The problem was that the two private equity–owned companies
often failed in the basic task of ensuring that the hospitals they serviced had the
doctors and supplies they needed.
Consider the case of Dr. Raymond Brovont, who was employed by
Envision’s predecessor, EmCare, as the director of an emergency room in
Overland Park, Kansas. EmCare had a long history with private equity: the firm
Onex bought the company in 2004 and took it public the next year, though
34
continued to own a majority of shares. Clayton, Dubilier & Rice bought the
35
business in 2011 and took it public once again, though the company kept a
substantial stake in the company until 2015 and kept affiliated directors on the
36
board until 2017. Finally, KKR bought the business’s parent, now named
37
Envision, in 2018.
As medical director at Overland Park, Brovont worked under a number of
private equity owners and investors and quickly felt that EmCare had
dangerously understaffed his department. For most of the day, just one doctor
was on call to treat patients in both the pediatric and ordinary emergency rooms.
Yet at the same time, the hospital required an emergency doctor to attend to any
38
code blues, situations in which a patient’s heart or lungs stopped working. This
could occur anywhere in the hospital, and when it did, it often meant that the
emergency room had quite literally no doctor available.
Brovont feared that this short-staffing violated the law, as well as the
39
standards set out by the American College of Surgeons. And so he complained
and ultimately organized a meeting between his emergency room doctors and an
EmCare executive, Dr. Patrick McHugh. McHugh listened to the doctor’s
complaints but offered an astoundingly tone-deaf reply. He wrote to all
emergency room physicians, noting that for the hospital chain, “many of their
40
staffing decisions are financially motivated. EmCare is no different.” “Profits
are in everyone’s best interest,” he added. “Thank you as well for respecting my
request to refrain from publicly voicing your concerns/objections until we are
41
given a fair opportunity to address them.” In his email, McHugh even included
links to EmCare’s stock and financial information. His comments were
refreshingly honest, but they laid bare the basic problem: EmCare was
apparently making decisions that affected patients and was doing so, it appeared,
out of a desire for profits alone, untempered by, for instance, medical judgment.
42
After the meeting, no changes were made. Brovont raised the issue several
more times with the EmCare executive, to no effect. And so Brovont wrote a
formal letter, endorsed by all the physicians in the emergency department,
complaining about the understaffing crisis. He never received a response, only a
terse shot from the EmCare executive in the hallway: “Why would you ever put
43
that in writing?” Six weeks later, Brovont was fired.
Brovont eventually sued the EmCare subsidiaries who employed him for
44
wrongful termination. In the course of litigation, it was revealed that Brovont’s
firing “petrified” the other doctors and created a “weird cult of coercion” and
45
silence on the code blue policy. Eventually, and encouragingly, Brovont won
46
nearly $26 million for his firing, including substantial punitive damages. After
the judgment, however, the hospital declined to say whether it had actually
47
changed the understaffing policies that Brovont had complained about.
The debacle with Brovont was illustrative, but it wasn’t isolated. Like
EmCare, Blackstone’s TeamHealth fired an emergency room physician—Dr.
Ming Lin—after he complained about his hospital’s inadequate COVID-19
protections. In particular, Lin sent a letter—and posted its contents on Facebook
—to the hospital’s chief medical officer, recommending that staff have their
temperatures taken at the beginning of their shifts and that patients be triaged in
48
the hospital parking lot. He also criticized as “ludicrous” the hospital’s practice
49
of testing patients for COVID only after a prior influenza test proved negative.
Doing so needlessly exposed both patients and doctors to increased risk, he
argued. Shortly after Lin published his complaint, TeamHealth terminated Lin’s
shifts with the hospital, telling Lin that while the company believed that his
comments were “intended to be constructive… unfortunately it is not possible
50
for you to return” to work. Ultimately the ACLU chose to represent Dr. Lin in
a wrongful termination lawsuit, characterizing the matter as one of free speech.
TeamHealth denied that it had fired Lin and told NBC that it offered to place him
51
“anywhere in the country”; the litigation remains ongoing.
Cases like Brovont’s and Lin’s occurred because they were fundamental to
Envision’s and TeamHealth’s business model under private equity ownership,
the whole point of which was to reduce the amount of money spent on doctors
and services in emergency rooms. This reached absurd proportions when, for
instance, both companies cut hours for emergency room doctors during the early
52
months of the COVID-19 pandemic. Because doctors were paid by the hour,
this also, in effect, cut their salaries, a fact that TeamHealth initially denied.
“[T]o see TeamHealth blatantly lying is infuriating,” one doctor told
53
ProPublica. Infuriating, perhaps, but not surprising. Private equity firms
bought these companies on the explicit promise of cost cutting: when it bought
Envision, KKR said that it would focus on “operational improvement
initiatives,” while when it bought TeamHealth, Blackstone said that it was
54
attracted to “near-term cost reduction opportunities.” These were euphemisms
for budget cuts, and it should be no surprise that the firms followed through on
their promises.
These companies’ practices, including their use of surprise billing, which is
discussed in later chapters, put a tremendous strain on doctors. One clinician
who worked for TeamHealth told ProPublica, “This is not what I signed up for
and this isn’t what most other ER docs signed up for. I went into medicine to
lessen suffering, but as I understand more clearly my role as an employee of
TeamHealth, I realize that I’m unintentionally worsening some patients’
55
suffering.” Robert McNamara, a former president of the American Academy of
Emergency Medicine, said that working for these companies “tears at your
56
soul.” Yet, he added, “It’s pretty hard to get a doctor to speak up against these
57
corporations… because they fear about being blacklisted.”

THE BASIC LOGIC of private equity drove these disastrous outcomes in

dermatology, hospitals, and emergency medicine. But sometimes, the relentless
pressure to increase profits and cut costs shoved these companies into allegedly
illegal conduct. In 2017, for instance, EmCare settled a case with the Department
of Justice over allegations that it improperly referred patients to hospitals in
58
exchange for kickbacks. Under the alleged scheme, a chain of hospitals made
bonus payments to EmCare’s physicians in exchange for increasing the number
of patient admissions, as Medicare generally pays three times as much for
 59
inpatient care as it does for outpatient care. If substantiated, this was risky
conduct. People ought to be admitted to hospitals only when truly necessary,
60
given the danger of infection and medical misadventure. EmCare agreed to pay
61
nearly $30 million to resolve the allegations. But it was unclear how much
these fines mattered. One industry analyst, Sheryl R. Skolnick, wrote that
investors “seem to think that D.O.J. investigations, qui tam suits and allegations
62
of serious Medicare fraud are simply a cost of doing business.”
EmCare wasn’t alone. In 2021, UnitedHealthcare sued Blackstone’s
TeamHealth for “upcoding,” that is, using billing codes unjustified by the
underlying medical distresses. In a battle between a health insurance company
and a private equity–owned physician staffing firm, it was hard to say that there
was a clear hero. And TeamHealth gave as good as it got, successfully suing
63
United for underpaying on thousands of claims. Yet according to United, for
example, TeamHealth charged $1,712—and billed the case as one of
“particularly high complexity”—to treat someone who came to the hospital with
64
indigestion from eating a chili dog (he was prescribed Maalox and sent home).
According to United, TeamHealth upcoded tens if not hundreds of thousands of
65
claims, which resulted in overpayments in excess of $100 million. But for a
case that began in 2021, over actions allegedly taken years before, trial was set
66
for 2024. In other words, it would take years to litigate the truth of the matter.
Finally, in 2020, another Blackstone-owned health care company, Apria
Healthcare Group, agreed to pay tens of millions of dollars for allegedly billing
the government for ventilators that were never used. Under Medicare, the
government provided higher reimbursement rates for so-called noninvasive
ventilators: those that could be worn like a mask, rather than, say, inserted down
67
patients’ throats with tubes. As alleged by the Justice Department, Apria
Healthcare moved aggressively to sell these devices, so aggressively, in fact, that
it billed the government for ventilators it knew were not being used. Having
been found out, Apria agreed to pay $40.5 million without admitting
68
wrongdoing. But such a settlement was little more than a rounding error for
Apria and its private equity owner. In 2020, Blackstone did a dividend
recapitalization of the company, making nearly five times what Apria paid to the
 69
government for its wrongdoing. Recall that with a dividend recapitalization, a
private equity firm makes its portfolio company borrow money to pay the private
equity firm. It’s like using someone else’s credit card, and because private equity
firms tend to lose only a little money if the company fails but gain
disproportionately if the company succeeds, it almost always makes sense for the
firm to do this. Here, Blackstone forced Apria to borrow $410 million to pay
70
Blackstone. In 2021, Apria went public, netting its owners an additional $170
million, of which Blackstone received a substantial percentage. Also that year,
the Trump administration removed Apria’s noninvasive ventilators from the
government’s competitive bidding process, a move that could have raised device
71
prices by more than a third. Finally, to save costs, Apria fired respiratory
specialists who were necessary to make sure that patients were using the
72
ventilator machines correctly. All of which is to say that the fines levied on
Apria were likely far too small to constrain its alleged behavior. They were, to
borrow a phrase, simply a cost of doing business.
Surveying all this alleged wrongdoing, it’s worth noting that the few
plaintiffs who litigate their cases to trial may take years—and spend millions of
dollars—to do so. As a result, most plaintiffs, including the government, tend to
73
settle and often without requiring defendants to admit their own guilt. While
this may save time and money, it prevents the development of any useful case
law that future plaintiffs can cite. And in either case—resolution by trial or by
settlement—the amounts that defendants pay typically are simply too small to be
anything other than a distraction for most wrongdoers.
With these limitations in bringing fraud cases, some doctors are taking the
issue on themselves and challenging the legality of the very business model of
companies like Envision and TeamHealth. Both companies are owned by private
equity firms—KKR and Blackstone, respectively—neither of which are run by
physicians. But state “corporate practice of medicine” laws nominally prohibit
people other than doctors and institutions other than hospitals from owning
74
medical practices. These laws capture the reasonable notion that medical
practices should be owned by those who actually understand medicine and who
are driven by professional obligations and duties of care over and above a simple
desire for profit.
In general, private equity firms circumvented these laws by establishing
intermediate “physician management” companies that bought the assets of the
offices they acquired and by setting up separate service agreements to employ
75
the doctors at those practices. In states where corporate practice of medicine
laws are more strict, private equity firms established new businesses run by
76
“friendly” or “captive” physicians allied with the firms. These arrangements
potentially circumvented state laws, but left the private equity firms—who now
owned the assets of the clinics, and essentially employed the physicians who
work there—effectively in charge of the practices they bought.
State medical licensing boards, who are, by and large, charged with policing
violations of the corporate practice of medicine laws, should have stopped this.
But Dr. Robert McNamara, the former president of the American Academy of
Emergency Medicine, complained that they were slow to do so. Perhaps it was
simply a failure to understand the issue or their own authority; perhaps it was a
fear of causing controversy. Whatever the result, according to McNamara, it fell
to others to enforce the law.
And so, in 2020, the American Academy of Emergency Medicine (AAEM)
sued Envision for violating the corporate practice statutes. As alleged by the
Academy, Envision created hundreds of subsidiary medical groups, each run by
a doctor, to manage its many practices. But according to AAEM, these medical
77
groups were “a mere front” for Envision itself. In fact, just a single doctor
78
served as the CEO of potentially hundreds of these companies. And this
doctor, Envision ensured, had no actual authority over the businesses he ran: he
was restricted, for instance, in his ability to issue dividends, create new stock, or
79
sell the medical group.
But as AAEM alleged, Envision controlled, not just business decisions, but
medical ones too; through a series of “best practices,” “red rules,” and
“evidence-based pathways” it promulgated protocols that described how to treat
80
patients. Envision also used “benchmarking” reports to compare doctors’
performance to the company’s standards, as well as “practice improvement
81
feedback” to “educate” doctors on clinical decisions. In effect, according to
AAEM, Envision was “rendering physicians as mere employees, and
82
diminishing physician independence and freedom from commercial interests.”
Envision’s management would be fine—perhaps even helpful—if decisions
were made by medical professionals. But the AAEM alleged that this was not
the case. In filing the case, the academy’s president said in a statement that
emergency room patients “deserve treatment by a board certified emergency
physician whose fiduciary duty is to place the patient’s medical needs above all
else, and not by a private equity or lay corporation whose fiduciary duty is to
83 84
place profit before the patient.” The litigation remains ongoing.

THE CASE AGAINST Envision is not a panacea because it attacks just one part of
private equity’s entry into health care. But it gets to a fundamental issue, namely,
that health care decisions should be motivated by need and knowledge, not by
profit. Private equity firms’ desire for money is not unique in our health care
industry. Yet the crushing logic of their business model, with its relentless focus
on short-term profits, brings out many of the industry’s worst tendencies. How
might these broader harms be addressed? One possibility is plain: the antitrust
laws.
As mentioned, private equity firms often buy companies—dermatology
clinics, for instance, or emergency room staffing firms—through rollup
strategies, by which they purchase several similar businesses and combine them
into one. The purported reasons for these rollups are efficiencies of scale. For
example, a private equity firm can consolidate billing, records, and marketing
operations of several clinics, allowing doctors to focus on the practice of
medicine. This may be so, but there are other reasons too. By building larger
practices, private equity firms and their companies can negotiate higher rates
from patients’ insurance companies and from uninsured customers. And by
buying up many competitors, firms can lower the quality of their care without
consequence, knowing that patients will struggle to find alternatives.
These are precisely the sorts of harms that the antitrust laws were meant to
protect against. In particular, Section 7 of the Clayton Act prohibits acquisitions
that may lessen competition by, for instance, raising prices for consumers,
reducing pay for workers, or gutting the quality of care. As far back as a decade
ago, as many as a fifth of physician markets were already so consolidated that
85
further acquisitions would presumptively violate the law. Since then, private
equity rollups have only grown more ambitious. While the specific facts of each
rollup matter, the trends suggest that those empowered to enforce the antitrust
laws—most prominently, the Department of Justice and Federal Trade
Commission (FTC)—could and should focus their attention on ensuring
compliance with those laws.
But for the most part, they have not done so. The federal government does
not appear to have challenged a single physician practice rollup, likely because
the agencies were unaware that they were even occurring (private equity firms
86
and other purchasers only report proposed acquisitions above a certain size).
But the government rarely challenged the acquisitions that it did know about,
too. When the hospital chain Community Health Systems bought one of its
87
largest rivals, the FTC required that it divest just two hospitals. When
Cerberus’s Steward Health Care Network bought its own rival for nearly $2
88
billion, it required no divestitures at all. And when Vanguard bought the
Detroit Medical Center, the Commission allowed the acquisition and, in fact, did
89
so on an expedited basis.
In short, because of private equity, patients at hospitals with fewer
competitors faced worse health outcomes, while families paid thousands more to
90
medical monopolies than they would have in more competitive markets. And
people who went to physician practices and hospitals rolled up by private equity
firms experienced all the harms—understaffing, increased costs, and insufficient
care—described above.
Why did this happen? The simple answer is that the antitrust laws have been
under a sustained assault for two generations, the result of which is that it has
become increasingly difficult for the enforcement agencies to stop the sorts of
rollups that private equity firms are now engaged in.
This was not always the case. The nation’s primary antitrust law, the Sherman
91
Act, was passed as a “comprehensive charter of economic liberty” and, in fits
and starts, protected America from the domination of great trusts,
conglomerates, and monopolies. At the turn of the last century, Theodore
Roosevelt wielded the statute to splinter J. P. Morgan’s Northern Securities
railroad trust and break up John D. Rockefeller’s Standard Oil. His successor,
William Howard Taft, brought even more cases than Roosevelt, dissolved the
92
“sugar trust,” and moved to end the U.S. Steel monopoly. President Wilson
signed successor legislation, the Clayton Act, which brought necessary scrutiny
to mergers and acquisitions. And Franklin Roosevelt, through the great assistant
attorney general Thurman Arnold, brought nearly as many cases as his
 93
predecessors combined. Arnold’s strategy to “hit hard, hit everyone and hit
94
them all at once” helped to simultaneously lower prices for consumers and
increase production and employment, laying the foundation for an economic
expansion after World War II broadly shared with the growing middle class.
By the 1960s, antitrust law, or at least the subset of law concerned with
acquisitions, was strong and simple. The Department of Justice and FTC’s
merger guidelines—the agencies’ statement to the world about which
acquisitions they would and would not tolerate—laid out clear concentration
thresholds above which further acquisitions would almost always be prohibited.
This wasn’t to say that companies couldn’t get bigger, but they would have to do
so through organic growth and competition on the merits, rather than by simply
buying up competitors.
Unsurprisingly, the broader business community despised this approach and
set out to remake the laws to its benefit. In this effort, businesses found an eager
intellectual defender in Robert Bork, the pugnacious, oddly bearded professor at
the University of Chicago. In his academic articles and enormously influential
1978 book The Antitrust Paradox, Bork set out to deconstruct America’s
antitrust laws. He argued that the statutes were drafted narrowly to maximize
“consumer welfare,” which in practice meant lowering prices. (This ignored
their other purposes, including protecting small businesses, workers, and
95
democracy itself from the too-strong influence of big corporations.) Bork
pushed to permit most predatory pricing schemes, where companies underpriced
their rivals to drive them out of business. He claimed that tacit collusion—the
process of a few firms raising their prices in coordination without explicitly
agreeing to do so—probably never actually occurred. And most importantly, he
argued that mergers between competitors should generally be allowed and that
so-called conglomerate mergers—acquisitions in disparate industries, like those
96
that private equity firms make—should be permitted entirely.
Intellectually, Bork was not alone. He was joined, with varying levels of
nuance and agreement, by University of Chicago professors (and later judges)
Richard Posner and Frank Easterbrook, as well as Harvard professors Donald
Turner and Phillip Areeda. Harvard professor and later Supreme Court justice
Stephen Breyer was also an occasional fellow traveler. These men cast a
skeptical eye on antitrust enforcement generally and believed that the harm of
97
overenforcement vastly outweighed the risks of underenforcement.
 Financially, too, Bork was not alone. In 1976, the Law and Economics
98
Center, funded by corporate donors, began holding an annual economics
99
institute for federal judges, where it spread a conservative doctrine on antitrust.
By 1990, 40 percent of sitting federal judges had completed its flagship
100
program, despite apparent conflicts of interest: multiple judges who attended
the course heard antitrust cases involving companies who sponsored the classes
101
they took. Nevertheless, the program survived and continues to operate
102
today.
Meanwhile, big companies had the money to litigate Bork’s novel claims in
103
court. Eventually, Bork and his corporate allies got their way. In 1979, one
year after the release of The Antitrust Paradox, the Supreme Court endorsed
Bork’s dubious proposition that “Congress designed the Sherman Act as a
104
‘consumer welfare prescription.’” In 1986, the Court said that tacit collusion
could not violate Section 1 of the Sherman Act, and raised the standards for
105
proving explicit collusion cases. In 1993, it neutered most predatory pricing
claims by requiring plaintiffs to show that defendants would likely recoup the
106
costs of their predatory schemes, a virtual impossibility to prove. And
gallingly, in 2004, Justice Scalia essentially endorsed the concept of monopoly,
writing in Verizon v. Trinko that “it is an important element of the free-market
system. The opportunity to charge monopoly prices—at least for a short period
—is what attracts ‘business acumen’ in the first place; it induces risk taking that
107
produces innovation and economic growth.” No wonder then that the
government often struggled to bring successful cases against merging
companies.
Antitrust enforcers suffered their own structural problems during this time as
108
well. Enforcement agencies remained persistently understaffed, and they had
little insight into smaller acquisitions—for instance, rollups of physician
practices—that fell below the reporting thresholds set by statute. The result was
that the Justice Department and FTC were simply unaware that many of these
acquisitions were even occurring.
But antitrust enforcers got in their own way, too. The Justice Department and
FTC’s merger guidelines in the late 1960s set clear standards for when they
would challenge proposed acquisitions, based on the number of competitors
109
remaining in the market. Importantly, the guidelines largely rejected
mitigating “efficiencies” that might justify these acquisitions. This was so, the
guidelines explained, because efficiencies could “normally be realized through
internal expansion” and because there were usually “severe difficulties” in
110
identifying and measuring those efficiencies. The idea motivating the
guidelines at the time was simple: big companies could get bigger, but they
would have to do so on their merits, not simply through acquisitions.
In 1982, the Reagan administration revised the merger guidelines to add a
number of exceptions to this framework. Among other things, where it was easy
for new competitors to enter the market, or where competitors’ products were
highly differentiated, the enforcement agencies announced that they were less
111
likely to challenge proposed mergers. Subsequent revisions in the 1980s and
1990s to the merger guidelines across administrations added further
complications and exceptions and raised the ceiling under which mergers would
112
be presumptively permitted. By 2010, the guidelines made an about-face on
their earlier incantation, cheering that efficiencies were “a primary benefit of
mergers” and that mergers could “result in lower prices, improved quality,
113
enhanced service, or new products.” Far from rejecting speculative efficiency
arguments, the guidelines now begged for them.
Three things resulted from all these changes. First, by raising the
concentration thresholds, the merger guidelines treated a vast new swath of
mergers as presumptively procompetitive. Second, by encouraging efficiency
arguments and allowing a host of other exceptions, the enforcement agencies put
judges in the impossible position of balancing harms and benefits that were both
qualitative (for instance, hypothesized price increases or decreases) and
quantitative (for instance, increased or decreased innovations). Third, by
complicating the merger analysis, the enforcers encouraged more reliance on
expert economists, whose work judges were ill-equipped to evaluate. Faced with
complications, exceptions, and complex economics, judges were prone to
figuratively throw up their hands and permit mergers that, under earlier versions
of the guidelines, ought not to have been allowed. And knowing all this,
enforcement agencies became less likely to bring actions in the first place: from
2015 to 2019, antitrust enforcers blocked just three of the seventy-five largest
114
acquisitions. With so many ways to lose a case, the Department of Justice and
FTC spent enormous resources preparing the cases they did bring, meaning that
115
they tended to file just a few health care cases—if that—each year.
The result was that antitrust law became a shadow of what it once was. The
consequences surround us. Today in America, there are just four leading
116 117
airlines. There are three cell phone companies. There are two leading drug
118
stores. Plausibly no one benefited from this decline of antitrust more than the
private equity industry, particularly in health care. Concentration didn’t cause all
the problems in the health care system, but it certainly contributed to them. And
this concentration wasn’t an accident: we let it happen.
Thankfully, this may be starting to change. The department and FTC are
working to revise the tangled merger guidelines. Both offices are now led by
officials who believe in aggressive antitrust enforcement, and both are taking
aggressive action to prevent rollups in the health care industry. The FTC, for
instance, has successfully challenged four large hospital mergers, including the
acquisition of Steward Health Care Network (once owned by Cerberus) by HCA
119
Healthcare (once owned in part by KKR). The Department of Justice,
meanwhile, sued to block UnitedHealth Group’s $13 billion acquisition of
120
Change Healthcare, a company owned in part by Blackstone. (The department
lost that case at trial, but merely bringing the case demonstrated a willingness to
be aggressive.) Outside of government, these enforcers are supported by a
growing chorus of activists and academics who are pushing to rethink the goals
of the antitrust laws, away from Bork’s cramped vision of “consumer welfare”
and closer to the broader reasons for which the laws have traditionally been
enforced. It’s encouraging; exciting even. But undoing the damage to the law,
health care, and elsewhere will take time.

HEALTH CARE ILLUSTRATES some of private equity firms’ worst tendencies: their
focus on short-term profits over long-term care, their disregard for customers
and patients, and their general ability to avoid meaningful consequences for their
actions. But, however fitfully and incompletely, that may be starting to change.
Though we have spent decades crippling antitrust laws, a new generation of
enforcers may revitalize the law in health care and beyond. In the meantime, as
the state corporate practice of medicine suits show, doctors and patients may be
able to challenge some of these acquisitions themselves. These efforts are just
beginning. But they point to a way in which the government, patients, and
medical professionals, working alone and together, might slow or even stop the
private equity industry’s takeover of the American health care system.
 CHAPTER SIX

THIS TIME WILL BE DIFFERENT

Private Equity in Finance

The chapters thus far have explained how private equity firms have reshaped the
economy, by buying companies and raising prices, cutting jobs, and shifting
money from ordinary businesses to themselves. This is the traditional work of
private equity. Yet increasingly, firms like Blackstone and Apollo are moving
beyond the business of buying and selling companies and into obscure markets
like private credit once dominated by the investment banks that started the Great
Recession. Yet they are doing so with far less oversight than those investment
banks ever faced. To fund their operations, firms are inhaling money from
insurance companies and soon from retirement funds, including potentially your
own. Some regulators appear to believe themselves powerless to stop this
expansion; others are eager to help. Either way, private equity is metastasizing
into new businesses and new pools of money. That they are doing this largely
without oversight is deeply disturbing for anyone who remembers the Great
Recession.

AT THE END of the last century and into the twenty-first, well-known investment
banks, like Goldman Sachs, JP Morgan, and Lehman Brothers, became
sprawling financial conglomerates. They still performed the traditional work of
advising companies on acquisitions and public offerings. But they also got into
the business of trading securities—stocks, bonds, and futures—for their own
accounts and bought, bundled, and sold (securitized, in industry parlance)
mortgages and other financial products. When the housing market collapsed, the
leading investment banks were fundamentally shaken, and those that survived
 1
were either bought by or transformed into bank holding companies. In this new
form, these firms were more tightly regulated, less free to make loans, and
largely barred from trading for their own benefit. They were also subject to
potential supervision by the newly created Financial Stability Oversight Council
and required to conduct “stress tests”—estimates of how they would handle
catastrophic losses—for regulators. A particular indignity to bankers, many of
these companies were required for the first time to report aspects of their
executives’ compensation.
Under this new scrutiny, the investment banks pulled back from many of their
riskiest investments. Something needed to fill the void, and that something was
private equity. This was possible because private equity firms were far less
regulated than were other kinds of firms and often structured their investments as
private funds, exempt from the ordinary disclosure requirements that, say,
2
mutual funds had to provide. They also had lower capital requirements—that is,
minimum amounts of money to be kept on hand for downturns—than did bank
holding companies. And they escaped being designated “systemically important”
by the Financial Stability Oversight Council, a move that would have
considerably increased regulatory requirements on them.
With comparatively less oversight, the largest private equity firms, like
Blackstone, Apollo, KKR, and Carlyle, began to diversify, just as the investment
banks had. And just like the investment banks, private equity firms threatened to
become too big to fail: that is, to become so large that the government would not
tolerate their collapse. They bought real estate and infrastructure. They launched
their own hedge funds and recruited from investment banks, which were forced
3
by regulation to shut down their own operations. And perhaps most importantly,
they got into the business of private credit, which, as the name might suggest, is
an alternative to the public stock markets. Historically, when a big company
wanted to raise money, it did so by issuing stock. In exchange for the obligations
of being public—such as filing quarterly and annual financial returns—the
company was allowed to broadly solicit money for investments, generally
through an initial public offering. But to avoid such burdens, some companies—
usually small or midsized businesses—borrowed money on the private credit
market from individual lenders, who typically would accept less transparency
from borrowers in exchange for higher interest rates.
Because of this looser oversight, over the course of forty years, private credit
grew and by some measures eclipsed the public markets. The statistics here are
necessarily incomplete, given that private credit is so opaque, but the Wall Street
Journal reports that assets held by private debt funds—businesses that lent
4
private credit—grew nearly fivefold from 2007 to 2020, to $850 billion. So-
called Regulation D offerings—broad solicitations for money, similar to initial
public offerings in the public markets—raised over $1.5 trillion in 2019, more
5
than all the money raised through the stock markets in the same year.
Meanwhile, as private credit grew, public markets shrank: In 1996, there were
over 7,400 companies listed on US stock exchanges. By 2018, there were fewer
6
than half that.
In the wake of the Great Recession, private equity firms became leading
lenders of private credit as investment banks receded from the business. Now,
Blackstone and Apollo have the largest private credit funds in the world, right
7
after the behemoth Japanese firm SoftBank Group. In fact, for many private
equity firms, the actual business of private equity—leveraged buyouts—now
makes up only a minority of their business. Ares, a private equity firm created by
8
several Apollo alumni, makes a substantial majority of its business ($262
billion in assets under management) in private credit, while just $31 billion is
9
invested in private equity. Blackstone has nearly as much invested in credit and
insurance ($259 billion) as it does in private equity ($261 billion), while real
10
estate, insurance, and hedge funds make up the bulk of its remaining ventures.
The growth of private credit, and private equity’s role within it, raises
significant concerns. Private borrowers are likely to be smaller, and more
11
indebted, than their public counterparts and are thus more likely to default on
their loans. Private lenders, meanwhile, including private equity firms, do not
have the capital requirements that investment banks now must have and so are in
greater danger of collapsing when borrowers fail to pay their loans. But beyond
the individual risks for individual borrowers and lenders, private credit creates
broader systemic risks too. According to the Financial Times, the ratings firm
Moody’s, for instance, warned of the “opacity, eroding standards and the
12
difficulty in trading these slices” of debt. For instance, private credit lenders
typically sell off chunks of the loans they make to other investors, a process
known as securitization. Often, these lenders do not bother to seek grades on the
trustworthiness of their debts from ratings agencies like Standard and Poor’s or
 13
Moody’s. When they do, according to investor Dan Rasmussen, they typically
rely on second-tier ratings agencies, who are willing to give overly optimistic
14
projections that borrowers will repay. What this means is that other investors
might be buying securitized loans that are far less reliable than they think. And
while the private credit market is vastly smaller than the US mortgage market, it
is growing rapidly, from barely $100 billion in investable money in 2005 to over
15
$900 billion in 2021. In other words, the same dynamic that started the Great
Recession may be happening here, albeit at a smaller scale.
Republican and Democratic administrations both worked eagerly for forty
years to make possible the growth of private credit and private equity firms’ role
within it. In 1982, for instance, the Securities and Exchange Commission (SEC)
under President Reagan issued Regulation D, through which companies could
generally borrow from “accredited investors”—shorthand for wealthy or
16
sophisticated lenders—without registering with the SEC. This created a new
class of firms from which companies could borrow money. Then, in 1990, the
SEC allowed for the syndication of private capital to certain institutional buyers.
Investors could now make loans on the private market and then bundle the
promises of payment on those loans and sell them to other investors. This Rule
144A, in essence, created a new, secondary market for private credit.
These regulations were issued under SEC chairmen appointed by Presidents
Reagan and Bush, respectively. But Democratic administrations got in on the
game too. In 1996, Congress passed, and President Clinton signed, legislation
that lifted the requirement that private funds—funds that made loans on the
17
private credit market—be limited to one hundred or fewer investors. This
created the opportunity for investors to build vast stores of capital with which to
18
make private loans. The legislation passed overwhelmingly in the House (just
19
eight members voted against it) and by unanimous consent in the Senate. Then,
in 2012, Congress passed, and President Obama signed, the JOBS (Jumpstart
Our Business Startups) Act, which further expanded the private credit market by
20
permitting borrowers to make general solicitations for money. This meant that
private credit sales could be advertised publicly and essentially obviated the
purpose of going public. The legislation passed with bipartisan majorities in both
21
chambers of Congress.
 The result of all these changes was to make it vastly easier to lend and
22
borrow money outside of the stock market, with vastly less oversight. This is
risky for the individual lenders and borrowers, who have less transparency in
their transactions and thus likely face a greater risk of default. But this is also
risky for the economy overall, as the mistakes that companies make in the
opaque private credit market can affect those who had no part in it, such as
customers, suppliers, employees, and communities. And with underregulated
private equity firms eager to take on this work, it is as if all the risks inherent in
the financial system before the Great Recession are simply moving from one set
of institutions—the investment banks—to a new set: private equity firms.

PRIVATE CREDIT IS just one area where firms like Blackstone and Apollo have
expanded. The simple fact is that these firms are so much more complex and so
much bigger than they were a generation ago. For Blackstone, the diversity of its
interests is astounding. It has expanded from private equity to private credit, as
23
well as into real estate and hedge funds. It operates a “life sciences” initiative
24
that invests in nascent medical technologies and manages a separate fund with
some $30 billion to spend on infrastructure projects. Almost incidentally, it has
25
even become the largest private sector property owner in America. Similar
26
transformations have occurred at the other leading private equity firms, who
27 28 29
now invest in infrastructure, health care, and energy, among so much else.
30
They also create hedge funds and buy and securitize distressed mortgages
31
(exactly the business that overturned companies like Lehman Brothers). The
biggest firms don’t even call themselves private equity anymore: they are
32
“alternative asset managers.”
The risk posed by this expansion is twofold. First, with less transparency
than other financial institutions, private equity firms may make bigger, riskier
bets, whose failures would affect not just them but employees, customers, and
communities. Second, once they reach a certain size, some private equity firms
might become too big to fail, that is, their collapse would be so devastating to
the economy that the government would step in to prevent their failure. Knowing
this, the biggest private equity firms may be encouraged not to scale back but to
take ever-greater risks, assuming that they will be bailed out if those risks fail.
As private equity firms have expanded in every direction, they have become
33
the hot places to work on Wall Street. Before the Great Recession, Goldman
Sachs was perhaps the most coveted firm to work for on Wall Street. Now, pay
there has fallen in half, and private equity firms like Blackstone have taken its
place: one commentator said, “Blackstone remind[s] me of Goldman Sachs in
the 1990s—every time you see a new business that is growing, that is where they
34
are.”
The statistics bear this out. Nearly a fifth of Blackstone’s employees and
more than a quarter of KKR’s previously worked at Goldman Sachs or Morgan
Stanley, while just 1 percent of Goldman Sachs or Morgan Stanley employees
35
previously worked at Blackstone or KKR. In other words, people are leaving
banks to go to private equity firms but not the other way around. There’s also the
matter of pay, from the bottom to the top. New hires at private equity firms may
36
earn double what young employees at the big investment banks might.
37
Meanwhile, the CEO of Goldman Sachs made just under $24 million in 2020;
38
the president of Blackstone received close to ten times that much. And since
2005, nearly two dozen private equity executives have become
39
multibillionaires. None of the CEOs of the largest investment banks save one
40
—Jamie Dimon of JP Morgan Chase—is worth close to that much.
The migration from investment banks to private equity firms means that the
great mass of talent in finance is shifting to ever-less regulated and transparent
parts of the industry. It means that inequality, as expressed in the extraordinary
pay of private equity executives, continues to grow. And it means that these
private equity firms are simply getting bigger, with the consequent risks to the
economy and the creation of too-big-to-fail firms just discussed. For perspective,
41
KKR had $15 billion in 2005 in assets under management; today, it has $459
42 43 44
billion. Blackstone had $79 billion in 2007; today it has $731 billion.
45
Several firms anticipate having $1 trillion in assets in a few years’ time. But to
achieve these goals, private equity firms need money—enormous sums of
money—with which to invest in their various plans. And with regulators’ help,
they’re getting it, from a perhaps unexpected source: you.

TO FINANCE THEIR expanding operations, private equity firms are buying

46
insurance companies. In 2019, for instance, Carlyle bought Fortitude, a
47
reinsurance company (an insurer for insurers). A few years later, Blackstone
48 49
bought Allstate Life Insurance. KKR bought Global Atlantic. And Apollo
50
bought Athene. Together, private equity firms spent almost $40 billion buying
insurance companies in the United States and today control over 7 percent of the
51
industry’s assets, some $376 billion—double what they had in 2015. This
means that firms are getting ever bigger, increasing risks to our economy in the
ways just described. It also means, as explained momentarily, that people’s
insurance policies—including potentially your own—may be less safe.
As described shortly, this expansion could threaten people’s life insurance
policies, including your own, as firms invest people’s premiums in possibly
riskier assets. Notably, this buying spree was enabled by state insurance
52
regulators, who approved acquisitions of companies domiciled in their states.
These regulators, the Washington Post reported, frequently received “campaign
contributions, lavish dinners and the prospect of future employment” in the
53
industry they regulated. In fact, of over one hundred state insurance
commissioners surveyed, more than half ultimately worked for insurance
54
companies after their careers in public service ended. Little wonder, then, that
the industry’s acquisitions were so often approved.
But why were firms buying these companies in the first place? Like so many
other businesses that attracted private equity, insurance offered a steady cash
flow. People make premium payments every month that insurers invest, hoping
to make the money they need to pay when the policies came due. By buying
insurers, private equity firms believed that they invest the insurers’ money—in
leveraged buyouts, for instance, or in private credit—better than the insurers
would themselves. On top of this, firms could charge the insurance companies
they owned and, ultimately, their customers, various management fees for
 55
sourcing investments. Regarding these increased fees, Larry Rybka, the CEO
of private insurance company Valmark Financial, told CNBC that “there’s
56
nothing good in this for the policyholder.”
Private equity’s appetite for risk attracted it to insurance for another reason,
namely, that it could engineer them to hold ever-fewer reserves and give the
money to the private equity firms. By law, insurers have to keep money in
reserve—capital requirements are set by state regulators—to pay out their
benefits. But private equity firms have set up complicated schemes to avoid
these restrictions. In particular, several created reinsurance companies—insurers
57
for insurers—in Bermuda, and sold US policies to them. Bermuda has lower
taxes and, crucially, lower capital requirements, which allow the private equity
58
firms to use more of their policyholders’ money as they choose. This means
that private equity firms have more to invest from policyholders than do
traditional insurance companies. But it also means that they have less cushion
with which to absorb losses if those investments fail. Unsurprisingly, this poses
huge risks for policyholders and governments. With lower capital reserves,
private equity–owned insurance companies are more likely to fail if their
investments do, and with private equity firms shoveling their money into riskier
ventures, that failure is becoming more likely. Private equity firms’ “focus is on
maximizing their immediate financial returns, rather than ensuring that promised
retirement benefits are there at the end of the day for policyholders,” said Ben
59
Lawsky, the former superintendent of New York State’s financial regulator.
“This type of business model isn’t necessarily a natural fit for the insurance
60
business, where a failure can put policyholders at very significant risk.”
Apollo Global Management and the insurance company it helped to create,
Athene Holding, illustrate many of the problems. Apollo was, in many ways,
culturally ill suited to run a staid insurance company. Profiles of Apollo tended
to describe it as “bare-knuckled,” “cutthroat,” and “rough-edged,” adjectives
describing a culture at odds with the quiet, conservative business of taking
61
premiums and paying out policies. It was the kind of place where an employee
who failed to respond to a boss’s Saturday morning emails might get a follow-up
62 63
“?” ten minutes later, where employees worked twenty-hour days, and
where, when one of the firm’s original founders finally resigned, employees
 64
hummed “Ding-Dong! The Witch Is Dead” from The Wizard of Oz. Moreover,
it was a place riven with controversy. In 2020, the New York Times revealed that
Leon Black, Apollo’s cofounder and CEO, had paid the financier and sex
offender Jeffrey Epstein $158 million for supposed tax and estate planning
65
services. As reported in Bloomberg, Black was not accused of being involved
in Epstein’s criminal activities, and an internal investigation by an independent
law firm found no connection between Black and Epstein’s illegal activity.
Observers were incredulous, however, at the purported justification for the
66
payments, given that Epstein, in fact, had no tax or estate planning training.
The next year, a former model accused Black of sexual assault and sued him for
67
defamation. Black countersued and alleged that the woman’s case was, in fact,
orchestrated by another cofounder—Josh Harris—who sought to steal his job.
The whole crisis resulted in both Black and Harris leaving the firm they founded
and suggested that Apollo was, in culture and values, a poor fit for an industry—
insurance—that rested on caution, conservatism, and good judgment.
Nevertheless, Apollo became a private equity leader in the insurance
industry, beginning with its decision, in 2009, to provide funding to create
Athene. Athene’s business model was, in a sense, simple: it would buy the
policies that other insurers no longer wanted or the pension obligations that
companies could no longer afford. It would then invest the money that
policyholders and pensioners gave them every month or year into investments
that, it hoped, would earn more than it would have to pay when those policies
68
came due. Over a decade, Athene bought up plans and whole insurers, and
69 70
took on the pensions of companies like Lockheed Martin and JC Penney. At
the same time, Apollo became increasingly entwined with the insurer: by 2021,
Athene provided Apollo with 40 percent of its assets under management—that
is, the money it could use to invest in projects—and 30 percent of its revenue
71
from fees. That year, Apollo decided to buy a majority stake in Athene
outright.
Athene and Apollo’s operations raised a number of concerns. For one,
Athene’s business model was predicated on earning more money than other
insurers in large part by buying “alternative assets” like Apollo’s own private
72
equity and debt funds. These were more profitable than other staid
investments. But they were also riskier. And the insurance industry, perhaps
more than virtually any other, feared risk.
For another, according to Tom Gober, an independent forensic account who
73
focused on fraud in the insurance industry, Athene dramatically increased its
liabilities—that is, its obligations to policyholders—without increasing its
surplus: the excess of its assets over its obligations. Between 2020 and 2021, the
company’s liabilities increased by nearly $30 billion to $105 billion. At the same
74
time, its surplus declined from 1.7 percent of liabilities to 1.2 percent. This was
exceedingly small: according to Gober, an insurance company’s average surplus
75
was over 5 percent and could go as high as 25 percent. This meant that only a
small percentage of Athene’s investments needed to sour before, legally, the state
would be required to take it over.
Finally, according to Gober, Athene “ceded,” or sold, over $50 billion in
liabilities to its own offshore affiliates. Generally, offshore affiliates existed in
jurisdictions where accounting standards were looser and capital requirements
76
were lower. This meant that a large portion of Athene’s business was managed
in places that likely allowed even riskier investing strategies than those
permitted in the United States.
Together, this meant that, under Apollo’s watch, Athene was allegedly
investing in riskier assets, while keeping ever less capital on hand if those
investments soured. At the same time, it was moving more of its business
offshore, where even riskier behavior was allowed. While this did not spell
disaster, it certainly increased the chances that disaster could occur. And it was
all overseen by a company—Apollo—whose culture was wildly at odds with
that of the insurance industry.
So what would happen if Athene, or any private equity–owned insurance
company, collapsed? State guaranty organizations would, as their names suggest,
guarantee insurance policies up to a certain point. But these insurers do not cover
77
the entirety of claim holders’ policies—generally they pay only up to $300,000
—and variable annuity programs (those whose payments fluctuate with the
78
performance of their investments) are not covered at all. Moreover, guaranty
organizations are funded with payments by other insurers. So, when an insurance
company fails, it is the more responsible, surviving insurers who must pay the
costs. This means that while private equity firms such as Apollo use insurance
companies like Athene to extract fees and fund various investments, if those
investments sour, it will be others—other, more responsible companies, and
other, unsuspecting policyholders—who will bear the cost.

BUT INSURANCE WAS only a small part of private equity’s quest for more assets.
The industry also lobbied—successfully—to access 401(k) funds, including,
possibly someday, your own. This change matters because the money that
private equity firms need to finance their acquisitions and other endeavors has
traditionally come from the very rich, from endowments and sovereign wealth
funds, and from pension funds. But in recent years, the industry largely
79
exhausted these resources. In search of new pools of money, firms looked to
401(k) funds. Such funds historically had not invested in private equity, as courts
and regulators were generally skeptical about the appropriateness of such
investments for retirees. For unlike stocks and bonds, investments in private
equity funds were generally “illiquid”—that is, they could not be withdrawn
whenever people needed them. Private equity firms also often charged high fees
that were difficult to comprehend, and potentially, their investments were riskier
than those in the stock market.
Nothing categorically prevented managers of retirement funds from investing
in companies like Blackstone and Carlyle, but few did, for fear of being sued
over investments gone bad. To get 401(k) money, private equity firms needed
help from the government to insulate these funds from lawsuits. And that’s
exactly what they did, with the help of two men—Eugene Scalia and Jay Clayton
—who served as secretary of labor and chairman of the SEC, respectively,
during the Trump administration.
Scalia is the son of the late Supreme Court justice and inherited his father’s
abiding support for big corporations. At the law firm of Gibson Dunn, which
primarily defended large companies, Scalia’s clients included Bank of America,
80
Goldman Sachs, Facebook, and Walmart. He developed a particular specialty
defending businesses in suits brought by their employees and the government.
Among other accomplishments, he defended UPS from a lawsuit brought by
81
workers injured on the job and represented SeaWorld in a lawsuit by the
government after one of its whales killed a trainer. He was well compensated for
this work and earned over $6 million in the roughly year and a half before
82
President Trump nominated him to serve as secretary of labor. Once in
government, Scalia continued to be a fierce advocate for companies and against
employees: among other things, he reduced COVID-19 reporting requirements
83
for companies while at the same time opposing extended unemployment
84
benefits for workers.
Scalia’s partner in government, Jay Clayton, was a corporate lawyer before
President Trump appointed him chairman of the SEC. Like Scalia, Clayton
represented big businesses, though his practice skewed toward dealmaking on
85
behalf of finance and private equity firms. And like Scalia, Clayton was rich:
he enjoyed membership in the Philadelphia Cricket Club (the nation’s oldest
86 87
country club), invested with a half-dozen leading private equity firms, and,
88
with his wife, accumulated assets worth between $12 and $47 million. Lastly,
like Scalia, Clayton advocated for business while in government. During his
tenure as chairman, the SEC’s enforcement actions dropped dramatically: in one
year, it brought just thirty-one insider trading cases, the lowest level since
89
1996. “That means they’re not trying,” Bartlett Naylor of Public Citizen told
NPR. “That means they told the cops to go play canasta instead of doing their
90
job.”
Clayton fought to expand private equity’s access to ordinary investors’
money. In an interview with, of all people, the cofounder of the private equity
firm the Carlyle Group, David Rubenstein, Clayton enthused about the idea of
giving private equity firms access to retirees’ funds. “[R]etirement money in the
defined-contribution [i.e., 401(k)] plan doesn’t have the same investment
opportunities that a defined-benefit [i.e., pension] plan has, even though they’re
91
both retirement dollars,” he complained. Rubenstein, in what looked a lot like
lobbying out in public, agreed: 401(k) managers should probably be allowed to
invest some money in private equity firms, he said, even if some of the money
92
was “lost or didn’t do as well.”
And so Clayton worked with Scalia to give firms like Rubenstein’s Carlyle
93
access to ordinary investors’ money. In 2020, with the support of both Clayton
and Scalia, the Department of Labor issued a letter that generally permitted
funds that managed 401(k)s to invest part of their clients’ assets with private
94
equity firms. The letter didn’t change any laws or regulations, but it endorsed
fund managers’ decisions to invest in private equity. With the government’s
imprimatur, this alone essentially insulated funds from lawsuits by ordinary
people if and when their investments ever went bad.
The letter was a huge boon to private equity. At the time it was issued, the
95
industry had about $4 trillion in assets under management; 401(k) funds had
96
about $6 trillion. Even if the industry got only a small fraction of that money, it
would expand firms’ total assets under management dramatically. Years earlier,
Stephen Schwarzman of Blackstone had gushed that “in life you have to have a
97
dream,” and “one of the dreams” was to access ordinary investors’ money.
That dream was now a reality. The industry’s lobbying organization said that the
letter would “give more hardworking Americans expanded access to private
98
markets.” Scalia observed that it “helps level the playing field for ordinary
99
investors,” and Clayton enthused that the letter would give “Main Street
investors” a “choice” to invest in the private markets. Consumer groups were far
less sanguine. “Secretary Scalia is still working for his former clients,” Barbara
100
Roper of the Consumer Federation of America complained. “This is a
101
multipronged attack on Americans’ retirement security.” With the danger
posed by private equity—its illiquidity, its fees, and its volatility—she was likely
right.
Clayton and Scalia were well compensated after their government work.
Within months of leaving office, Clayton was appointed to the newly created
102
position of lead independent director at Apollo Global Management. Shortly
thereafter, as Apollo’s CEO and chairman Leon Black was consumed by scandal,
Clayton was named to replace Black as nonexecutive chairman of the
103
company. Scalia, meanwhile, returned to his old law firm, Gibson Dunn,
104
where he cochaired its regulatory practice and continued to write about his
105
passion: cutting unemployment benefits for workers.

WHAT WILL HAPPEN now that private equity has all this money? First, people’s
retirement accounts may be less secure. Investments in private equity firms are
simply less transparent than those in, say, public companies. Our history of
financial crises teaches that opacity inevitably leads to riskier investments, and
risky investments, by definition, sometimes fail. Second, with more cash but not
necessarily more companies to buy, private equity firms may compete more
vigorously on the same deals. The value of a business is often determined in part
by a “multiple” of its cash flow: a business might be worth three, four, or five
times however much it makes in a year. Competition among firms has increased
these multiples to such an extent that, by 2020, average deal valuations were
twelve times the common measure of cash flow, higher than the previous peak in
106
2007. Private equity firms are also just buying worse companies. In 2019, for
the first time ever, a majority of private equity investments went to unprofitable
companies. With these companies forced to service the debt that private equity
firms load onto them, this will all increase the odds that the companies
themselves will fail.
More generally, private equity firms will continue to take on many of the
tasks that investment banks had before the Great Recession. With ever more
money under their management to finance their various adventures, this poses
systemic risks for the economy. But unlike the Great Recession, private equity
firms may have externalized many of the risks they create. If one of their
businesses fails, private equity firms may lose their management fees and their
investment in the company. But the majority—likely the vast majority—of the
107
losses will be absorbed by employees, investors, and lenders, since private
equity firms generally aren’t liable for the debts of their funds. The result: in a
future financial crisis, the companies that private equity firms own may fail, but
the private equity firms themselves may survive and even thrive.
There are things that can be done to reverse this. To push companies out of
the private credit markets and toward the public markets, the SEC can revise
Regulation D, which permits broad solicitations of private money, and Rule
144A, which permits the resale of private debt. To reduce risks to retirees and
investors, the Department of Labor can rescind its letter granting private equity
firms access to 401(k)s, and state regulators can reject future private equity
acquisitions of insurance companies. To its credit, the Biden administration
added a follow-up letter, generally limiting private equity investments to those
108
401(k) managers that already had experience working with private equity. But
the new letter contained loopholes so large that Bloomberg concluded that “the
109
fundamentals of the [original] letter remained untouched.”
 More systematically, the Federal Reserve, alongside other regulators, should
prohibit the banks they regulate from making loans to private equity firms that
would result in excessive leverage to companies. The Financial Stability
Oversight Council, part of the Treasury Department, should designate the largest
private equity firms as systemically important, subjecting them to greater
oversight. And state insurance regulators should cast a skeptical eye upon further
acquisitions of insurance companies by these firms. Together, these actions
would contain the metastasization of private equity to disparate industries and
limit the damage that such expansion might cause.
We have to move quickly. As private equity firms get used to the rules
promulgated by the Trump administration, it will become harder and harder to
undo them. It is possible to do so and prevent private equity firms from repeating
the mistakes of the investment banks a generation ago. But we have to act now.
 CHAPTER SEVEN

CAPTIVE AUDIENCE
Private Equity in Prisons

America’s prisons are increasingly operated by private equity firms. If you’re

incarcerated today, the food you eat at the cafeteria or buy at the commissary
may be served by the Keefe Group or Trinity Services Group, both of which are
1
owned by the private equity firm H.I.G. Capital. If you call your lawyer or a
loved one, you will likely do so on a phone operated by Securus Technologies
2 3
(owned by Platinum Equity), ICSolutions (H.I.G.), or Global Tel Link
4
(American Securities). If you get sick, the care you receive may be
5 6
administered by Wellpath (H.I.G.) or Corizon Health (Flacks Group). If you’re
placed under house arrest, the ankle monitor you wear may be operated by an
7
Apax Partners company. And if you are given a debit card with your prison
8
wages upon release, it may be managed by a business owned by Platinum
9
Equity.
Along the way, you may pay thousands of dollars to these companies for the
cost of your own incarceration: money to the commissary, money to place a
phone call or send an email, money to post bail, and money to access your own
10
wages. You may even pay money for every minute you read an e-book, a sort
of protoprivatization of the prison library system.
The story of private equity’s privatization of prison services is infuriating in
its own right. But it is also illustrative of the industry’s broader business model,
for it shows how, when facing a captive audience, firms are willing—eager, even
—to eviscerate the services they offer, until the companies they buy give the
bare minimum required for subsistence and survival, and sometimes less. While
this is seen most clearly in the prison industry, private equity’s perspective is not
exclusive to it. As other chapters explain, it is fundamental to these firms’
philosophies to raise prices and cut care to a natural breaking point, and with
short investment horizons, they do so with little regard for the long-term
consequences. Unfortunately—and here again, prisons are illustrative but not
exclusive—this is all happening with the support of local governments, whose
contracts with private equity firms save, and often generate, money for police
and sheriffs’ offices. In fact, local law enforcement agencies have become
private equity’s strongest advocates, defending the industry and shielding it from
scrutiny and regulation. The entwining of private equity and government is not
unique, but in prisons, it finds its nadir.
As for the incarceration industry itself, this trend is without meaningful
precedent. In America, we have a long history of debtors’ prisons: punishments
for those who could not pay their debts and deterrents for those who might be
similarly situated. These were in time replaced with the civil bankruptcy code,
11
which allowed people to discharge their debts without going to prison. We also
have a dark history of convict leasing, where prisoners—overwhelmingly
12
African American men—were lent out as labor to private companies. But only
rarely have we actually charged prisoners for their own incarceration, as most
13
inmates lacked the ability to pay for their imprisonment. Yet now, that is
precisely what we are doing, with prisoners’ and their families’ money going not
primarily to the government but to companies and, in particular, to companies
owned by private equity firms.
These firms are attracted to prison services for a number of reasons. First,
prison services tend to offer steady cash flows through government contracts,
which private equity firms are adept at landing. Second, these businesses service
a literally captive audience—prisoners—who will tolerate, because they must,
steep price increases and deep quality cuts. In other words, prison services can
be gutted, largely without consequence. Third, prisons are run by government
agencies that can be co-opted to become firms’ allies and advocates. To
emphasize, while these traits attract private equity to prisons, they exist in so
many other industries described in this book: health care, housing, nursing
homes, and so much else. In other words, what private equity firms do to
prisoners, they may someday hope to do to you.
THE MOST PUBLIC part of this story has been private equity firms’ purchase of
prison phone companies. (Unless otherwise indicated, I use the terms jail and
prison interchangeably, though jails are typically where people are held after
being newly arrested, while awaiting trial, or to serve short sentences. Prisons
are generally where people convicted of crimes serve their sentences.) For
decades, inmates were generally allowed only a few collect calls a year, until
1973, when the Federal Bureau of Prisons recommended expanding inmates’
access to phones, citing evidence of increased recidivism among people who
14
were isolated from their families and communities. Federal prisons loosened
their restrictions on calls, followed by state and local facilities, and for a decade,
prisoners were able to reach their loved ones at rates comparable to those on the
outside, as billing was handled by AT&T. But after the breakup of America’s
telephone monopoly and a favorable deregulatory ruling from the Federal
15
Communications Commission (FCC) in the early 1990s, companies like Sprint
and MCI entered the prison communications business, followed by smaller,
16
niche competitors, like Securus Technologies and Global Tel Link. Under their
contracts, governments didn’t pay these companies for their services. Rather, it
was the opposite: the companies paid the prisons for the privilege to operate the
phone systems and made their money by charging prisoners for their calls. This
created a perverse incentive system: prison phone companies were encouraged
not to lower their rates but to raise them so that correctional facilities got as
17
much money as possible.
At this point, private equity got in the game, attracted to an industry with
steady cash flows and a literally captive audience. In 2004, H.I.G. Capital
18
bought the company that became Securus, which it sold to Castle Harlan in
19 20
2011, who sold it to ABRY Partners in 2013, who sold it in turn to Platinum
21
Equity in 2017. Similar dances occurred with the other leading phone
companies: Global Tel Link (now ViaPath Technologies) is now owned by the
22
private equity firm American Securities, and ICSolutions was most recently
23
owned by H.I.G. Capital.
This was a great deal for prisons, which were allegedly offered as much as 94
24
percent of the revenue that phone companies made from inmates’ calls. With
prisons and companies aligned, costs for inmates spiraled. Many states charged
 25
$12 or more for a fifteen-minute call, and in one Arkansas jail, the cost
26
reached nearly $25. Companies also charged various fees for users to pay their
bills by credit card, to pay by phone, to process bills, and to variously create,
27
maintain, or close accounts. One former inmate told the Detroit Free Press that
he spent $3,000 on calls over just five months to keep in touch with his family
28
and maintain a rental property business. “Life didn’t stop because I was in
29
jail,” he said. Another limited his calls to only the most urgent situations, going
months without talking to his four- and five-year-old children so that his family
could afford childcare and other expenses. “The longer you’ve been in prison,
the more distant you become to the outside world,” yet another former inmate
30 31
told The Verge. “People can’t afford you anymore.”
Moreover, the costs of these calls were borne largely by those least able to
pay. Family members—women in particular—overwhelmingly shouldered the
burden of prison phone calls, and one-third of these family members went into
32
debt to pay for them. “It’s death by a thousand pennies,” one woman, who
founded a support group for incarcerated family members, told the Nation.
33
“Most people around here just don’t have a lot of pennies to spare.”
This was all in contrast to the people who profited from these calls. It is
worth spending a moment to focus on just one: Tom Gores, whose private equity
firm, Platinum Equity, owns Securus. Gores is an American success story, a
child of immigrants who formed Platinum Equity by cold-calling businesses to
34
ask if they had divisions they wanted to sell off. He bought his first business
35
for $200,000 and flipped it to profitability in six months. Over the years, Gores
36
purchased dozens of companies, including the San Diego Union-Tribune, the
37
textbook publisher McGraw-Hill, and the yearbook and class ring company
38
Jostens. Along the way he became fabulously rich, and his 90,000-square-foot
office in Beverly Hills featured marble and mahogany paneling, paintings by
39
Joan Miró and Alexander Calder, and a courtyard fountain. In 2016, he bought
40
a home in Los Angeles for $100 million, whose structures covered two acres
and in which a single bedroom spanned 5,300 square feet, about twice the size of
 41
an average American home. The estate had two outdoor pools (and inside, a
water wall flowing into a third), a hair salon with manicure and pedicure
42
stations, and a theater with a dedicated valet entrance.
In 2017, shortly after buying his mansion, Gores, through his firm, bought
43
Securus for $1.5 billion. His purchase would have likely generated little
interest—another private equity billionaire buying another prison services
company—were it not for the fact that he’d also bought the Detroit Pistons a few
years before. Gores apparently was not an adept manager, as he traded young
players who would succeed elsewhere for established ones who nevertheless
44
failed to win the Pistons a title. But Gores did demonstrate genuine empathy
and support for the community. He donated $10 million to address the Flint
45
water crisis. He moved the team from suburban Auburn Hills back to
46
downtown Detroit. And after the killings of Breonna Taylor, George Floyd,
and Ahmaud Arbery, Gores issued a statement in support of racial justice and
47
committed to specific local initiatives.
In light of these actions, his purchase of a prison phone company—one that
profited from a criminal justice system that disproportionately affected people of
color—seemed wildly hypocritical. And here, Bianca Tylek and her
organization, Worth Rises, were able to capitalize on this hypocrisy. Tylek was a
criminal justice reform advocate who founded Worth Rises after graduating from
law school in 2016. She had spent the first part of her career working for Morgan
Stanley and Citibank, and the way her conversation was littered with profanity
was evidence of her time in the finance industry. Her experience also meant that
she was perhaps uniquely capable among activists of understanding private
equity and its weaknesses. “In banking, I learned a skill set to build companies
48
that I now use to dismantle them,” she said.
In 2018, Worth Rises successfully pushed the FCC to block Securus’s
proposed acquisition of one of its last remaining competitors, ICSolutions. The
group argued that the merger would result in just two companies controlling 90
percent of the prison phone market and would “lead to fewer options for
facilities and higher rates for the end consumers, [namely,] those with
49
incarcerated loved ones.” The FCC apparently agreed, and forced Securus to
50
abandon the deal.
 Worth Rises then turned to lobby Platinum Equity’s investors, exploiting a
quirk in the industry that made private equity more susceptible to influence than,
say, most public companies, whose investors tend to be dispersed. If you have a
401(k), for instance, your money may be invested in hundreds of different
businesses. In contrast, private equity firms typically draw from a smaller
number of large institutional investors, often public pension funds, and these
pension funds allow public comments before making investment decisions.
Worth Rises seized on this fact and lobbied three large pension funds that were
considering investing with Platinum Equity. In a major victory, one of them—
Pennsylvania’s public employee fund—chose not to invest a reported $150
51
million with the private equity firm. Dave Fillman, the chairman of the fund’s
board, said that “I’ve been on this board for about 20 years, and I’ve never seen
52
the amount of negative press on a firm that I’ve seen here today.” He said he
feared Platinum would invest in some other “messed up” company “that we’re
53
not going to know about.”
The public pressure campaign continued. In September 2020, Worth Rises
and another nonprofit wrote a letter to the Los Angeles County Museum of Art,
54
opposing Gores’s membership on the museum’s board. After some hemming
and hawing, Gores resigned. A few months later, the organization took out a full-
page ad in the New York Times, addressed to the commissioner of the NBA and
the league’s various owners, asking, “If black lives matter, what are you doing
55 56
about Detroit Pistons owner Tom Gores?” Gores said of the ad, “it hurts,”
and later conceded that the prison telephone business should probably be run by
57
nonprofits. It was an understandable but hollow statement, given that Gores
was perhaps the only person in the world capable of making that happen.
And so, Worth Rises and other advocacy organizations continued to push
58 59
their agenda at the local level and in the courts. San Francisco, New York,
60
and Connecticut all passed bills to make phone calls free for inmates, all at
Worth Rises’s urging. At the same time, the nonprofit Justice Catalyst and a
coalition of other groups sued Securus and Global Tel Link in federal district
court, alleging that the companies conspired to raise prices. (The defendants
61
largely denied the allegations and the litigation remains ongoing.) Separately,
hundreds of lawyers sued Securus for illegally recording privileged phone
 62
calls. Communications between lawyers and their clients generally are
constitutionally protected, but 750 attorneys in and around Kansas alleged that
Securus had a widespread policy of recording their conversations with inmates.
Securus and a private prison operator ultimately agreed to settle the case for $3.7
63
million, while similar lawsuits began in Maine, Texas, Kansas, and California.
Faced with all this pressure, over the course of 2020, Gores and Securus
announced a number of new measures. They would give away $3 million to
64
reduce recidivism and improve prisoner reentry, they would continue to reduce
65
the cost of calls, and Gores himself would give away his personal profits from
66
the company. Gores told the Detroit Free Press, with considerable self-
importance, that “ultimately it’ll be a blessing that I’m in there and that
67
somebody cares about what’s happening.” But Tylek responded, “We’re not
68
asking you to come save people; we’re asking you to stop taking from them.”
She added, “So before you can argue that you want to do something good and all
these things, you have to stop doing the harm that you’re trying to unwind.
69
Those two things can’t operate in the same space.” Thus far, Gores hasn’t
heeded Tylek’s direction: he has not yet sold Securus—now rebranded Aventiv
Technologies—nor has he shut it down. It remains, as of this writing, a part of
70
Platinum Equity’s portfolio.

THE GRASSROOTS to lower Securus’s outrageous prices were

EFFORTS
heartening, but they were necessitated by a twenty-year, largely unsuccessful
movement to regulate these companies at the federal level. In 2001, a group of
inmates and their family members sued the leading prison phone companies,
71
including the company that became Securus, alleging that their high costs
72
violated inmates’ constitutional rights. Later that year, a court ruled that the
lawsuit was premature and that the plaintiffs would need to first seek redress
through the Federal Communications Commission. But under President Bush’s
appointees, the FCC took no action, and for years the matter lingered, until
finally Barack Obama was elected president and appointed Mignon Clyburn as a
new commissioner. Clyburn was one of the few African American members in
the commission’s history, and after meeting with activists, she took a particular
interest in the issue of prison phone call costs. It took barely half an hour, she
said, to convince her of the importance of the matter, which disproportionately
73
affected families of color and which later she described as a “tax on pain.”
Prison phone systems, she said, were “the smartest, most evil way to make
74
money.”
Clyburn pushed the FCC to regulate the cost of prison calls, a move that,
unsurprisingly, Securus and its peers opposed. They were joined in opposition by
the National Sheriffs’ Association, which represented a powerful constituency.
75
“Who is going to go against the sheriffs of these counties?” asked Clyburn.
76
“Who is going to go against the wardens?” In comments to the FCC, the
sheriffs threatened that taxes could rise if rates were reduced, or that prison
77
phone calls could be banned entirely. It did not need to be said—though,
inexplicably, the sheriffs said it—that they received financial benefits from their
78
arrangement with the companies. (Even today, the Sheriffs’ Association lists
Global Tel Link—now Viapath Technologies—as one of its “Diamond Level”
corporate partners, which entitles it to a private dinner with the association’s
79
executive committee and a reception with its board of directors.) In other
words, the Sheriffs’ Association took Securus’s money and became one of its
most vocal and powerful advocates.
Yet even in the face of all this lobbying by law enforcement and the phone
companies, in 2013 Clyburn convinced her fellow commissioners to place strong
80
limits on the rates for such calls. Under the new rules, collect calls would cost
twenty-five cents a minute. It was an enormous accomplishment and one that the
phone companies and their allies in state government sued to stop. But before a
court could even reach a decision, Donald Trump was elected president and
appointed a former Verizon lawyer, Ajit Pai, as chairman of the FCC. One week
later, in a highly unusual move, Pai said that the commission would refuse to
81
defend much of its own regulation.
Pai’s decision was controversial: in private practice, Securus had been one of
82
his clients, and in 2017, as chairman, he voted to approve Platinum Equity’s
83
acquisition of the company. (Later, Pai left the commission to work for another
 84
private equity firm. ) Clyburn called Pai’s decision not to defend the rule “one
85
of the most painful times of my life.” Without the government to argue for its
own proposal, an appeals court held that the FCC lacked the authority to regulate
86
intrastate prison phone calls, rendering the rule largely toothless. Clyburn said
the decision marked “a sad day for the more than 2.7 million children in this
87
country with at least one incarcerated parent.”
In 2021, with a newly reconstituted commission under President Biden, the
FCC voted unanimously to lower the rates for interstate—as opposed to
88
intrastate—calls. But because the vast majority of prison calls are reportedly
89
made in state, the action affected only a portion of the business of these
companies. Meanwhile, members of Congress proposed legislation to regulate
90
intrastate calls, but the bills have languished in committee.
Looking back on the whole reform effort, Clyburn lamented the entrenched
forces, including local law enforcement, who defended the current system.
91
“There are just too many critical people that are being enriched,” she said.
“There is a dependence on this flow of income. Those who have become
92
dependent on it are not going to give it up.” The whole saga showed how hard
it was to regulate these companies at the federal level and explained why
activists focused so much on action by states and cities. A sclerotic
administrative process, a skeptical court, and occasionally industry-friendly
leadership all make it exceedingly difficult to enact national reforms.
Finally, the story shows how prison phone companies and local law
enforcement allied with one another in a mutually beneficial financial
partnership, a story that continues today. In recent years, Securus and Global Tel
Link have expanded to sell video teleconferencing services to prisoners. In
theory, this could have been a boon to inmates, who now could talk to loved
ones who couldn’t visit in person. But unsurprisingly, these companies
demanded extraordinary sums for their services. Securus’s subsidiary, JPay, for
93
instance, charged $12.95 for a half-hour call in Washington state. Prisoners
94
there earned between 36 cents and $2.70 per hour, meaning that a single thirty-
minute call could cost nearly a week’s wages.
 Not that inmates had much of a choice. For a time, in its contracts with law
enforcement, Securus required that prisons using their teleconferencing service
95
actually stop in-person visits. In Keene, New Hampshire, for instance, when
the local jail signed a teleconferencing contract with Securus, it agreed to ban all
96
in-person visits with family members. One mother described the process of
going to the jail to “visit” her son, not directly in person or even separated by
plexiglass but through a small screen. During the visit the sound often failed and
the video frequently froze. “I can’t stand it, because he’s on the screen in front of
97
me, and I can’t touch him,” she told NPR.
Under heavy criticism, in 2015, Securus struck this term from its contracts,
98
and delegated the decision to local authorities. But the local authorities had the
same incentives as Securus because they were getting a slice of the money
coming from the teleconferencing services. So even after the company stopped
demanding that prisons end in-person visits, according to the nonprofit news
99
organization The Appeal, prisons continued to do so voluntarily. The
companies and prisons, it seems, had fully allied with one another to the harm of
inmates and their families.
These stories were upsetting, but they were not isolated to prisons, as firms
like Platinum Equity and H.I.G. cut the quality of care and otherwise
mismanaged other companies in their portfolios. For instance, as detailed in
Chapter 8, Platinum’s portfolio company, Transworld Systems, was fined
millions of dollars for mishandling students’ loan accounts. H.I.G. Capital,
meanwhile, paid nearly $20 million to resolve claims that a mental health
100
company it owned provided services with unlicensed and unqualified staff.
Increasing prices and slashing the quality of the services their companies
provided was central to these firms’ business models. And if their tactics in
prison services seemed extreme, it was only because inmates had even less
ability to fight back than did, say, student borrowers and mental health patients.

PHONES ARE JUST one star in the constellation of private equity’s rollup of prison
services. For example, H.I.G. Capital’s portfolio companies Keefe Group and
Trinity Services increasingly provide the food that inmates eat in cafeterias and
commissaries. While these companies offer their services across the country, it is
instructive to look at the experiment in just one state: Michigan. There, the
101
government moved to privatize its prison food services in 2013, and in 2015,
contracted H.I.G.-owned Trinity Services to provide meals. It was quickly
apparent that the quality of the food that Trinity offered was appalling. On at
least three occasions, Trinity served food with maggots in it, and other times
served food contaminated with mold and “crunchy dirt.” One former Trinity
employee, Steve Pine, said that he was fired for refusing to serve about one
102
hundred bags of rotten potatoes. “It was the most disgusting thing I’ve seen in
my life,” Pine told the Detroit Free Press. “You could smell them… they had
103
black and green mold all over them.” Another former corrections officer told
Salon, “It was a human atrocity against the inmates, in my opinion.” He added,
“The rotten garbage that was being served, plus the way they were allowing it to
104
be prepared. It was an atrocity.”
105
However terrible the food was, at times, there wasn’t enough of it. Under
its cafeteria contract, Trinity was paid based on the number of prisoners in the
106
facilities rather than the number of meals it served. In theory, this saved effort
in tracking how many meals were served. But it also subtly changed Trinity’s
incentives, for it meant that even if the meals were so bad that prisoners would
not or could not eat them, the company would still be paid. Through another
portfolio company, Trinity’s private equity owner also owned the contract for the
commissaries, where prisoners paid for food and supplies. Together, this created
a perverse incentive system to reduce the quantity and quality of cafeteria meals
in order to push inmates to pay for commissary food. As such, inmates
complained to Detroit’s Metro Times that Trinity wasn’t serving food with the
107
minimum calories required by law. “[W]hen a person goes hungry,” said one
108
inmate, “the only thing it does is make them angry.”
Prisoners’ complaints about the food actually helped to incite a prison riot, in
which inmates started a fire, smashed windows and sinks, and barricaded
109
themselves into their housing areas. Officers with pepper bomb–loaded guns
were sent to quell the uprising, reportedly the first time the state had to quash a
110
riot since 1981. The riot cost the Michigan government about $900,000. And
these weren’t the only problems with Trinity. The company had enormous staff
turnover—one Trinity employee was fired for having sex with an inmate—and
over one hundred of its other employees were placed on “stop orders” for
111
violating prison rules. Ultimately, Michigan’s governor announced that the
112
state would no longer rely on Trinity for food services. The experiment with
113
private equity–owned privatization of prison food in that state had failed.
Michigan wasn’t the only state that used Trinity. In Arizona, the company
114
allegedly served meat marked “not fit for human consumption.” The meat,
supposedly turkey, had already turned green, and one inmate told the Phoenix
New Times that “[w]e would constantly be gagging from the smell that seeped
115
out.” In Ohio, Trinity reportedly served chicken labeled “for further
116 117
processing only.” In Utah, it served food with maggots, mold, and dirt. And
in Atlanta, where Trinity provided food services, prisoners complained about
being severely undernourished. One inmate said that he regularly ate toothpaste
118
and toilet paper to ease his hunger pangs. Another repeatedly filed a
119
complaint with a single word: “Hungry.” In a system that served only two
meals a day, several inmates said that they lost twenty pounds or more over just
a few months.
In all these cases, the basic logic of private equity applied: with a captive
audience and steady cash flows, firms’ portfolio companies could serve, quite
literally, inedible food without consequence. Of course, private equity firms and
their businesses might be more responsible if they faced legal consequences for
their actions, and lots of prisoners have sued to stop various mistreatments. But
the law has developed in ways unfavorable to prisoners and favorable to
governments and prison service companies. For one thing, the Prison Litigation
Reform Act required prisoners to exhaust their administrative remedies before
120
bringing their challenges to court, a long and potentially fruitless process. For
another, a forgiving body of case law has developed for prison food providers,
which allows that “isolated incidents” of rodents or insects appearing near food
121
do not violate the Eighth Amendment’s ban on cruel and unusual punishment.
Moreover, to successfully sue the companies (as opposed to individual
employees), prisoners must generally show that the companies were, in effect,
122
acting as arms of the state and that they had unconstitutional policies, as
123
opposed to merely the occasional impermissible incident. Finally, to recover
damages not just from the companies but their private equity owners, plaintiffs
must often show that a given company and private equity firm are so intertwined
124
that their “separate personalities do not exist,” a difficult proposition to prove.
The cumulative effect of these decisions was to make it enormously difficult
for prisoners to successfully sue and recover damages for atrocious, unsafe, or
insufficient food. This difficulty became a near impossibility when trying to hold
private equity owners responsible as well. Without the possibility of
consequences, firms had no incentive other than to provide the worst food at the
cheapest prices to prisoners. It saved money, and no matter the harm to people,
the private equity firms themselves would be fine.
More than food, private equity’s flaws were most concerning in their
acquisitions of prison health care companies. The industry owed its modern
genesis to the Supreme Court, which, in its 1976 decision Estelle v. Gamble,
established prisoners’ constitutional right to health care. That case concerned J.
W. Gamble, a Texas inmate who was injured while working on loan at a local
125
textile mill. Gamble’s doctors gave him painkillers for the injury but failed to
perform an X-ray, and when Gamble refused to work further, was moved to
solitary confinement. Gamble protested his treatment in a case that wound its
way to the Supreme Court and argued that his inadequate care was an
unconstitutional violation of the Eighth Amendment’s prohibition on cruel and
unusual punishment. The Supreme Court agreed and announced that the
“deliberate indifference to serious medical needs of prisoners” violated the
Constitution. Gamble’s case thus created a legal minimum of care for prisoners
in America (Gamble himself did not benefit, as a lower court found that his care
was not so poor as to justify compensation. He was later murdered by a fellow
prisoner). But correctional facilities struggled to adapt to this constitutional
guarantee of basic health care, and after the widespread closure of mental health
hospitals in the 1990s and 2000s, many people who would have wound up in
126
such facilities went to jail. Increasingly, prisons turned to private companies
to offer health care services, and by 2018, 62 percent of surveyed jails used some
sort of private health care service.
Today, the two leading correctional health care companies—Wellpath and
Corizon Health—are owned by private equity firms (H.I.G. Capital and
BlueMountain Capital Management, respectively). Wellpath cares for about
127
250,000 prisoners, and Corizon has responsibility for 180,000. As with phone
and food services, these companies have disastrous contractual incentives. They
are often paid a flat rate based on the number of prisoners in a facility and are
thus incentivized to keep costs low. Unsurprisingly, there are any number of
examples of these companies badly mishandling or ignoring prisoners’ health
problems, with horrible results. In Arizona, for instance, a fifty-nine-year-old
inmate allegedly died after nurses ignored his cries for help, even while
128
“weeping lesions” on his body were covered with flies. At the time, the state’s
129
prison health care services were administered by Corizon. Another inmate
130
wrote a “notice of impending death” when his cancer went untreated, also by
131
Corizon. “Now because of there [sic] delay, I may be luckey [sic] to be alive
132
for 30 days,” he wrote. He was dead in a month. Another lawsuit alleged that
a prisoner died in 2017 from a rare fungal infection (Corizon managed his
133
care). The inmate allegedly suffered a “staggeringly slow, physically and
134
mentally excruciating death.” (Before trial, Corizon successfully had the case
dismissed by disqualifying the expert witness for the inmate’s mother, making
135
her unable to prosecute her claim.) In New York’s Westchester County, a
thirty-six-year-old man died of a heart attack after a nurse for Correct Care
136
Solutions (the predecessor to Wellpath) said that he was faking his symptoms.
And in another case involving Correct Care Solutions, a mentally ill woman
alerted staff that she was having contractions. Staff failed to come to her aid, and
137
she was forced to give birth in her cell, alone.
Overall, Corizon and Wellpath were sued about 1,500 times in just five
138
years, not just for individual harms like the ones above but for broader
systemic failings too. In Maine, for instance, a class action lawsuit alleged that
Wellpath treated just 3 of the more than 580 inmates who were diagnosed with
139
hepatitis C, a disease that can damage and eventually destroy liver function.
Instead, Wellpath and the department of corrections had an apparent policy, not
of preventing the disease’s progression but of treating only those people who
already showed signs of extreme liver damage. The state ultimately settled the
class action lawsuit and agreed to treat all inmates who suffered from the
disease. Elsewhere, in Pierce County, outside Seattle, Washington, prison
officials alleged that medical professionals employed by the private equity–
owned Correct Care Solutions were not, in fact, licensed to practice in the state
140
and “had to be escorted out of the jail by corrections staff.” Insufficient
management and inadequate training “resulted in literally weekly turnover,”
141
according to the county. The company even lacked enough medications to
142
treat patients, with a nursing director announcing a “drug holiday” for a week.
A jury eventually awarded the county nearly $2 million for the company’s
143
negligence.
But if private equity–owned health care companies weren’t doing a good job,
why were they so dominant? In essence, these companies’ real product may not
be their health care services but the indemnification they provide state and local
144
governments. Corizon and Wellpath widely agree to defend prisoners’ claims
against them, relieving governments of some of the burden of costly litigation.
145
These companies often rely on the same law firms for their defenses and so
can bring to bear a national litigation strategy against individual defendants. The
likely result: more wins, fewer losses, and less litigation for governments to
worry about. As Todd Murphy, the business development director for one of
146
Wellpath’s predecessor companies, put it, “the biggest thing we do is
indemnify the county against risk and reliability, [and] do everything we can to
147
keep them out of trouble.”
And if private equity firms insulate governments from legal liability, they
also insulate themselves too. In one case, for instance, an incarcerated man died
148
of sepsis while under the general care of Wellpath. When his estate sued
Wellpath’s owner, H.I.G. Capital, for wrongful death, H.I.G. successfully had the
149
case against it dismissed. The court determined that even if H.I.G. “acquired,
controlled, managed, and directed Wellpath,” that alone would be insufficient to
hold the private equity firm liable, as the one was not the “alter ego” of the
150
other. If such a conclusion seems confusing, it was: the decision was the sort
of legal sleight of hand that made no sense except perhaps to the lawyers who
performed it. But it also showed how private equity firms were insulated from
the consequences of their own actions and had little, if any, incentive to improve
the quality of their care, even when lack of care proved deadly.
FINALLY, AS PART of their rollup, private equity firms are expanding their carceral
reach beyond prison itself and into prison release cards. These are debit cards
that facilities give inmates when leaving jail or prison, in theory holding the
money that the inmates brought with them, that they made inside, or that the
facilities gave them. But multiple lawsuits allege that the business model of
these companies was largely to extract fees from prisoners. For instance, one
151
plaintiff, Jeffrey Reichert, was arrested for driving while intoxicated. When he
was detained, the local jail confiscated the $177.66 he had in cash. He spent just
four hours in detention but upon his release was not given his money back.
152
Instead, he was given an ironically named Access Freedom debit card.
Reichert quickly found that the card, which he had not previously agreed to take,
was slowly draining him of his money: there was a weekly maintenance fee, an
153
inquiry fee to check the balance, and an issuer fee to withdraw funds. This, it
turned out, was company policy: the Keefe Group, which issued the card and
which was owned by H.I.G. Capital, charged fees for card activity, for card
inactivity, to request too much money, to ask about how much money there was
to request, to replace a card, and to close the account. “Clearly, these cards are
designed to make it impossible to avoid fees,” wrote Lauren Sanders of the
154
National Consumer Law Center. A portion of the case was settled, and Keefe
agreed to pay a percentage of the fees it took from prisoners, but much of the
155
litigation remains ongoing. Additionally, the Consumer Financial Protection
Bureau (CFPB) eventually fined JPay, which issued many of these cards and
which was owned by Tom Gores’s Platinum Equity. The CFPB said that JPay’s
tactic to attach fees to credit cards after people were released from prison was
156
abusive. In the settlement, JPay agreed to give the former prisoners $4 million
and pay a penalty of $2 million, as well as limit the fees that it would charge in
157
the future.
While such litigation and regulation is welcome, it appears simply to be the
cost of doing business for the companies themselves, as private equity firms
continue to invest in prison services. The reason why goes back to the kinds of
businesses that Tom Gores and his peers buy. Platinum Equity’s website
advertises that it seeks companies with “[l]ong-term customers and stable
 158
revenue.” So it is with prisons, where a loyal customer base is guaranteed and
where customers are certain to provide Platinum with a stable source of revenue.
Moreover, it’s an industry where prisoners have little power to protest declining
product quality or increasing prices. Finally, it is an industry where private
equity can form alliances with state and local governments and turn them into
effective advocates for the status quo.
In this sense, private equity’s excursion in prison services is less unique than
it is illustrative: in industries where consumers have limited options, private
equity firms will raise the prices and gut the quality of their services until people
very nearly reach the breaking point, and firms do this with the government’s
help. In this way, what firms do in prisons is no different than what they do in
civilian health care, housing, and nursing homes. The only difference is that in
these other industries, the actions of private equity happen on a far grander scale.
But if there is reason for fear, there is also reason for hope. People like
Bianca Tylek and Mignon Clyburn have, in fits and starts, been able to shame,
litigate, regulate, and legislate against companies like Securus and Platinum
Equity and, however incompletely, slow their growth. Where courts blocked
substantial reform at the federal level, activists pushed change locally. Where
private equity firms were unwilling to divest from the industry, they convinced
institutional investors not to invest in the private equity firms themselves. Their
strategy is a multifront attack on prison services, and it is one that can serve as a
model for activists in other industries as private equity firms spread ever
outward.
 PART II
HOW THEY GET THEIR WAY
 CHAPTER EIGHT

SUING THEIR OWN CUSTOMERS

Private Equity in the Courts

When private equity firms buy companies, they sometimes get in the business,
not of making new products or services, but of suing their own customers. This
opportunity to target people—especially poor and working-class people—often
seems like the very reason that some firms buy businesses. When they do, they
benefit from a small mountain of favorable case law, and where favorable laws
do not exist, they spend enormous sums to create them. Yet when customers try
to seek some measure of justice for themselves, they are often stymied, by
arbitration agreements, by limitations on suing investors, and by a host of other
legal decisions that make it hard for ordinary people to get redress. It is as if
private equity firms and their allies have built a justice system to their liking.
Now the rest of us must survive within it.
Consider when, in 2016, Mariner Finance allegedly sent Leticia Castellanos,
1
unprompted, a check for $2,539. Castellanos hadn’t asked for the money;
Mariner had just sent it. According to Castellano’s subsequent complaint, the
only thing she needed to do was endorse the check and in so doing agree to pay
Mariner a little under a hundred dollars a month for a little over three years. The
check was, in fact, a loan, with a 25 percent interest rate. Though Castellanos
lived in the gentrifying Fells Point neighborhood of Baltimore, she herself made
just $800 a month. A hundred dollars was more than she could afford, but to
cover emergency repairs to her boiler, she endorsed the check anyway.
As she subsequently alleged, after Castellanos made several payments,
2
Mariner reached out to her to discuss the terms of her loan. But rather than
finding a way to accommodate Castellanos’s fixed income, Mariner convinced
her to borrow more money, this time over $3,000. Most of that went back to
Mariner to cover her existing debt. But oddly, the loan also included payments
for multiple insurance policies—a life insurance policy, a “Non-filing” policy to
protect Mariner if Castellanos’s collateral was no good, and an “Accidental
Death–Dismemberment–Loss of Sight” policy—that Mariner said it would buy
3
for her. It was unclear whether Castellanos ever asked for any of these things.
Of the more than $3,000 that she borrowed in this second loan, the vast majority
went back to Mariner for the unpaid balance of her account and for Mariner’s
insurance. Less than one-tenth went back to Castellanos.
Unsurprisingly, given the size of the loan and her modest income, Castellanos
4
reported that she fell behind on her monthly payments. So Mariner sued to
5
collect the debt in Maryland state court, seeking interest and late fees. With the
6
assistance of a law firm specializing in consumer protection, Castellanos
countersued, alleging fraud, usury, and violations of Maryland’s debt collection
and consumer protection acts, among other harms.
And here, things took a turn for the worse for Castellanos. Knowingly or not,
when she signed the terms of her second loan, she agreed to a broad arbitration
provision, which committed her to resolving any disputes she had with Mariner
7
at an arbitration firm of the company’s choosing. But fiendishly, Mariner was
not similarly bound: the company could use the machinery of the state court
8
system to garnish her wages and seize her assets.
So Mariner moved to have Castellanos’s case pushed into arbitration.
Castellanos opposed, arguing through her lawyer that Mariner couldn’t have it
both ways, litigating its own claims against Castellanos while defending against
9
hers in arbitration. But the case law simply was not on her side. The local judge,
citing the US Supreme Court, noted a “strong federal policy favoring
10
arbitration.” It found no problem with the double standard of this particular
agreement: Castellanos, the court held, was bound to pursue her claims in
arbitration, while Mariner could continue to collect its debt through the state
court system. With Castellanos compelled to arbitrate her claims, in a system
where plaintiffs must often agree to silence about the outcomes of their disputes,
11
the ultimate outcome of her fight with Mariner never became public.
Mariner Finance, which sent Leticia Castellanos that first check, is owned by
12
the private equity firm Warburg Pincus. Warburg’s president, Timothy
Geithner, was once President Barack Obama’s treasury secretary. Mariner isn’t
quite a payday lender: it’s an “installment” lender whose loans are a little larger
and whose repayment periods are a little longer than those of its more notorious
cousin. Nevertheless, Mariner is one part of a small army of lending companies
targeting working-class and poor people that private equity firms have purchased
in recent years. Among others, Friedman Fleischer & Lowe bought Speedy
13
Cash. Diamond Castle Holdings bought a controlling interest in Community
14 15
Choice Financial. Blackstone bought Lendmark Financial Services LLC.
16
And Lone Star Funds bought DFC Global. The list goes on.
Payday and installment lending is an ideal industry for private equity. It
provides a stable cash flow and a captive customer base that has little alternative
but to keep using its product. The loans that so many people receive from
payday lenders aren’t used to buy real-world necessities but to service prior
loans. In fact, the Consumer Financial Protection Bureau (CFPB) found that over
17
80 percent of payday loans were renewed or refinanced within two weeks. For
the vast majority of these “loan sequences,” the principal on the most recent loan
was the same or larger than the principal on the first, meaning that for the
duration, the borrower was paying only interest and fees to the lender, rather
than escaping the debt.
While payday lending is an ideal industry for private equity, private equity in
turn exacerbates the industry’s worst tendencies. Consider two payday lenders:
Advance America, which is independently operated, and ACE Cash, which is
18
owned by a private equity firm, JLL Partners. Advance is the larger of the
19
two, but between 2012 and 2022, it had fewer than 700 complaints filed
20
against it to the CFPB. In contrast, ACE, the smaller, private equity–owned
21
company, had 1,800 complaints, more than twice as many. Among other
things, borrowers alleged that people collecting debts for ACE called their
22 23
family and work, threatened prosecution, and attempted to collect on loans
24
never made. ACE ultimately entered into a $10 million settlement with the
25
CFPB over substantially similar allegations. But ACE wasn’t alone. After
Blackstone bought Lendmark in 2013, for instance, complaints against it rose
26
every year. It seemed that the logic of private equity, with its focus on quick
profits and limitations on private equity firms’ own liability, pushed these
companies into actions that were cruel and, in the case of ACE, allegedly illegal.
But in addition to making payday lenders worse, private equity firms also
made them more litigious. In 2012, the year before Warburg Pincus bought
Mariner Finance, the company was a plaintiff in just 240 state cases. By 2018,
27
that number had risen to over 2,000, an eightfold increase. The contrast was
even more dramatic with OneMain Financial, which Fortress Investment Group
28
bought in 2015. The year before the acquisition, OneMain brought 406 state
cases. The year after the acquisition, it brought 1,200. Three years later the
29
number increased over 10,000. These dramatic increases suggested that private
equity firms saw legal action as an effective way to wring more money out of
people who received the loans and perhaps even built it into their business plans
when buying these companies. For upon winning a judgment, lenders could
garnish their customer’s wages and deplete their bank accounts, often simply by
completing a form provided by the court and serving it on the borrower’s bank
30
or employer. Suing their customers wasn’t an aberration: it appeared to be a
business strategy.
In contrast, as Leticia Castellanos’s story illustrates, where consumers tried to
sue these lenders for violations of, say, state consumer protection laws, they were
often compelled into arbitration, where private companies, not courts, resolved
their disputes. This was bad for a number of reasons. To start, plaintiffs often had
31
to pay a filing fee—one that could go to several thousand dollars —just to bring
their claims. And when they did, their cases were litigated before arbitration
companies who were typically paid for by the defendant business. A large body
32
of research has shown that these companies, knowing who paid their bills,
typically sided with the defendants that fronted for their services. In the rare
arbitrations in which consumers actually won, they were often bound by
nondisclosure agreements that prevented them from publicizing their victories
and notifying people like them of the opportunity to sue. At the same time,
victorious plaintiffs in arbitration did not develop any precedential case law—as
they might through ordinary litigation—that fellow consumers could rely upon.
These basic injustices could have been resolved through regulation. Toward
the tail end of the Obama administration, the CFPB proposed a rule that would
require lenders to confirm that borrowers could plausibly pay back the money
 33
they received, as opposed to simply servicing the debt in perpetuity. This
would have helped to end the cycles of debt that so many consumers faced,
reducing the chance for subsequent litigation. The rule also placed some limits
on lenders’ ability to take money from borrowers’ bank accounts to repay
34
debts.
The CFPB finalized the rule in 2017, at the outset of the Trump
administration. But the payday lending industry—supported, in part, by private
equity firms—brought its enormous litigation and lobbying effort to bear upon
the regulation. To start, the Community Financial Services Association of
35
America, which included numerous private equity–backed lenders, sued the
CFPB, arguing that the bureau lacked the authority to promulgate the rule. The
36
groups succeeded in repeatedly delaying the rule’s implementation.
Meanwhile, Community Choice Financial (owned by the private equity firm
Diamond Castle Holdings) retained the services of President Trump’s former
campaign manager Corey Lewandowski, who went on television to advocate
37
that Trump fire the CFPB’s director, Richard Cordray. Under pressure, Cordray
38
resigned and was ultimately replaced by former congressman Mick Mulvaney,
who had been publicly contemptuous of the whole organization and who had
39
called it a “sick, sad joke.” Private equity–backed lenders also lobbied
generously during this time. ACE Cash Express, owned by JLL Partners, spent
40
$390,000 in 2018 alone. Lendmark Financial Services, owned by Blackstone,
41
spent $400,000. Mariner Finance, owned by Warburg Pincus, spent nearly
42
$100,000. And OneMain Financial, owned by Fortress Investment Group,
43
spent $1 million. Their spending was successful. In 2020, the CFPB rescinded
the core provisions of the rule, including the provision that payday lenders prove
customers’ ability to repay their principals (rather than merely servicing the
debt). This left essentially just the limitations on how often lenders could try to
44
take money from delinquent borrowers’ accounts.
A similar assault—this one in Congress—occurred when the CFPB issued a
rule prohibiting financial institutions from forcing consumers into arbitration
45
agreements like the one that bound Leticia Castellanos. The bureau’s rule did
not sit well with Arkansas senator Tom Cotton, who said it “ignores the
consumer benefits of arbitration and treats Arkansans like helpless children,
46
incapable of making business decisions in their own best interests.” Unstated
was that consumers rarely, if ever, had a choice to opt out of arbitration. Also
unstated were the tens of thousands of dollars that payday lenders had donated to
47
Senator Cotton himself. Executives at Blackstone, which owned the payday
lender Lendmark, were particularly generous: more than a half dozen of its
executives, including its president, Stephen Schwarzman, donated to Cotton and
48
his campaign funds.
Cotton was joined in opposition by the Trump administration’s Treasury
Department and Office of the Comptroller of the Currency, the latter of which
regulated national banks. The Treasury Department issued a fevered report
saying that the prohibition on forced arbitration would raise costs for
49
consumers. The comptroller, meanwhile, fretted that the rule could result in
50
“potentially ruinous liability” for lenders. (The comptroller apparently failed to
appreciate the argument that it would be “ruinous” to hold lenders fully
responsible for their actions in court.) Armed with these regulators’ support, in
2017, allies of the finance industry introduced resolutions under the rarely used
Congressional Review Act, which allowed Congress to rescind recently
51
implemented regulations. The resolution passed both chambers and was signed
by President Trump. Afterward, Senator Cotton released a statement calling the
52
repeal “good news for the American consumer.” That election cycle, Cotton
53
received $1.8 million from the finance industry.
The effect of all of this was that the courts continued to operate just as
companies like Mariner Finance would prefer. Mariner could force people like
Leticia Castellanos to arbitrate their claims, while pursuing its own claims
against borrowers in court. When it did, Mariner added a cruel twist: it would
require borrowers to pay the cost of Mariner’s own attorneys. “That really got
me,” one borrower who was obligated to pay Mariner over $500 for the
54
company’s own lawyer told the Washington Post. The whole court system, it
seemed, was built for companies like Mariner and not for people like Leticia
Castellanos.
PRIVATE EQUITY’S FORAY into payday lending is just one instance of the industry’s
expansion into areas where firms have profited, not by improving the businesses
they buy but by suing their customers. This makes sense for private equity firms,
whose short-term investments preclude the sorts of actions that would build
long-term trust and engagement with customers. Take, for instance, Southeastern
Emergency Physicians. Southeastern is a physician staffing company that makes
money by assigning doctors to hospitals and other medical facilities. In 2017,
55
Blackstone bought Southeastern and its parent company. Shortly thereafter,
Southeastern’s litigation docket exploded. Between 2017 and 2019, Southeastern
filed 4,800 lawsuits against patients for unpaid bills in the Memphis
metropolitan area alone. In the first half of 2019, it sued more patients than three
of the largest regional hospitals combined.
Southeastern’s explosion in litigation is directly correlated with Blackstone’s
purchase of the company. The year before Blackstone bought it, Southeastern
56
filed a comparatively modest 798 lawsuits in Shelby County. The year after, it
filed more than double that. Meanwhile, former call center agents were
instructed not to raise with patients the possibility of charity care, the common—
57
and required —practice of forgiving debts for those who cannot afford to pay.
“A lot of times, a patient would call in and say, ‘Hey, can you give us a
discount?’” a former TeamHealth employee told NPR. “But we had to say, ‘No, I
can’t do that,’ because we weren’t allowed to say, ‘Well, did you apply for
58
charity care at the hospital?’” (After its tactics were publicly reported,
59
TeamHealth said that it would no longer sue patients.)
It wasn’t just health care. The student loan collector Transworld Systems, for
60
instance, supported tens of thousands of lawsuits against borrowers. After the
private equity firm Platinum Equity bought the company in 2014, the CFPB
61
received over 4,600 complaints about it. As alleged, Transworld sued people
for debts that it couldn’t prove that they actually owed and pressured its
employees into signing affidavits saying that they knew debts were legitimate,
when in fact they had no such knowledge. In 2017, the CFPB fined the company
62
$2.5 million for these illegal practices. But the bureau has yet to collect, as
given the complicated ownership structures of student debt, Transworld now
63
contests whether it actually agreed to a valid settlement. Years after the CFPB
issued its fine, the litigation remains ongoing. Meanwhile, Transworld has
continued to prosper and expand, buying numerous other debt collection
64
companies.
Private equity–owned businesses pursue similarly litigious strategies in other
65 66
industries, such as single-family home rentals, nursing facilities, and mobile
67
homes. These are not, as noted earlier, necessarily industries with wealthy
customers or clients. In fact, some of them cater to the poorest people in
America. Why, then, do private equity–owned companies focus on suing these
customers? Because they are the ones least able to fight back. Defending against
a collection action is a costly exercise, affirmatively suing these companies for
wrongdoing even more so. Customers of these businesses do not have much
money and are far less able to defend themselves than are wealthier clientele in
other industries, who might be able to hire lawyers or at least devote the time to
fighting unjust tactics.

IN THE PURSUIT of their own customers, private equity firms have both created
and benefited from changes in the law and the legal profession. First among
these was the general reshaping of corporate law in favor of private equity. Big
law firms like Kirkland & Ellis and Paul Weiss used to make their money
primarily from litigation, while transactional work—the business of helping
companies organize, issue stock, and buy and sell one another—formed a rump
of the overall revenues of these forms. In time, these roles shifted, with the
largest law firms making most of their money from transactional work: that is,
helping businesses buy one another, go public, form investment funds, and so
forth. And for some firms, that transactional work came ever more often from
private equity.
Take Kirkland & Ellis. The firm had many of the leading lights of
conservative litigation, including partners Bill Barr, Ken Starr, and Paul
Clement. In 2010, however, a transactional lawyer—Jeff Hammes—took over as
68
chairman of the firm’s global management executive committee. Within a
decade, three-quarters of Kirkland’s business was transactional work, a big part
of which came from private equity, as the firm serviced over 450 different
69
firms. “[P]rivate equity has become a massive asset class,” one partner told the
 70
Financial Times, “with a demand for legal services that is diverse and deep.”
71
Kirkland was smart “because we realised how damn good that business was.”
Similar transformations occurred at other big law firms, many of which
72
developed dedicated practice areas for private equity. Quinn Emanuel, for
instance, claimed that it had over 250 lawyers working in its private equity
73
litigation practice group. Sidley Austin, meanwhile, bragged about its “strong
relationships with an extensive network of government lawyers and enforcement
officials” who could provide “credibility” to private equity firms facing
74
regulatory issues. Other firms similarly staffed up. The consequence of this
was that private equity firms generally had access to some of the best-paid
lawyers in the country for their highest-stakes matters.
As law firms changed, so did the law itself, in particular, laws insulating
private equity firms from the legal consequences of their actions. Consider the
case of Annie Salley, discussed earlier in the introduction. Salley was in her
early seventies when she was admitted to the Heartland nursing home in
Hanahan, South Carolina. Heartland was owned, through a series of shell
companies, by HCR ManorCare and, in turn, by several funds controlled by the
75
private equity firm Carlyle Group. As previously discussed, Carlyle bought
ManorCare by loading the company up with debt and selling its property. The
move left the company cash strapped, the natural consequence of which was to
cut the quality of care.
This had disastrous consequences for Salley. With urinary tract infections,
76
arthritis, and foot pain, Salley struggled to get herself to the bathroom. But as
subsequently alleged by her estate, with inadequate staffing at the facility, Salley
was forced to do so herself, the result of which was that one evening she fell and
hit her head on a bathroom fixture. After the accident, nursing home staff
reportedly failed to perform a head scan and did not refer her to a doctor, even
though Salley exhibited confusion, “thrash[ed] around,” and vomited.
As her estate alleged, Salley was eventually ejected from the nursing home—
her family was unable to afford the copay on her insurance—and was shortly
thereafter taken to a local hospital, where doctors discovered severe bleeding in
77
her brain. The blood was allegedly several weeks old (presumably from the fall
in the nursing home) and had pushed her brain to one side of her head. Surgeons
attempted to relieve the pressure by drilling into her head but were unsuccessful,
and Salley died of subdural hematoma: that is, pooling of blood in the skull.
Salley’s estate eventually sued the nursing home, as well as its ultimate
parent company, Carlyle. But Carlyle moved to dismiss the case against it and, in
so doing, performed several legal sleights of hand. For one thing, Carlyle argued
that it didn’t actually own ManorCare or its facilities. Rather, it claimed, it
simply advised a series of funds that did. For another, Carlyle refused to
participate in any discovery about its control over the facility in which Salley
was injured. But it did produce affidavits from Carlyle and ManorCare
executives asserting that the firm had no responsibility for the “policies or
procedures” at Salley’s facility, nor did it have “responsibility or involvement”
78
with its “day-to-day operations.” This allowed Carlyle to shape the facts of the
case in its favor, without giving the lawyers for Salley’s estate the opportunity to
respond.
Although this was brought as a “motion to dismiss,” in which Salley’s estate
was entitled to all reasonable inferences in its favor, the court granted Carlyle’s
motion. It held that the estate had not “alleged specific facts that support a claim
79
that Carlyle actually did control the budget of Heartland.” Moreover, the court
held, “it would be a far stretch for the court [to] infer this fact based solely on
80
alleged ownership of a sixth-tier subsidiary.” Of course, it was hard for
plaintiffs to allege specific facts because Carlyle moved to dismiss the case
before discovery began. The nursing home was a sixth-tier subsidiary—a
common tactic in the industry that obscures ultimate ownership and
81
responsibility, of which the court was presumably unaware. Ultimately,
Salley’s family was unable to collect any money from Carlyle for the death of
their mother. The case was settled with ManorCare and its affiliates for an
undisclosed sum and without an admission of wrongdoing.
Salley’s case showed how private equity firms managed to avoid legal
liability for their actions. It was also a relatively simple case to dispose of—just
a matter of crafting a motion to dismiss. In contrast, the case of Scott Brass
showed how far and how long a private equity firm would go to insulate itself
from the consequences of its actions. Scott Brass was not a person but a
82
company, an industrial metal manufacturer based in Rhode Island. Sun Capital
bought the business in 2007, and like so many of the firm’s other acquisitions,
83
the company quickly fell into bankruptcy. In the wreckage, the employees’
 84
pension fund tried to hold Sun Capital liable for its underfunded benefits. But
Sun Capital refused and in 2010 sought a judgment in federal court that it was
not responsible for these debts.
The subsequent litigation was tortuously long. After over two years of
argument, the district court held that Sun Capital was not a “trade or business” as
required under the relevant statute and therefore could not be held liable for the
85 86
pension. A year later, the First Circuit reversed the decision. Four years after
that, the district court found that Sun Capital’s various funds could be held liable
87
for the debt. But Sun Capital again appealed, on the rather facile argument that
investors were generally responsible for pension debts only when they owned 80
percent or more of a company and that, in fact, two separate Sun Capital funds
owned Scott Brass: one with a 70 percent stake, the other 30 percent.
In 2019, the appellate court sided with Sun Capital and against the
employees. On the merits, the decision was likely incorrect. Nevertheless, Sun
Capital won an important victory. The process had taken nine years over what
88
was, for Sun Capital, a pittance: $4.5 million. In fact, it’s plausible that Sun
Capital actually spent more than that litigating the issue, but the case was a
model for how private equity firms could avoid liability for underfunded
pensions. And it demonstrated how far a firm would go to protect the principle
that it should not be held responsible for the consequences of its actions.

WHILE PRIVATE EQUITY firms worked hard to insulate themselves from legal
liability generally, two other, broader developments in the law helped the
industry: the fall of class action lawsuits and the concomitant rise of forced
arbitration.
With class actions, one or a handful of plaintiffs can bring suit on behalf of
all similarly situated people: say, all the residents in a nursing home chain or all
the purchasers of a defective product. These class actions are necessary when it
would be unaffordable for each person to bring suit individually. By allowing
plaintiffs’ lawyers to recover a contingency on the total amount awarded, class
actions make it possible—and rational—to recover for these sorts of ordinary
harms.
But class actions have been under sustained assault for over forty years. From
the Reagan administration onward, conservative administrations appointed
 89
judges hostile to class action lawsuits. Meanwhile, with far more money than
their opponents, the corporate defense bar had the resources to challenge nearly
every facet of class action case law. This pincer move had its intended effect, as
increasingly conservative judges, faced with the opportunity to do so, desiccated
class actions. Among other things, judges required plaintiffs to prove ever more
90
of their case ever earlier in litigation. They raised the standards for certifying
classes. And they rejected proposed settlements between purported classes and
defendants.
At the same time, courts increasingly blessed the use of forced arbitration
agreements. As noted earlier, since the 1980s, the Supreme Court has repeatedly
expressed a “federal policy favoring arbitration” and directed that these
91
agreements be enforced as corporations had written them. As with class
actions, an increasingly conservative judiciary blessed ever more lopsided
arbitration agreements that favored companies over consumers and employees.
In 2011, for instance, the Supreme Court held that federal law preempted any
state statutes that would require agreements to allow plaintiffs to arbitrate in
92
groups, like in ordinary class actions. In 2013, it held that arbitration
agreements could be enforced even when they would make it economically
93
impossible for plaintiffs to pursue their claims. And in 2018, the Court held
that employees could be compelled into arbitration and waive their right to join
94
class actions as a condition of employment.
The result was an explosion in the use of arbitration agreements. In the
1990s, about 2 percent of companies used arbitration with their nonunion
95
employees; by 2019, more than half did. In 2020, over two-thirds of popular
brands surveyed by Consumer Reports, from GE and Kenmore to Sony, Bose,
Microsoft, LG, Samsung, and Dell, used mandatory arbitration clauses to
96
manage disputes with their own customers. And, as intended, almost no one
used these agreements. Of the over 800 million consumer arbitration agreements
in effect in 2018, only 6,000—less than 1 percent of 1 percent—actually resulted
97
in arbitration. Even among the infinitesimally small number of cases brought,
people rarely won. The Consumer Financial Protection Bureau found that when
customers brought arbitration disputes over financial products, for instance, they
succeeded barely more than a quarter of the time, and recovered just thirteen
cents for every dollar in damages claimed.
Private equity firms benefited from both of these trends. As previously
98
discussed, portfolio companies in the payday loan, nursing home, and single-
99
family home rental industries all forced their customers to use arbitration
agreements, to the enormous detriment of people like Leticia Castellanos. At the
same time, they have successfully defeated class action lawsuits against
themselves and their portfolio companies. To take just one example, in
Kentucky, beneficiaries of the state’s pension fund filed a class action lawsuit
against KKR and Blackstone, alleging that the firms breached their fiduciary
duties by selling the pension fund financial products with onerous, hidden
100
fees. It was a dangerous case for the private equity firms, as the plaintiffs
alleged billions of dollars in damages. And so KKR and Blackstone filed an
unusual “writ of prohibition” with the state appellate court, arguing that the
plaintiffs had no standing to sue. The appeals court and, subsequently, the
Kentucky Supreme Court agreed. Because the pension plan had not yet
101
collapsed, the court held, the plaintiffs could not sue; their allegations were
102
“too speculative and hypothetical” for the court to consider. This was a
devastating loss for pensioners in Kentucky. But as Blackstone’s lawyers noted,
its impact was larger, given the rise in lawsuits filed by beneficiaries of
103
underfunded pensions across the country. The case showed how private equity
firms both benefited from existing case law and worked to shape their own,
neutering class actions as a tool for justice along the way.

WHAT CAN BE done so that private equity firms do not enjoy such lopsided
advantages in our justice system? To start with, plaintiff-side lawyers need to
understand and explain how private equity firms are often intimately involved in
the management of their portfolio companies. Most judges simply do not know
what private equity firms are or how they work. Showing that firms like Carlyle
and Sun Capital don’t just invest in but also shape the strategy of their portfolio
companies may help plaintiffs to extend liability to private equity firms.
At the same time, we’re seeing a variety of new tactics emerge to protect
consumers, even under increasingly hostile case law. One is mass arbitration. To
make arbitration agreements seem fair, defendant companies often agreed to pay
104
the costs of any case. Effectively foreclosed from pursuing class actions, a
few enterprising law firms took these companies at their word and brought
hundreds or thousands of individual arbitration claims, the costs of which
companies had to bear. This gave plaintiffs, for the first time, some negotiating
leverage with these businesses. Mass arbitrations have been brought against
companies as diverse as Uber, Amazon, DoorDash, Intuit, Buffalo Wild Wings,
and FanDuel, the latter two of which were owned or invested in by private
105
equity firms. And when companies have tried to wriggle out of their
agreements, courts have held them to their word. When DoorDash, for instance,
tried to renege on paying thousands of arbitration fees, the presiding judge wrote
that its employees were exercising “the remnant of procedural rights left to
106
them.” DoorDash’s “hypocrisy” in refusing to pay, the judge wrote, “will not
107
be blessed.”
Faced with the first serious challenge to the architecture of arbitration,
companies are regrouping to reduce what leverage consumers have gained.
DoorDash, for instance, reconfigured its employee contract to significantly slow
the pace at which cases are reviewed, to the detriment of plaintiffs. The defense-
side law firm Gibson Dunn, meanwhile, has recommended that businesses no
longer pay for the cost of arbitration and instead force plaintiffs to pay when
108
arbitrators deem claims frivolous. Demonstrating enormous chutzpah,
companies are trying to make these changes retroactively. And they are also
creating “batching” mechanisms to force individual plaintiffs into class action–
like procedures in arbitration.
Yet even if mass arbitrations lose their potency, plaintiffs are finding other
ways to challenge private equity’s conduct. One nascent possibility is to pursue
lawsuits for breach of fiduciary duty. The directors who sit on corporate boards
typically have various duties of loyalty and care to the companies they oversee;
in essence, they cannot be negligent or ransack a company for their own gain.
But when private equity firms buy companies, they often install their own
employees or allies on their boards. These directors may act in the interest of
their private equity employers over the businesses they oversee, approving
exorbitant management fees, for example, or agreeing to sell businesses for less
than their worth. When they do so, board members may violate their fiduciary
duties, and the people harmed by their actions—creditors, employees, even
customers—may sue to stop them.
We’ve seen a handful of cases like this succeed. In 2013, for example, the
private equity firm Sycamore Partners bought the Jones Group, a manufacturer
of several then popular shoe lines, including Nine West, Anne Klein, and Gloria
109
Vanderbilt. The Jones Group’s board approved its sale to Sycamore, even
though the deal resulted in debt levels for the company higher than what its own
investment bankers said it could sustain. After the merger, Sycamore’s
executives decided to sell some of the company’s most promising businesses to
their own affiliates. They did so at a price well below the businesses’ market
values and well below what the Jones Group had paid for them just a few years
110
before.
The move helped to destroy the company, which filed for bankruptcy in
2018.
Ultimately, a consortium of the old Jones Group’s creditors sued the
company’s former board of directors and others, alleging, among other things, a
breach of fiduciary duty. Judge Jed Rakoff, a sort of liberal lion of the Southern
District of New York, pointedly refused to dismiss their claims. Judge Rakoff
found that the directors had failed to conduct a reasonable investigation into
111
whether the sale to Sycamore would render the company insolvent. It was a
technical, narrow ruling, but it showed how people might sue board members of
other companies who approved similarly disastrous sales to private equity firms.
This was a lightning bolt within the industry. Law firms sent out hurried client
alerts. And the finance commentator William Cohan wrote in his article for the
New York Times, “The Private Equity Party Might Be Ending,” that, given the
chance that officers and directors could now be held liable for private equity
firms’ most brazen actions, “[t]he days of just selling a company to the highest
112
bidder regardless of the consequences—might just be over.” The defendants,
113
perhaps realizing what the case had revealed, quickly settled the matter.
The suit showed what was possible: private equity–appointed board members
could finally perhaps be held legally liable for decimating companies. Of course,
there are challenges to bringing these sorts of suits. Corporate directors are
generally insulated from liability by the “business judgment rule,” which
114
typically protects executives’ decisions made in good faith. And executives
have learned, in advance of major sales, to get materials from their financial
 115
advisers assuring them of the reasonableness of their actions. But private
equity firms are getting increasingly bold, and their acquisitions increasingly
financially unreasonable: as far back as 2014, 40 percent of private equity deals
used debt in excess of what the Federal Reserve considered financially
116
sustainable; that number has likely increased considerably. These sorts of
decisions can ruin companies and careers, but potentially they can be challenged
under the law.

THE AMERICAN JUSTICE system today is tremendously solicitous and supportive

of private equity. Firms have built whole businesses not on raising the quality or
reducing the costs of their products but on simply suing their customers. They’ve
spent enormous sums to insulate themselves from the legal consequences of their
actions, and they’ve both benefited from and shaped the law on class actions and
arbitrations to their own benefit.
But we can do something about this. Plaintiffs’ lawyers can educate judges on
just how private equity firms work. Mass arbitrations can be a tool for fighting
inequity. So too may be suits for breaches of fiduciary duty. There are creative
ways in which private equity firms may be held responsible for their actions. All
we need are the lawyers to act.
 CHAPTER NINE

PRIVATIZING THE PUBLIC SECTOR

Private Equity in Local Government

In 2014, Middletown, Pennsylvania, was in trouble. The small borough was tens
of millions of dollars in debt to service its water and sewer system and employee
1
benefit program. In addition, its pension obligations to retired police were
2
rising. Middletown was unlikely to grow its way out of the problem, as its
3
population had been declining for decades. Moreover, the per capita income ran
4
thousands of dollars below the national average, and in a borough of nine
thousand people, less than one-fifth of residents had bachelor’s degrees and
5
nearly one in six people lived in poverty.
In 2014, the city’s leaders hit upon an idea, one that had been pursued with
apparent success by other cash-precarious towns: lease the water system. For an
upfront payment and some annual revenue, Middletown would let a company
manage its water utilities and collect fees from its citizens. The company the
town chose was Middletown Water Joint Venture LLC, led by the private equity
firm KKR. It was a “good decision” for the “long term,” according to city
6
council member Ben Kapenstein. “I think the citizens got a good deal,” he
7
said.
It did, indeed, seem like a good deal for Middletown. KKR was offering to
make essential investments in the city’s water system, federal funds for which
had dried up long ago. And even though KKR would be paying for those
investments, Middletown would continue to own the infrastructure: the project
was merely a lease to the joint venture. KKR promised, in general, not to raise
rates for four years, after which it would be allowed to do so only at a certain
 8
percentage above inflation. And most importantly, Middletown was getting
money—tens of millions of dollars upfront and hundreds of thousands of dollars
9 10
every year —to deal with the city’s debt and pension liabilities.
But if the deal seemed too good to be true, it was, of course. The joint
venture was not initially allowed to raise rates—in general. But in fact, it could
do so if demand fell below a threshold, one that was pegged to the city’s water
11
consumption in a year of particularly high demand. When, unsurprisingly,
residents’ water use fell below that peak, the operating company assessed a 11.5
12
percent rate increase.
In a place like Middletown, where incomes were not high, these increases
were not affordable. On Facebook, Jackquline Foster wrote that “Middletown is
just becoming to[o] expensive,” and that she was “barely surviving now being a
13
single mom of 3.” Sheila Hinkson commented, “guess I cut the cable off and
forget the Internet[,] not to mention doctor co-pays etc.… Maybe even have to
14
take a bath every other day? When does it stop?” Tom Buck complained—
accurately, as it turned out—that “we can post and bitch all we want on
15
Facebook but that won’t change a damn thing.”
It became increasingly clear that the operating company and KKR had simply
out-negotiated the small city of Middletown. One of the members of the lease
exploratory committee—a city council member—was just four years out of
16
college. In subsequent litigation, the city said that the companies foisted the
loophole that allowed the rate increases in the final days of negotiation, a tactic
that the city perhaps did not understand at the time, and certainly did not
17
address. Ultimately, recognizing its own error, Middleton sued to get out of the
contract but without success. The city’s primary argument—that KKR and its
operating partner could not have actually intended these enormous rate increases
—was weak, and the defendants were represented by Allen and Overy, one of
18 19
the largest law firms in the world. The judge dismissed the city’s case, and
the lawsuit proved to be another instance in which the city was simply no match,
strategically, for KKR.
KKR and its operating partner, eventually named Suez, were great at
negotiating the deal but bad at running the system. In 2018, Suez alerted
residents that one of its disinfection systems had failed and urged them to “BOIL
 20
YOUR WATER BEFORE USING.” The company’s advisory assured residents
that they should not be concerned, even if “the water is yellow,” though they
directed residents to disinfect their water even for tasks as small as brushing
one’s teeth. Yet Suez declined to provide bottled water to residents. Meanwhile,
KKR sold its 90 percent stake in the project to another private equity firm,
21
tripling its money in under four years. The town, it appeared, had been played.
The situation was even worse in Bayonne, New Jersey, which had taken a
similar deal with KKR and its operating partner a few years before. In
announcing the agreement, the parties made big promises. A law firm hired by
the water authority estimated that the city could save over $35 million over forty
22
years. The CEO of the operating company extolled “KKR’s long-term vision,”
23
which, he said, “brings credibility to address America’s water challenges.” The
Clinton Global Initiative even featured the partnership as an innovative new
24
business model in its annual meeting.
In announcing the deal, Bayonne officials promised a four-year rate freeze,
but unsurprisingly, that never happened. Because the city had guaranteed
revenue to KKR and its operating partner and because people were using less
25
water than expected, rates increased substantially almost every year. Moreover,
Bayonne agreed to pay for any major infrastructure repairs itself and, if it needed
26
any money to do so, to borrow specifically from KKR. In other words, the deal
was almost comically lopsided. Yet despite the talk of KKR’s “long-term
vision,” within a few years, the firm sold its stake to another private equity firm,
in the same deal in which it offloaded its investment in Middletown, for $110
27 28
million. It nearly tripled its money on the Bayonne project.
In the aftermath of the deal, citizens of Bayonne tried to find ways to escape
their forty-year contract, or at least live under it. “I’ve become the water nazi,”
one resident told the Hudson Reporter, “telling my family: ‘You’ve got two
minutes in the shower.’” “I buy flowers that require little water because I don’t
29
want to use my water,” she added. A third resident complained that she had
been charged $900 for a single three-month period. “There is no water being
used other than our faucets and our toilets and our shower,” she told the Jersey
 30
Journal. “I don’t know how to handle this.” Liens against properties for unpaid
31
water bills rose dramatically.
But there was little that residents, or Bayonne, could do. After hiring a law
firm to review its contract, the city found that the only way it could escape its
forty-year agreement would be to buy the parties out, for hundreds of millions of
dollars. This was an unaffordable proposition. And so, while KKR left the deal
after just a few years, having made tens of millions of dollars, Bayonne was
saddled for decades with an agreement that its residents simply could not afford.
Bayonne, like Middletown, had been played.

THE DISASTERS IN Middletown and Bayonne are part of a much larger story about
how the basic facets of government are increasingly being privatized, with the
aid of private equity firms. For a variety of reasons, since the 1970s, the
government has invested ever less, as a percentage of our economy, in
32
infrastructure. At the same time, states and localities, which bear primary
responsibility for education and emergency services, faced a pincer move of
33
declining federal aid and laws that limit their ability to raise taxes. As a result,
many infrastructure projects were never funded, and governments have struggled
to find ever more creative ways to continue their basic functioning.
Private equity firms stepped in to fill this gap. Often through dedicated
infrastructure funds, firms invested in the projects to keep America running:
34
Carlyle bought into electric vehicle charging stations. KKR bought oil and gas
35 36
distributors. Riverstone Holdings bought power plants. And Blackstone
37
invested in cell phone towers. With a “huge funding gap” in infrastructure, one
Carlyle executive observed, there was an opportunity for private equity firms to
38
fund essential assets for “providing drinking water, power, roads, and airports.”
An executive at KKR said, “We are slowly starting to see more cities looking at
39
these partnerships given all the fiscal pressures they’re facing.”
Beyond traditional infrastructure, private equity firms bought businesses that
offered services once provided primarily by the government, including
ambulance companies and firefighting departments, 911 dispatch services, and
technical colleges. In all these industries, the basic business model of private
equity, which demanded short-term results while insulating firms from the
consequences of their actions, yielded all the predictable disasters. But these
disasters had particular poignancy because the people betrayed, overcharged, and
underserved were simply using the services they had the right to expect from
their government. In other words, they had no other choice.

TO BEGIN, PRIVATE equity firms bought—and hobbled—one of the leading

providers of 911 dispatch services. In 2006, the private equity firms Thomas H.
Lee Partners and the Quadrangle Group bought the West Corporation, an
40
operator of customer call centers. Among other things, West nominally
provided routing services for 911 dispatch, ensuring that local calls went to the
right departments. The problem was that, under its new ownership, the company
repeatedly failed in this basic task, leading to widespread failures and thousands
of calls that never reached emergency dispatchers.
In 2014, for instance, West suffered a six-hour outage that affected eleven
41
million people, or 3 percent of the entire country. Over six thousand calls never
reached a dispatcher, and for a time, virtually the entire state of Washington was
without a working 911 system. The FCC fined West $1.4 million, which agreed
42
to implement a compliance program. In August 2018, a “human error” made
43
by a West employee resulted in nearly 700 calls in Minnesota not connecting.
44
West agreed to pay the FCC a fine and, again, implement a compliance plan. In
December of the same year, West failed once more, with a thirty-seven-hour
45
outage that resulted in nearly 900 calls not being routed. And then again in
2020, West, now named Intrado, had an outage in fourteen states for over an
46
hour, in which 135 calls failed to reach their dispatchers. It agreed to pay $1.75
47
million and, yet again, implement a compliance program.
Were the company’s cascading failures the fault of its private equity owners?
Plausibly, yes. Under their ownership, the company experienced dramatic
48
layoffs. In 2006, when it was first bought, West had 29,000 employees. By
49
2016, its last year as a public company, it had fewer than 11,000. Additionally,
according to Reuters, the company “grappled with a debt pile of more than $3
50
billion,” which by necessity made it harder for the business to invest in its own
operations. Meanwhile, as reported by Fitch Ratings, the company identified
51
$125 million in “cost savings,” which is to say, budget cuts. The consequence
of these three things—large layoffs, borrowing, and budget cuts, all hallmarks of
private equity ownership—was that the company had fewer people and less
money to invest in the actual operations of the business. Inevitably “human
error” and the failure of a basic social service became all the more likely.

THE 911 DISPATCH was just one small part of private equity’s expansion into
emergency services; the far larger part was its acquisition of ambulance
companies. It may be surprising to learn that ambulances were once free,
overwhelmingly provided by the government—especially for younger people
who have only known the prohibitive costs of calling an ambulance. In fact, in
1988, a national survey of cities found that not one had privatized its ambulance
52
services. But in the 1990s, amid municipal budget cuts and a growing distrust
in government, that began to change. By 1997, 16 percent of cities had
53 54
privatized their ambulance services. By 2012, nearly 40 percent had. If
localities were looking to sell their ambulance operations, private equity firms
were looking to buy them, as people who called emergency services were willing
to pay perhaps enormous sums to save their own lives. So, over the course of
fifteen years, Patriarch Partners, Warburg Pincus, Clayton, Dubilier & Rice, and
55
KKR, among other firms, all bought ground ambulance companies. KKR and
American Securities also bought the largest air ambulance companies—those
that delivered patients by helicopter and plane—which, together with one other
56
firm, controlled two-thirds of the industry.
The results were upsetting and unsurprising. As reported by the New York
Times, within three years, a quarter of the twelve ambulance companies recently
bought by private equity firms went bankrupt. By comparison, none of more
than one thousand other, nonprivate equity–owned companies that the paper
tracked failed over the same period of time. When one private equity–owned
ambulance company, TransCare, went bankrupt, fully 30 percent of its
ambulances were not operating. Some vehicles had brakes that didn’t work,
while others took upward of four hours to get started. “You really had to become
57
a MacGyver in the field,” one former employee told the Times. Response times
at another ambulance company, Rural/Metro, slowed after it was bought by the
private equity firm Warburg Pincus, and during some crises, the company simply
had no ambulances to dispatch.
While quality suffered, private equity firms kept companies focused on their
priority: profits. Rural/Metro, for instance, pushed its employees to get patients
to sign documents, even in times of dire need, so that the company could bill
them. “Almost always, if the patient is alert, they will be able to sign” release
documents, a poster hung in Rural/Metro ambulances and fire stations
58
explained.
While private equity firms cannot bear the full blame for rising costs, over
the past five years—a time when the industry continued to invest in
59
ambulances —costs for consumers rose 23 percent, such that, before insurance
60
is paid, a single ride now costs, on average, nearly $1,300. At the same time,
nearly half of all rides now result in surprise medical bills for privately insured
61
patients, a tactic particularly favored by private equity firms. Among air
ambulances, a single ride in a private equity–owned plane or helicopter now
costs, on average, $48,000, nearly $20,000 more than with a nonprivate equity–
62
owned company. Private equity firms cannot fully explain the rising costs for
ambulances, but the costs they impose have become so ingrained in our social
consciousness that the industry, in essence, helped to transform an essential
service into a luxury, and an unaffordable one at that.
Beyond ambulances, at least two private equity firms are bringing these same
innovations to fire departments, which similarly command a captive—and
potentially lucrative—consumer base. In 2011, Warburg Pincus bought
Rural/Metro, which KKR in turn bought in 2018. Rural/Metro contracted with
cities to provide fire services and solicited individuals for subscriptions in
smaller communities, often in the arid Southwest.
The company also put out fires for nonsubscribers but at an enormous cost.
To take just one example, in 2013, Justine and Kasia Purcell’s mobile home in
63
Maricopa County, Arizona, burned down. The couple was away from home at
the time, preparing for the birth of a child, and arrived only to see firefighters put
out the remnants of their house, which was totally destroyed. Some of those
firefighters were from Rural/Metro, and though they were unable to save the
Purcells’ home, the company billed them for nearly $20,000. Later, a
spokesperson for Rural/Metro told HuffPost that the Purcells “knew they had an
obligation/option to pay our annual subscription” and had “elected to… roll the
64
dice that they would not have a fire—they lost.” Such stories are not isolated.
Reporters for the New York Times spoke with more than a dozen people who had
been sued by Rural/Metro for putting out fires. One couple, the Addies, who
similarly lost their mobile home to a fire, were sued for about $7,000. To save
money to pay off the debt, Mr. Addie said, “We just eat two meals a day instead
65
of three.” (In contrast, Henry Kravis, the cofounder of Rural/Metro’s private
66
equity owner, KKR, is worth just shy of $10 billion. )
The stories above—on water utilities, ambulances, and fire departments—tell
some simple truths about the effect of the private equity business model. In each
industry, firms found cities and states that, starved of revenue, were willing to
give up their responsibilities for fiscal reprieve. And in each, firms found a
captive audience—citizens and residents—that had little choice but to pay the
prices charged. The money these people paid did not go to local governments to
help in the basic project of caring for one another. Instead, it went to firms that
were motivated not by the public good but by private desires. People can
demand these services back and force governments to reclaim the
responsibilities they lost. But the cost, in money, time, and political effort, will
be enormous.

FINALLY, PRIVATE EQUITYfirms are turning to higher education, the result, once
again, of government underinvestment. Historically, the task of funding public
67
colleges fell primarily to the states. But over the last two decades, and in
particular after the Great Recession, local investment in higher education fell
68
dramatically, while federal investment failed to fully make up the difference.
State schools faced significant budget shortfalls and, in response, most raised
69
tuition. Community colleges were particularly hard hit and, for the first time,
70
turned to tuition as a major source of revenue, which increased substantially.
This meant that community and public colleges were no longer seen as an
obviously affordable path to higher education. This also meant that they had
fewer resources to make the kinds of changes, such as night classes and flexible
start dates, to meet students’ changing needs. Enter for-profit colleges, who were
able to turn their enormous marketing teams to steer students to their programs
who, in another era, might have gone to public institutions of higher education.
Underfunded community colleges were slow to adapt to the lives and needs of
their students, while for-profit enrollment officers (i.e., salespeople) were there
to help people navigate the system in a way that publicly funded schools didn’t.
Such for-profit colleges were ideal acquisition targets for private equity
firms: they had lots of cash flow, a consumer base that, once enrolled, would
struggle to leave, and enormous revenue from the government in the form of
student loans and grants. So when enrollment in for-profits rose dramatically in
the 2000s (particularly after the Great Recession), private equity firms began an
aggressive push into the industry. Warburg Pincus helped to create Ashford
University. KKR and its allies bought Laureate Education. Landmark Partners,
with others, bought the Education Corporation of America. And Apollo Global
Management bought the University of Phoenix. In all, the Private Equity
71
Stakeholder Project identified over fifty acquisitions of for-profit colleges.
The industry that private equity entered had a miserable reputation and
deservedly so. For every dollar of tuition they received, for-profits spent just 29
cents on instruction, compared to 84 cents at private colleges, and $1.42 at
72
public universities. Students who attended for-profit bachelor’s programs left,
73
on average, with $14,000 more debt than their peers in nonprofit colleges. And
while for-profits enrolled just 8 percent of students, they accounted for 30
74
percent of student loan defaults. Most importantly, students who attended
could expect to earn well below what their peers at public schools made, and at
least one study found that graduates of for-profit colleges were no more likely to
75
be hired than candidates who attended no college at all.
But if it were possible, the outcomes at private equity–owned schools were
even worse than at ordinary for-profits. Research found that students at these
76
schools paid higher tuition and left with more debt. They were less likely to
graduate, less likely to pay off their loans, and less likely to earn as much as their
peers at ordinary for-profits. Private equity firms invested less in faculty and
more—much more—in sales even than did other for-profits. As a result, they
siphoned students away from nearby community colleges. And all the while,
they were more likely to be investigated by the government, mostly for
recruiting violations, such as misrepresenting student loan terms, graduation
rates, and employment outcomes.
The case of Ashford University is instructive. Ashford began as the
77 78
Franciscan University of the Prairies, a small college run by nuns whose
campus in Clinton, Iowa, sat just off the Mississippi River. In 2005, the private
equity firm Warburg Pincus—now run by President Obama’s former treasury
secretary, Tim Geithner—funded a handful of executives from the University of
79
Phoenix to buy the school, sever its affiliation with the Catholic Church, and
80
repurpose it as a for-profit college, which they renamed Ashford University.
By doing so, the executives inherited the college’s accreditation, which gave it
access to federal financial aid.
With accreditation, Ashford’s new leaders were able to explode enrollment.
81
When they bought the college in 2005, it had just 332 students. Six years later,
it had over 83,000, almost all of them enrolled in the school’s online program. In
just a few years, Ashford became the second-largest degree-granting college in
the country, and its revenue grew from $7.9 million in 2005 to $968 million in
2012.
But Ashford, it turned out, was allegedly little more than a scheme to extract
money from its students. At a time when the school had over seventy thousand
82
enrollees, its online degree program allegedly had just seven full-time faculty.
A study led by Senator Tom Harkin found that in 2011, the school had over
1,700 recruiters, but one—just one—employee devoted to helping its graduates
find jobs.
Unsurprisingly, students had terrible outcomes. One former student
complained, “I’ve gotten my resume updated numerous times, I’ve applied to
83
well over 100 jobs, and years later I still don’t have a job in my field.” Another
said, after failing to find a job, “I have given up hope and I feel like I wasted 4
84
years and all that money for a useless paper that hangs on my wall.” According
to the California attorney general, an alumni survey conducted by Ashford itself
found that over half of its respondents were either unemployed or working in a
85
field unrelated to their degree. Separate studies reportedly found that barely a
quarter of students enrolled in bachelor’s degree programs graduated within six
years, while just 10 percent of students enrolled in associate’s degree programs
 86
graduated within three. As alleged in the same lawsuit, three years after
leaving, less than a quarter of students had paid any money toward the principal
87
balance of their loans.
An education at Ashford was almost worthless; it was also overpriced. The
four-year cost of an online bachelor’s degree, including tuition, fees, books, and
88
supplies, was over $60,000. By comparison, the average cost of attending a
local public four-year college in person, including room and board, was less than
89
half that amount.
And yet, Ashford enrolled tens of thousands of students through an
extraordinarily aggressive, highly successful, and potentially illegal sales
campaign. As the California attorney general subsequently alleged, Ashford’s
salespeople, misleadingly called enrollment advisers, university advisers, or
90
admissions counselors, told prospective students that federal financial aid
would cover the entire cost of their attendance and, in fact, that surplus aid could
be spent on cars and vacations. They said that the credits earned from other
schools would transfer to Ashford. And they promised that entirely unrelated
programs would help students achieve their ambitions: one recruiter, for
instance, allegedly told a student that a program in acupuncture, reiki, and
traditional Chinese medicine would help him to become a biochemist. “They lied
about the costs.… The tuition and fees were outrageous.… So many lies,” said
91
one student. Another student added, “I didn’t realize how disregarded this
92
degree [from Ashford] would be until I couldn’t find a job.”
Recruiters also trapped students into enrolling. One of their alleged tactics
was to promise that federal financial aid would cover the cost of attendance but
93
that any award letters could be sent only after students enrolled. Students
would receive their letters months after classes started, discovering then that they
might in fact owe thousands of dollars themselves. At that point, the students
could withdraw or continue, but they would be obligated to pay Ashford either
way. This left students trapped. By the time of the California lawsuit in 2017,
students owed billions of dollars to the government in loans and hundreds of
94
millions to Ashford itself.
The salespeople were themselves under tremendous pressure. Managers
allegedly forced people to stand at their desks when they missed sales targets and
 95
prodded them to make bets on one another’s performances. One manager had a
“Guess Who” game where she showed her team’s metrics and asked people to
guess who had gotten each. Another saved the key cards of fired admissions staff
on a key ring, which she would rattle in front of salespeople to remind them of
what would happen if they failed to meet their targets. Because of these tactics,
one director of admissions—that is, one of the salespeople—at Ashford said,
“you stop thinking of these students as people, you start putting numbers on
people.… Your entire day was consumed with a number so that you wouldn’t get
96
in trouble.” Ultimately, California succeeded in its lawsuit against Ashford,
97
which the court ordered must pay $22 million for defrauding students.
In short, Ashford preyed upon students’ dreams: the dreams of an affordable,
accessible education that, due to declining government investment, was ever
harder to obtain. Ashford was in part able to accomplish this—to create the
patina of legitimacy—because of its real estate. Recruiters were able to say that
the school had a beautiful campus and a tradition dating back to 1918, and that
students were simply enrolling in an online program from a reputable university,
one in which the instruction would be just as good as that delivered to the
98
school’s in-person students. But there were vanishingly few such students. In
99
fact, the school shut the physical location entirely in 2015.
Various government agencies investigated Ashford, but none succeeded in
closing it. First, Senator Harkin’s investigation into the for-profit college
industry generally and Ashford specifically found that spending on instruction
there fell from $5,000 to $700 per student after Warburg Pincus’s allies bought
100
the college. Meanwhile, more than twice as much money went to profits and
nearly four times as much went to recruiting as went to actual teaching. Senator
Harkin also revealed that Andrew Clark, the chief executive of Ashford’s parent
company, made $20.5 million in a single year, more than twenty times that of his
101
counterpart at Harvard. “I think this is a scam,” Senator Harkin said, “an
102
absolute scam.” Second, in 2016, the Consumer Financial Protection Bureau
fined Ashford’s parent company tens of millions of dollars for offering private
loans to its students, which the company’s salespeople said students could pay
103
off for as little as $25 per month. This was false, and the bureau required
Ashford to give millions back to the students it misled. Third, in 2018, the Iowa
attorney general settled with the college for, among other things, charging
students in the middle of courses a surprise “technology fee” of $900 to $1,200.
104
Ashford agreed to return over $7 million back to students. Finally, there were
other investigations by the Massachusetts, North Carolina, and New York
attorneys general, as well as the US Department of Justice, the Department of
105
Education, and the Securities and Exchange Commission. But none of these
investigations succeeded in closing Ashford, which was ultimately sold to the
106
University of Arizona.
The private equity firm Warburg Pincus was central to the school’s whole
project. In its prospectus to launch as a public company, Ashford’s parent
gloated that the private equity firm had started the business, alongside the
107
college’s management team. After the company went public in 2009, Warburg
108
retained two-thirds of the company’s common stock and held two seats on the
company’s seven-person board, while a third was held by a former employee of
109
Warburg’s. As the attention on Ashford turned sour, Warburg appeared to—
but did not in fact—cut ties with the school. In particular, after Senator Harkin’s
deeply embarrassing hearing on the company, Warburg filed papers to sell its
110 111
stake in the business (at the time it owned 65 percent of the company ). But
it didn’t actually divest, at least not meaningfully, because six years later, it
remained the company’s largest shareholder. Finally, in 2017, thirteen years after
112
its initial investment, Warburg sold its stake in the company —and only then
after another scandal over whether the school could accept money from the
113
Department of Veterans Affairs. Now, while Warburg Pincus prominently
discusses many of its investments on its website, there is literally no reference to
Ashford University on it.
But this makes sense. Ashford made hundreds of millions of dollars in
114
profits. Though the terms of Warburg’s investment are not public, a portion of
this money likely went to the private equity firm as the company’s earliest
investor and biggest shareholder. Why would it need to advertise this fact?
Warburg got everything it needed.
THE STORY OF Ashford University illustrates what could happen when private
equity got in the business of higher education. But there were so many other
schools owned by private equity firms and so many other problems. For
instance, graduates at the Austin campus of Southern Careers, owned by
Endeavour Capital, earned nearly $5,000 less than the average Austin resident
115
with only a high school diploma. Three years after leaving school, less than a
fifth of students there had paid back any of their federal student loans. More
generally, students at private equity–owned for-profits were less likely to
116
graduate and held more debt than students even at other for-profits.
Moreover, not just Ashford, but other private equity–owned schools engaged
in deception. For example, Education Management Corporation, owned at
various times by Goldman Sachs’s private equity arm, Providence Equity
Partners, and Leeds Equity Partners, agreed to pay nearly $100 million to settle
117
claims that it engaged in an illegal student recruiting scheme. Education
Affiliates, meanwhile, owned by JLL partners, agreed to pay $13 million to
settle claims that it violated the False Claims Act and submitted false student
118
loan applications to the Department of Education.
Some private equity–owned schools even exceeded Ashford in certain ways,
by, for instance, abandoning their students midway through the school year.
Vatterott College, for example, owned by TA Associates, shut down on a day’s
119
notice. Education Corporation of America, supported by Willis Stein &
Partners, shut down with similarly little advance warning. This dizzying
abandonment, perhaps more than anything, showed that these schools were
interested in taking from, rather than educating, the students who enrolled with
them.
These disastrous outcomes were so common because the problems of for-
profit colleges and the problems of private equity compounded upon one
another. If for-profit colleges were, by definition, concerned primarily with
making money, private equity firms exacerbated that perspective by loading
companies up with debt, extracting fees, and demanding returns in just a few
short years. If for-profits insufficiently considered the needs of students, private
equity firms made the problem worse, knowing that they were unlikely to be
held legally liable for the consequences of their own actions.
But private equity wasn’t alone. Allies in the federal government didn’t just
allow for-profit colleges to flourish: they overwhelmingly subsidized them. For
example, between 2006 and 2016, Ashford got between 80 and 87 percent of its
money from the federal government, primarily through federal student loans and
120
grants. This was not unusual: on average, over 80 percent of revenue from
121
private equity–owned for-profits came from the government. In fact, the
industry’s reliance on these loans and grants was so intense that the Department
of Education had a rule that no more than 90 percent of colleges’ revenue could
come from it. (For-profits circumvented the rule nevertheless: Southern Careers
Institute, owned by Endeavour Capital, actually got 98 percent of its revenue
from the government.)
The government tried to constrain some of the industry’s worst instincts but
with limited success. In 2014, the Obama administration issued the “gainful
employment” rule. Under it, colleges whose students generally had debt
payments more than 12 percent of their incomes could lose their access to
122
federal financial aid. Though the rule took years to implement, it had an
effect: colleges shut down some of their worst-performing programs and
123
instituted tuition freezes. Several private equity–owned for-profits failed
under the rule, including programs at the University of Phoenix (owned by
124
Apollo Global Management), the Fortis Institute (owned by JLL Partners),
125
and Brightwood College (owned by Landmark Partners and Vision Capital).
126
Apollo said that it would close programs likely to fail under the rule, Fortis
127
eventually shut down some campuses, and Brightwood College eventually
128
closed entirely.
Implementing the rule was a tortuous process, however. The drafters took
129
eight years to research the issue and considered 190,000 public comments.
Along the way, they faced $16 million worth of industry lobbying, spent
130
particularly to hire Democrats close to the White House. And after the rule
was implemented, Congress and the courts were aggressively pushed to stall or
stop it. For instance, House Education Committee chairman John Kline, who
subsequently received over $100,000 from the for-profit industry, held a hearing
called “The Gainful Employment Regulation: Limiting Job Growth and Student
Choice” and claimed that the regulation would hamper the creation of career
131
training programs and stifle job growth. Meanwhile, after winning an
 132
injunction against an earlier version of the rule in 2012, for-profit trade
associations brought lawsuits in New York and Washington, DC. Both suits
133
ultimately failed, but it took years for the courts to resolve the matter.
Although the rule survived these legal changes, once Donald Trump was
elected president, his administration acted quickly to undo it. In particular,
President Trump’s secretary of education, Betsy DeVos, was an advocate for for-
profits and delayed the rule, suspended it, and proposed rewriting it, before
134
ultimately rescinding it in 2019. Along the way, her department
acknowledged that doing so would cost the government $6.2 billion over ten
135
years. The Biden administration ultimately vowed to revive some version of
the rule but chafed at simply returning to the old one, which it said was now
technically outdated, and actually went to court to prevent it from being
136
implemented. All of which is to say that, nearly a decade after the rule was
first promulgated, for-profit colleges and their private equity owners are not
bound by any gainful employment regulation.
Under Secretary DeVos—a longtime advocate for the for-profit industry who
137
herself invested in private equity —the government found other ways to
support the for-profit industry. DeVos disbanded the team that was investigating
138
fraud at for-profit colleges. She restored recognition for the accrediting body
that oversaw several collapsed for-profits, and she hired several for-profit allies
to work in her administration, including a former executive at Warburg Pincus’s
Ashford University, Robert Eitel, who worked at the Department of Education
139
for a time without even leaving his old job. With Eitel at the department,
DeVos worked to dismantle another Obama-era regulation on for-profits, the
“borrower defense” rule, which allowed students to discharge their debts when
colleges lied about their job placement rates or otherwise broke state consumer
140
protection laws. Under the Obama rule, students received, on average,
141 142
$11,154 in relief. Under DeVos’s replacement rule, they received $523.
The Biden administration announced plans to review DeVos’s rule, but like so
many other federal regulations, doing so could take months or years.
In short, the government subsidized the for-profit college industry but did
little to constrain its predation. It was an industry that preyed upon people’s
dreams. But it was an industry that existed in large part because the government
at the local and state level was unable to help people realize those dreams
themselves. States’ relative decline in higher education funding and the inability
to compete with for-profit marketing meant that students moved from public
universities and community colleges to for-profits. And throughout, private
equity firms were ready to fund the entire endeavor, making an already predatory
industry worse.

IN THE STORIES above—in infrastructure, emergency services, and higher

education—private equity is both a symptom and a cause of the problem.
Though the basic logic of private equity made life worse for people who
depended on running water, reliable ambulances, and affordable education,
private equity only entered these businesses because governments chose to
reduce their commitment to residents. For those who have pushed the philosophy
that private industry in general—and private equity in particular—can always
provide better and cheaper services than the government, these stories are a
painful rebuttal. And for those of us who have lived with the consequences of
that ideology, they show that we can demand that our governments do better. As
explained later in Chapter 12, we can sue to stop private equity’s predation in
these industries. We can return the basic responsibilities of infrastructure and
emergency services to our local governments. And we can demand that these
services be affordable. That our governments once took on these responsibilities
as a matter of course shows that, in fact, they can do so again.
 CHAPTER TEN

THE INDUSTRY’S STRONGEST ADVOCATES

Private Equity in Congress

Private equity is a force in Congress. Since 1990, the industry has given over
1
$896 million to congressional candidates and members. This distribution of
money has been bipartisan, with Republicans getting more—but just slightly
2
more—than Democrats. But this money tells only part of the story of the
industry’s influence. As noted earlier, private equity firms are populated with
people who once held the most powerful positions in government. In addition to
cabinet secretaries, generals, and two Speakers of the House (Paul Ryan and
Newt Gingrich), any number of former congresspeople and senators now lobby
3 4
on behalf of the industry and several serve as their advisers or board members.
Perhaps even more importantly, the industry offers a home not just for former
leaders in government but for their staff too. The lobbying disclosure forms for
the largest firms are filled with the names of former government employees:
former chiefs of staff and counsels, former legislative directors, and former
5
special assistants. This means that when someone in government is lobbied by a
private equity firm, the person doing the lobbying may be a friend or a former
boss. It also means that those currently in government know that, quite likely,
they have a home to go to when their time in public service comes to an end.
As a result, private equity has become one of Congress’s most important
constituents. Through its money and connections, the industry has worked its
unpopular will on Congress to enact surprise medical billing. It protected its
preferred tax benefit, the carried interest loophole, despite its astounding
unfairness and a fifteen-year campaign to end it. It extracted money from
Congress during the pandemic. And it evaded oversight when firms, however
inadvertently, damaged our national security. Quite simply, Congress works for
few constituencies harder than it works for private equity.
All of the issues just mentioned are concerning, but it is the first—surprise
medical billing—that tends to touch Americans most directly. For instance,
6
Drew Calver was forty-four years old when he had his heart attack. Perhaps
even more than most cardiac episodes, it was unexpected: Calver was a healthy
high school teacher and swim coach and had competed in an Ironman Triathlon
just a few months before. As he collapsed onto his bedroom floor, Calver called
out to his young daughter and used the voice recognition feature on his phone to
send a text message to his wife, who was at the grocery store at the time.
Ultimately, a neighbor got to Calver and took him to a nearby hospital. Doctors
implanted stents in his clogged artery the next day.
As reported by Kaiser Health News and NPR, Calver recovered, but at a
terrible financial cost. The hospital charged him $164,941, of which he was
7
personally responsible for over $100,000, despite the fact that Calver had
insurance and that he even had the wherewithal to ask from his hospital bed
whether it could cover the cost of his care (he was assured it would). But while
his insurance company nominally agreed to pay for his operation, it and the
hospital failed to settle on a price. The hospital, managed in part by the private
equity–funded HCA Healthcare, billed Calver for the extraordinary remainder. “I
can’t pay this bill on my teacher salary,” Calver said, “and I don’t want this to go
8
to a debt collector.”
After Calver’s story was reported, the hospital that treated him dramatically
9
lowered the amount it demanded. But he was lucky; few people in America can
expect national coverage for their own billing crises. Unfortunately, Calver’s
crisis is achingly typical. In a country where two-thirds of bankruptcies are the
10
result, in part, of medical emergencies, almost two in five Americans are “very
11
worried” about receiving surprise medical bills. These typically occur when a
patient seeks treatment at a hospital or clinic that is nominally within their
insurance network but is cared for by a doctor who is not and so is billed at an
12
out-of-network rate. Nearly one in five emergency room visits and one in six
13
hospital stays result in such a surprise bill. The problem is particularly acute
for ambulances. Fully half of emergency ground trips result in out-of-network
charges, and about two-thirds of trips on air ambulances—helicopters and planes
—are out-of-network for the patients they carry, at an average cost of over
14
$36,000 for each helicopter ride.
Private equity firms are responsible for much of this. Doctors once worked
15
directly for hospitals or on individual contracts. But in time, and as discussed
previously, these hospitals shifted to rely on physician staffing companies to
populate their facilities. Physician staffing companies often depend on creating
surprise, out-of-network bills for the patients in their care. And in the last
decade, private equity firms bought them up. As described in Chapter 5, in 2016,
16 17
Blackstone bought TeamHealth, with over twenty thousand employees, and
18 19
in 2018, KKR acquired Envision, with over seventy thousand. The private
equity owners loaded up both these businesses with debt, which together
20
provided staffing for about a third of all emergency rooms. At the same time,
some of the same private equity firms bought up ground and air ambulance
21
companies. KKR bought Air Medical Resource Group and American Medical
22 23
Response; American Securities bought Air Methods; and Patriarch Partners
24
bought TransCare, among other acquisitions.
Little good came from private equity firms entering the market. Researchers
at Yale found that after Blackstone-owned Envision took over staffing at nearly
two hundred emergency rooms, most—and in some extraordinary cases, all—of
25
their bills became out-of-network surprises. “I discovered a pattern of inflated
bills and out-of-network bills,” one doctor at such a hospital told the New York
26 27
Times. “What they are doing is egregious billing.” On average, emergency
28
room patient costs increased 83 percent after the company took over. “It almost
29
looked like a light switch was being flipped on,” said one of the researchers.
(In a statement to the Times, Envision’s subsidiary EmCare called the study
30
“fundamentally flawed and dated.”)
This seemed like precisely the kind of issue that Congress should solve, and
at the end of the last decade, there was broad, bipartisan support for action: 90
percent of Democrats, 75 percent of independents, and 60 percent of
31
Republicans wanted the government to prohibit surprise medical bills. The key
issue for Congress, however—beyond whether to act at all—was whether to set
bill prices through benchmarking or through arbitration. Under benchmarking,
out-of-network bills would be set at, say, the median price that insured patients
paid. So, for example, if the average in-network patient paid $2,500 to treat a
broken arm, an out-of-network patient would be billed the same. Under
arbitration, the provider—often the staffing company like Envision or
TeamHealth—and the insurer would go before a third party to determine a “fair”
price. This way an arbitrator would decide, considering various factors, how
much a patient should pay to mend a broken arm. Benchmarking was simpler
and cheaper and would more likely have lowered health care costs. Arbitration
was more complicated and less likely to do so. To the extent that they were
willing to accept any legislation, staffing companies and their private equity
owners preferred the latter proposal.
In 2019, despite all the ordinary dysfunction in Congress, committees in both
32
the House and Senate neared agreement on a compromise solution. Under it,
small bills would be benchmarked to the in-network rate, while large bills would
33
go to arbitration. Even the White House had apparently agreed to the plan. It
actually looked like something might happen. But for the private equity–owned
staffing companies, this was an existential fight. State-level legislation had
34
reduced out-of-network billing by more than a third in New York. Similar
federal legislation could be mortally damaging to TeamHealth and Envision,
both of whom, thanks to their private equity ownership, were billions of dollars
35
in debt.
And so staffing companies and their private equity owners spent money—lots
of money—to kill the bill. A mysterious group called Doctor Patient Unity, later
revealed to be funded by Blackstone’s Envision and KKR’s TeamHealth, spent
36
$54 million to oppose surprising billing legislation. Their ads said that the bill
was the “first step toward socialists’ Medicare-for-all dream” and was an effort
37
by big insurance companies to “profit from patients’ pain.” The group was also
unusually aggressive in whom it targeted. For instance, it deluged Senator Tina
Smith with $2 million in attack ads, even though she supported the softer
arbitration, as opposed to benchmarking, proposal (Senator Smith said that she
thought the ads were “designed to intimidate us” into dropping the legislation
38
entirely).
 And Doctor Patient Unity wasn’t the only private equity–affiliated group
agitating against change. Physicians for Fair Coverage, a half dozen of whose
39
corporate board members were funded by private equity firms, spent $4
40
million in just three months. Their ads claimed that surprise billing legislation
“would cut money that vulnerable patients rely on the most” and that “seniors,
41
children and Americans who rely on Medicaid would be hurt.” (The ad, in
addition to being wrong, was a non sequitur: surprise billing legislation was
completely unrelated to Medicaid.) A third group, American Physician Partners,
hired three lobbying firms and a former congressman to make their case in
42
Congress. The organization was affiliated with several staffing companies
43
funded by the private equity firm Welsh, Carson, Anderson & Stowe.
Ultimately, a more direct touch solved private equity’s problem: Blackstone,
which owned TeamHealth, gave Representative Richard Neal, the chairman of
44
the powerful Ways and Means Committee, over $31,000. And so, in December
2019, just as Congress was finalizing compromise legislation, Neal and a
colleague introduced a competing proposal that appeared to rely on arbitration
alone. Neal’s proposal wasn’t even an actual bill—it was a one-page description
of a potential bill—but it was enough to shatter the fragile coalition that
45
supported compromise legislation. One Republican aide told BuzzFeed News
that “there is extreme frustration. This was the deal. It was vetted. It was signed
46
off on. It was approved. The White House endorsed it.” And yet, the deal was
dead.
The next year, Congress tried again, and again, Representative Neal almost
47
killed the bill. Only after repeated intervention by Speaker Nancy Pelosi did
48
Congress, remarkably, manage to pass any legislation. But the bill that passed
was weaker than the benchmarking proposal, weaker even than the compromise
legislation that had been proposed the year before. Instead, all types of medical
bills would be pushed into a complicated dispute resolution process that could
result in arbitration: essentially, Representative Neal’s proposal. And once there,
arbitrators were circumscribed in what they could consider in determining a fair
price and could not, for instance, consider the cost that Medicare or Medicaid
49
paid for similar procedures, something that would likely have saved people
money. Additionally, surprise bills from ground ambulances—bills that averaged
50
$1,200 per ride, often from private equity–owned companies—were excluded
51
from the legislation entirely.
The bill, undoubtedly, was progress: most Americans would not experience
surprise medical bills in the way that they had before. But by resorting to
arbitration, Congress failed to actually address the exorbitant prices that
companies like Envision and TeamHealth threatened. Those prices would likely
be absorbed into higher insurance premiums, which, in turn, would be passed on
52
to consumers. That TeamHealth praised the legislation upon passage was a
sure sign that the problem remained.
Even after Congress passed the bill, private equity’s lobbying didn’t stop. In
2021, the Biden administration issued a rule to implement the legislation. Private
equity–owned providers, however, apparently felt that the regulation would sway
arbitrators toward awarding too-low fees. And so, in November of that year, 150
members of Congress sent a letter to the relevant agencies, urging them to
53
weaken the rule. The letter’s lead authors all received large donations from
54
Blackstone, KKR, and private equity–backed physician staffing companies.
And they weren’t alone. Senators Bill Cassidy (who, in the 2020 election cycle,
55
received over $57,000 from KKR and over $13,000 from Blackstone) and
Maggie Hassan (who received $12,000 from a private equity–funded staffing
56 57
company) wrote their own letter. So too did Representatives Kevin Brady
58 59
($14,000 from Blackstone) and Richard Neal ($31,800 from Blackstone).
The letters weren’t just nudges to the regulators; they were a way to shape the
history of what Congress intended with the legislation. This proved quite useful
when several providers sued to enjoin the rule. In their opening brief, the
companies actually cited Brady and Neal’s letter to argue that the Biden
60
administration had misinterpreted Congress’s intent in writing the regulation.
The letters were, in effect, tools to rewrite congressional history. And private
equity, having largely won in Congress, was now using that history to win
further advances. The industry was relentless, and it was enormously successful.
IF PRIVATE EQUITY exercised power in Congress to protect its ability to issue large
medical bills, it demonstrated overwhelming—and overwhelmingly successful—
force to protect its prized tax benefit: the carried interest loophole. As explained
in Chapter 1, private equity firms were historically compensated on a 2-and-20
model: every year, they would take 2 percent of the assets they managed and 20
percent of the profits they earned past a certain threshold. The 2 percent of assets
was taxed as ordinary income, while the 20 percent was taxed at the lower
capital gains rate. Intuitively, this seemed unfair. Though private equity
executives were earning income just as most people did, much of the money they
made was taxed at a far lower rate than for the rest of us. This trick was what
became known as the “carried interest loophole.”
In 2006, Victor Fleischer, then a professor at the University of Illinois,
brought this loophole to national attention in an unexpectedly popular law
61
review article. Fleischer’s point was that by taxing a large part of private
equity executives’ compensation as capital gains, rather than as ordinary income,
many executives in the industry could have lower effective tax rates than did
ordinary Americans. A decade and a half later, the news that the very rich may
pay relatively little in taxes is no surprise, but at the time, it was a revelation.
Multiple members of Congress introduced bills to close the loophole, and then
62
Senator Obama campaigned against the tax preference.
63
But then Blackstone staffed up. In 2007, the firm and its companies spent
over $5 million on lobbying—more than five times what it spent the year before
—to employ dozens of former staffers and a couple congressmen. By 2011,
Blackstone’s spending rose to over $8 million annually. (Carlyle, KKR, and
64
Apollo also spent millions on lobbying during this time.) And with that
spending came results: none of the reforms introduced in Congress, or proposed
by the president, went anywhere. After becoming president, Obama tried
65 66
repeatedly, in 2011 and again in 2015, to create momentum on the issue but
failed each time. Toward the end of the Obama administration, Steve Rosenthal
of the Tax Policy Center reflected that the private equity industry had “tied up
the Congress for six or seven years.” Remarking as one might about a bank heist,
67
“[i]t’s really phenomenal,” he said.
The industry would tie up Congress for many more years. President Obama’s
successor was generally regressive on most tax issues, but he had a curious
distaste for carried interest. As a candidate, Trump claimed that the loophole had
“been so good for Wall Street investors and for people like me but unfair to
68
American workers” and promised to eliminate it. Multiple times, the president
reportedly tried to close the loophole as part of his 2017 tax cut package, and
multiple times he was rebuffed. The about-faces in Congress during this time
were almost comical. In late November 2017, for instance, Susan Collins
proposed to pay for an expanded child care tax credit by closing the carried
69
interest loophole. But just one day after she made the proposal, two
Republican officials (one of whom—Drew Maloney—later left to run the private
equity industry’s main lobbying arm) said that she had retreated on carried
interest. As if in reward for her reversal, Collins subsequently became a major
recipient of private equity donations: KKR and Blackstone numbered among her
70
largest contributors, and Blackstone’s Stephen Schwarzman personally gave $2
71
million to a super PAC that supported her.
Faced with a strong constituency in Congress for protecting the tax benefit,
Treasury Secretary Steve Mnuchin—an investor who subsequently formed his
72
own private equity fund —fashioned a compromise of sorts. Under it, carried
interest treatment would apply to the profits of assets held longer than three
73
years; less than three years, and profits would be treated as ordinary income.
The problem was that private equity firms typically held their investments for far
longer than that, meaning that vanishingly few private equity firms would
actually be affected by the change. The deal “was structured by industry to
appear to do something while affecting as few as possible,” said Victor Fleischer,
74
the law professor who first brought attention to the issue. As if to cement the
tight bond between Mnuchin and private equity, the next year, his key legislative
75
adviser left to run the industry’s lobbying association.
With Trump having failed to meaningfully address the loophole, the task fell
finally to his successor. President Biden initially proposed, as part of his first
budget, to raise the capital gains rate and eliminate the carried interest loophole
76
for people with very high incomes. But as his proposal wended its way through
77
Congress, it grew weaker. By the fall of his first year as president, the carried
78
interest solution was reportedly no longer a part of his budget negotiations.
“This is a loophole that absolutely should be closed,” Jared Bernstein, one of the
79
president’s senior economic advisers, told CNBC. But “when you go up to
Capitol Hill and you start negotiating on taxes, there are more lobbyists in this
80
town on taxes than there are members of Congress.” This was true: there were
over 4,100 lobbyists registered to work on tax issues, or about 7 for every 1
member of Congress. Moreover, while the administration was pushing to close
the carried interest loophole, lobbying by private equity firms surged: Carlyle
spent over $3 million in 2021, KKR over $4 million, Blackstone over $5
81 82
million, and Apollo over $7 million. Apollo alone employed the former
83
general counsel to the House Republican caucus, a former senior adviser to a
84 85
past Speaker of the House, a former chief of staff to another Speaker, and a
86
former US senator, among more than a dozen other former officials.
Eventually, even the modest increase in the capital gains rate that Biden
proposed failed. Senator Kyrsten Sinema conditioned her support for President
Biden’s revived Build Back Better legislation, by then renamed the Inflation
Reduction Act, on making no modifications to the carried interest loophole.
Looking at her contributors, this was unsurprising. By year-end 2021, two of
Senator Sinema’s top five donors were private equity firms; a third was Goldman
87
Sachs. Meaningful tax reform and a final fix for the carried interest loophole
never stood a chance, it seemed.
Incredibly, in the debate over the legislation, private equity managed not just
to protect its tax advantage but gain a new one. The Inflation Reduction Act
established a corporate minimum tax for companies making over $1 billion in
revenue a year. A key question was whether private equity firms and their
portfolio companies would be considered together or apart for the purposes of
calculating such revenue. This mattered, as it would mean that most private
equity firms’ portfolio companies would be subject to the minimum tax. But if
they were exempted, it would give firms an advantage over other acquiring
firms, as it would mean that the acquired companies might avoid paying a
minimum rate.
As the legislation was considered on the floor, members of Congress rejected
dozens of amendments, including amendments to extend the child tax credit, to
cover dental, hearing, and vision benefits under Medicare, and to expand access
88
to free preschool. One of the few amendments they did approve was one to
clarify that companies owned by the same investor—for instance, a private
equity firm—would not be considered together for purposes of the minimum
89
tax. In short, private equity firms not only protected their preferred tax
advantage, the carried interest loophole; they actually gained a new one. Yet
again, the industry’s allies in Congress delivered for private equity as they did
for few others.

PRIVATE EQUITY’S FIGHTS to protect surprise medical billing and the carried
interest loophole illustrate the industry’s effectiveness in Congress in scuttling
legislation and avoiding taxation. But private equity firms have also been
effective in convincing Congress to, quite simply, give them money. For
instance, at the outset of the pandemic, the industry received over $5 billion in
90
federal assistance, in part through programs meant to help small businesses.
This might not have been so objectionable—COVID didn’t distinguish between
corporate ownership structures—except that the private equity firms whose
companies received this money held over $908 billion in reserves. This meant
that private equity firms, which might otherwise have had to spend their own
money rescuing their portfolio companies, could simply do more deals instead.
And that’s exactly what happened: the ten firms that received the most bailout
91
money did 230 leveraged buyouts in just nine months. More importantly, this
also meant that private equity firms could appropriate bailout money from their
portfolio companies. For instance, businesses that Apollo, Blackstone, Carlyle,
and KKR owned together got $1.8 billion in aid in 2020. But that year, those
same firms extracted $5.4 billion in management fees from their businesses. In
other words, with hundreds of millions of dollars flowing from Congress to their
companies, private equity firms were able to take that money—and more—for
themselves.
At the same time, private equity firms convinced the Department of Health
and Human Services to give them more than $1.5 billion in no-interest loans
92
through programs that Congress greatly expanded during the pandemic. KKR
and its subsidiaries, for example, got nearly three hundred loans that totaled
more than $60 million, even though the firm itself had over $58 billion in
reserves. Apollo Global Management and its subsidiaries, meanwhile, received
at least $500 million, despite the fact that Apollo had $46 billion in cash on
 93
hand. These loans were initially due within seven to twelve months, when, in
94
October 2020, Congress further delayed repayments. This free money was
unnecessary for the private equity firms but allowed them to finance their
various adventures free of charge. Not without reason, two Apollo executives
95
said that the pandemic was a “time to shine.”
How did the industry accomplish this? The path is not perfectly clear, though
it is worth noting that eighteen private equity firms and the industry’s trade
96
association together spent $32 million on lobbying in 2020. These firms
further disclosed that they lobbied on the CARES Act, Congress’s primary
97
emergency legislation during the pandemic. While it is difficult to know what
happened in the meetings their lobbyists had with legislators, it seems clear that
private equity spent large sums of money to get even more money from the
government.

CONGRESS HAS THE responsibility not just to legislate but also to investigate and
oversee. Its various committees have the power to compel testimony and the
production of documents, to issue reports, and to ensure that issues of national
importance are receiving their due. But just as private equity got its way in
legislation and appropriation, it managed to avoid Congress’s tools of oversight.
Here, the case of SolarWinds is instructive. That company sold software to help
companies manage their computer networks, and its products were enormously
98
popular: the company reportedly had over 320,000 customers and contracts
with the government worth $230 million. “We manage everyone’s network
99
gear,” SolarWinds CEO once boasted.
In 2016, the private equity firms Silver Lake and Thoma Bravo bought
100
SolarWinds for several billion dollars. Thoma Bravo’s basic strategy was
simple: buy and combine companies, increase their prices, and cut costs by
101
hiring employees in other countries. These moves were typically accompanied
102
by layoffs, often of 10 percent or more of a company’s employees. And that’s
largely what happened with SolarWinds. The company bought up several
103 104
competitors and moved some of its software development to Belarus.
According to the New York Times, “every part of the business was examined for
cost savings and common security practices were eschewed because of their
105
expense.”
With an obsession over savings, SolarWinds allegedly neglected its own
security. One former employee claimed that the company internally relied on
older operating systems and web browsers that were more vulnerable to
106
attack. Plaintiffs in a class action lawsuit said that the company failed to
107
create a password policy or cybersecurity training for its employees. And a
cybersecurity researcher discovered that the company accidentally published—
and failed to take down for over a year—the password to its update server, from
108
which customers downloaded its software. (Almost comically, that password
109
was “solarwinds123.”) Allegedly, the company even advised customers to
110
disable their own antivirus tools before installing SolarWinds software, a
recommendation that put its own users in danger.
Allegedly, this neglect was no accident. In 2017, a cybersecurity adviser for
the company met with SolarWinds executives and implored them to improve
111
their internal security. Failure to do so, he warned, would be “catastrophic.”
But under Silver Lake and Thoma Bravo’s management, SolarWinds apparently
declined to follow his advice. As alleged in a subsequent lawsuit, one participant
said that the CEO “won’t like spending that kind of money” to make internal
112
reforms. The adviser resigned in protest and subsequently said that a major
113
breach of the company was inevitable.
114
That’s precisely what happened. Sometime in 2019, hackers affiliated with
Russia’s intelligence service managed to embed malicious code into the software
115
update for one of SolarWinds’s most popular products. Over the course of
116
several months, thousands of customers downloaded the infected software,
through which the hackers were able to steal users’ credentials and access ever
117
more sensitive parts of their victims’ networks. Hundreds of businesses and at
118
least a half-dozen federal agencies were infected. Many of the details of the
hack remain secret, but the government revealed that, at the very least, the
intruders were able to access the emails of senior officials at the Treasury
 119 120
Department and prosecutors at the Justice Department. One government
121
official called it “the worst hacking case in the history of America.”
It’s hard to say that Thoma Bravo and Silver Lake’s cost cutting inevitably
led to the attack, just as it’s hard to say that the budget cuts at Carlyle’s nursing
homes inevitably led to more accidents and deaths. But the drive to cut costs, to
increase profits over long-run sustainability, permeated the company’s culture.
And the particular decision to shift software development to Eastern Europe,
where Russia had deep connections, potentially exposed SolarWinds to just this
122
sort of attack.
Congress could have done something, and to its credit, it tried. At least five
committees—the Senate Committee on Intelligence, the House Committees on
Oversight and Reform and on Science, Space and Technology, and both
chambers’ committees on homeland security—held hearings, jointly or
123
individually, on the attack. They heard testimony from current and former
employees, from government officials, and from various experts. But missing
from these hearings was testimony from executives at SolarWinds’s actual
124
owners, Silver Lake and Thoma Bravo. In fact, while the Congressional
Record during this time had nearly fifty references to SolarWinds, there was not
125
a single reference to either private equity firm. Silver Lake and Thoma Bravo,
as owners of the company, were a crucial part of the story, but Congress never
got their testimony and perhaps never even tried. This was made more galling by
the fact that the two firms sold $280 million in stock just six days before the
126
company revealed that it had been hacked. The move saved the private equity
127
firms $100 million in losses. It was also, potentially, illegal, as selling stock
based on “confidential corporate”—that is, insider—information is generally
prohibited, and the Securities and Exchange Commission opened an
investigation. That Silver Lake and Thoma Bravo potentially broke the law to
avoid paying a financial price for their behavior was another reason to demand
the companies’ testimony. But Congress never did.

PUBLIC RECORDS FROM this time do not show that Thoma Bravo or Silver Lake
lobbied to avoid congressional testimony. Rather, the truth may be simpler and
sadder: it simply did not occur to members of Congress to investigate these
firms’ roles in the crises just described. The lack of understanding of private
equity, as well as Congress’s innate chumminess with the industry, meant that
these firms just don’t receive the scrutiny that other risks to national security
pose. But this failure to oversee suggests that if ignorance, not influence, is to
blame, then there may be a chance for Congress, properly informed, to
investigate some of the problems posed by private equity. In particular, the
legislative branch may be uniquely positioned to examine one sprawling
problem, alluded to in the previous example: private equity’s ties to foreign
governments.
Private equity firms make no secret of the fact that they take money from
foreign countries and investors. But the extent of the industry’s entanglement
may be greater than is commonly understood. To take just one example,
Blackstone has established numerous connections with America’s fickle allies,
like Saudi Arabia, and outright adversaries, like China and Russia. When
Blackstone went public in 2007, for instance, China’s sovereign wealth fund
128
bought an enormous stake in the company, just below that which triggered a
129
review by the US government for national security concerns. The purchase
was apparently the first time that China invested its foreign reserves in
130
something other than US treasuries and, according to Stephen Schwarzman,
131
required the personal approval of Premier Wen Jiabao. In turn, Blackstone
132
invested in various businesses in China and, among other assets, sold the
133
famous Waldorf Astoria hotel to a Chinese investment firm. Perhaps as a
result, the Washington Post said that Schwarzman had “one of the closest
134
relationships to Beijing of any American executive.”
At the same time, Blackstone developed ties with the Russian government, at
least for a while. In 2011, Schwarzman, along with several other private equity
executives, joined the international advisory board of the Russian Direct
Investment Fund, which married private and government money for
135
development projects inside the country. The partnership was short-lived,
however: after Russia invaded Crimea in 2014, Schwarzman and others’ names
136
were removed from the fund’s list of advisers, and the following year, the
137
Obama administration sanctioned the fund as punishment for Russia’s actions.
 Finally, Blackstone cultivated ties to Saudi Arabia. Schwarzman spent years
138
courting the country’s de facto leader, Crown Prince Mohammed bin Salman,
meeting with him repeatedly and at one point hosting him for lunch in
139
Schwarzman’s Manhattan apartment. In 2017, as part of President Trump’s
first state visit to the Saudi kingdom, Blackstone announced that the country
would give the firm up to $20 billion to invest in infrastructure projects,
primarily in the United States. Afterward, Schwarzman showered praise on the
work of the young prince, telling CNBC, “It’s sort of extraordinary what’s going
on in Saudi Arabia… you see economic growth and other good things happen
140
when you have intelligent, informed, reform-oriented governments.” He
added, “As an outsider, this is like a case study. And it’s happening so fast and is
141
so bold.” Perhaps this was true, though as Schwarzman was potentially aware,
142
at the same time the crown prince was also arresting his critics and holding
143
some of the country’s elite hostage.
After Saudi operatives killed dissident journalist Jamal Khashoggi,
Blackstone distanced itself visually, but not financially, from the country. In
2018, Schwarzman declined to attend Saudi’s Future Investment Initiative, the
144
“Davos in the Desert” of figurative and literal potentates. But his company
145
did not back out of its financial partnership with the country, and ultimately,
Blackstone abandoned even the optical illusion of distance: in 2021,
Schwarzman returned to the Davos in the Desert event, where he spoke about
146
women’s empowerment at his firm.
Perhaps these connections would not be so concerning were it not for the fact
that Schwarzman played such a substantial role in shaping policy during the
Trump administration. Schwarzman spoke with the president and his advisers
147
frequently, and Treasury Secretary Steven Mnuchin said that he talked to
148
Schwarzman more than nearly any other business leader. On matters of
foreign policy, the Trump administration treated Schwarzman as a private
diplomat. He served as an interlocutor between China’s President Xi Jinping and
149
Trump and advised Trump on a summit between the two at Mar-a-Lago. He
publicly nudged Trump not to declare China a currency manipulator and—after
making eight trips to China in a single year on behalf of the administration—
150
helped to negotiate a trade agreement between the two countries.
This may or may not have been a good deal for America, but it almost
certainly was a good deal for Blackstone. Reduced tariffs could potentially help
the firm’s industrial investments, as could a repeal prohibiting foreign ownership
151
of Chinese financial services firms in China could create new investment
possibilities. And the mere fact of consultation mattered. Going back to
Blackstone’s deal with Saudi Arabia, that country reportedly considered working
with several investment firms but chose Blackstone only after Schwarzman
152
started advising Trump. Schwarzman’s proximity to power was an asset.
Blackstone’s disquieting relationships with foreign policy adversaries and its
leader’s role in shaping American policy should be concerning for us all. And
Blackstone’s combination of foreign investment and domestic influence, while
illustrative, is hardly exhaustive. The industry’s connections to foreign
governments are worthy of investigation, understanding, and perhaps, someday,
legislation.
In this sense, Congress is uniquely positioned to act. Private equity’s
entanglement with foreign governments does not appear illegal. As such, the
government’s law enforcement agencies are largely irrelevant. Meanwhile, the
arms of our foreign policy—the State Department and Defense Department, for
instance—do not generally perform these sorts of reflective, searching inquiries
that touch as much on life in America as they do abroad. The White House itself
is so thinly staffed and lacks the subpoena power to compel testimony that would
be necessary to investigate the issue. That leaves Congress, which has the broad
purview to investigate people and companies. It has the power to compel
testimony. And crucially, it does not need to pass a sixty-vote threshold in the
Senate to begin an investigation. All that’s required is the majority support of
just one relevant committee or subcommittee; the filibuster plays no role here.
An enterprising senator or congressperson need only convince a handful of
colleagues that this is an issue worthy of their attention. In other words, even in a
dysfunctional institution like Congress, action to investigate and constrain
private equity’s entwining with foreign adversaries might really be possible here.
SURPRISE MEDICAL BILLING, carried interest, COVID funding, and so much else:
these issues illustrate Congress’s failure to legislate or oversee—and at times, its
outright capture by—private equity. But if there is failure in the institution of
Congress, there is also opportunity. The disturbing relationship between the
industry and foreign adversaries is an issue worthy of Congress’s attention and
uniquely suited to its scope and powers. Progress is possible, even in the face of
dysfunction. All that’s needed is a single enterprising congressperson to begin
this work.
 PART III
HOW TO STOP THEM
 CHAPTER ELEVEN

WHAT WE MUST DO

So what is to be done? I hope that the chapters thus far have convinced you that
private equity firms are transforming America—not for the better—and creating
systemic risks for our economy as a whole. I hope too that I have convinced you
that these firms have done so not because of great business acumen—most of the
people who run the largest private equity firms do not know how to write
software, run a factory, or market a product—but in large part because of their
ability to find, or create, gaps in our legal system. Finally, I hope that I have
convinced you that our various arms of government, from the courts to Congress
to our federal and state regulators, not only allowed this to happen but, often,
actively encouraged it.
This story feeds into a deeper pessimism in our country. The twenty-first
century has been enormously disheartening for most Americans. With the failure
of the government to equitably address the Great Recession, its inconsistent and
often inept response to the global pandemic, and its inability to address the
urgent problems of health care, climate change, economic inequality, systemic
racism, and the opioid crisis, there is a reason why public faith in our institutions
is abysmal.
With our economy specifically, there is a widespread sense that things have
simply stopped working. For most Americans, real wages have barely grown in
two generations, while for the very rich they have doubled, and for the
1
exceedingly rich, tripled. Despite the commitment of over $4 trillion in
emergency stimulus funds over the past fifteen years, household wealth for most
Americans has yet to return to its pre–Great Recession high (this, of course, has
2
not been true for the wealthy). Meanwhile, businesses in increasingly
concentrated industries have used the pandemic to raise prices for consumers
and increase profits for themselves. But it isn’t just that the economy feels
unfair; it feels like it’s breaking down. Manufacturing—the part of our economy
that actually builds things—continues to shrink, while finance continues to
3
grow. We need banks and investors to provide capital and build businesses, but
we do not need to give them as much power as they have today: research shows
that American finance has long since exceeded the size at which it begins to
4
hurt, rather than help, our growth. Anecdotally, it feels like everything’s getting
a little worse: our products are lower quality, our stores are understaffed. Private
equity is not the whole of this story, but by draining productive companies of
their assets, it is a part. The question becomes ever more urgent: Can we still
make things as a country? Can we still care for ourselves?
Commentators have looked abroad and backward to see where America
might be going. Perhaps, some argue, America in 2023 is Japan in 1993. There,
banks, often enmeshed in conglomerate keiretsu not unlike our own private
5
equity firms, drove a speculative real estate bubble to absurd proportions. When
the bubble burst, the banks and keiretsu needlessly prolonged the survival of
6
various zombie companies in order to hide their own financial risk. Businesses
moved production overseas and replaced their workforces with temporary
7
employees who had less job security and fewer benefits. Productivity collapsed,
8
and unemployment exploded. The government, which had been slow to
recognize the crisis, ultimately spent enormous but insufficient sums on
stimulus, creating a huge public debt. In the ensuing “lost decades,” Japanese
citizens disengaged from politics, and voter participation plummeted to levels
more like those in America. Less than a fifth of Japanese people now believe
9
that their children will be better off than themselves, almost identical to public
10
polling here. Perhaps America is bound for similar years of twilight.
Or perhaps, more darkly, America in 2023 is Germany in 1933. There, giant
corporations—in particular, the chemical manufacturer IG Farben—supported
the Nazis at crucial moments and helped bring Hitler to power. Farben, for
instance, made a massive contribution to the Nazis on the day of the Reichstag
fire and spread the party’s propaganda through its company-owned
11
newspapers. Once installed, Hitler made the corporations a part of his engine
of war. Farben in particular ran a concentration camp at Auschwitz, and two
dozen of its executives were ultimately tried at Nuremberg. Perhaps, some might
argue, America is headed toward similar democratic collapse, enabled by its
corporate elite.
Or perhaps—and this is my hope—America in 2023 is America in 1903. The
turn of the last century was a time of renewal after two generations of darkness.
After America abandoned the commitment of Reconstruction in 1877, most
citizens lived in fear and misery. In the South, a dual campaign of white
terrorism and voter suppression destroyed biracial state governments and
reestablished rule by white elites. “Black Codes,” blessed by President Andrew
Johnson, criminalized the existence of “idle,” “vagrant,” or “undomiciled”
African Americans and forced them into prison or labor much like the slave
12
conditions they had escaped. In the North, the fortunes of men like J. P.
Morgan and James J. Hill were built on railroads, while over two hundred
thousand mechanics and laborers died in their repair shops and on the tracks
themselves. At a time when New York millionaires hosted literal treasure hunts
on their country estates, burying diamonds in the lawn for friends to find with
golden trowels, the New York Times and Harper’s Weekly lobbied for a
constitutional amendment to take away the right to vote from middle-income and
working-class residents.
Government in the Gilded Age did not simply stand idly by: it was an
advocate and defender for racial and economic elites. The Justice Department
13
largely abandoned any attempt to stop white terrorism in the South, while the
Supreme Court interpreted the Fourteenth Amendment to make it largely
powerless to stop racial segregation. As monopolies formed in the steel, tobacco,
and oil businesses, the Court also ruled that the new antitrust laws were
powerless to stop manufacturing monopolies but could be used to break up labor
unions. State courts, meanwhile, invalidated employee protections and
anticompany store laws. And the US Supreme Court, in its famous Lochner
decision, nullified a law limiting some workers to sixty-hour workweeks for
14
violating their “liberty of contract.” The governor of New York at the time said
it most truly when he declared, unironically, that “in America the people support
the government; it is not the province of the government to support the
15
people.”
And then, slowly, fitfully, with terrible defeats and disappointments,
something changed. The rural Grangers and populists and, later, urban
progressives led multiple movements to remake America. In the twenty years
from 1901 to 1920, they started the first antitrust movement and broke up the
steel, tobacco, sugar, and oil monopolies. In Congress, they established eight-
16
hour workdays for interstate rail workers and empowered the government to
17 18
set fair railway rates. They created regional banks to lend to farmers and
19 20
postal banks for others to save. In the states, they passed factory safety laws
21 22
and worker compensation laws. Localities established clean air ordinances,
and Congress created the national parks system.
For farmers, the rural Grange movement bought cooperatively owned
23
machinery and grain elevators. For workers, Congress prohibited
discrimination against rail workers who joined unions and in 1912 created the
24
Department of Labor. To reduce inequality, the country passed a constitutional
amendment to authorize a graduated income tax. To expand democracy,
progressives successfully forced the direct election of senators and the president
and passed the Nineteenth Amendment, which granted suffrage to women.
These were flawed movements. The vision of progress that these groups held
largely excluded African Americans and immigrants. Yet, on balance, they
remade America for the better and laid the social and organizational foundation
for the New Deal a generation later. Arguably, the post–Second World War
boom, which brought about the greatest middle-class prosperity in American
history, happened because of the work that began at the turn of the century.
History here has a funny rhyming quality. When Stephen Schwarzman held
an opulent sixtieth birthday party with hundreds of guests and video tributes to
25
himself, he did so at the Park Avenue Armory, which—perhaps unknown to
Schwarzman or his guests—was built a century earlier by Gilded Age barons in
26
part to defend against mobs of laborers. Meanwhile, Schwarzman’s Park
Avenue apartment was once owned by John D. Rockefeller Jr., son of the creator
27
of the Standard Oil Monopoly. Schwarzman quite literally inhabits the role of a
Gilded Age tycoon. And just as those tycoons were eventually tamed—the
Standard Oil monopoly was splintered, the masses that the volunteers of the Park
Avenue Armory feared eventually organized into unions—so too it can happen
here.
All of which is to say that our country is not necessarily doomed to follow
the path of others. America has experienced a first Gilded Age, yet with
successes and setbacks and through shifting coalitions and years of effort,
ordinary people remade the country. We can do so again. We are aided,
ironically, by the fact that the victory of private equity over our economy was not
an accident; it was the result of deliberate choices we made. If we once chose to
let private equity win, we can reverse that choice, constrain the industry, and
make room in our economy and our lives for more productive businesses, ones
that actually build things and solve problems for consumers.
To do that, we need to make dozens of changes to our laws and regulations,
changes that fall into three groups. First, we need to constrain private equity
firms’ abuses in specific industries by, for instance, setting minimum standards
of care in nursing homes and ending contracts with private prison health care
and cafeteria providers. Second, we need to change the incentives that drive
private equity’s worst excesses. In particular, we need to change our laws to
make private equity firms consider the long-term effects of their actions, to stop
firms from loading up the companies they buy with debt and extracting fees, and
to stop them from dodging the legal consequences of their actions. Finally, we
need to reduce the systemic risks that private equity poses to our economy
overall, in particular through its expansion into insurance, retirement funds, and
private credit. The chapter that follows describes these reforms in detail.
These are changes we can accomplish through regulation, litigation, and, if
possible, legislation. But to do so, we must confront the reality that one branch
of the federal government—Congress—has proven largely incapable of solving
the greatest challenges of the past quarter century. As the previous chapters have,
I hope, demonstrated, the courts, federal regulators, and state and local
governments are not absolved here. But only Congress can write national
legislation for the good of ordinary Americans, and for the most part, it has not
done so. Consider some of the biggest crises facing America: the opioid
epidemic, climate change, a broken immigration system, and economic
inequality, to name just a few. These problems have been with us for
generations, and yet, despite a handful of bills passed—most recently, the
Inflation Reduction Act, which would offer incentives to reduce greenhouse gas
emissions—Congress has proven largely unable to solve any of them. This is not
necessarily because of a deeper division in our country. Large majorities of
Americans, for instance, support gun control, climate change legislation, and a
public health care option. In fact, majorities of Republicans support these
28
measures too. The problem isn’t a deep division in our country on these issues;
the problem is that Congress is largely unable to reflect the popular will, in
particular when doing so would constrain the power of big businesses. It will be
particularly hard to take action on private equity, whose firms have donated
enormous sums to members of Congress and on a bipartisan basis. Blackstone,
for instance, and its affiliated donors (employees and so forth) gave $38 million
in just one election cycle and to both Democrats and Republicans. Overall, the
29
industry gave over $200 million in the 2020 election cycle alone.
Someday this may change. Congress may reform itself by, for instance,
eliminating the filibuster, resuscitating its professional staff, and empowering its
committees over its party leadership. Politicians responsive to widespread
popular support for action on inequality may come into office. The institution
may live up to its best ideals and rein in the excesses of corporate power while it
addresses our climate crisis, passes comprehensive immigration reform, and
finally confronts the raging opioid epidemic.
Perhaps. But we cannot wait for that to happen. Instead, we must use the
other levers of power over private equity: federal agencies, courts, investors, and
state and local governments.
Through federal agencies, we can address many of private equity’s abuses in
specific industries and contain some of the more dangerous tactics—dividend
recapitalizations, for example—that drive the industry’s worst behaviors. The
Department of Health and Human Services, for instance, can impose minimum
staffing criteria at nursing homes. The Department of Labor can effectively
block private equity firms from accessing individuals’ 401(k) savings. And the
Federal Reserve can designate firms as systematically important and subject
them to greater regulatory oversight.
Through the courts, we can stop some of the gaming that allows private
equity to take all the benefits of its risk taking while experiencing none of the
harms. The government or private litigants, for instance, can pierce the corporate
veil that, in specific cases, insulates firms from the liability of their portfolio
companies. Antitrust enforcers like the Department of Justice, Federal Trade
Commission, and state attorneys general, as well as individuals, can investigate
and sue to stop private equity rollups of various industries.
Through investors, we can shape private equity firms’ behaviors. Worth
Rises’s successful effort to stop or slow public pension investments in private
equity firms buying prison phone companies is a useful model. Where firms are
acquiring particularly odious businesses, public pension funds can be pressured
not to invest.
 Finally, through the states, we can stop abuses in some of the most predatory
industries in which private equity invests. States can, for instance, end contracts
with for-profit prison health care and phone services companies. They can
enforce corporate practice of medicine laws to stop the rollup of physician
practices. They can end the most abusive arbitration agreements and outlaw the
most predatory debt collection practices. And they can ensure basic protections
for tenants in single-family home rentals and limit corporate ownership of these
properties.
Perhaps most importantly, through states we can regulate the fundamental
shortcomings of the industry. Private equity firms are often short-sighted,
extractive, and insulated from the consequences of their actions. States can
change that. Within certain constitutional limits on how much they can regulate
actions beyond their borders, states can likely limit how much debt locally
headquartered companies can take on in the process of being acquired. They can
ban the use of dividend recapitalizations and sale-leasebacks for the same. And
they can update their own liability laws and hold firms responsible for what they
do. In the absence of congressional action, states can be some of the most
powerful forces for reform.
To accomplish this, we do not need, as some might suggest, to rethink the
entirety of the finance industry or overthrow capitalism itself (if such a thing
were possible). No, the changes we need are not small, but they are not utopian
either. We just need to make private equity firms, simply put, boring. The
essential work of providing capital, both public and private, for businesses to
grow and prosper should and will continue. But if we’re successful, private
equity firms will not be so readily able to extract money from captive
companies. Instead, that money will go to productive businesses, which will be
able to reinvest in infrastructure and employees, research and marketing. Rather
than money flowing to the very richest among us, it will—at least potentially—
go to useful endeavors. In the process, we will relearn how to make things. We
will build a better economy for all.
To do all of this, we’ll need to organize ourselves.
We’ll need better reporting on private equity. Some of this will come from
traditional news outlets, but nonprofit and volunteer organizations can play an
important role here too. The Prison Policy Initiative, for instance, has done
excellent reporting on private equity’s purchase of prison phone services. Other
industry-specific efforts would help enormously. We’ll also need databases of
private equity portfolio companies, their owners, and the institutional investors
that support the private equity firms themselves. This will give activists areas on
which to focus. And we’ll need to better understand—and publicize—which
firms are giving money to which politicians and when the latter are acting on the
former’s behalf.
We’ll also need a way to channel popular energy. Groups like the Private
Equity Stakeholder Project, Americans for Financial Reform, the American
Economic Liberties Project, and the Open Markets Initiative are already doing
important advocacy work. These organizations should consider campaigns to
encourage people to get involved in federal rulemaking. Agencies like the
Securities and Exchange Commission and the Consumer Financial Protection
Bureau are doing important work, but it is often difficult for people to
understand those efforts, much less comment on them. Advocacy organizations
can help to clear the fog. These groups should also find a way to include people
in the litigation process. Too often, public interest litigation is filled with dry
briefs, devoid of human context. Organizations should find ways to include
people in cases, through affidavits and testimony, which will help judges and
clerks understand the human component of the decisions they make.
Finally, we’ll need allies. Private equity firms will spend enormous sums to
protect their interests. But we have the advantage of having more people. We’ll
need to build partnerships with other groups—social justice organizations,
unions, small businesses, plaintiff-side law firms, and religious groups—who
have experienced the effects of private equity firms’ injustice firsthand. We’ll
need to educate one another on how private equity firms affect our specific areas
of concern and share tactics (for instance, on how to hold firms legally
accountable for the actions of their portfolio companies) that will be of interest
to us all. We’ll also need to run for office. Yes, advocates for economic justice
need to win the Congress and presidency, but we also need to populate
legislatures and city councils: as mentioned, much of the engine for action here
will, for years to come, be at the state and local level. We also need public-
spirited public servants. As someone who has worked in government several
times, I can attest both to the importance of line-level government employees
and to the need for people in government who care about, and can fight on
behalf of, ordinary people.
So what can you do? Here, let me speak personally for a moment. My first
job in the Department of Justice was in the National Security Division and
specifically in the office that advised the White House on the legality and
advisability of various national security policies. I held that job at the tail end of
the Obama administration and into the Trump administration. As relevant here,
for several months, my office was intimately involved in debates over the Trump
administration’s travel ban, which barred transit from several majority Muslim
nations. It was a horrifying experience, and for several months, in meetings and
memos, I and others tried to stop the various iterations of the ban from being
issued or to have countries taken off the list. I was obviously unsuccessful in that
effort and left the office shortly after the ban was issued, which the Supreme
Court subsequently upheld. Nevertheless, throughout that process, I remember
feeling strengthened knowing that my objections were supported by people—
millions of people—outside the Department of Justice. The literal protests in the
street gave me, a junior lawyer in a quiet office, the strength to make my
complaints to more senior and powerful people.
All of which is to say that protest has an effect. In big departments and
agencies, it can give career staff the courage to argue their points. In courts, it
can alter and expand what judges and clerks consider possible options. The
effects of protests might not always be visible, the strand connecting outburst
and action not always clear, but I can say that they have an effect because they
had an effect on me.
So, I encourage you to make your voice heard, at whatever level of volume
you can. Tweet your outrage if you have a moment. Volunteer your time or
money to any of the organizations mentioned in this book, or find one that works
on your specific area of interest if you can (there are so many great local groups
working on, for instance, housing justice, eldercare, and retail workers’ rights). If
no organization does what you think needs doing, start your own. And, quite
seriously, run for local office. In a time when national legislation is infrequent,
we need smart people to push state and local lawmaking in the right direction.
Your voice matters.
Most importantly, do not give in to despair or nihilism. Yes, private equity is
part of a larger story of the financialization of our American economy, a story
about how our country has grown more unequal and unjust. But to believe that
our condition is, for better or worse, inevitable is exactly what the most
privileged among us want you to believe. They want you to think that a better
world isn’t possible. They want things to stay as they are.
This isn’t to say that change is certain, but it is possible. Let’s get started.
 CHAPTER TWELVE

AN AGENDA FOR REFORM

The specific reforms in this chapter would rein in private equity’s worst
excesses. They fall into three groups and are organized by the different
institutions that can make them a reality. First are reforms that address
wrongdoing in specific industries where private equity firms have been active:
nursing homes, for instance, and prison services. Second are those that would
limit private equity firms’ ability to engage in specific abusive tactics, like
dividend recapitalizations and excessive management fees. Finally are those
recommendations that would reduce the systemic risks that the industry poses to
the broader economy through, for instance, its investment in private credit.

THE DEPARTMENT OF JUSTICE AND FEDERAL TRADE COMMISSION

Investigate rollups. Private equity firms are acquiring individual companies in a
host of industries and rolling them up into larger businesses. This is happening to
a diverse array of fields: dentist and dermatology practices, portable toilet and
puzzle companies, church software providers and veterinary clinics, to name just
a few. As these businesses are rolled up, prices are liable to rise, while quality—
and pay for employees—is likely to fall. While not every rollup is illegal, in their
extreme forms, they may violate antitrust laws, which prohibit acquisitions that
may reduce competition.
In addition to investigating rollups themselves, the FTC and Justice
Department should engage the states in this process too by more regularly
referring matters of local interest to state attorneys general. The agencies should
require more information from companies that propose to merge with or acquire
one another. In particular, forms that companies submit to the government when
proposing major acquisitions should be revised to require private equity firms to
better show the investments they have in competing companies. This will make
it easier for agencies to identify and stop incipient rollups.
 Revise the merger guidelines. The antitrust merger guidelines describe
when the Justice Department or FTC will typically intervene to stop proposed
acquisitions. These have become baroque documents with too many exceptions
that permit what once would have been impermissible acquisitions. Fortunately,
under new and assertive leadership, the Justice Department and FTC are revising
these guidelines. The agencies should return to the framework of the earlier 1968
guidelines, which offered clear direction for when mergers would be permitted
and offered few exceptions that would cloud the agencies’—and courts’—
analyses.
Investigate interlocking directorates. Private equity firms often place their
allies on the boards of the companies they buy. Ordinarily this is fine, but private
equity firms may violate antitrust laws if they install their representatives on the
boards of competing companies. Such “interlocking directorates” are generally
illegal because they could facilitate collusion between companies. The FTC and
Justice Department should investigate these interlocks to ensure that private
equity firms do not have so easy a mechanism to coordinate collusion among the
companies they invest in.
Prohibit and prosecute tacit collusion. As private equity firms engage in
rollups, it becomes easier for the remaining companies to engage in “tacit
collusion,” the practice by which companies can raise prices in coordination
without an explicit agreement. Though rarely used, the FTC has broad authority
1
to stop this. The commission should prosecute the worst tacit colluders directly
or promulgate a rule to stop the practice in general. Either strategy would make
it harder for private equity firms to profit off of rolling up and concentrating
industries.
Investigate prison health services. Prisoners are guaranteed a minimum
quality of health care under the Eighth Amendment’s prohibition against cruel
and unusual punishment. But private equity firms’ acquisition of leading prison
health care companies led to a marked deterioration in the quality of care for
inmates: as described in an earlier chapter, one female inmate was forced to give
birth alone in her cell, for instance, while another prisoner died after his weeping
2
lesions went untreated. The Justice Department’s Civil Rights Division,
specifically its Special Litigation Section, should investigate these companies to
determine whether they are violating prisoners’ constitutional rights.
At the same time, the Justice Department should investigate private equity
firms’ acquisitions of prison food services, which have had similarly disastrous
results. Inmates, as noted earlier, allegedly have been forced to eat meat labeled
3
“not fit for human consumption,” for instance, while others ate toothpaste to
stave off hunger pangs or shivered at night with hunger, given that portions were
4
so small. The department should investigate these practices for similar
constitutional violations.
Fairly enforce the bankruptcy code. Private equity firms have successfully
used the bankruptcy code to discharge employees’ pension obligations while
retaining control of the companies they buy. (Josh Gotbaum, the former head of
5
the Pension Benefit Guaranty Corporation, called this “pension laundering.”)
They have done so in part by relying on “363 sales,” which expedite the
bankruptcy process at the expense of other lenders, and “credit bids,” which, in
essence, allow private equity firms to buy companies at a discount.
The United States Trustee Program, a part of the Department of Justice, is
tasked with ensuring the equitable enforcement of the bankruptcy code. The
trustees should file amicus briefs in high-profile bankruptcies arguing for
limitations on 363 sales and credit bids. The trustees should also push to ensure
that private equity firms do not slough off their pension obligations through the
bankruptcy process. The trustees are well respected in the bankruptcy courts;
their voice could make a difference.
Help to pierce the corporate veil. Private equity firms are often insulated
from the wrongdoing of their portfolio companies, even when the firms
themselves were responsible for or even directed that wrongdoing. The
challenge for plaintiffs is to pierce the corporate veil, a legal argument that
courts are often reluctant to accept. Plaintiffs would be aided if the Department
of Justice—likely through the Consumer Protection Branch or the Fraud Section
of the Commercial Litigation Branch of the Civil Division—joined a handful of
plaintiffs in amicus briefs to help clarify that a private equity firm should not be
insulated from liability where a company’s misdeeds were directly caused by the
firm’s actions.

DEPARTMENT OF LABOR
Reverse private equity access to 401(k)s. The Trump administration issued a
directive allowing 401(k) asset managers to invest in private equity funds. This
will increase risks for ordinary retirement savers, while giving private equity
firms access to trillions of dollars they do not need. This will also likely
encourage private equity firms to pay yet more money for the companies they
buy. These companies, loaded with debt, will then increase the systemic risk to
the economy as a whole. The loophole enabled by this directive is unnecessary
and should be eliminated. The Biden administration, thankfully, has started this
effort, though it continues to permit a potentially large subset of 401(k)
managers—those that also manage pension plans—to continue to invest in
6
private equity. The administration should complete the job and fully prohibit
private equity firms from accessing 401(k) funds.
Clarify that the WARN Act applies to private equity firms. The Worker
Adjustment and Retraining Notification (WARN) Act requires that companies
provide advance notice to their employees when contemplating major layoffs
and provides damages to employees when their employers fail to do so. This
statute is often violated, but the case law is muddled as to whether liability under
the act extends to private equity owners of companies. The Department of Labor
should help clarify through amicus briefs that, in fact, the act applies to private
equity.

CONSUMER FINANCIAL PROTECTION BUREAU

Revive the payday lending rule. Private equity firms have bought up payday
lenders. Toward the end of the Obama administration, the Consumer Financial
Protection Bureau proposed a rule that would require these lenders to estimate
7
that borrowers could actually repay the loans they were offered. This mattered
because the overwhelming majority of payday borrowers are trapped in lending
cycles they cannot escape, in which they pay exorbitant fees and interest. The
Trump administration largely gutted this rule, leaving only limitations on how
often payday lenders could take money from borrowers’ bank accounts. The
CFPB should revive and expand the earlier, 2016 rule, which, fortunately, it is
8
already considering doing.
Revive the financial institution arbitration rule. Payday lenders have
achieved a frustrating double standard: borrowers agree to pursue their own
claims in arbitration but grant lenders the ability to prosecute their debts through
the state court system. This standard, unsurprisingly, has been disastrous for
borrowers, who, in pursuing arbitration, must often front unaffordable filing
fees. In 2016, the Obama administration issued a rule to limit financial
institutions’ use of forced arbitration agreements. The Trump administration and
Congress rescinded the rule using the Congressional Review Act. That act
 9
prohibits the CFPB from simply reintroducing the rule, so the bureau should
consider a more tailored regulation—one that prohibits the litigation-arbitration
double standard just described—which might survive both congressional and
judicial scrutiny.
Investigate usurious rates of prison release cards. Private equity firms
have bought up companies that offer “prison release cards.” These cards—
essentially debit cards—are given when prisoners are released from jail or prison
and contain the money they brought with them or earned while incarcerated. But
usurious fees—for withdrawals, balance inquiries, and card activity and
inactivity—make this little more than a way to steal former inmates’ money. The
CFPB has done important work investigating whether the fees charged by one
10
company (JPay) violated the Electronic Funds Transfer Act. The bureau should
conduct an additional, larger investigation of the industry as a whole.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Impose staffing minimums and ban arbitration agreements at nursing
homes. Private equity firms have been buying up thousands of nursing homes
and generally gutting the quality of their care. Under the supervisory authority of
the Center for Medicare and Medicaid Services, or the Occupational Health and
Safety Administration’s authority to regulate workplace safety, the Department
of Health and Human Services should require a baseline level of nursing home
11
staffing—likely 4.1 hours per resident per day —that is generally recognized as
necessary for residents’ safety. Fortunately, the Biden administration has begun a
12
process to set minimum staffing levels; it should complete that effort.
Similarly, the Obama administration in 2016 issued rules to largely ban
arbitration agreements for nursing home residents. The Trump administration
largely gutted this rule, allowing forced arbitration agreements in almost all
circumstances. The 2016 rule should be revived.
Require reporting on the ultimate parent entity of nursing homes. Private
equity firms often obscure their ultimate ownership of nursing homes to avoid
legal liability. The Center for Medicare or Medicaid Services has regulations that
require homes to disclose any investors with a 5 percent or greater ownership
13
stake. These regulations should be updated to require nursing homes to
identify the ultimate parent entities of the investors, as well as the ultimate
parent entities of the contractors that they use (nursing homes often obscure their
wealth by paying money to contractors that they themselves own). This
information should be made public so that the families of those who die in
nursing homes know whom to sue.

FEDERAL COMMUNICATIONS COMMISSION

Make interstate prison calls free or at-cost. Private equity firms have bought
up the leading prison phone companies and charged exorbitant rates. With new
legislation signed in early 2023, the FCC finally has renewed authority to
regulate interstate, as well as intrastate, prison phone services. Given the positive
demonstrated effects of allowing prisoners to communicate with their families,
the commission should use this authority and follow the path of several cities to
make these calls free or at-cost.
Prohibit replacement of free in-person meetings with for-pay
teleconferencing meetings. Prisons are increasingly replacing spaces for in-
person visits with private equity–owned videoconferencing systems. This would
not necessarily be a bad thing except that the private equity firms that own these
prison teleconferencing systems are charging exorbitant fees. The result is that,
increasingly, prisoners must pay to see their own family members. The FCC
should use its regulatory authority over phone systems, if possible, to mandate
that prisons that adopt these videoconferencing systems not replace in-person
visits and make videoconferences free or at-cost.

DEPARTMENT OF EDUCATION
End abuses of for-profit colleges. Private equity firms are buying up the
booming industry of for-profit colleges. From 2000 to 2010, undergraduate
14
enrollment in for-profit colleges quadrupled. The results have been disastrous.
Private for-profit colleges enroll just 10 percent of students but account for half
of student loan defaults. Average tuition at a for-profit is $10,000 higher than at a
public community college. And graduates of for-profits typically earn less than
graduates of public or non-profit colleges.
The Obama administration imposed a “gainful employment” rule, which cut
federal spending when schools’ graduates were unable to meet certain debt-to-
earnings ratios. The Trump administration rescinded this rule. The Department
of Education should reinstate it and expand the regulation to consider the
15
outcomes for nongraduates as well. The Trump administration also weakened
the “borrower defense” rule, which created a process for canceling student debt
when students were defrauded by schools. This too should be reinstated.
The Department of Education should also fix the so-called 90/10 rule, which
generally requires that no more than 90 percent of students’ tuition come from
government sources but which historically excepted military funds, such as those
from the GI Bill. The result has been that for-profit colleges particularly target
16
veterans for enrollment, who complain that college salespeople contact them
dozens of times a week, often falsely describing themselves as “Pentagon
17
Advisors” whose school is “Pentagon-approved.” In fact, almost one-third of
18
GI Bill funds go to for-profit colleges. Legislation in 2021 aimed to close that
loophole by extending the 90-10 rule to all federal benefit programs, including
military ones. The Department of Education, in drafting regulations to
implement the new law, should confirm that it does.
The department also needs to hold executives accountable when for-profit
schools shut down. The Center for American Progress proposed the innovative
idea of conditioning the receipt of federal aid on for-profit school executives
19
agreeing to hold themselves liable for school failures. Money paid in salaries
and bonuses should be clawed back to reimburse students who were cheated out
of proper educations and who had nothing to do with the schools’
mismanagement.
Finally, the government should make public data on graduate earnings and
loan repayment rates for each for-profit college so that students can make
20
informed decisions about the risks of attending for-profit schools. Publicity is
not a panacea, but if students are aware of schools’ actual costs and likely
outcomes, they may be more likely to enroll in nonprofit universities and
community colleges.

SECURITIES AND EXCHANGE COMMISSION

Reduce the size, and increase the transparency, of private credit. Private
equity firms are lending money to companies through the “private credit”
markets, which function as something of an alternative to the stock markets,
albeit with far less transparency. With less visibility, companies are more likely
to take on too much debt, creating a bubble that may, like all bubbles, eventually
burst, to the detriment of companies’ consumers and workers. To push borrowers
back to the public markets, the SEC should narrow Regulation D by limiting the
size of private offerings, which function as an alternative to IPOs. The SEC
should also reform Regulation 144A to limit the ability of private equity and
other firms to pass off the debt they lend to other investors, a process known as
syndication that gives firms an incentive to make loans, with little care to their
quality. If possible, the SEC should require firms that seek private credit above a
threshold size to publicly disclose certain facts about themselves, such as their
level of indebtedness. To the extent that private credit is replacing the public
market, the SEC should bring similar transparency to it.
Bring necessary transparency to the industry. The Dodd-Frank Act
requires private equity firms to file a document—Form PF—with the SEC,
21
which provides general statements about the firms’ leverage and liquidity. As
currently designed, however, this form is not particularly informative and should
be revised to collect much more information. For instance, rather than general
statements, each firm should provide specific data on executive compensation,
the companies the firm has invested in, and the level of indebtedness of those
companies. Additionally, each firm should report generally accepted measures of
revenue and income (the industry’s preferred metric, “internal rate of return,”
has been shown to be liable to gaming). Finally, each firm should report on how
much it has lent and borrowed through the “private credit” market, an emerging
source of funds that poses systemic risks to the economy.
Establish fiduciary duties and fee disclosure requirements for private
equity firms. Various professions have fiduciary duties, such as candor and
loyalty, which generally require those professionals to be honest with their
clients and to put the interests of their clients ahead of their own. Private equity
firms, however, can often contract with their investors to slough off these duties,
in essence preventing institutions that invest in them from suing when they act
22
against those investors’ interests. Thankfully, the SEC has proposed a rule
23
clarifying that private equity firms can no longer abandon their fiduciary duties
24
and must also disclose the fees they charge to investors. The commission
should complete this important process.
Prohibit incentive-based pay when companies engage in immediate
dividend recapitalizations, lay off masses of workers, or abandon pensions.
Section 956(b) of the Dodd-Frank Act directs federal agencies to “prohibit any
types of incentive-based payment arrangement, or any feature of any such
arrangement, that the regulators determine encourages inappropriate risks by
 25
covered financial institutions.” To the extent possible, the SEC should issue a
rule barring incentive-based pay at private equity firms when their portfolio
companies engage in dividend recapitalizations, mass layoffs, or abandoned
pensions within the first several years of ownership. The rule should also ban
pay when firms demand excessive management or transaction fees from their
portfolio companies. Doing so would contain the excessive risks that private
equity firms often place onto the economy.

INTERNAL REVENUE SERVICE

End the carried interest loophole. Many private equity executives pay lower
tax rates than ordinary Americans, thanks to the 2-and-20 model, explained in
Chapter 10. For close to fifteen years, however, Congress has struggled to close
the loophole through legislation. Professor Victor Fleischer, who first
popularized this issue, proposes that the IRS use its existing statutory authorities
26
to issue a rule to eliminate this loophole. Doing so would be far simpler than
waiting another generation for legislative action and would dramatically reduce
the incentives for private equity to engage in risky dealmaking.
Investigate management fee waivers. As just mentioned, private equity
firms tend to be compensated on a 2-and-20 model, with variable tax rates.
Private equity firms are increasingly creating complicated ways to have the 2 in
the 2-and-20 model treated as capital gains too, using what are called
management fee waivers. These waivers may often violate the tax code, but the
IRS rarely investigates them, in part, perhaps, because the IRS never finished
rulemaking to clarify which kinds of waivers are illegal. The agency should
finish this rulemaking process and investigate the most egregious waiver
27
schemes.
Shift enforcement to the largest tax abusers. Many if not most private
equity firms organize themselves as partnerships. The United States loses an
estimated $75 billion per year from investors in partnerships who fail to report
28
their income accurately. Yet despite such widespread violations, these legal
structures are exceedingly unlikely to be audited. In fact, people earning less
than $25,000 are three times as likely to be audited as are partnerships. This is a
terribly inefficient allocation of resources. Understanding that audits of
partnerships are more complicated, the IRS should find ways to shift its
enforcement resources to these vastly more important and, for taxpayers, costly,
tax avoidance schemes.

FEDERAL RESERVE
Limit bank lending to overleveraged private equity portfolio companies.
The Federal Reserve can play an important, perhaps crucial, role in regulating
the banks that lend to private equity firms and the companies they buy. Back in
2013, the Fed and other bank regulators issued informal guidance, generally
recommending that companies not borrow more than six times their annual cash
29
flow. This guidance was widely ignored, and by 2021, a third of all US loans
30
sold to investors exceeded this threshold. This creates huge risks for the
companies that private equity firms buy: debt sucks money away from
companies’ operations and makes them vulnerable to collapse in slight
downturns. To the extent possible, the Fed, alongside other bank regulators,
should prohibit banks from making loans to private equity firms that would
result in excessive leverage for companies. In the meantime, the Fed should
revise its nonbinding guidance and more aggressively investigate those banks
who flout it.

FANNIE MAE AND FREDDIE MAC

Protect tenants in private equity–owned rental properties. Government-
sponsored entities like Fannie Mae and Freddie Mac helped to drive single-
family properties to private equity firms. These same organizations can now help
to protect consumers, by selling distressed properties they own to institutional
31
investors only when those investors agree to basic tenant protections, such as
caps on fees, limits on rent increases, and rights of first refusal for tenants to buy
these properties. Fannie and Freddie should also set internal preferences to sell
to nonprofits and other mission-driven developers, who are less likely to take
32
advantage of tenants. To their credit, both Fannie and Freddie have started to
33
prioritize some of these issues, but they must dramatically increase their
ambitions.

TREASURY DEPARTMENT
Designate the largest private equity firms as systemically important. In the
wake of the Great Recession, Congress created the Financial Stability Oversight
Council to monitor incipient risks to the economy and designate systemically
important businesses to heightened oversight. The Obama administration
identified a handful of such businesses, while the Trump administration
34
attempted to undo much of that work. The council should designate the largest
private equity firms as systemically important to the financial system. Doing so
will subject them to greater reporting requirements and potentially help curtail
their most dangerous practices, such as loading up the companies they own with
excessive debt.

STATE AND LOCAL GOVERNMENTS

Prohibit dividend recapitalizations and other abuses. In the absence of action
by Congress, states can play perhaps the most important role in limiting private
equity firms’ abuses. As described throughout this book, private equity firms
suffer from three core problems in their business model: they invest for the short
term, load companies up with debt and extract fees, and insulate themselves
from legal liability. States can address all three of these issues. They can require
that private equity firms buying businesses headquartered within their borders
hold those businesses for a meaningful period of time. They can require that
firms not load up local companies with debt, not extract unreasonable fees, and
not engage in tactics like dividend recapitalizations and sale-leasebacks, which
often eviscerate companies’ assets. And they can reform their “corporate veil”
statutes to make it possible to hold firms responsible for the consequences of
their actions.
Such actions will no doubt be subject to legal challenge. But states shape
their own liability laws, regulate in-state companies, and even in certain
circumstances impose laws that have effects beyond their borders. In a world
where congressional legislation is unlikely, states may be the most powerful
institutions to constrain the actions of private equity.
Investigate rollups. As described above, private equity firms are rolling up a
huge range of industries. States, through their attorneys general, have the
authority to enforce the antitrust laws and stop these abuses. To do so, they will
need better information about acquisitions that are occurring. States should
require companies to submit to them the same information they submit to the
federal government about large proposed transactions and require independent
reporting on smaller transactions that are nevertheless important, such as rollups
in the medical profession. Washington and Connecticut already require reporting
35
like this on significant health care mergers. Other states should do the same.
Strengthen corporate practice of medicine laws. Private equity firms are
rolling up medical practices in part because they have been able to circumvent
state corporate practice of medicine laws. To make this possible, firms are
appointing figurehead physicians to “run” these companies, when, in fact, it is
the firms themselves that allegedly do so. States should update their laws that
prohibit this “corporate practice of medicine” to more clearly ban this behavior
and prevent medical decisions from being made by nonmedical professionals.
End contracts with abusive prison service companies. Private equity firms
have bought numerous prison services, from cafeteria and commissary providers
to health care companies and prison release card servicers. Previous chapters
document the overwhelmingly negative result—far worse than what would
likely happen if the states were in charge of these services. States and localities
should end their contracts with private equity providers of these services and do
this work themselves. By removing the profit motive for these services,
governments will eliminate the incentive that drives down the quality of care in
each industry and may ultimately save themselves money.
End surprise billing for ambulances. Congress passed legislation to deal, in
part, with the scourge of surprise medical billing. But the legislation did not
36
address surprise billing by ground ambulatory services. States, many of whom
independently adopted their own legislation on the issue, should ban surprise
billing by these ambulance companies.
Ban abusive arbitration agreements. Private equity firms have imposed
arbitration agreements in a range of industries in which they have been active:
nursing homes, payday lending, for-profit colleges, and others. The Supreme
Court has circumscribed states’ ability to regulate these agreements, but there is
still some room to maneuver. California, for instance, prohibited employers from
forcing employees to sign arbitration agreements as a condition of their
employment. The Supreme Court may yet invalidate the legislation, but in late
37
2021, the Ninth Circuit upheld it. Vermont, meanwhile, proposed legislation
banning “unconscionable” arbitration agreements, such as those that would
38
require fees greater than those for a court proceeding. The bill was ultimately
39
vetoed, but it, along with model legislation proposed by the National
40
Consumer Law Center, could serve as a template for other states.
 Stop abusive debt collection practices. Private equity firms are buying up
payday and installment lenders. States can update their sometimes comically
out-of-date lists of personal property exempt from collection: until 2011, for
instance, Massachusetts protected two cows, twelve sheep, and two swine from
41
being taken by debt collectors, but only a car worth up to $750. Updates will
ensure that borrowers can keep essential assets—cars, phones, and so forth—that
are necessary to work and survive. States can also prohibit the abuse of arrest
warrants in civil cases and cap the statute of limitations on collecting consumer
debts. Importantly, states can limit how aggressively debtors can garnish low-
income people’s wages, leaving a minimum for how much must be kept in
42
people’s bank accounts. Finally, states can require creditors to have actual
documentation that the debts they seek to collect are valid and properly
43
transferred to the companies trying to collect the debts, something, incredibly,
that often does not happen.
Protect tenants in private equity–owned rental properties. Private equity
firms are buying up single-family homes and flipping them into rental properties.
States and cities should make sure that these residents are adequately protected.
For instance, governments should extend rent control and tenant protection laws
44
to single-family rental homes (California and Oregon have already done this ).
They should limit how many properties a single owner can have and impose a
residential vacancy tax for corporate property owners, to discourage owners
45
from strategically keeping properties empty. Governments should also stop
selling foreclosed homes in bundles, a practice that ensures that only institutional
46
investors can buy these properties. And they should ban hidden fees that drive
so much of private equity firms’ income from rental properties. Disclosure laws
here are not enough: governments should cap how much a corporate landowner
can make from fees as a percentage of rental income.
Corporate control of the rental properties is also distorting the market: in
47
2021 alone, asking rents for houses rose 13 percent over the year before.
Building more properties is important, but in a market increasingly controlled by
large investors, it is also necessary to impose limits on rent increases for some
properties: Oregon, for instance, limits rent increases to 7 percent above the local
48
rate of inflation; California, 5 percent. Tenants should also be given a right of
first refusal to buy properties they rent. Washington, DC, Portland, and
49
Baltimore have already adopted this; others should follow their lead.
End abuses of for-profit colleges. As discussed above, private equity firms
are investing in for-profit colleges, which often have abysmal graduation and job
placement rates while leaving students mired in debt. The Century Foundation
has made a number of recommendations for how states can contain the abuses of
for-profit colleges.
First, where data shows that for-profit schools are being particularly
predatory—for instance, saddling students with unreasonable debt or
demonstrating poor graduation or job placement rates—they should be shut
50
down. For-profit colleges already report much of this information to the
Department of Education. States should require that the same information be
sent to them, so that they can decide whether these schools should continue to
operate. Additionally, states should create a private right of action for students to
sue schools that have poor student outcomes.
Second, states should ensure that for-profit colleges actually spend money on
instruction. For instance, public and nonprofit colleges generally spend over half
the money they receive on teaching; for-profit colleges spend less than 10
51
percent. Each college reports to the US Department of Education how much
money it spends on instruction. States should demand this information
52
themselves and require that a minimum percentage be spent on teaching. This
may ultimately discourage private equity investment in the industry.
Third, schools that go bankrupt must do so in an orderly way. For-profit
colleges often close down unexpectedly, leaving students in the lurch. States
should require colleges to close in an orderly fashion, and students shouldn’t
have to pay money (and in fact, should be refunded) when a school abruptly
53
closes before they get their degrees. Maryland’s Disorderly School Closures
54
Act already does this and can serve as a model for other states.
Fourth, for-profit colleges must stop disguising themselves as nonprofits. All
nonprofits must file a Form 990 with the IRS to prove that they are not abusing
55
their tax-exempt status. While the IRS should pursue investigations into the
issue, the agency’s staffing has been gutted. States should require the same
information to be sent to them, to conduct their own independent reviews.
 Finally, for-profit colleges must stop requiring students to sign binding
arbitration clauses. The Obama administration issued a rule to end forced
arbitration for students at for-profit colleges, a rule that the Trump administration
56
reversed. While the Department of Education should reinstate the rule, states
can accomplish the same by conditioning the grant of any money they send to
57
for-profit colleges on their dropping the use of arbitration agreements.

STATE ATTORNEYS GENERAL AND PRIVATE PLAINTIFFS

State attorneys general and, in many cases, ordinary people can sue to stop some
of private equity firms’ worst excesses and generally can follow the litigation
strategy for the Justice Department and FTC described above. For instance,
attorneys general and private plaintiffs can sue to stop anticompetitive rollups, as
well as the interlocking directorates of corporate boards. When harmed, people
can also sue for violations of state corporate practice of medicine laws. And both
consumers and state attorneys general can sue private equity–owned businesses
—for-profit colleges, nursing homes, prison services, and so forth—that violate
local consumer protection laws.
Most creatively, people may be able to sue the board members of private
equity–owned companies for breaches of fiduciary duty. Board members
typically owe duties of care and loyalty to the companies they oversee, and yet
many board members are personally divided between the companies they lead
and the private equity firms they often work for. When board members authorize
dividend recapitalizations, sale-leasebacks, or excessive fees, they may violate
their obligations to these companies. Employees at, or customers of, companies
gutted by private equity firms should seek to recover damages under this
58
theory.

CONGRESS
More than anything, to address the fundamental problems with the private equity
business model, Congress should pass the Stop Wall Street Looting Act. This
legislation, introduced by Senators Elizabeth Warren, Tammy Baldwin, and
59
Sherrod Brown, as well as Representatives Mark Pocan and Pramila Jayapal,
would give workers higher priority in the bankruptcy process, end the carried
interest loophole, and prevent companies from doing dividend recapitalizations
within the first two years of ownership.
 Congress can also address through legislation virtually all of the regulatory
solutions discussed above. It can also fill important gaps that can only be fixed
through new laws. For instance, it can condition the receipt of additional
stimulus money on not firing workers or engaging in extractive practices like
dividend recapitalizations and excessive management fees or executive
60
compensation.
Even if it is not feasible to pass legislation with a sixty-vote majority in the
Senate, Congress should launch an investigation into private equity, similar to its
high-profile investigation into Big Tech, which produced important revelations
about the industry. With subpoena power, Congress will be able to uncover, in
ways that ordinary reporting cannot, so much about how private equity firms are
making their money. It can also uniquely focus on the concerning ties that many
private equity firms have with foreign governments and the extent to which
those ties may hurt our economy and our national security.

INVESTORS
Private equity firms get their money through a variety of sources: sovereign
wealth funds, high-net-worth individuals, and, most importantly, public pension
61
funds, which provide nearly half of firms’ investable money. Most public
pension funds have open meetings and invite comments from the public.
Following the example of Worth Rises’s successful efforts to slow investments
in prison phone services, discussed in Chapter 7, activists should use these
meetings to stop public pensions from investing in the most predatory private
equity firms.

ACTIVISTS
Activists—individuals, nonprofit organizations, academics, and others—play an
essential role in building the infrastructure and public pressure for action on the
predatory practices of private equity.
First, new or existing groups can connect people agitating for change in
disparate industries affected by private equity, such as nursing homes, payday
lending, prison services, and medical practices. The specifics of each industry
are different, but there is much that these people can learn from one another,
including how private equity firms are organized, where they might be
vulnerable to lawsuits, when public advocacy campaigns have been particularly
effective, and who might join adjacent causes in solidarity. There is much that
we can learn from each other, and strength that we can draw on.
Second, these organizations can publish explanations of how the private
equity business model affects their area of concern. Plaintiffs can then make
better arguments to pierce the corporate veil and hold firms accountable for the
actions of their portfolio companies. Publishing a database of the largest
investors in private equity firm funds—public pension funds chief among them
—will help activists identify which funds they should pressure to divest
investments. Highlighting which politicians are getting the most money from
private equity firms—information that is publicly available through the nonprofit
Open Secrets but that is seldom reported—will be illuminating and informative.
Many of private equity’s influence campaigns are conducted in the open; all that
is necessary is for someone to look.
Third, these organizations can make it easier for people to participate in
rulemaking and litigation. Protests matter. So too do comments submitted to
regulators and affidavits submitted to courts. The processes for participating in
rulemaking and litigation can be obscure, but it is important for people to be a
part of them. Citizens can make concrete the harms of decisions that private
equity firms, more often than not, would like to be kept obscure and technical.
Organizations can help people understand how to participate in these processes
and convince them to do so.
Fourth, organizations focused on doing something about private equity
plunder can power creative lawsuits, something that government agencies
cannot. For instance, activists should work with investors in or former
employees of private equity–owned companies to sue for breach of fiduciary
duty and work with consumers to bring mass arbitration claims. These kinds of
cases require finding private plaintiffs, a task that only activists outside of
government can do.
Finally, organizations can pressure public pension funds to divest from
private equity firms that engage in particularly odious tactics and pressure
nonprofits (for instance, art museums), on whose board many private equity
leaders sit, to agitate for change. Public pressure campaigns worked in the prison
services industry, and they can work elsewhere too. All that’s necessary are the
organizations and people to offer focus and momentum.
THE ACTIONS DESCRIBED above would rein in private equity’s worst excesses and
help to protect consumers, workers, and the economy as a whole. While many
are ambitious and time consuming, the risk of inaction is enormous. As
described at the outset of this book, left unconstrained, private equity will
transform the economy in this decade the way that Big Tech did in the last
decade and subprime lenders did in the decade before that.
But if inaction carries enormous risks, action carries enormous opportunity.
Americans are a diverse and dynamic people. Limiting private equity—freeing
people from these companies’ predation and enabling their own
entrepreneurialism—could immeasurably improve people’s lives and the spirit of
our country. The recommendations above are ambitious, but they are all
achievable.
A better world is possible. We just need to demand it.
 ACKNOWLEDGMENTS

This book relies on the reporting and research of hundreds of journalists,

academics, and activists without whose work this project would have been
impossible. I am enormously grateful for their research, as evidenced by the
hundreds of citations in this book. Where appropriate, I have mentioned specific
writers in the text to draw attention to their important work.
The opportunity to write this book has been an enormous gift, and I am
grateful to my agent Gail Ross and editor John Mahaney for their faith in an
unknown author. Thank you to Ben Wittes and Ganesh Sitaraman for crucial
advice and introductions at the outset of the project, and to “Team Plunder”—
Amita Chauhan, Zoe Li, Lindsay Maher, and Claire Yang—for exceptional
research and revisions. Thank you to Johanna Dickson, Maggie Goodlander,
Danielle Hauck, Aaron Hoag, Jonathan Kanter, Dara Kaye, Dave Lawrence,
Kelly Lenkevich, Carolyn Levin, Karina Lubell, Kate Mueller, Adam Severt,
and Paul Sliker, as well as to my many friends who read chapters and listened to
long monologues during this project, including Max Friedman, Ben Heller, Nick
Kelly, Leora Kelman, Henry Klementowicz, Paul Kubicki, Nikki Leon, Amy
Marshak, Eric Rosenblum, Alan Rozenshtein, Laura Sloan, Alex Statman, and
Glover Wright.
Two final notes of gratitude. First, to Louis Brandeis, whose book Other
People’s Money, and How the Bankers Use It was the inspiration and lodestar for
this project. Brandeis’s ideas permeated every part of this effort, and I returned
repeatedly to his writings throughout and thought often about how his work a
century ago is newly urgent today. Second, to my mother, Martha Ballou. She
was and is a fierce champion for working people and someone whose moral
compass I try to emulate. This book, of course, is dedicated to her.
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 NOTES

INTRODUCTION: A NEW GILDED AGE

1. Peter Whoriskey & Dan Keating, Overdoses, Bedsores, Broken Bones:
What Happened When a Private-Equity Firm Sought to Care for Society’s Most
Vulnerable, WASH. POST (Nov. 25, 2018), https://wapo.st/2TMbMzj.
2. William Conway, Jr., FORBES, https://www.forbes.com/profile/william-
conway-jr/?sh=7d8e699f7ae6; David Rubenstein, FORBES,
https://www.forbes.com/profile/david-rubenstein/?sh=13fecb91792f; Daniel
D’Aniello, FORBES, https://www.forbes.com/profile/daniel-daniello/?
sh=64cf09de6ea9.
3. Whoriskey & Keating, supra note 1.
4. Id.
5. Id.
6. Matthew Goldstein et al., Push for Profits Left Nursing Homes Struggling
to Provide Care, N.Y. TIMES (May 7, 2020),
https://www.nytimes.com/2020/05/07/business/coronavirus-nursing-
homes.html.
7. Whoriskey & Keating, supra note 1.
8. Complaint, Salley et al. v. Heartland-Charleston of Hanahan SC LLC et
al., No. 2:10-cv-791 (D.S.C. Mar. 29, 2010), EB No. 1.
9. Motion to Dismiss at 3, Salley et al. v. Heartland-Charleston of Hanahan
SC LLC et al., No. 2:10-cv-791 (D.S.C. June 25, 2010), ECF No. 15-1.
10. Order Granting Motion to Dismiss at 9, Salley et al. v. Heartland-
Charleston of Hanahan SC LLC et al., No. 2:10-cv-791 (D.S.C. June 25, 2010),
ECF No. 45.
11. Ben Unglesbee, In Pandemic Era, Private Equity–Owned Retail Is as
Vulnerable as Ever, RETAIL DIVE (July 14, 2020),
https://www.retaildive.com/news/in-pandemic-era-private-equity-owned-retail-
is-as-vulnerable-as-ever/581252/ (BC Partners acquired PetSmart, Leonard
Green acquired J.Crew, and Sycamore acquired Talbots); KKR to Acquire DTC
Pioneer 1-800 Contacts from AEA Investors, PR NEWSWIRE (Sept. 23, 2020),
https://www .prnewswire.com/news-releases/kkr-to-acquire-dtc-pioneer-1-800-
contacts-from-aea-investors-301136355.html (KKR acquired 1-800 Contacts).
12. Ingrid Lunden, Iconic Font Company Monotype Is Getting Acquired by
PE Firm HGGC for $825M, TECHCRUNCH (July 26, 2019),
https://techcrunch.com/2019/07/26/iconic-font-company-monotype-is-getting-
acquired-by-pe-firm-hggc-for-825m/; Monotype, HGGC,
https://www.hggc.com/portfolio/monotype; Bembo Family, MONOTYPE,
https://catalog.monotype.com/family/monotype/bembo (the private equity firm
HGGC bought Monotype, which licenses Bembo, among other fonts).
13. Get the Private Equity Data You Need to Fundraise Faster, Invest
Smarter and Exit Stronger, PITCHBOOK, https://pitchbook.com/private-equity-
database (identifying over 47,000 businesses in which private equity invests);
Vartika Gupta et al., Reports of Corporates’ Demise Have Been Greatly
Exaggerated, MCKINSEY (Oct. 21, 2021) (identifying about four thousand
publicly traded companies in the United States).
14. Mark Vandevelde, How Private Equity Came to Resemble the Sprawling
Empires It Once Broke Up, FIN. TIMES (Oct. 15, 2021),
https://www.ft.com/content/2c56a7da-6435-469c-90d8-28e966f20379.
15. Paul J. Davies, Why Private Equity Risks Tripping on Its Own Success,
WALL ST. J. (Feb. 13, 2018), https://www.wsj.com/articles/why-private-equity-
risks-tripping-on-its-own-success-1518518193.
16. Blackstone Growth (BXG), BLACKSTONE,
https://www.blackstone.com/our-businesses/blackstone-growth-bxg/.
17. Frank Holmes, Top 10 Largest Fortune 500 Employers in the U.S.,
FORBES (Oct. 26, 2022),
https://www.forbes.com/sites/greatspeculations/2022/10/26/top-10-largest-
fortune-500-employers-in-the-us/?sh=57eebb977e36.
18. Eileen Appelbaum & Rosemary Batt, PRIVATE EQUITY AT WORK: WHEN
WALL STREET MANAGES MAIN STREET 41, 43–44, 52–53 (2014) (discussing use
of debt, short-term investments, limited liability, and fees).
19. Alicia McElhaney, LBOs Make (More) Companies Go Bankrupt,
Research Shows, INSTITUTIONAL INVESTOR (July 26, 2019),
https://www.institutionalinvestor.com/article/b1gfygl4r8661f/LBOs-Make-
More-Companies-Go-Bankrupt-Research-Shows.
20. Jim Baker et al., Pirate Equity: How Wall Street Firms Are Pillaging
American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 9 (2019),
https://united4respect.org/wp-content/uploads/2019/07/Pirate-Equity-How-Wall-
Street-Firms-are-Pillaging-American-Retail-July-2019.pdf; Emily Stewart, What
Is Private Equity, and Why Is It Killing Everything You Love?, VOX (Jan. 6,
2020), https://www.vox.com/the-goods/2020/⅙/21024740/private-equity-
taylor-swift-toys-r-us-elizabeth-warren; Rosemary Batt et al., How Private
Equity Firms Will Profit from COVID-19, AM. PROSPECT (May 7, 2020),
https://prospect.org/coronavirus/private-equity-firms-profit-covid-19-j-crew/;
Sapna Maheshwari & Vanessa Friedman, The Pandemic Helped Topple Two
Retailers. So Did Private Equity, N.Y. TIMES (June 18, 2020),
https://www.nytimes.com/2020/05/14/business/coronavirus-retail-bankruptcies-
private-equity.html; Ben Unglesbee & Nicole Ault, Is the Road to Bankruptcy
Paved by Private Equity?, RETAIL DIVE (Nov. 9, 2018),
https://www.retaildive.com/news/the-road-to-bankruptcy/540617/; Adam Lewis,
Private Equity–Backed Bankruptcies Surged in May, but Future Might Not Be
So Bleak, PITCHBOOK (June 5, 2020),
https://pitchbook.com/news/articles/private-equity-backed-bankruptcies-surged-
in-may-but-future-might-not-be-so-bleak; Jordan Weissmann, Why Private
Equity Keeps Wrecking Retail Chains Like Fairway, SLATE (Jan. 26, 2020),
https://slate.com/business/2020/01/private-equity-retail-fairway-why.html.
21. The Forbes 400, FORBES (2020), https://www.forbes.com/forbes-400/.
22. GDP (current US$), WORLD BANK,
https://data.worldbank.org/indicator/NY .GDP.MKTP.CD.
23. Dawn Lim, Blackstone’s Schwarzman Collects $1.1 Billion in Dividends,
Pay, BLOOMBERG (Feb. 25, 2022),
https://www.bloomberg.com/news/articles/2022-02-26/blackstone-s-
schwarzman-collects-1-1-billion-in-dividends-pay; Nicole Goodkind, JPMorgan
Shareholders Vote Down Pay Bump for CEO Jamie Dimon, CNN (May 18,
2022), https://www.cnn.com/2022/05/18/investing/jpmorgan-ceo-pay-
shareholders/index.html; Everything Is Private Equity Now, BLOOMBERG (Oct. 3,
2019), https://www.bloomberg.com/news/features/2019-10-03/how-private-
equity-works-and-took-over-everything.
24. Jordan Weissmann, How Wall Street Devoured Corporate America,
ATLANTIC (Mar. 5, 2013),
https://www.theatlantic.com/business/archive/2013/03/how-wall-street-
devoured-corporate-america/273732/.
25. Elizabeth Warren, End Wall Street’s Stranglehold on Our Economy,
MEDIUM (July 18, 2019), https://medium.com/@teamwarren/end-wall-streets-
stranglehold-on-our-economy-70cf038bac76.
 26. Private Equity & Investment Firms: Summary, OPEN SECRETS,
https://www.opensecrets .org/industries/indus.php?ind=F2600&cycle=All.
27. Timothy F. Geithner, WARBURG PINCUS,
https://warburgpincus.com/team/timothy-f-geithner.
28. Team, LINDSAY GOLDBERG, https://www.lindsaygoldbergllc.com/team.
29. Investment Team, JAM CAPITAL,
http://www.jamcapitalpartners.net/#team-header-1.
30. Team, SOLAMERE CAPITAL, https://www.solamerecapital.com/team/.
31. David H. Petraeus, KKR, https://www.kkr.com/our-
firm/leadership/david-h-petraeus.
32. Zachary Mider & Jennifer Jacobs, At Cerberus, Feinberg Built a Web of
National Security Ties, BLOOMBERG (Feb. 16, 2017),
https://www.bloomberg.com/news/articles/2017-02-16/at-cerberus-feinberg-
built-a-web-of-national-security-contacts.
33. Senator Kelly A. Ayotte, BLACKSTONE,
https://www.blackstone.com/people/senator-kelly-a-ayotte/; Tony Cook, Evan
Bayh’s Board Seats Made Him Millions After Senate, INDYSTAR (Aug. 13,
2016), https://www.indystar.com/story/news/politics/2016/08/13/evan-bayhs-
private-sector-work-raises-questions/88582174/.
34. Dan Quayle, CERBERUS, https://www.cerberus.com/our-
firm/leadership/dan-quayle/.
35. Tim Shorrock, Kushner and Bannon Team Up to Privatize the War in
Afghanistan, NATION (July 14, 2017),
https://www.thenation.com/article/archive/kushner-and-bannon-team-up-to-
privatize-the-war-in-afghanistan/.
36. Cutting James Baker’s Ties, N.Y. TIMES (Dec. 12, 2003),
https://www.nytimes.com/2003/12/12/opinion/cutting-james-baker-s-ties.html
(identifying Baker’s employment with the Carlyle Group); Lee Fang, Homeland
Security Pick Gen. John Kelly Fails to Disclose Ties to Defense Contractors,
INTERCEPT (Jan. 17, 2017), https://theintercept.com/2017/01/17/homeland-
security-pick-gen-john-kelly-fails-to-disclose-ties-to-defense-contractors/
(identifying John Kelly’s employment with DC Capital Partners); Zachary
Mider & Jennifer Jacobs, At Cerberus, Feinberg Built a Web of National
Security Ties, BLOOMBERG (Feb. 16, 2017),
https://www.bloomberg.com/news/articles/2017-02-16/at-cerberus-feinberg-
built-a-web-of-national-security-contacts (identifying Dan Coats’s employment
with Cerberus); John W. Snow, CERBERUS, https://www.cerberus.com/our-
firm/leadership/john-w-snow/; Former FCC Chairman Kennard to Join the
Carlyle Group, CARLYLE GROUP (May 1, 2001), https://www.carlyle.com/media-
room/news-release-archive/former-fcc-chairman-kennard-join-carlyle-group;
Julius Genachowski, CA R LY L E GROUP, https://www .carlyle.com/about-
carlyle/team/julius-genachowski; Ajit Pai, SEARCHLIGHT CAPITAL,
https://www.searchlightcap.com/team/ajit-pai/; Former SEC Chairman Arthur
Levitt to Join the Carlyle Group, CARLYLE GROUP (May 1, 2001),
https://www.carlyle.com/media-room/news-release-archive/former-sec-
chairman-arthur-levitt-join-carlyle-group; Apollo Appoints Jay Clayton as Lead
Independent Director, APOLLO GL O B A L MANAGEMENT (Feb. 18, 2021),
https://www.apollo.com/media/press-releases/2021/02-18-2021-113016273.
37. US PE Breakdown, PITCHBOOK (Jan. 11, 2022),
https://pitchbook.com/news/reports/2021-annual-us-pe-breakdown.
38. Louis Brandeis, OTHER PEOPLE’S MONEY AND HOW THE BANKERS USE IT
13 (1914).
39. Id. at 16 (discussing excessive fees); id. at 49 (discussing forced
partnerships); id. at 75 (discussing decline in product quality).

CHAPTER 1: OTHER PEOPLE’S MONEY, AND HOW THEY USE IT

1. Dan Primack, How Workers Suffered from Shopko’s Bankruptcy While Sun
Capital Made Money, AXIOS (June 11, 2019), https://www.axios.com/shopko-
bankruptcy-sun-capital-547b97ba-901c-4201-92cc-6d3168357fa3.html.
2. ShopKo Through the Years, POUGHKEEPSIE J. (Jan. 16, 2019), https://www
.poughkeepsiejournal.com/picture-gallery/money/2019/01/09/shopko-through-
years-bankruptcy-green-bay-stores-headquarters/2526099002/.
3. Jeff Bollier, “There Were Memories Here”: Shopko Store Where Business
Was Born Ends 57-year Run, GREEN BAY PRESS-GAZETTE (Apr. 22, 2019),
https://www.greenbaypressgazette .com/story/news/2019/04/22/there-were-
memories-here-green-bays-original-shopko-store-closes-bankrupcy-
liquidation/3537413002/.
4. Shopko, WIKIPEDIA, https://en.wikipedia.org/wiki/Shopko; List of Former
Shopko Stores, MALLS AND RETAIL WIKI,
https://malls.fandom.com/wiki/List_of_former_Shopko_Stores.
 5. Erik Gunn, One Year After Shopko Went Bankrupt, URBAN MILWAUKEE
(Mar. 22, 2020), https://urbanmilwaukee.com/2020/03/22/one-year-after-
shopko-went-bankrupt/.
6. Id.
7. Jeff Bollier, Shopko Files for Bankruptcy, Will Close 105 Stores, Including
16 in Wisconsin, GREEN BAY PRESS-GAZETTE (Jan. 16, 2019),
https://www.greenbaypressgazette.com/story/money/2019/01/16/shopko-files-
bankruptcy-close-38-more-stores/2551819002/; Sari Lesk, Shopko to Close All
Stores, Liquidate After Unsuccessful Attempt to Find a Buyer, MILWAUKEE BUS.
J. (Mar. 18, 2019),
https://www.bizjournals.com/milwaukee/news/2019/03/18/shopko-to-close-all-
stores-liquidate-after.html.
8. Sun Cap Affiliate to Buy ShopKo, PROGRESSIVE GROCER (Oct. 19, 2005),
https://progressivegrocer.com/sun-cap-affiliate-buy-shopko.
9. Ryan Chittum & Dennis K. Berman, Spirit Finance to Buy Most of
ShopKo’s Property, WALL ST. J. (May 10, 2006),
https://www.wsj.com/articles/SB114723045415348642.
10. Id.
11. Jeff Bollier, Shopko Used Borrowed Money to Pay Dividends; Owes
Wisconsin $13 Million in Taxes, Fees, GREEN BAY PRESS-GAZETTE (Mar. 1,
2019), https://www.greenbaypressgazette
.com/story/money/2019/03/01/shopko-dividends-under-investigation-also-owes-
wisconsin-13-5-million/2906336002/.
12. Primack, supra note 1.
13. Bollier, supra note 11.
14. Creditor Data Details—Claim # 345, KROLL (July 29, 2019),
https://cases.ra.kroll .com/shopko/Home-ClaimInfo.
15. Shopko Timeline of Notable Events, from 1961–2019, GREEN BAY PRESS-
GAZETTE (Jan. 16, 2019),
https://www.greenbaypressgazette.com/story/money/2019/01/16/shopko-
timeline-notable-events-1961-2019/2540803002/.
16. Primack, supra note 1.
17. Jeff Bollier, Bankruptcy Judge Approves $3 Million for 4,000 Former
Shopko Workers Promised Severance, GREEN BAY PRESS-GAZETTE (Oct. 15,
2020), https://www.greenbaypress
gazette.com/story/money/2020/10/15/shopko-severance-bankruptcy-judge-
approves-3-million-severance-pay-4-000-workers/3651776001/; WBAY news
staff, Court Approves Severance Pay Settlement for Former Shopko Employees,
WBAY (Oct. 16, 2020), https://www .wbay.com/2020/10/16/court-approves-
severance-pay-settlement-for-former-shopko-employees/.
18. Id.
19. Gunn, supra note 5.
20. Id.
21. Id.
22. Dana Schuster, This Party-Boy Investor Throws the Grossest Ragers in
the Hamptons, N.Y. POST (July 2, 2015), https://nypost.com/2015/07/02/the-
hugh-hefner-of-the-hamptons-is-back-with-naked-ladies-lasers-and-booze-
galore/.
23. PageSix.com staff, Nude Frolic in Tycoon’s Pool, PAGE SIX (Aug. 7,
2011), https://pagesix.com/2011/08/07/nude-frolic-in-tycoons-pool/.
24. Id.
25. Mark Memmott, Romney’s Wrong and Right About the “47 Percent,”
NPR (Sept. 18, 2012), https://www.npr.org/sections/thetwo-
way/2012/09/18/161333783/romneys-wrong-and-right-about-the-47-percent.
26. David Corn, Secret Video: Romney Tells Millionaire Donors What He
Really Thinks of Obama Voters, MOTHER JONES (Sept. 17, 2012),
https://www.motherjones.com/politics/2012/09/secret-video-romney-private-
fundraiser/.
27. Alexander Bolton, Restive GOP Freshmen Eye Entitlement Reform, THE
HILL (Oct. 1, 2016), https://thehill.com/homenews/senate/298792-restive-gop-
freshmen-eye-entitlement-reform.
28. Jeff Stein, Ryan Says Republicans to Target Welfare, Medicare, Medicaid
Spending in 2018, WASH. POST (Dec. 6, 2017),
https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-post-
tax-cut-changes-to-welfare-medicare-and-social-security/.
29. Steve Kadel, Congressman: Reform Entitlement Programs to Reduce
Federal Debt, TIMES-INDEPENDENT (Apr. 4, 2013),
https://www.moabtimes.com/articles/congressman-reform-entitlement-
programs-to-reduce-federal-debt-2/.
30. Hannah Hess, Welfare Reform Act Champion Clay Shaw Dies, ROLL
CALL (Sept. 11, 2013) https://rollcall.com/2013/09/11/welfare-reform-act-
champion-clay-shaw-dies/.
31. Nicole Goodkind, Mitch McConnell Calls for Social Security, Medicare,
Medicaid Cuts After Passing Tax Cuts, Massive Defense Spending, NEWSWEEK
(Oct. 16, 2018), https://www .newsweek.com/deficit-budget-tax-plan-social-
security-medicaid-medicare-entitlement-1172941.
32. Individual Contributions, FEDERAL ELECTIONS COMMISSION,
https://www.fec.gov/data/receipts/individual-contributions/?
contributor_name=leder&contributor_employer=sun+capital.
33. Wolf Richter, Another Retail Chain Bought & Stripped Bare by Sun
Capital Goes Bankrupt, WOLF STREET (Jan. 17, 2019),
https://wolfstreet.com/2019/01/17/another-retail-chain-owned-stripped-bare-by-
sun-capital-goes-bankrupt/.
34. 2021 Highlights, SUN CAPITAL PARTNERS (2021),
https://suncappart.com/wp-content/uploads/2022/03/Sun-Capital-2021-
Highlights.pdf.
35. George Fisher Baker, WIKIPEDIA,
https://en.wikipedia.org/wiki/George_Fisher_Baker; George F. Baker, 91, Dies
Suddenly of Pneumonia, N.Y. TIMES (May 3, 1931),
https://www.nytimes.com/1931/05/03/archives/george-f-baker-91-dies-
suddenly-of-pneumonia-dean-of-nations.html.
36. Louis Brandeis, OTHER PEOPLE’S MONEY AND HOW THE BANKERS USE IT
116 (1914).
37. Id.
38. Vetrerie Riunite, SUN CAPITAL, https://suncappart.com/portfolio/vetrerie-
riunite/.
39. West Dermatology, SUN CAPITAL, https://suncappart.com/portfolio/west-
derma tology/.
40. Smokey Bones, SUN CAPITAL, https://suncappart.com/portfolio/smokey-
bones/.
41. Windsor Fashions, SUN CAPITAL,
https://suncappart.com/portfolio/windsor-fashions/.
42. Brandeis, supra note 36, at 5, 13.
43. Baker, George Fisher, SCOTT J. WINSLOW AMERICANA,
https://www.scottwinslow
.com/manufacturer/BAKER_GEORGE_FISHER/2446 (estimating Baker’s
fortune at $73.5 million in 1931, or about $1.4 billion in 2022 dollars).
44. #79 Stephen Schwarzman, FORBES,
https://www.forbes.com/profile/stephen-schwarzman/?sh=6ee1ffa6234a.
 45. Mark Luscombe, Historical Capital Gains Rates, WOLTERS KLUWER
(Mar. 9, 2022), https://www.wolterskluwer.com/en/expert-insights/whole-ball-
of-tax-historical-capital-gains-rates.
46. Philip Shabecoff, U.S. Eases Pension Investing, N.Y. TIMES (June 21,
1979), https://www.nytimes.com/1979/06/21/archives/us-eases-pension-
investing-pension-investments .html.
47. Ann Crittenden, Reaping the Big Profits from a Fat Cat, N.Y. TIMES
(Aug. 7, 1983), https://www.nytimes.com/1983/08/07/business/reaping-the-big-
profits-from-a-fat-cat.html.
48. David Gelles, Billionaire Confessional: David Rubenstein on Wealth and
Privilege, N.Y. TIMES (Mar. 12, 2020),
https://www.nytimes.com/2020/03/12/business/david-rubenstein-carlyle-corner-
office.html.
49. Stephen Gandel, 3 Reasons the Go-Go ’80s Aren’t Back on Wall Street,
FORTUNE (Oct. 20, 2015), https://fortune.com/2015/10/20/wall-street-1980s/.
50. History of the RJR Nabisco Takeover, N.Y. TIMES (Dec. 2, 1988),
https://www .nytimes.com/1988/12/02/business/history-of-the-rjr-nabisco-
takeover.html.
51. John M. Doyle, Judge Dismisses Prison Term for Former Milken
Associate, ASSOCIATED PRESS (Sept. 8, 1992),
https://apnews.com/article/2efffe6a8df8a34c9e4200ec0473 25ed.
52. Savings and Loan Crisis, FEDERAL RESERVE HISTORY,
https://www.federalreservehistory .org/essays/savings-and-loan-crisis.
53. Tom Pratt, Snapple Insiders to Cash In Part of Huge LBO Windfall,
INVESTMENT DEALERS’ DIGEST (Sept. 20, 1993)
https://www.proquest.com/docview/198348759.
54. Antoine Gara, How Burger King’s Brilliant Brazilian Billionaire Turned
$1.2B into $22B, THESTREET (Aug. 25, 2014),
https://www.thestreet.com/markets/mergers-and-acquisitions/how-burger-kings-
brilliant-brazilian-billionaire-turned-12b-into-22b-12856055.
55. James Politi & John Murray Brown, Houghton Mifflin Agrees $5BN Sale,
FIN. TIMES (Nov. 29, 2006), https://www.ft.com/content/07a232e4-7f60-11db-
b193-00007 79e2340.
56. John Kreiser, Harrah’s Accepts $17.1B Buyout Bid, CBS (Dec. 19,
2006), https://www.cbsnews.com/news/harrahs-accepts-171b-buyout-bid/.
57. Sue Zeidler, MGM Seeks Lenders’ OK for Pre-packaged Bankruptcy,
REUTERS (Oct. 7, 2010), https://www.reuters.com/article/us-mgm-
restructuring/mgm-seeks-lenders-ok-for-pre-packaged-bankruptcy-
idUSTRE69706320101008.
58. Jeff Spross, How Vulture Capitalists Ate Toys ‘R’ Us, THE WEEK (Mar.
16, 2018), https://theweek.com/articles/761124/how-vulture-capitalists-ate-toys-
r.
59. Daniel Rasmussen, Private Equity: Overvalued or Overrated?, AM.
AFFAIRS (Spring 2018), https://americanaffairsjournal.org/2018/02/private-
equity-overvalued-overrated/.
60. BLACKSTONE, https://www.blackstone.com/.
61. About, APOLLO, https://www.apollo.com/about-apollo; see also Google
Books Ngram Viewer, GOOGLE, https://books.google.com/ngrams/graph?
content=%22private+equity
%22%2C+%22leveraged+buyout%22&year_start=1800&year_end=2019&corpus
=26&smoothing=3 (The term leveraged buyout rose to prominence in 1987 and
immediately declined in use. Private equity replaced leveraged buyout as the
term of art, peaked in 2009, then similarly collapsed).
62. US PE Breakdown, PITCHBOOK 4 (Jan. 11, 2022),
https://files.pitchbook.com/website/files/pdf/2021_Annual_US_PE_Breakdown.pdf.
63. Gross Domestic Product, FEDERAL RESERVE BANK ST. LOUIS,
https://fred.stlouisfed .org/series/GDP (Q4 2022 GDP was about $24 trillion).
64. Dylan Thomas, KKR Scales AUM in 2021, Targets Private Wealth, S&P
GLOBAL (Feb. 8, 2022), https://www.spglobal.com/marketintelligence/en/news-
insights/latest-news-headlines/kkr-scales-aum-in-2021-targets-private-wealth-
68795650.
65. Blackstone Reports Fourth Quarter and Full Year 2021 Results,
BLACKSTONE (Jan. 27, 2022),
https://s23.q4cdn.com/714267708/files/doc_financials/2021/q4/Blackstone4Q21Earnings
PressRelease.pdf.
66. For simplicity’s sake, unless otherwise indicated, references to private
equity firms in this book include the funds they manage.
67. Eileen Appelbaum & Rosemary Batt, PRIVATE EQUITY AT WORK: WHEN
WALL STREET MANAGES MAIN STREET 2–3 (2014).
68. Id. at 3, 7.
69. Id. at 72.
70. Victoria Knight, Private Equity Ownership of Nursing Homes Triggers
Capitol Hill Questions—and a GAO Probe, KAISER HEALTH NEWS (Apr. 13,
2022), https://khn.org/news/article/private-equity-ownership-of-nursing-homes-
triggers-federal-probe/; Amy Abdnor & Alexandra Spratt, Part 2: Hotspots for
COVID Deaths, Nursing Homes Have Long Been Targeted—and Gutted—by
Private Equity, ARNOLD VENTURES (Sept. 8, 2020),
https://www.arnoldventures.org/stories/hotspots-for-covid-deaths-nursing-
homes-have-long-been-targeted-and-gutted-by-private-equity.
71. Id.; Atul Gupta et al., Does Private Equity Investment in Healthcare
Benefit Patients? Evidence from Nursing Homes (National Bureau of Economic
Research, Working Paper No. 28474, Feb. 2021),
https://www.nber.org/papers/w28474.
72. Abdnor & Spratt, supra note 70.
73. Gupta et al., supra note 71.
74. Appelbaum & Batt, supra note 67.
75. Adam Lewis, PE Firms Keep Deploying Dividend Recaps Despite the
Risks, PITCHBOOK (Aug. 15, 2019), https://pitchbook.com/news/articles/pe-
firms-keep-deploying-dividend-recaps-despite-the-risks.
76. Dan Primack, Why Hertz Crashed, AXIOS (May 26, 2020),
https://www.axios.com/hertz-bankruptcy-6f16b3a4-141f-43cd-8f7b-
e6a60a01d5dd.html.
77. Appelbaum & Batt, supra note 67, at 7.
78. Primack, supra note 76.
79. Tom Krisher, Debt and Coronavirus Push Hertz into Bankruptcy
Protection, ASSOCIATED PRESS (May 23, 2020),
https://apnews.com/article/3d73d765cb60bef45afc83fa0dd24775.
80. Lewis, supra note 75.
81. Eliza Ronalds-Hannon & Davide Scigliuzzo, Sycamore Gets $1 Billion in
Deal That Amazed Street, BLOOMBERG (Apr. 11, 2019),
https://www.bloomberg.com/news/articles/2019-04-11/sycamore-pockets-1-
billion-from-deal-that-amazed-wall-street (Sycamore invested $1.6 billion in
equity into the company, received $1 billion through a dividend recapitalization,
and received another $300 million back through a separate deal).
82. Matthew Goldstein, Private Equity Firms Are Piling on Debt to Pay
Dividends, N.Y. TIMES (Feb. 19, 2021),
https://www.nytimes.com/2021/02/19/business/private-equity-dividend-
loans.html; Dividend Recapitalizations in Healthcare: How Private Equity
Raids Critical Health Care Infrastructure for Short Term Profit, PRIVATE EQUITY
STAKEHOLDER PROJECT (Oct. 2020), https://pestakeholder.org/wp-
content/uploads/2020/10/PESP-HC-dividends-10-2020.pdf.
83. Morgan Greene, Hundreds More Lawsuits Filed over Ethylene Oxide
Emissions at Sterigenics Plant in Willowbrook, CHICAGO TRIB. (Aug. 21, 2020),
https://www.chicagotribune .com/news/breaking/ct-sterigenics-lawsuits-
20200821-mugtioojxvf2rfqoxnbfante2y-story.html. Sterigenics fought the
lawsuits and argued that the quantities of chemicals it released were too small to
be harmful. Nevertheless, in late 2022, a jury awarded $363 million to a plaintiff
who lived near the facility and developed cancer. Sterigenics said that it would
appeal the decision. Michelle Gallardo, Sterigenics Trial Jury Reaches $363M
Verdict in Favor of Woman Who Sued Willowbrook Company, ABC7 CHICAGO
(Sept. 19, 2022), https://abc7chicago.com/sterigenics-lawsuit-willowbrook-
verdict-locations/12240473/.
84. Sterigenics Funnels $1.3 Billion in Cash While Facing Increased Legal
Pressure for Causing Cancers, ROMANUCCI & BLANDIN (Feb. 3, 2020),
https://jnswire.s3.amazonaws.com/jns-
media/5f/59/11380855/Sterigenics_Amended_Complaint_2-3-20.pdf. The
Atlanta-Journal Constitution exposed Sterigenics’s use of dividend
recapitalizations. In a statement to the paper, Sterigenics denied that the
company “took actions with respect to capital structure at the expense of safety”
but did not deny the recapitalizations themselves. Brian Eason, Investor Payouts
Put Sterigenics in Tenuous Financial Position as Pressure Mounts, ATLANTA
JOURNAL-CONSTITUTION (Feb. 3, 2022), https://www.ajc.com/news/atlanta-
news/investor-payouts-put-sterigenics-in-tenuous-financial-position-as-pressure-
mounts/EJC5VJYEH5CINFSN24TGN5C4RI/.
85. Goldstein, supra note 82.
86. Davide Scigliuzzo, Private Equity’s Dividend Spree Looks Like It’s Just
Starting, BLOOMBERG (Sept. 15, 2021),
https://www.bloomberg.com/news/articles/2021-09-15/private-equity-s-
dividend-spree-looks-like-it-s-just-starting.
87. Id.
88. Margalit Fox, Alan Haberman, Who Ushered in the Bar Code, Dies at
81, N.Y. TIMES (June 15, 2011),
https://www.nytimes.com/2011/06/16/business/16haberman.html.
89. Peter Whoriskey, As a Grocery Chain Is Dismantled, Investors Recover
Their Money. Worker Pensions Are Short Millions, WASH. POST (Dec. 28, 2018),
https://wapo .st/32fIQFh.
 90. Id.; Eileen Appelbaum & Rosemary Batt, Private Equity Pillage:
Grocery Stores and Workers at Risk, CENTER FOR ECONOMIC AND POLICY
RESEARCH (2018), https://cepr .shorthandstories.com/private-equity-
pillage/index.html (estimating that Marsh’s property was undervalued by $100
to $150 million).
91. Whoriskey, supra note 89.
92. Id.
93. Id.
94. Id.
95. Id.
96. Id.
97. Sun Capital allegedly received dividends on several of these investments.
See, e.g., Jonathan Shieber, Sun Capital Sees Healthy Return on Fluid Routing
Solutions, WALL ST. J. (Mar. 9, 2012),
https://www.wsj.com/articles/DJFLBO0020120308e838sjksd; Stephanie
Gleason, Indalex Sues Kirkland & Ellis, Alleges Investment Conflicts, WALL ST.
J. (May 15, 2021), https://www.wsj.com/articles/DJFDBS0020120515e85fjr2ah
(Indalex alleged that Sun Capital received a substantial dividend from Indelex;
the matter settled before the allegation could be resolved publicly).
98. Sycamore Partners Completes Acquisition of Talbots, CISION (Aug. 7,
2012), https://www.prnewswire.com/news-releases/sycamore-partners-
completes-acquisition-of-talbots-165259216.html.
99. William Grimes, Nancy Talbot, Who Helped Build a Retail Empire, Dies
at 89, N.Y. TIMES (Sept. 3, 2009),
https://www.nytimes.com/2009/09/04/business/04talbot.html.
100. Id.
101. Khadeeja Safdar & Miriam Gottfried, How One Investor Made a
Fortune Picking Over the Retail Apocalypse, WALL ST. J. (Mar. 21, 2018),
https://www.wsj.com/articles/how-one-investor-made-a-fortune-picking-over-
the-retail-apocalypse-1521643491.
102. Steve Gelsi, Sycamore Pays Dividend Recap with $205 mln in Fresh
Talbots Debt, BUYOUTS (Apr. 27, 2015),
https://www.buyoutsinsider.com/sycamore-pays-dividend-recap-with-205-mln-
in-fresh-talbots-debt/.
103. Safdar & Gottfried, supra note 101.
104. Ben Unglesbee, Talbots Downgraded by S&P as Pandemic Weighs on
Sales, Cash Flow, RETAIL DIVE (Jan. 22, 2021),
https://www.retaildive.com/news/talbots-downgraded-by-sp-as-pandemic-
weighs-on-sales-cash-flow/593821.
105. Debtors’ Motion for an Order, In re: Aeropostale Inc., et al., No. 16-bk-
11275 (S.D.N.Y. July 22, 2016), ECF No. 496 at ¶ 5; Declaration of Julian R.
Geiger, In re: Aeropostale Inc., et al., No. 16-bk-11275 (S.D.N.Y. May 4, 2016),
ECF No. 26.
106. Peg Brickley, Aéropostale Loses Bid to Rein in Sycamore, WALL ST. J.
(Aug. 26, 2016), https://www.wsj.com/articles/aeropostale-loses-bid-to-rein-in-
sycamore-1472243765; Memorandum of Decision, In re: Aeropostale Inc., et
al., No. 16-bk-11275 (S.D.N.Y. July 22, 2016), ECF No. 724 at 60-64; Jessica
DiNapoli, Aeropostale to Challenge Sycamore’s Status as Creditor, REUTERS
(July 21, 2016), https://www.reuters.com/article/us-aeropostale-claims-
bankruptcy/aeropostale-to-challenge-sycamores-status-as-creditor-
idUSKCN10130P.
107. Jana Kasperkevic, All the Stores You Shopped at as a Teen Are Going
Bankrupt, MARKETPLACE (Mar. 20, 2018),
https://www.marketplace.org/2018/03/20/all-stores-you-shopped-teen-are-
going-bankrupt/.
108. Nathan Bomey, Will Your Aeropostale Close? Here’s the List, USA
TODAY (May 4, 2016),
https://www.usatoday.com/story/money/2016/05/04/aeropostale-chapter-11-
bankruptcy-store-closure-list/83916028/.
109. Eileen Appelbaum & Rosemary Batt, Private Equity Partners Get Rich
at Taxpayer Expense, CENTER FOR ECONOMIC AND POLICY RESEARCH (July 2017),
https://cepr.net/images/stories/reports/private-equity-partners-2017-07.pdf.
110. Gregg D. Polsky, Private Equity Management Fee Conversions 12
(FSU College of Law, Public Law Research Paper No. 337, 2012),
https://papers.ssrn.com/sol3/papers .cfm?abstract_id=1295443.
111. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
112. Appelbaum & Batt, supra note 67, at 79.
113. Robert F. Smith, FORBES, https://www.forbes.com/profile/robert-f-
smith/?sh =45b9d7bb2236.
114. Ted Andersen, Billionaire Private Equity Firm Founder, CEO Caught
Up in Federal Tax Fraud, SAN FRANCISCO BUS. TIMES (Oct. 15, 2020),
https://www.bizjournals.com/sanfrancisco/news/2020/10/16/sf-private-equity-
firm-founder-federal-cuts-deal.html.
115. Laura Saunders, The IRS Reels In a Whale of an Offshore Tax Cheat—
and Goes for Another, WALL ST. J. (Oct. 23, 2020),
https://www.wsj.com/articles/the-irs-reels-in-a-whale-of-an-offshore-tax-
cheatand-goes-for-another-11603445399.
116. Id.
117. David Voreacos & Neil Weinberg, Lawyer to Billionaire Who Died on
Eve of Tax-Fraud Trial Took His Own Life, BLOOMBERG (Nov. 29, 2022),
bloomberg.com/news/articles/2022-11-29/lawyer-to-billionaire-died-by-suicide-
on-eve-of-tax-fraud-trial.
118. Suhas Gondi & Zirui Song, Potential Implications of Private Equity
Investments in Health Care Delivery, JAMA (Feb. 28, 2019),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6682417/.
119. Complaint, Jones et al. v. Varsity Brands, LLC et al., 2:20-cv-02892
(W.D. Tenn. Dec. 10, 2020).
120. Complaint to the FTC,
https://www.dropbox.com/s/f4o6w112dnzqv0x/Complaint
%20to%20the%20FTC.pdf; Matt Stoller, The Coming Collapse of a
Cheerleading Monopolist, BIG (May 27, 2020),
https://mattstoller.substack.com/p/the-coming-collapse-of-a-cheerleading.
121. Varsity Defendants’ Answer to the Class Action Complaint, Jones et al.
v. Varsity Brands, LLC et al., 2:20-cv-02892 (W.D. Tenn. Aug. 15, 2022), ECF
No. 340; Bain Capital Private Equity’s Answer to the Class Action Complaint,
Jones et al. v. Varsity Brands, LLC et al., 2:20-cv-02892 (W.D. Tenn. Aug. 15,
2022), ECF No. 338.
122. Leslie Helm, Wellhaven’s Pet Project, SEATTLE BUS. (Apr. 2019),
https://wellhaven .com/wp-content/uploads/2019/03/SBM-WellHavenArticle-
3.29.19.pdf.
123. Private Equity—What Veterinarians Should Know, VETERINARY
IDEALIST (Feb. 12, 2020), https://vetidealist.com/private-equity-veterinarians/.
124. Wall Street’s Secret Pet Profiteering, AMERICANS FOR FINANCIAL
REFORM (Apr. 2020), https://ourfinancialsecurity.org/2020/04/blog-posts-wall-
streets-secret-pet-profiteering/.
125. Id.
126. Toys ‘R’ Us to Close 75 Stores and Cut 11% of Work Force, N.Y. TIMES
(Jan. 10, 2006), https://www.nytimes.com/2006/01/10/business/toys-r-us-to-
close-75-stores-and-cut-11-of-work-force.html.
127. Ben Unglesbee, Ex-Toys R Us Employees Win $2M Severance
Agreement, RETAIL DIVE (June 28, 2019), https://www.retaildive.com/news/ex-
toys-r-us-employees-win-2m-severance-agreement/557888/.
128. Id.
129. Mayra Rodriguez Valladares, Private Equity Firms Have Caused
Painful Job Losses and More Are Coming, FORBES (Oct. 30, 2019),
https://www.forbes.com/sites/mayrarodriguezvalladares/2019/10/30/private-
equity-firms-have-caused-painful-job-losses-and-more-are-coming/?
sh=35bbe1b37bff.
130. Jim Baker et al., Pirate Equity: How Wall Street Firms Are Pillaging
American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 40–44 (2019),
https://united4respect.org/wp-content/uploads/2019/07/Pirate-Equity-How-Wall-
Street-Firms-are-Pillaging-American-Retail-July-2019.pdf.
131. Valladares, supra note 129.
132. Appelbaum & Batt, supra note 67, at 217; Julie Creswell, Oh, No! What
Happened to Archway?, N.Y. TIMES (May 30, 2009),
https://www.nytimes.com/2009/05/31/business/31archway.html.
133. Id.
134. Id. Catterton denied allegations of financial mismanagement made in a
subsequent complaint by unsecured creditors. A spokeswoman for Catterton told
the Times that “Archway notwithstanding, Catterton has helped to capitalize and
grow nearly 75 successful consumer companies in its 20-year history.”
135. Warren, Pocan, and Ocasio-Cortez Investigate Private Equity Firms
Profiteering Off Incarcerated People and Their Families, OFFICE OF SENATOR
ELIZABETH WARREN (Oct. 1, 2019),
https://www.warren.senate.gov/oversight/letters/warren-pocan-and-ocasio-
cortez-investigate-private-equity-firms-profiteering-off-incarcerated-people-
and-their-families.
136. Letter from Senator Elizabeth Warren et al. to Andrew Feldstein et al. at
8 (Sept. 30, 2019), https://www.warren.senate.gov/imo/media/doc/2019-09-
30%20Letters%20to %20PE%20Firms%20re%20Prison%20Services.pdf.
137. Steve Coll, The Jail Health-Care Crisis, NEW YORKER (Feb., 25, 2019),
https://www.newyorker.com/magazine/2019/03/04/the-jail-health-care-crisis.
138. Id.
139. Neil Irwin, How Private Equity Buried Payless, N.Y. TIMES (Feb. 1,
2020), https://www.nytimes.com/2020/01/31/upshot/payless-private-equity-
capitalism.html.
140. Id.
141. Alicia McElhaney, LBOs Make (More) Companies Go Bankrupt,
Research Shows, INSTITUTIONAL INVESTOR (July 26, 2019),
https://www.institutionalinvestor.com/article/b1gfygl4r8661f/LBOs-Make-
More-Companies-Go-Bankrupt-Research-Shows.
142. Capabilities, BLUE WOLF CAPITAL,
http://bluewolfcapita.wpengine.com/about/capabilities/.
143. Stephen Steed, Arkansas Town Sees More Jobs with Sawmill Revival,
ARK. DEMOCRAT-GAZETTE (June 8, 2017),
https://www.capitalpress.com/nation_world/profit/arkansas-town-sees-more-
jobs-with-sawmill-revival/article_8332864c-0459-55a6-9bf4-a6fafe
409f03.html.
144. Capabilities, supra note 142.
145. Steed, supra note 143.
146. Stephen Steed, Sawmill’s Revival Gives Arkansas Town a Lift, ARK.
DEMOCRAT-GA Z E T T E (June 1, 2017),
https://www.arkansasonline.com/news/2017/jun/01/sawmill-s-revival-gives-
town-a-lift-201/.
147. Id.
148. Steed, supra note 143.
149. Investment Strategy, BLUE WOLF CAPITAL,
https://www.bluewolfcapital.com/strategy/investment-strategy.
150. Interview with Charlie Miller, partner and chief compliance officer,
Blue Wolf Capital (Mar. 14, 2022).
151. Conifex Buying U.S. Sawmills for $258 Million to Add 50 per Cent
More Capacity, FIN. POST (May 15, 2018),
https://financialpost.com/pmn/business-pmn/conifex-buying-u-s-sawmills-for-
258-million-to-add-50-per-cent-more-capacity.
152. Robert Dalheim, Conifex Shuts Down Arkansas Lumber Mill
Indefinitely, Lays Off 92, WOODWORKING NETWORK (Aug. 15, 2019),
https://www.woodworkingnetwork.com/news/woodworking-industry-
news/conifex-shuts-down-arkansas-lumber-mill-indefinitely-lays-92.
153. Resolute Forest Products Buying El Dorado, Glenwood Mills from
Conifex, Will Reopen Union County Site in 2021, MAGNOLIA REP. (Jan. 4, 2020),
http://www.magnoliareporter
.com/news_and_business/union_county/article_b1febdaa-2927-11ea-a8eb-
27ef7d9357e1 .html.
154. Glenwood, RESOLUTE FOREST PRODUCTS,
https://www.resolutefp.com/installation_site.aspx?siteid=173&langtype=4105.

CHAPTER 2: ENDING HOMEOWNERSHIP AS WE KNOW IT

1. Amanda L. Gordon, Schwarzman Parties at 70 with Camels, Cake and
Trump’s Entourage, BLOOMBERG (Feb. 13, 2017), https://bloom.bg/3mS8hWK.
2. Bess Levin, Populist Hero Stephen Schwarzman’s Birthday Blowout
Included Fireworks, Acrobats, and Live Camels, VANITY FAIR (Feb. 13, 2017),
https://www.vanityfair.com/news/2017/02/stephen-schwarzmans-birthday-
blowout-included-fireworks-acrobats-and-live-camels; Sam Dangremond, Steve
Schwarzman Hosted an Epic 70th Birthday Party in Palm Beach, TOWN &
COUNTRY (Feb. 13, 2017), https://www.townandcountrymag.com/the-
scene/parties/news/a9556/steve-schwarzman-birthday-party/; Emily Smith,
Blackstone CEO Throws Himself “the Party of the Century,” N.Y. POST (Feb.
13, 2017), https://pagesix.com/2017/02/13/blackstone-ceo-throws-himself-the-
party-of-the-century/.
3. Sam Dangremond, Steve Schwarzman Hosted an Epic 70th Birthday Party
in Palm Beach, TOWN & COUNTRY (Feb. 13, 2017),
https://www.townandcountrymag.com/the-scene/parties/news/a9556/steve-
schwarzman-birthday-party/.
4. Levin, supra note 2.
5. Smith, supra note 2.
6. Gordon, supra note 1.
7. Smith, supra note 2.
8. Julia Gordon, The Dark Side of Single-Family Rental, SHELTERFORCE (July
30, 2018), https://shelterforce.org/2018/07/30/the-dark-side-of-single-family-
rental/.
9. Brett Christophers, How and Why U.S. Single-Family Housing Became an
Investor Asset Class, J. URBAN HIST. 1, 6–7 (2021),
https://journals.sagepub.com/doi/pdf/10.1177/00961442211029601.
10. Francesca Mari, A $60 Billion Housing Grab by Wall Street, N.Y. TIMES
(Mar. 4, 2020), https://www.nytimes.com/2020/03/04/magazine/wall-street-
landlords.html.
 11. Elora Raymond et al., Corporate Landlords, Institutional Investors, and
Displacement: Eviction Rates in Single-Family Rentals, 04-16 COMMUNITY &
ECONOMIC DEVELOPMENT DISCUSSION PAPER 1, 2 (Dec. 2016),
https://www.atlantafed.org/-/media/documents/community-
development/publications/discussion-papers/2016/04-corporate-landlords-
institutional-investors-and-displacement-2016-12-21.pdf.
12. Gordon, supra note 8.
13. Rachel Bogardus Drew, Single-Family Rentals Have Risen to Nearly a
Third of Rental Housing, JOINT CENTER FOR HOUSING STUDIES OF HARVARD
UNIVERSITY (Oct. 5, 2015), https://www.jchs.harvard.edu/blog/single-family-
rentals-have-risen-to-nearly-a-third-of-rental-housing.
14. Julianne Pepitone, Foreclosures: Worst-hit Cities, CNN (Oct. 28, 2009),
https://money.cnn.com/2009/10/28/real_estate/foreclosures_worst_cities/.
15. George Packer, THE UNWINDING 260 (2013).
16. Andrew Clark, Mortgage Crisis: Welcome to Sub-prime Capital, USA,
GUARDIAN (July 27, 2008),
https://www.theguardian.com/business/2008/jul/28/subprimecrisis .useconomy.
17. Id.
18. Christopher J. Goodman & Steven M. Mance, Employment Loss and the
2007–09 Recession: An Overview, MONTHLY LAB. REV. 1, 3 (April 2011),
https://www.bls.gov/opub/mlr/2011/04/art1full.pdf.
19. Maya Abood et al., Wall Street Landlords Turn American Dream into a
Nightmare, ACCE INSTITUTE ET AL. 4, https://www.publicadvocates.org/wp-
content/uploads/wallstreetland lordsfinalreport.pdf.
20. Charles Duhigg, Loan-Agency Woes Swell from a Trickle to a Torrent,
N.Y. TIMES (July 11, 2008),
https://www.nytimes.com/2008/07/11/business/11ripple.html?ex=1373515200.
21. Reduce, Refinance, and Rent? The Economic Incentives, Risks, and
Ramifications of Housing Market Policy Options, CONGRESSIONAL RESEARCH
SERVICE 13 (Aug. 28, 2012),
https://crsreports.congress.gov/product/pdf/R/R42480/12.
22. Id.
23. Ben Hallman, Edward DeMarco’s Lonely Stand Against Mortgage Debt
Relief, HUFFPOST (Aug. 2, 2012), https://www.huffpost.com/entry/edward-
demarco-principal-reduction_n_1730806.
24. Letter from Edward J. DeMarco, acting director, Federal Housing
Finance Authority to Tim Johnson, chairman of the House Committee on
Banking, Housing and Urban Affairs et al. (July 31, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Documents/PF_LetterToCong_73112_N508.pdf.
25. Ben Hallman, Ed DeMarco, Top Housing Official, Defies White House;
Geithner Fires Back, HUFFPOST (Sept. 30, 2012),
https://www.huffpost.com/entry/ed-demarco-principal-reduction_n_1724880.
26. President Obama, Fire Edward J. DeMarco, CHANGE.ORG,
https://www.change.org/p/president-obama-fire-edward-j-demarco?
redirect=false.
27. FHFA’s DeMarco Opposes Mortgage Help, UPI (July 31, 2012),
https://www .upi.com/Business_News/2012/07/31/FHFAs-Demarco-opposes-
mortgage-help/88651343773559/.
28. Ben Hallman, Edward DeMarco Threatens Action Against Communities
Weighing Principal Reduction Proposal, HUFFPOST (Aug. 9, 2012),
https://www.huffpost.com/entry/edward-demarco-principal-
reduction_n_1759767?utm_hp_ref=business.
29. Id.; Use of Eminent Domain to Restructure Performing Loans, FEDERAL
HOUSING FINANCE AGENCY (Aug. 9, 2012),
https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Use-of-Eminent-
Domain-to-Restructure-Performing-Loans.aspx.
30. Welcome to HPC, HOUSING POLICY COUNCIL,
https://www.housingpolicycouncil .org/mission.
31. FHFA Announces Pilot REO Property Sales in Hardest-Hit Areas,
FEDERAL HOUSING FINANCE AGENCY (Feb. 27, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Pilot-REO-
Property-Sales-in-HardestHit-Areas.aspx.
32. Housing Markets in Transition, FEDERAL RESERVE (Feb. 10, 2012),
https://www.federal reserve.gov/newsevents/speech/bernanke20110210a.htm
(Bernanke said that “[w]ith home prices falling and rents rising, it could make
sense in some markets to turn some of the foreclosed homes into rental
properties.”).
33. Id. (“[A]ppropriately structured programs could help some involuntary
renters become owners again by giving them options to purchase the homes they
are renting.”).
34. Lorraine Woellert, FHFA Will Sell Foreclosed Homes to Investors for
Rentals, BL O O M B E R G (Feb. 27, 2012),
https://www.bloomberg.com/news/articles/2012-02-27/fhfa-to-begin-selling-
foreclosed-homes-to-investors-for-rentals.
 35. Meredith Abood, Securitizing Suburbia: The Financialization of Single-
Family Rental Housing and the Need to Redefine “Risk,” MIT 13 (2017),
https://dspace.mit.edu/handle/1721.1/111349.
36. Id.
37. FHFA Statement on REO Pilot Transactions, FEDERAL HOUSING FINANCE
AGENCY (Nov. 1, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-REO-
Pilot-Transactions.aspx.
38. Lisa Bartley, Billion-Dollar Landlords: Rental-Home Giant Under Fire
for Unsavory Conditions, ABC7 (Nov. 18, 2017), https://abc7.com/starwood-
waypoint-homes-tom-barrack-donald-trump-invitation/2663400/.
39. Christophers, supra note 9, at 1, 5.
40. Robbie Whelan, Firms Flock to Foreclosure Auctions, WALL ST. J. (Sept.
12, 2012),
https://www.wsj.com/articles/SB10000872396390443696604577644700448760254.
41. Id.
42. Starwood Waypoint Homes, Quarterly Report (Form 10-Q) (Nov. 2017),
https://www.sec.gov/Archives/edgar/data/1579471/000156459017023253/sfr-
10q_20170930 .htm.
43. Robbie Whelan, Colony Capital to Acquire 10% Stake in Fannie
Housing Pool, WALL ST. J. (Oct. 25, 2012),
https://www.wsj.com/articles/SB10001424052970204076204578079183382983270.
44. Allison Bisbey, Invitation Homes Obtains Financing from Fannie Mae,
NAT’L MORTGAGE NEWS (Jan. 26, 2017),
https://www.nationalmortgagenews.com/news/invitation-homes-obtains-
financing-from-fannie-mae; Abood et al., supra note 19, at 37.
45. Stephanie Zimmerman, Through Fannie Mae, US Taxpayers Provide
Backing for Some Rental Home Giants, ABC NEWS (Nov. 16, 2017),
https://abcnews.go.com/US/fannie-mae-us-taxpayers-provide-backing-rental-
home/story?id=51194097.
46. Elora Lee Raymond et al., From Foreclosure to Eviction: Housing
Insecurity in Corporate-Owned Single-Family Rentals, 20 CITYSCAPE: J. POL’Y
DEV. RES. 159, 160 (2018), https://bit.ly/3C7lEZu.
47. Abood, supra 35, at 12.
48. In 2015, Starwood Waypoint Residential Trust announced plans to buy
Colony American. Barry Sternlicht and Tom Barrack were set to become
nonexecutive cochairmen of the combined board of trustees. Chad Bray,
Starwood Waypoint Residential Trust to Acquire a Rival, N.Y. TIMES (Sept. 21,
2015), https://www.nytimes .com/2015/09/22/business/dealbook/starwood-
waypoint-residential-trust-to-acquire-a-rival.html. The deal was completed
along these terms in 2016. Colony Starwood Homes Announces Closing of $7.7
Billion Merger of Starwood Waypoint Residential Trust with Colony American
Homes, Creating the Premier Single-Family REIT, BUSINESS WIRE (Jan. 5,
2016), https://www.businesswire.com/news/home/20160105006880/en/Colony-
Starwood-Homes-Announces-Closing-of-7.7-Billion-Merger-of-Starwood-
Waypoint-Residential-Trust-with-Colony-American-Homes-Creating-the-
Premier-Single-Family-REIT. The new venture was initially called Colony
Starwood Homes but in 2017 rebranded as Starwood Waypoint Homes. Ben
Lane, Colony Starwood Homes Rebranding as Starwood Waypoint Homes,
HOUSING WIRE (July 9, 2017), https://www .housingwire.com/articles/40722-
colony-starwood-homes-rebranding-as-starwood-waypoint-homes/. Then in July
2017, Blackstone’s Invitation Homes bought Starwood Waypoint. Ben Lane,
Invitation Homes, Starwood Waypoint Homes Merge to Create Largest Single-
Family Landlord, HOUSING WIRE (Nov. 16, 2017),
https://www.housingwire.com/articles/41839-invitation-homes-starwood-
waypoint-homes-merge-to-create-largest-single-family-landlord/. When they
changed names, Barrack sold his stake in the firm. Ryan Dezember, Blackstone,
Starwood to Merge Rental-Home Businesses in Bet to Be America’s Biggest
Home Landlord, WALL ST. J. (Aug. 10, 2017),
https://www.wsj.com/articles/with-merger-deal-blackstone-starwood-bet-on-
being-americas-biggest-home-landlord-1502361000. In the discussion that
follows, “Colony” refers to any of the iterations of the company.
49. Abood, supra 35, at 73.
50. Affordability Issues Aid Spike in Single-Family Rent Growth, DS NEWS
(July 20, 2021), https://dsnews.com/daily-dose/07-20-2021/affordability-aids-
spike-in-single-family-rent-growth.
51. Abood et al., supra note 19, at 17.
52. Mari, supra note 10.
53. Rivera v. Invitation Homes, Inc., No. 4:18-cv-3158 (N.D. Cal. 2018);
McCumber et al. v. Invitation Homes Inc., 3:21-cv-2194 (N.D. Tex. 2021). As of
November 2022, the parties in the Texas case have neared a settlement. Joint
Status Report, McCumber et al. v. Invitation Homes Inc., 3:21-cv-2194 (N.D.
Tex. Nov. 22, 2022), ECF No. 86.
 54. Order Denying Motion for Class Certification and Dismissing Action at
8, Rivera v. Invitation Homes, Inc., No. 4:18-cv-3158 (N.D. Cal. Feb. 18, 2022),
ECF No. 70.
55. Alexandra Stevenson & Matthew Goldstein, Rent-to-Own Homes: A
Win-Win for Landlords, a Risk for Struggling Tenants, N.Y. TIMES (Aug. 21,
2016), https://www .nytimes.com/2016/08/22/business/dealbook/rent-to-own-
homes-a-win-win-for-landlords-a-risk-for-struggling-tenants.html; Invitation
Homes Makes Dreams of Home Ownership a Reality for Residents, INVITATION
HOMES (Nov. 8, 2018), https://www .prnewswire.com/news-releases/invitation-
homes-makes-dreams-of-home-ownership-a-reality-for-residents-
300746216.html; Matthew Goldstein & Alexandra Stevenson, Market for Fixer-
Uppers Traps Low-Income Buyers, N.Y. TIMES (Feb. 20, 2016),
https://www.nytimes.com/2016/02/21/business/dealbook/market-for-fixer-
uppers-traps-low-income-buyers.html?_r=0 (Blackstone and its Invitation
Homes offered such “opportunities,” and KKR invested in a company that did
the same).
56. Stevenson & Goldstein, supra note 55.
57. Abood, supra 35, at 77.
58. Capitol Forum, Single Family Rental Industry: Companies Lean on
Tenant Chargebacks to Effectively Cut Operating Expenses (Feb. 21, 2018).
59. Id.
60. Id.
61. Mari, supra note 10; Abood et al., supra note 19, at 21.
62. Raymond et al., supra note 46, at 159–160.
63. Joshua Akers et al., Toxic Structures: Speculation and Lead Exposure in
Detroit’s Single-Family Rental Market 3 (2019), https://npr-
brightspot.s3.amazonaws.com/legacy/sites/michigan/files/toxic_structures_2019-
final.pdf.
64. A Brief Guide to Mold, Moisture and Your Home, ENVIRONMENTAL
PROTECTION AGENCY (Mar. 25, 2022), https://www.epa.gov/mold/brief-guide-
mold-moisture-and-your-home.
65. Abood, supra 35, at 74.
66. Complaint, Lisboa v. Colfin AI-FL 4, LLC et al., No. 5:16-cv-312 (M.D.
Fla. May 3, 2016).
67. Id.
68. Id.
69. Id.
 70. Abood et al., supra note 19, at 12.
71. Mari, supra note 10.
72. Maya Abood, Wall Street Landlords Turn American Dream into a
Nightmare, ACCE INSTITUTE ET AL., 33, https://www.publicadvocates.org/wp-
content/uploads/wallstreetland lordsfinalreport.pdf (“Members of the Council
include Invitation Homes, American Homes 4 Rent, Tricon American Homes,
Altisource Rental Homes, FirstKey Homes, Roofstock, National Rental Homes,
and over a dozen others.”); Renter’s Rights, NATIONAL RENTAL HOME COUNCIL,
https://www.rentalhomecouncil.org/advocacy/ (promising to prevent “harmful
rent control policies from being established that undermine rental choices for
consumers”).
73. Homeowners vs Renters Statistics, PROPERTY MANAGEMENT (July 12,
2022), https://ipropertymanagement.com/research/renters-vs-homeowners-
statistics.
74. Mari, supra note 10 (“Blackstone contributed $5.6 million to the No
campaign, and Invitation Homes contributed nearly $1.3 million.”).
75. Eli Vitulli, Hedge Papers No. 69: Billionaire Corporate Landlords, 20
(2019), https://hedgeclippers.org/wp-
content/uploads/2019/08/HP69_CorpLandlords-CA-Housing_V14.pdf.
76. Prop 10 Flaws, Bad Future, YOUTUBE, https://www.youtube.com/watch?
v=Bde X1UTy5wo.
77. Eli Vitulli, HEDGE PAPERS NO . 69: BILLIONAIRE CORPORATE LANDLORDS
20 (2019), https://hedgeclippers.org/wp-
content/uploads/2019/08/HP69_CorpLandlords-CA-Housing_V14.pdf.
78. Raymond et al., supra note 46, at 159, 162 n.2.
79. Ben Lane, Blackstone Cashes Out on Invitation Homes, HOUSING WIRE
(Nov. 22, 2019), https://www.housingwire.com/articles/blackstone-cashes-out-
on-invitation-homes/; Peter Grant, Blackstone Bets $6 Billion on Buying and
Renting Homes, WALL ST. J. (June 22, 2021),
https://www.wsj.com/articles/blackstone-bets-6-billion-on-buying-and-renting-
homes-11624359600.
80. Ryan Dezember, KKR Doubles Down on House Flippers, WALL ST. J.
(June 12, 2019), https://www.wsj.com/articles/kkr-doubles-down-on-house-
flippers-11560331806.
81. Blackstone Establishes Single-Family Buy-to-Rent Lending Platform,
BLACKSTONE (Nov. 15, 2013),
https://www.blackstone.com/news/press/blackstone-establishes-single-family-
buy-to-rent-lending-platform/.
82. Julia Gordon, The Dark Side of Single-Family Rental, SHELTERFORCE
(July 30, 2018), https://shelterforce.org/2018/07/30/the-dark-side-of-single-
family-rental/.
83. Diana Click, Government’s Fannie Mae Will Back PE Giant Blackstone’s
Rental Homes Debt, CNBC (Jan. 25, 2017),
https://www.cnbc.com/2017/01/25/governments-fannie-mae-will-back-pe-giant-
blackstones-rental-business-debt.html.
84. Kevin Schaul & Jonathan O’Connell, Investors Bought a Record Share of
Homes in 2021. See Where, WASH. POST (Feb. 16, 2022),
https://www.washingtonpost.com/business/interactive/2022/housing-market-
investors/.
85. Investor Relations, INVITATION HOMES,
https://www.invh.com/home/default.aspx.
86. Daniel Immergluck, Renting the Dream: The Rise of Single-Family
Rentership in the Sunbelt Metropolis, 2 (2018),
https://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1010
&context=urban_studies_institute.
87. Mari, supra note 10.
88. Alana Semuels, When Wall Street Is Your Landlord, ATLANTIC (Feb. 13,
2019), https://www.theatlantic.com/technology/archive/2019/02/single-family-
landlords-wall-street/582394/.
89. Mari, supra note 10.
90. Hanna Ziady, Wall Street Is Buying Up Family Homes. The Rent Checks
Are Too Juicy to Ignore, MERCURY NEWS (Aug. 2, 2021),
https://www.mercurynews.com/2021/08/02/wall-street-is-buying-up-family-
homes-the-rent-checks-are-too-juicy-to-ignore/.
91. Id.
92. Jacob Passy, Black Homeownership Rate Hits Lowest Level Since the
1960s—That’s Unlikely to Change in Pandemic Year 2, MARKETWATCH (Mar.
23, 2021), https://www .marketwatch.com/story/most-black-americans-arent-
homeowners-how-can-we-change-that-11615431459.
93. Amanda Lee et al., U.S. Homeownership Rates Fall Among Young
Adults, African Americans, POPULATION REFERENCE BUREAU (Feb. 13,202),
https://www.prb.org/resources/u-s-homeownership-rates-fall-among-young-
adults-african-americans/.
 94. Id.
95. Rani Molla, The Home Sales Boom Means You Might End Up Renting,
VOX (May 4, 2021), https://www.vox.com/recode/22407667/home-sales-boom-
rent-housing-single-family-rental.
96. Matthew Goldstein, As Banks Retreat, Private Equity Rushes to Buy
Troubled Home Mortgages, N.Y. TIMES (Sept. 28, 2015),
https://www.nytimes.com/2015/09/29/business/dealbook/as-banks-retreat-
private-equity-rushes-to-buy-troubled-home-mortgages .html.
97. Nationstar Mortgage LLC, FORTRESS,
https://www.fortress.com/businesses/private-equity/select-
investments/nationstar.
98. Nationstar Mortgage Announces Completion of Greenlight Financial
Services Acquisition, MR. COOPER GROUP (June 3, 2013),
https://investors.mrcoopergroup.com/events-and-presentations/press-
releases/press-release-details/2013/Nationstar-Mortgage-Announces-
Completion-of-Greenlight-Financial-Services-Acquisition/default.aspx.
99. TEXT-S&P Monitoring Nationstar on ResCap Acquisition Plans,
REUTERS (May 21, 2012),
https://www.reuters.com/article/idUSWNA774420120521.
100. Nationstar Mortgage Announces Agreement to Acquire Approximately
$215 Billion in Mortgage Servicing Assets from Bank of America, NATIONSTAR
(Jan. 7, 2013), https://www
.sec.gov/Archives/edgar/data/1520566/000119312513009512/d461579dex991.htm.
101. Complaint for a Permanent Injunction and Other Relief, CFPB v.
Nationstar Mortgage LLC, No. 1:20-cv-3550 (D.D.C. Dec. 7, 2020), ECF No. 1.
102. Matthew Goldstein et al., How Housing’s New Players Spiraled into
Banks’ Old Mistakes, N.Y. TIMES (June 26, 2016),
https://www.nytimes.com/2016/06/27/business/dealbook/private-equity-
housing-missteps.html.
103. Id.
104. Quarterly Report to Congress, OFFICE OF THE INSPECTOR GENERAL FOR
THE TROUBLED ASSET RELIEF PROGRAM 72 (Apr. 26, 2017),
https://www.sigtarp.gov/sites/sigtarp/files/Quarterly_Reports/April_26_2017_Report_to_Con
105. Id.
106. Consumer Financial Protection Bureau and Multiple States Enter into
Settlement with Nationstar Mortgage, LLC for Unlawful Servicing Practices,
CONSUMER FINANCIAL PROTECTION BUREAU (Dec. 7, 2020),
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-multiple-states-enter-settlement-nationstar-mortgage-llc-
unlawful-servicing-practices/; Complaint for a Permanent Injunction and Other
Relief, supra note 101.
107. Consumer Financial Protection Bureau and Multiple States Enter into
Settlement with Nationstar Mortgage, LLC for Unlawful Servicing Practices,
supra note 106.
108. National Creditor Settlements, DEPARTMENT OF JUSTICE (Sept. 27, 2022),
https://www.justice.gov/ust/national-creditor-settlements.
109. Goldstein et al., supra note 102.
110. Id. Nationstar declined to comment on the Browns’ case to the New
York Times.
111. Nationstar Mortgage LLC, FORTRESS,
https://www.fortress.com/businesses/private-equity/select-
investments/nationstar; Nationstar’s Merger with WMIH, CRAVATH, SWAINE &
MOORE LLP, https://www.cravath.com/news/nationstar-s-merger-with-
wmih.html; Ben Lane, Invitation Homes, Starwood Waypoint Homes Merge to
Create Largest Single-Family Landlord, HOUSING WIRE (Nov. 16, 2017) (In
2012, Fortress organized an initial public offering for Nationstar, but continued
to own a majority stake in the company into 2018).
112. Alexander Hermann, New Paper Details the Dramatic Decline of Low-
Cost Rentals, JOINT CENTER FOR HOUSING STUDIES (Sept. 17, 2019),
https://www.jchs.harvard.edu/blog/new-paper-details-the-dramatic-decline-of-
low-cost-rentals.
113. Rana Foroohar, Why Big Investors Are Buying Up American Trailer
Parks, FIN. TIMES (Feb. 7, 2020), https://www.ft.com/content/3c87eb24-47a8-
11ea-aee2-9ddbdc86190d.
114. Id.; Dori Zinn, How Much Does It Cost to Buy a Mobile Home?,
FORBES (Sept. 7, 2022), https://www.forbes.com/advisor/mortgages/mobile-
home-cost/; Geoff Williams & Devon Thorsby, How Much Does It Cost to Buy
a Mobile Home?, U.S. NEWS & WO R L D REPORT (May 4, 2022),
https://realestate.usnews.com/real-estate/articles/how-much-does-it-cost-to-buy-
a-mobile-home.
115. Foroohar, supra note 113.
116. Andrew Keel, Mobile Home Park Trends: Big Money and
Improvements, FORBES (Sept. 14, 2021),
https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/14/mobile-home-
park-trends-big-money-and-improvements/?sh=4b9c851c5a89.
117. Private Equity Giants Converge on Manufactured Homes, PRIVATE
EQUITY STAKEHOLDER PROJECT, 1 (Feb. 2019), https://pestakeholder.org/wp-
content/uploads/2019/02/Private-Equity-GIants-Converge-on-Manufactured-
Homes-PESP-MHAction-AFR-021419.pdf.
118. Sheelah Kolhatkar, What Happens When Investment Firms Acquire
Trailer Parks, NEW YORKER (Mar. 8, 2021),
https://www.newyorker.com/magazine/2021/03/15/what-happens-when-
investment-firms-acquire-trailer-parks.
119. Peter Whoriskey, A Billion-Dollar Empire Made of Mobile Homes,
WASH. POST (Feb. 14, 2019),
https://www.washingtonpost.com/business/economy/a-billion-dollar-empire-
made-of-mobile-homes/2019/02/14/ac687342-2b0b-11e9-b2fc-
721718903bfc_story .html.
120. Peter Grant, Singapore Fund GIC Is in Talks to Buy Owner of
Manufactured-Home Communities, WALL ST. J. (June 28, 2016),
https://www.wsj.com/articles/singapores-sovereign-wealth-fund-is-in-talks-to-
buy-manufactured-home-owner-1467106203.
121. Sam Tabachnik, Raise Rent Repeatedly, Remove Amenities: The Core
Tenets of Colorado’s Mobile Home University and the People Who Suffer,
DENVER POST (Sept. 14, 2021), https://www
.denverpost.com/2021/09/05/mobile-home-university-rv-horizons-impact-
communities-frank-rolfe-dave-reynolds/.
122. Gillian Tan, Blackstone to Boost Mobile-Home Bet with $550 Million
Deal, BLOOMBERG (Sept. 14, 2020),
https://www.bloomberg.com/news/articles/2020-09-14/blackstone-said-to-boost-
mobile-home-bet-with-550-million-deal.
123. Kolhatkar, supra note 118.
124. Jacob Channel, Mobile Home Values Are Rising Faster Than Single-
Family Home Values—Here’s Where They’re the Most, Least Expensive,
LENDINGTREE (Nov. 30, 2021),
https://www.lendingtree.com/home/mortgage/mobile-home-values-study/.
125. Private Equity Giants Converge on Manufactured Homes, supra note
117, at 1–4.
126. Id. at 2 (Sunrise Capital Investors describes itself as a “real estate
private equity investment firm.”); Sunrise Capital Investors, Sunrise Capital
Investors Distributes Over $4.5 Million to Fund 2 Investors, CISION (Oct. 21,
2021), https://www.prnewswire.com/news-releases/sunrise-capital-investors-
distributes-over-4-5-million-to-fund-2-investors-301405867.html.
127. Private Equity Giants Converge on Manufactured Homes, supra note
117, at 2.
128. Id. at 6.
129. Whoriskey, supra note 119.
130. Id. Stockbridge said in a statement to the Post that “Stockbridge is
proud of its association with YES Communities, which has met the affordable
housing needs of its residents nationwide for the past 11 years.”
131. Tracy Lien, In Silicon Valley, Even Mobile Homes Are Getting Too
Pricey for Longtime Residents, L.A. TIMES (May 4, 2017),
https://www.latimes.com/business/technology/la-fi-tn-silicon-valley-mobile-
homes-20170504-htmlstory.html.
132. Whoriskey, supra note 119.
133. Foroohar, supra note 113.
134. Chris Arnold, Why Are Investors Buying Up Mobile Home Parks and
Evicting Residents?, NPR (Sept. 3, 2021),
https://www.npr.org/2021/09/03/1033910731/why-are-investors-buying-up-
mobile-home-parks-and-evicting-residents.
135. Duty to Serve Underserved Markets Plan: 2022–2024, FANNIE MAE, 8
(2021), https://www.novoco.com/sites/default/files/atoms/files/fannie-mae-duty-
to-serve-2022-24-proposed-052021.pdf.
136. Id.
137. San Jose-Sunnyvale-Santa Clara Home Values, ZILLOW,
https://www.zillow.com/home-values/54626/sunnyvale-ca/. The Zillow Home
Value Index is “[a] smoothed, seasonally adjusted measure of the typical home
value and market changes across a given region and housing type. It reflects the
typical value for homes in the 35th to 65th percentile range.” Housing Data,
ZILLOW, https://www.zillow.com/research/data/.
138. Lien, supra note 131.
139. Id. Carlyle declined to comment to the Los Angeles Times about its rent
increases or plans after its lease ended.
140. Id.
141. Victoria Keira, Sunnyvale: Council Will Select Top Issues to Study This
Year, MERCURY NEWS (Jan. 21, 2017),
https://www.mercurynews.com/2017/01/21/sunnyvale-council-will-select-top-
issues-to-study-this-year/.
142. Interview with Fred Kameda (Feb. 9, 2022).
143. Id.
144. Id.
145. Ben Silverfarb, “Last Man Standing”: Woman Will Not Accept
Relocation Package After Being Evicted from Mobile Home Park, DAILY J. (Jan.
11, 2016), https://www .smdailyjournal.com/news/local/last-man-standing-
woman-will-not-accept-relocation-package-after-being-evicted-from-mobile-
home/article_b6c227bc-f94b-5406-9508-cdfccaaa6a9c.html.
146. Lien, supra note 131.
147. George Avalos, Big Sunnyvale Mobile Home Park Is Bought by
Chicago Investors, MERCURY NEWS (Aug. 30, 2019).
https://www.mercurynews.com/2019/08/30/big-sunnyvale-mobile-home-park-
is-bought-by-chicago-investors/.
148. Leonardo Castañeda, “It’s Absolute Desperation”: Mobile Park
Residents Say Rent Increases Threaten One of Silicon Valley’s Last Affordable
Housing Options, MERCURY NEWS (May 10, 2021),
https://www.mercurynews.com/2021/05/08/were-like-hostages-mobile-park-
residents-say-rent-increases-threaten-silicon-valleys-last-affordable-housing-
option/.
149. Omar Pérez, Sunnyvale Mobile Home Park Residents Express
Frustrations over Rent Increases, KRON4 (May 26, 2021),
https://www.kron4.com/news/sunnyvale-mobile-home-park-residents-express-
frustrations-over-rent-increases/.
150. Id.
151. Sunnyvale Mobile Home Park Owners Agree on Deal to Keep Lots
Affordable, KRON4 (Oct. 22, 2021), https://www.kron4.com/news/bay-
area/sunnyvale-mobile-home-park-owners-agree-on-deal-to-keep-lots-
affordable/.
152. Kavish Harjai, Sunnyvale’s Mobile Homeowners Are Eligible for Key
Financial Perks—if They Sign Up in Time, PENINSULA PRESS (Nov. 4, 2021),
https://peninsulapress .com/2021/11/04/sunnyvales-mobile-homeowners-are-
eligible-for-key-financial-perks-if-they-sign-up-in-time/.
153. Resident interview (Feb. 10, 2022).
154. GOP Candidate’s Private Equity Resume Draws Scrutiny in Va., WTOP
(July 1, 2021), https://wtop.com/virginia/2021/07/gop-candidates-private-
equity-resume-draws-scrutiny-in-va/.

CHAPTER 3: PROFITING OFF BANKRUPTCY

1. Charles Lazarus, WIKIPEDIA,
https://en.wikipedia.org/wiki/Charles_Lazarus.
2. Toys “R” Us, WIKIPEDIA,
https://en.wikipedia.org/wiki/Toys_%22R%22_Us.
3. Geoffrey Through the Years, TOYS R US,
https://www.toysrus.com/geoffrey.html.
4. Julia Horowitz, How Toys ‘R’ Us Went from Big Kid on the Block to Bust,
CNN (Mar. 17, 2018), https://money.cnn.com/2018/03/17/news/companies/toys-
r-us-history/index.html.
5. Jake Pearson, Toys R Us Closes Flagship Store: Ferris Wheel, T-Rex and
All, SEATTLE TIMES (Dec. 30, 2015),
https://www.seattletimes.com/business/toys-r-us-closes-flagship-store-ferris-
wheel-t-rex-and-all/.
6. Mylene Mangalindan, How Amazon’s Dream Alliance with Toys ‘R’ Us
Went So Sour, WALL ST. J. (Jan. 23, 2006),
https://www.wsj.com/articles/SB113798030922653260.
7. Toys “R” Us, Form 10-K (May 15, 2007),
https://www.sec.gov/Archives/edgar/data/1005414/000119312507115768/d10k.htm.
8. Jeff Spross, How Vulture Capitalists Ate Toys ‘R’ Us, WEEK (Mar. 16,
2018), https://theweek.com/articles/761124/how-vulture-capitalists-ate-toys-r.
9. Id. (Toys “R” Us’s debt servicing ranged from $425 million to $527
million per year.)
10. Id.
11. Bryce Covert, The Demise of Toys ‘R’ Us Is a Warning, ATLANTIC (July
2018), https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-
bankruptcy-private-equity/561758/ (“After its buyout, Toys “R” Us acquired a
number of companies, including FAO Schwarz, eToys.com, and assets from KB
Toys (itself a failed reclamation project of Bain’s). Consolidating brick-and-
mortar and online toy businesses may have been a good-faith strategy. What’s
certain is that the deals helped generate $128 million in transaction fees for the
owners.”).
12. KKR, Bain Capital, Vornado Repeatedly Rewarded Themselves for
Adding Debt to Toys “R” Us, PRIV. EQUITY STAKEHOLDER PROJECT (May 29,
2018), https://pestakeholder.org/news/kkr-bain-capital-vornado-repeatedly-
rewarded-themselves-for-adding-debt-to-toys-r-us/.
13. Spross, supra note 8.
14. Covert, supra note 11.
15. Ben Unglesbee, Inside the 20-Year Decline of Toys R Us, RETAIL DIVE
(June 26, 2018), https://www.retaildive.com/news/inside-the-20-year-decline-of-
toys-r-us/526364/.
16. Toys “R” Us, supra note 2.
17. Covert, supra note 11.
18. Alina Selyukh, Game Over for Toys R Us: Chain Going out of Business,
NPR (Mar. 14, 2018), https://www.npr.org/sections/thetwo-
way/2018/03/14/592882488/game-over-for-toys-r-us-chain-going-out-of-
business.
19. Tara Lachapelle, Lessons Learned from the Downfall of Toys ‘R’ Us,
BLOOMBERG (Mar. 29, 2018), https://www.bloomberg.com/news/articles/2018-
03-09/toys-r-us-downfall-is-ominous-reminder-about-debt-laden-
deals#xj4y7vzkg (Interest expenses tended to near or even exceed operating
income. In 2017, had $460 million in operating income, $457 million in interest
expenses.).
20. David A. Brandon, Experience, LINKEDIN,
https://www.linkedin.com/in/david-a-brandon-5b826654/details/experience/ (“In
March 1999, Brandon was named Chairman and CEO of Domino’s Pizza by
Bain Capital Partners, LLC after they acquired the world’s largest pizza delivery
company in December 1998.”).
21. Complaint at ¶ 71, TRU Creditor Litigation Trust v. David A. Brandon et
al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020). The case was eventually
transferred to the Eastern District of Virginia and settled without a final
adjudication on the creditors’ allegations, while broader bankruptcy litigation
remains ongoing. Order Granting Joint Stipulation of Dismissal, TRU Creditor
Litigation Trust v. David A. Brandon et al., No. 3:20-cv-311 (E.D. Va. Nov. 15,
2022) ECF No. 92; TRU Creditor Litigation Trust v. Raether et al., No. 3:20-ap-
3038 (E.D. Va.).
22. Central Park + The Plaza District, ONE57,
https://one57.com/location#location-hero.
23. JC Reindl, Ex-U-M Athletic Director Dave Brandon Couldn’t Save Toys
R Us, DETROIT FREE PRESS (Mar. 15, 2018),
https://www.freep.com/story/money/2018/03/15/dave-brandon-toysrus-
liquidates/423756002/.
24. Complaint, TRU Creditor Litigation Trust v. David A. Brandon et al., No.
651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020).
25. Id. at ¶ 7.
26. Id. at ¶ 87, 170; Jeremy Hill & Eliza Ronalds-Hannon, Former Toys ‘R’
Us Executives Face Trial over Botched Bankruptcy, BLOOMBERG (June 28,
2022), https://www .bloomberg.com/news/articles/2022-06-28/former-toys-r-us-
execs-to-stand-trial-over-botched-bankruptcy.
27. Complaint ¶ 88, TRU Creditor Litigation Trust v. David A. Brandon et
al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020).
28. Id. at ¶ 89.
29. Id. Brandon and the legal entity managing Toy’s “R” Us’s bankruptcy
subsequently denied the allegation that Brandon misled the store employee.
Answer at 44, TRU Creditor Litigation Trust v. Raether et al., No. 3:20-ap-3038
(E.D. Va. Oct. 1, 2020), ECF No. 66. The case remains ongoing.
30. See Kirkland & Ellis: Bankruptcy/Restructuring, CHAMBERS AND
PARTNERS, https://chambers.com/department/kirkland-ellis-llp-bankruptcy-
restructuring-usa-5:513:127 88:1:3636 (an interviewee comments, “I think they
are the very best; they are aggressive and extremely commercially minded.”);
Roy Strom, Kirkland’s Bankruptcy Business Out-Billing Peers in Pandemic,
BLOOMBERG L. (June 9, 2020), https://news .bloomberglaw.com/business-and-
practice/kirklands-bankruptcy-business-out-billing-peers-during-pandemic.
31. Kate Gibson, Toys R Us’ Bankruptcy Lawyers Get $56 Million While
Laid-Off Workers Get $2 Million, CBS NEWS (June 28, 2019),
https://www.cbsnews.com/news/bankruptcy-court-gives-toys-r-us-workers-2-
million-and-retailers-lawyers-56-million/.
32. Samantha Stokes, Kirkland Secures $56M in Fees for Toys R Us
Bankruptcy, AM. LAWYER (June 10, 2019),
https://www.law.com/americanlawyer/2019/06/10/kirkland-ellis-secures-56m-
in-fees-for-toys-r-us-bankruptcy/.
33. Average Hourly Rate for Toys ‘R’ Us Inc Employees, PAYSCALE,
https://www.payscale
.com/research/US/Employer=Toys_%27R%27_Us_Inc/Hourly_Rate (Jan. 15,
2021).
34. Melanie Anzidei, Toys R Us Workers Win $2 Million Severance
Settlement, N. JERSEY (June 27, 2019),
https://www.northjersey.com/story/money/2019/06/27/toys-r-us-workers-win-2-
million-severance-settlement/1587364001/.
35. Interview with Jack Raisner (Nov. 10, 2021).
36. Jeremy Hill & Eliza Ronalds-Hannon, Former Toys ‘R’ Us Executives
Face Trial over Botched Bankruptcy, BLOOMBERG (June 28, 2022),
https://www.bloomberg.com/news/articles/2022-06-28/former-toys-r-us-execs-
to-stand-trial-over-botched-bankruptcy; Kate Gibson, Toys R Us’ Bankruptcy
Lawyers Get $56 Million While Laid-Off Workers Get $2 Million, CBS NEWS
(June 28, 2019, 2:36 PM), https://www.cbsnews .com/news/bankruptcy-court-
gives-toys-r-us-workers-2-million-and-retailers-lawyers-56-million/.
37. Gibson, supra note 36.
38. Id.
39. Gibson, supra note 31.
40. Id.
41. Gretchen Morgenson & Lillian Rizzo, Who Killed Toys ‘R’ Us? Hint: It
Wasn’t Only Amazon, WALL ST. J. (Aug. 23, 2018),
https://www.wsj.com/articles/who-killed-toys-r-us-hint-it-wasnt-only-amazon-
1535034401.
42. Chris Cumming, Lawmakers Question KKR, Bain Capital over Toys ‘R’
Us Failure, WALL ST. J. (July 6, 2018),
https://www.wsj.com/articles/lawmakers-question-kkr-bain-capital-over-toys-r-
us-failure-1530896043 (“Even accounting for fees received from Toys ‘R’ Us,
we have lost many millions of dollars. To find anyone who profited, one would
need to look at the institutions that pushed for Toys to liquidate its U.S.
business,’ the firm wrote.”).
43. Dan Primack, Toys “R” Us Not a Total Loss for Private Equity Fund
Managers, AXIOS (Oct. 5, 2017), https://www.axios.com/2017/12/15/toys-r-us-
not-a-total-loss-for-private-equity-fund-managers-1513305992.
44. Complaint at ¶ 48, TRU Creditor Litigation Trust v. David A. Brandon et
al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020) (the private equity firms
allegedly extracted over $250 million in advisory fees).
45. Jim Baker et al., Pirate Equity: How Wall Street Firms Are Pillaging
American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 9 (2019),
https://united4respect.org/wp-content/uploads/2019/07/Pirate-Equity-How-Wall-
Street-Firms-are-Pillaging-American-Retail-July-2019.pdf.
46. Id.
47. Id. at 3.
 48. Id. at 15, 21.
49. Id. at 3.
50. Steve LeVine, Vulture Capitalists Are Killing Off Retail Jobs, AXIOS (Jan.
10, 2018), https://www.axios.com/private-equity-1515603080-efd39541-a9fb-
474b-8c24-04623ee518fd.html.
51. Baker et al., supra note 45, at 13.
52. Id. at 40–44.
53. Id. at 5.
54. Amazon and Walmart Are Nearly Tied in Full-Year Share of Retail Sales,
PYMNTS (Mar. 11, 2021), https://www.pymnts.com/news/retail/2021/amazon-
walmart-nearly-tied-in-full-year-share-of-retail-sales/.
55. McKinsey & Company, FUTURE OF RETAIL OPERATIONS: WINNING IN A
DIGITAL ERA 25 (2020),
https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our
%20Insights/Future%20of%20retail%20operations%20Winning%20in%20a%20digital
%20era/McK_Retail-Ops-2020_FullIssue-RGB-hyperlinks-011620.pdf
(discussing Macy’s, Nordstrom, and Walmart).
56. Sapna Maheshwari & Vanessa Friedman, The Pandemic Helped Topple
Two Retailers. So Did Private Equity., N.Y. TIMES (June 18, 2020),
https://www.nytimes.com/2020/05/14/business/coronavirus-retail-bankruptcies-
private-equity.html.
57. Id.
58. PetSmart-Chewy, BC PARTNERS, https://www.bcpartners.com/private-
equity-strategy/portfolio/petsmart-chewy.
59. Lauren Kaori Gurley, Some Understaffed PetSmarts Are Dealing with
Freezers Overflowing with Dead Pets, VICE (Mar. 9, 2022),
https://www.vice.com/en/article/3ab4ek/some-understaffed-petsmarts-are-
dealing-with-freezers-overfilled-with-dead-pets.
60. Id.
61. Id.
62. Id.
63. Id.
64. Id.
65. Neil Irwin, How Private Equity Buried Payless, N.Y. TIMES (Feb. 1,
2020), https://www.nytimes.com/2020/01/31/upshot/payless-private-equity-
capitalism.html.
66. Id.
 67. Id.
68. Friendly’s, WIKIPEDIA, https://en.wikipedia.org/wiki/Friendly%27s.
69. Emily Langer, S. Prestley Blake, a Founder of Friendly’s Ice Cream
Chain, Dies at 106, WASH. POST (Feb. 12, 2021),
https://www.washingtonpost.com/local/obituaries/s-prestley-blake-
dead/2021/02/12/acbb76d0-6d4b-11eb-9f80-3d7646ce1bc0_story.html.
70. Emily Langer, Curtis Blake, Co-founder of the Friendly’s Ice Cream
Chain, Dies at 102, WASH. POST (May 31, 2019),
https://www.washingtonpost.com/local/obituaries/curtis-blake-co-founder-of-
the-friendlys-ice-cream-chain-dies-at-102/2019/05/31/bc0a502c-83b2-11e9-
95a9-e2c830afe24f_story.html.
71. Langer, supra note 69.
72. Id.
73. Rhode Island’s Awful Awful Love Affair: A History, NE W EN G . HIST.
SOC’Y, https://www .newenglandhistoricalsociety.com/rhode-islands-awful-
awful-love-affair-history (Aug. 15, 2022).
74. Langer, supra note 69.
75. Friendly’s, supra note 68.
76. Edwin Durgy, Friendly’s Files for Bankruptcy, FORBES (Oct. 5, 2011),
https://www.forbes.com/sites/edwindurgy/2011/10/05/friendlys-files-for-
bankruptcy/?sh=108c15144da3.
77. Id.
78. Sun to Buy Friendly Ice Cream in $337 Million Deal, REUTERS (June 17,
2007), https://www .reuters.com/article/friendlyicecream-suncapital/sun-to-buy-
friendly-ice-cream-in-337-million-deal-idUSWEN881220070618; Mia Lamar &
Jacqueline Palank, Friendly’s Files for Chapter 11 Bankruptcy, WALL ST. J.
(Oct. 6, 2011),
https://www.wsj.com/articles/SB10001424052970203388804576612531340661442.
79. See Tom Hals, UPDATE 3-Friendly’s Chain Files for Bankruptcy,
REUTERS (Oct. 5, 2011), https://www.reuters.com/article/friendlys/update-3-
friendlys-chain-files-for-bank ruptcy-idUSL3E7L51GD20111005 (“The
company’s debt load also prevented it from sprucing up its restaurants, which
got their start in Springfield, Massachusetts, in 1935.”). See also Motion for
Joint Administration Filed by Friendly Ice Cream Corporation at 4, In re:
Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 5, 2011), ECF
No. 2 (“As the Debtors’ liquidity position deteriorated, the Debtors struggled to
meet their debt service obligations and failed to satisfy financial covenants
under their prepetition revolving credit agreement, resulting in a default.”).
80. Friendly Sells 160 Units in Sales-Leaseback Deal, NATION’S REST. NEWS
(Oct. 22, 2007), https://www.nrn.com/corporate/friendly-sells-160-units-sales-
leaseback-deal.
81. Ch. 11 Voluntary Petition at 1925–26, In re: Friendly Ice Cream Corp.,
No. 11-13167 (Bankr. D. Del., Oct. 5, 2011), ECF No. 1 (Friendly Ice Cream
Corporation had its headquarters or principal place of business in
Massachusetts. Its various subsidiaries were headquartered or had their principal
places of business in Delaware); Motion for Joint Administration Filed by
Friendly Ice Cream Corporation at 5, In re: Friendly Ice Cream Corp., No. 11-
13167 (Bankr. D. Del., Oct. 5, 2011), ECF No. 2.
82. Motion for Joint Administration Filed by Friendly Ice Cream
Corporation at 9, In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr. D.
Del., Oct. 5, 2011), ECF No. 2.
83. In re: Humboldt Creamery, LLC, No. 09-11078 (Bankr. N.D. Cal. 2009).
84. Mike Spector, Two Hats a Fit for Friendly’s Owner, WALL ST. J. (July
26, 2012),
https://www.wsj.com/articles/SB10000872396390443477104577551000555121714.
85. Omnibus Objection of the Official Committee of Unsecured Creditors ¶
19, In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 28,
2011), ECF No. 242. Technically, Friendly’s owner—the Sun Capital affiliate
Freeze LLC—had lent the money, then transferred ownership of the debt to the
second affiliate, Sundae Group Holdings II; Omnibus Objection of Pension
Benefit Guaranty Corporation at 7, In re: Friendly Ice Cream Corp., No. 11-
13167 (Bankr. D. Del., Oct. 28, 2011), ECF No. 241.
86. Lamar & Palank, supra note 78.
87. Spector, supra note 84.
88. Order Approving Bidding Procedures at 5, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011), ECF No. 289.
89. Notice of Service/Notice of Cancellation of Auction and Successful
Bidder Filed by Friendly Ice Cream Corporation, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Dec. 30, 2011), ECF No. 526.
90. Spector, supra note 84; Lamar & Palank, supra note 78.
91. Motion to Approve Debtor in Possession Financing at 2, In re: Friendly
Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 5, 2011), ECF No. 16.
 92. Israel Goldowitz et al., The PBGC Wins a Case Whenever the Debtor
Keeps Its Pension Plan, 16 MARQ. BEN. & SOC. WELFARE L. REV. 257, 297 (2015),
https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?
referer=&httpsredir=1&article =1005&context=benefits.
93. Douglas J. Elliott, A Guide to the Pension Benefit Guaranty Corporation,
BROOKINGS INSTITUTION, 7 (May 20, 2009), https://www.brookings.edu/wp-
content/uploads/2016/06/0520_pensions_elliott.pdf.
94. Omnibus Objection of Pension Benefit Guaranty Corporation at 1, In re:
Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 28, 2011), ECF
No. 241.
95. Order Approving Bidding Procedures at 5, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011), ECF No. 289.
96. Motion to Authorize Debtors’ Motion for Entry of an Order Approving
Bidding Procedures and Notice Procedures at 28, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011), ECF No. 15.
97. Statement of Hon. Joshua Gotbaum, ABI COMMISSION TO STUDY REFORM
O F CHAPTER 11 (Mar. 14, 2013), https://www.pbgc.gov/documents/Gotbaum-
ABI-Statement.pdf.
98. Friendly’s Bankruptcy: Full List of Closed Friendly’s Restaurants,
MASSLIVE (Oct. 5, 2011), https://www.masslive.com/business-
news/2011/10/full_list_of_closed_friendlys_restaurants.html.
99. Eric Anderson, Friendly Emerges from Bankruptcy, TIMES UNION (Jan. 9,
2012), https://www.timesunion.com/business/article/Friendly-emerges-from-
bankruptcy-2452103.php.
100. Aisha Al-Muslim, Friendly’s Restaurant Owner Files for Bankruptcy
amid Pandemic, WALL ST. J. (Nov. 2, 2020),
https://www.wsj.com/articles/friendlys-restaurant-owner-files-for-bankruptcy-
amid-pandemic-11604318761.
101. Jonathan Maze, Friendly’s Declares Bankruptcy and Will Be Sold to the
Owner of Red Mango, RE S T . BUS. (Nov. 2, 2020),
https://www.restaurantbusinessonline.com/financing/friendlys-declares-
bankruptcy-will-be-sold-owner-red-mango.
102. Al-Muslim, supra note 100.
103. Julie Creswell, In a Romney Believer, Private Equity’s Risks and
Rewards, N.Y. TIMES (Jan. 21, 2012),
https://www.nytimes.com/2012/01/22/business/in-a-romney-believer-private-
equitys-risks-and-rewards.html.
 104. Baker et al., supra note 45, at 38 (“A National Bureau of Economic
Research analysis of over 3,000 private equity acquisitions found that retail
companies acquired by private equity experienced a 12 percent drop in
employment over the subsequent five years.”).
105. Elizabeth Lewis, A Bad Man’s Guide to Private Equity and Pensions 7
(Edmond J. Safra Working Papers No. 68, 2015),
https://papers.ssrn.com/sol3/papers.cfm ?abstract_id=2620320.
106. Lynn M. LoPucki, COURTING FAILURE: HOW COMPETITION FOR BIG CASES
IS CORRUPTING THE BANKRUPTCY COURTS 16 (2006) (Forum shopping provisions
became part of bankruptcy code in 1978, went into effect 1979).
107. Lynn M. LoPucki, Chapter 11’s Descent into Lawlessness 4 (UCLA
Sch. of L. L.-Econ., Working Paper No. 21–12, 2022),
https://ssrn.com/abstract=3946577.
108. Id.
109. LoPucki, supra note 106, at 18.
110. Id.
111. Id. at 20.
112. Tom Hals, Ever-Shorter U.S. Bankruptcies Have Creditors Scrambling,
REUTERS (Feb. 1, 2017), https://www.reuters.com/article/us-usa-
bankruptcy/ever-shorter-u-s-bank ruptcies-have-creditors-scrambling-
idUSKBN15G5FO.
113. LoPucki, supra note 106, at 2, 8.
114. Id. at 16.
115. Id. at 3.
116. Stephen Kurczy, Annmarie Reinhart Smith, Who Battled for Retail
Workers, Dies at 61, N.Y. TIMES (Mar. 15, 2021),
https://www.nytimes.com/2021/03/06/obituaries/annmarie-reinhart-smith-dead-
coronavirus.html; Sarah Jaffe, Service with a Smile: A Retail Worker Learns to
Fight for Her Rights, PR O G R E S S I V E MAG. (Jan. 26, 2021),
https://progressive.org/magazine/service-with-a-smile-jaffe/.
117. Jaffe, supra note 116.
118. Rachel Siegel, $20 Million Fund Set Aside for Laid-Off Toys R Us
Workers, WASH. POST (Nov. 20, 2018),
https://www.washingtonpost.com/business/2018/11/20/million-fund-set-aside-
laid-off-toys-r-us-workers/.
119. Jaffe, supra note 116.
120. Id.
 121. Kurczy, supra note 116.
122. Letter from Rep. Mark Pocan et al., to Joshua Bekenstein, cofounder of
Bain Capital, L.P., et al. (July 5, 2018),
http://online.wsj.com/public/resources/document s/toysrusletter_0706.pdf.
123. Menendez, Booker, Pascrell Demand Fairness for Toys ‘R’ Us Workers
Following Bankruptcy, OFFICE OF SENATOR BO B MENENDEZ (June 1, 2018),
https://www.menendez .senate.gov/newsroom/press/menendez-booker-pascrell-
demand-fairness-for-toys-r-us-workers-following-bankruptcy.
124. Kurczy, supra note 116.
125. Chris Isidore, Toys ‘R’ Us Employees Protest Lack of Severance Pay,
CNN (June 4, 2018), https://money.cnn.com/2018/06/04/news/companies/toys-
r-us-employees-severance-protests/index.html.
126. Michael Corkery, Laid-off Toys R Us Workers Find Powerful Ally in
Public Pensions, AL B U Q U E R Q U E BUS. J. (Oct. 8, 2018),
https://www.bizjournals.com/albuquerque/news/2018/10/08/laid-off-toys-r-us-
workers-find-powerful-ally-in.html.
127. Mark Vandevelde, KKR Faces Pension Fund Ire over Toys R Us
Collapse, FI N . TIMES (June 24, 2018), https://www.ft.com/content/7370b1fc-
763a-11e8-a8c4-408cfba4327c.
128. Siegel, supra note 118.
129. Memorandum Opinion, TRU Creditor Litig. Tr. v. Brandon (In re: Toys
“R” U.S., Inc.), No. 17-34665-KLP (Bankr. E.D. Va. June 27, 2022).
130. Corinne Ruff, Former Toys R Us Employees Receive Hardship Fund
Checks, RETAIL DIVE (Jan. 4, 2019), https://www.retaildive.com/news/former-
toys-r-us-employees-receive-hardship-fund-checks/545295/.
131. Siegel, supra note 118 (The employees would get payments from $20
million fund. Rise Up Retail said that they were owed $75 million, however.)
132. Id.
133. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
Leader in Toys ‘R’ Us, Private Equity Campaigns, UNITED FOR RESPECT (Feb. 18,
2021), https://united4respect.org/statement/ann-marie-reinhart-smith/
(Employees will get between $200 and $12,000).
134. Kurczy, supra note 116.
135. Anne D’Innocenzio, Former Toys R Us Workers to Get $20 Million in
Hardship Fund, TELEGRAPH (Nov. 25, 2018),
https://www.telegraphherald.com/news/business/article_9bcaa561-2f95-5e3e-
9308-81d36e5e4d87.html/.
 136. Jaffe, supra note 116.
137. Kurczy, supra note 116.
138. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
supra note 133.
139. Jaffe, supra note 116.
140. Kurczy, supra note 116.
141. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
supra note 133.

CHAPTER 4: DEADLY CARE

1. David Gelles, Billionaire Confessional: David Rubenstein on Wealth and
Privilege, N.Y. TIMES (Mar. 12, 2020),
https://www.nytimes.com/2020/03/12/business/david-rubenstein-carlyle-corner-
office.html.
2. Greg Schneider, Connections and Then Some, WASH. POST (Mar. 16,
2003),
https://www.washingtonpost.com/archive/lifestyle/2003/03/16/connections-and-
then-some/faaece9e-0225-4310-a8f9-8137d2329d52/.
3. David Montgomery, David Rubenstein, Co-founder of Carlyle Group and
Washington Philanthropist, WASH. POST (May 14, 2012),
https://www.washingtonpost.com/lifestyle/style/david-rubenstein-co-founder-of-
carlyle-group-and-washington-
philanthropist/2012/05/14/gIQA7XcvPU_story.html.
4. Id.; Interview with David Rubenstein, Deputy Director Domestic Policy
Staff, JIMMY CARTER PRESIDENTIAL LIBRARY (Dec. 3, 1980),
https://www.jimmycarterlibrary.gov/assets/documents/oral_histories/exit_interviews/Rubenste
5. Schneider, supra note 2.
6. Id. (President Carter said, “He devoted probably more hours to his work in
the White House than anyone on my staff, so far as I ever knew.… He was a
reticent person as far as putting himself forward. He was very modest, and never
claimed credit for successes when they did materialize.”).
7. Thomas DeFrank & Eleanor Clift, Inside the Carter White House, Wash.
Post (Jan. 18, 1981),
https://www.washingtonpost.com/archive/opinions/1981/01/18/inside-the-carter-
white-house/31f3eb8e-038e-48c0-ae29-a805adb92a7a/; Collection: Office of
Staff Secretary; Series: Presidential Files; Folder: 8/27/80; Container 173,
JIMMY CARTER PRESIDENTIAL LIBRARY (Aug. 27, 1980),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/173/SSO_148878_173_05.pdf
Folder Citation: Collection: Office of Staff Secretary; Series: Presidential Files;
Folder: 9/13/77; Container 40, JIMMY CARTER PRESIDENTIAL LIBRARY (Sept. 13,
1977),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/40/SSO_148878_040_08.pdf;
Folder Citation: Collection: Office of Staff Secretary; Series: Presidential Files;
Folder: 7/2/80; Container 168, JIMMY CARTER PRESIDENTIAL LIBRARY (July 2,
1980),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/168/SSO_148878_168_03.pdf
Folder Citation: Collection: Office of Staff Secretary; Series: Presidential Files;
Folder: 12/13/77; Container 54, JIMMY CARTER PRESIDENTIAL LIBRARY (Dec.
13, 1977),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/54/SSO_148878_054_12.pdf.
8. Jimmy Carter entering presidential helicopter, fr 1-5; David Rubenstein, fr
8-28, NATIONAL ARCHIVES CATALOG (Apr. 13, 1979),
https://catalog.archives.gov/id/184343.
9. Schneider, supra note 2.
10. David A. Vise, Area Merchant Banking Firm Formed, WASH. POST (Oct.
5, 1987), https://www.washingtonpost.com/archive/business/1987/10/05/area-
merchant-banking-firm-formed/c567202c-e8ed-409a-8c08-d552e1857844/.
11. Hotel Fact Sheet, CA R L Y L E , A RO S E W O O D HOTEL,
https://www.rosewoodhotels .com/en/the-carlyle-new-york/media/press-
kit/hotel-fact-sheet.
12. Schneider, supra note 2.
13. Carlucci Takes Job at Carlyle Group, N.Y. TIMES (Jan. 30, 1989),
https://www.nytimes .com/1989/01/30/business/carlucci-takes-job-at-carlyle-
group.html.
14. Kenneth N. Gilpin, Little-Known Carlyle Scores Big, N.Y. TIMES (Mar.
26, 1991), https://www.nytimes.com/1991/03/26/business/little-known-carlyle-
scores-big.html.
15. Id.
16. Schneider, supra note 2.
17. David Ignatius, The President as Businessman: The Fancy Financial
Footwork of George W. Bush, N.Y. TIMES (Aug. 7, 2002),
https://www.nytimes.com/2002/08/07/opinion/IHT-the-president-as-
businessman-the-fancy-financial-footwork-of.html.
 18. Schneider, supra note 2; Biography: William E. Kennard, DEPARTMENT OF
STATE, https://2009-2017.state.gov/s/p/fapb/185588.htm; Julius Genachowski,
CARLYLE, https://www.carlyle.com/about-carlyle/team/julius-genachowski.
19. Schneider, supra note 2.
20. Id.
21. Bain Capital Partners, the Carlyle Group and Thomas H. Lee Partners
Agree to Acquire Dunkin’ Brands, Inc. from Pernod Ricard S.A. for $2.425
Billion, CARLYLE GROUP (Dec. 11, 2005), https://www.carlyle.com/media-
room/news-release-archive/bain-capital-partners-carlyle-group-and-thomas-h-
lee-partners-agree; The Carlyle Group and Getty Images Management to
Acquire Getty Images from Hellman and Friedman for $3.3 Billion, CARLYLE
GROUP (Aug. 14, 2012), https://www.carlyle.com/media-room/news-release-
archive/carlyle-group-and-getty-images-management-acquire-getty-images;
Austen Hufford, Carlyle to Sell Remaining Stake in Booz Allen Hamilton,
PRIVATE EQUITY NEWS (Dec. 2, 2016), https://www.penews.com/articles/carlyle-
remaining-stake-in-booz-allen-hamilton-20161202; Dan Primack, Why Hertz
Crashed, AXIOS (May 26, 2020), https://www .axios.com/2020/05/26/hertz-
bankruptcy.
22. The Carlyle Group, WIKIPEDIA,
https://en.wikipedia.org/wiki/The_Carlyle_Group.
23. Schneider, supra note 2; Tina Sfondeles & Alex Thompson, Why
“Scranton Joe” Loves Nantucket, POLITICO (Nov. 24),
https://www.politico.com/newsletters/west-wing-playbook/2021/11/24/why-
scranton-joe-loves-nantucket-495223.
24. David Rubenstein, FORBES, https://www.forbes.com/profile/david-
rubenstein/?sh =2c0fcd8792fd (Oct. 2, 2022).
25. Mikaela Lefrak, Why This Billionaire Is Spending a Fortune on
Washington’s Monuments, WAMU 88.5 (Feb. 12, 2020),
https://wamu.org/story/20/02/12/why-this-billionaire-is-spending-a-fortune-on-
washingtons-monuments/.
26. Gelles, supra note 1.
27. Schneider, supra note 2.
28. The David Rubenstein Show, BLOOMBERG,
https://www.bloomberg.com/peer-to-peer (Sept. 29, 2022).
29. David Rubenstein, WIKIPEDIA,
https://en.wikipedia.org/wiki/David_Rubenstein; Daniel Trotta, Carlyle CEO
Buys 1776 Printing of Declaration of Independence, REUTERS (June 25, 2013),
https://www.reuters.com/article/us-usa-declaration-carlyle/carlyle-ceo-buys-
1776-printing-of-declaration-of-independence-idUSBRE95O1HK20130626;
Newseum, First Newspaper Printing of the Declaration of Independence Goes
on Display at the Newseum, CISION (June 29, 2016),
https://www.prnewswire.com/news-releases/first-newspaper-printing-of-the-
declaration-of-independence-goes-on-display-at-the-newseum-300292229.html;
Smithsonian Announces $10 Million Gift from David Rubenstein to the National
Museum of African American History and Culture, NATIONAL MUSEUM OF
AFRIC A N AM E R I C A N HISTORY AND CULTURE (Jan. 20, 2016),
https://www.si.edu/newsdesk/releases/smithsonian-announces-10-million-gift-
david-rubenstein-national-museum-african-american-his.
30. David Rubenstein, supra note 29.
31. Benjamin Wofford, How Did David Rubenstein—Yes, That David
Rubenstein—Become a TV Star?, WASHINGTONIAN (Oct. 26, 2017),
https://www.washingtonian.com/2017/10/26/david-rubenstein-become-tv-star/.
32. Martin Pengelly, “America Is Not a Perfect Country”: David Rubenstein
on Trump, Biden and a Nation’s Troubled History, GUARDIAN (Sept. 6, 2021),
https://www.theguardian .com/books/2021/sep/06/david-rubenstein-interview-
trump-biden-america.
33. David Matthews, “Sesame Street” Stars Feted at the Kennedy Center
Honors, on Day Big Bird Puppeteer Caroll Spinney Died, N.Y. DAILY NEWS
(Dec. 8, 2019), https://www .nydailynews.com/news/national/ny-sesame-street-
kennedy-center-honors-big-bird-elmo-20191209-ezraqh3o6rhgfpll74rltyrexm-
story.html.
34. Schneider, supra note 2.
35. Overview, CARLYLE GROUP (Dec. 2017),
https://www.carlyle.com/sites/default/files/inline-
files/CarlyleFactSheet_Dec2017.pdf; Dan Primack, David Rubenstein Steps
Down as Carlyle Group Co-CEO, AXIOS (Oct. 25, 2017),
https://www.axios.com/2017/12/15/david-rubenstein-steps-down-as-carlyle-
group-co-ceo-1513306434.
36. Grace Birnstengel, How’d We Get Here? The History of Nursing Homes,
NEXT AVE. (Mar. 5, 2021), https://www.nextavenue.org/history-of-nursing-
homes/.
37. Charlene Harrington et al., Marketization in Long-Term Care: A Cross-
Country Comparison of Large For-Profit Nursing Home Chains, 10 HEALTH
SERVS. INSIGHTS (2017) (“Major growth occurred in the 1990s with many
acquisitions and mergers by chains.”).
38. Nursing Home Care, CENTERS FOR DISEASE CONTROL AND PREVENTION
(Sept. 6, 2022), https://www.cdc.gov/nchs/fastats/nursing-home-care.htm.
39. Peter Whoriskey & Dan Keating, Overdoses, Bedsores, Broken Bones:
What Happened When a Private-Equity Firm Sought to Care for Society’s Most
Vulnerable, WASH. POST (Nov. 25, 2018),
https://www.washingtonpost.com/business/economy/opioid-overdoses-
bedsores-and-broken-bones-what-happened-when-a-private-equity-firm-sought-
profits-in-caring-for-societys-most-vulnerable/2018/11/25/09089a4a-ed14-11e8-
baac-2a674 e91502b_story.html.
40. Charlene Harrington et al., Improving the Financial Accountability of
Nursing Facilities, KAISER COMMISSION ON MEDICAID AND THE UNINSURED, 6
(June 2013), https://www .kff.org/wp-content/uploads/2013/06/8455-improving-
the-financial-accountability-of-nursing-facilities.pdf.
41. Mike Shepard, Carlyle to Buy Nursing Home Operator Manor Care,
WASH. POST (July 2, 2007),
http://voices.washingtonpost.com/washbizblog/2007/07/carlyle_to_buy_nursing_home_op_1.
42. David A. Vise, Manor Care Keeps Growing, WASH. POST (Aug. 8, 1982),
https://www.washingtonpost.com/archive/business/1982/08/08/manor-care-
keeps-growing/3a77db32-e28f-40a9-b567-b1358d088ddc/. See also Despite
Recent Troubles, HCR ManorCare Has a Rich History, INS. NEWSNET (Apr. 29,
2018), https://insurancenewsnet .com/oarticle/despite-recent-troubles-hcr-
manorcare-has-a-rich-history (The former head of HCR, prior to its merger with
ManorCare, said that today “the elderly are more wealthy… [and] increasingly
able to pay for their own care.”).
43. Vise, supra note 42.
44. Carlyle to Buy Manor Care for $4.9 Billion, REUTERS (July 2, 2007),
https://www .reuters.com/article/us-manorcare-carlyle/carlyle-to-buy-manor-
care-for-4-9-billion-idUSWNAS513520070702.
45. HCP to Acquire the Real Estate Assets of HCR ManorCare, Inc. for $6.1
Billion, CARLYLE (Dec. 12, 2010), https://www.carlyle.com/media-room/news-
release-archive/hcp-acquire-real-estate-assets-hcr-manorcare-inc-61-billion.
46. Whoriskey & Keating, supra note 39.
47. Id.
48. Id.
 49. Matthew Goldstein et al., Push for Profits Left Nursing Homes
Struggling to Provide Care, N.Y. TIMES (May 7, 2020),
https://www.nytimes.com/2020/05/07/business/coronavirus-nursing-
homes.html.
50. Whoriskey & Keating, supra note 39.
51. Harrington et al., supra note 40.
52. Eileen O’Grady, Pulling Back the Veil on Today’s Private Equity
Ownership of Nursing Homes, PRIVATE EQUITY STAKEHOLDER PROJECT (2021),
https://pestakeholder.org/wp-
content/uploads/2021/07/PESP_Report_NursingHomes_July2021.pdf
(discussing issues with Genesis (owned by Formation) and Golden Living
(owned by Fillmore)); Sava Senior Care, NURSING HOME ABUSE GUIDE,
https://www.nursinghomeabuseguide.org/resources/sava-senior-care (discussing
Sava).
53. Harrington et al., supra note 40.
54. Genesis Healthcare Inc. Agrees to Pay Federal Government $53.6
Million to Resolve False Claims Act Allegations Relating to the Provision of
Medically Unnecessary Rehabilitation Therapy and Hospice Services,
DEPARTMENT OF JUSTICE (June 16, 2017), https://www.justice
.gov/opa/pr/genesis-healthcare-inc-agrees-pay-federal-government-536-million-
resolve-false-claims-act (Genesis settled for $53.6 million); Alex Spanko, DOJ
Drops False Claims Act Case Against HCR ManorCare, SKILLED NURSING
NEWS (Nov. 9, 2017), https://skillednursingnews.com/2017/11/doj-drops-false-
claims-act-case-hcr-manorcare/; Golden Living Nursing Homes Settle
Allegations of Substandard Wound Care, DEPARTMENT OF JUSTICE (Jan. 2, 2013),
https://www.justice.gov/usao-ndga/pr/golden-living-nursing-homes-settle-
allegations-substandard-wound-care; SavaSeniorCare LLC Agrees to Pay $11.2
Million to Resolve False Claims Act Allegations, DEPARTMENT OF JUSTICE (May
21, 2021), https://www.justice.gov/opa/pr/savaseniorcare-llc-agrees-pay-112-
million-resolve-false-claims-act-allegations.
55. R. Tamara Konetzka et al., The Staffing—Outcomes Relationship in
Nursing Homes, 42 HEALTH SERVICES RESEARCH (2008),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2442239/.
56. Atul Gupta et al., Does Private Equity Investment in Healthcare Benefit
Patients? Evidence from Nursing Homes 4 (Nat’l Bureau of Econ. Rsch.,
Working Paper No. 28474, 2021).
 57. Nalea Ko, Licensed Practical Nurses (LPN) vs. Registered Nurses (RN),
NURSE J. (Aug. 29, 2022), https://nursejournal.org/resources/lpn-vs-rn-roles/;
Rohit Pradhan et al., Private Equity Ownership of Nursing Homes: Implications
for Quality, 42 J. HEALTHCARE FIN. 1, 9 (2014),
https://healthfinancejournal.com/index.php/johcf/article/view/12 (“In terms of
structural (staffing) variables, results suggest that private equity nursing homes
have 29% lower RN hours PPD compared to the control group (p<.001). On the
other hand, private equity owned facilities have 7% higher LPN hours PPD
(p<.05).”).
58. Gupta et al., supra note 56, at 2–4.
59. Id. at 2–3.
60. The Deadly Combination of Private Equity and Nursing Homes During a
Pandemic, AMERICANS FOR FINANCIAL REFORM 1 (Aug. 2020),
https://ourfinancialsecurity.org/wp-content/uploads/2020/08/AFREF-NJ-
Private-Equity-Nursing-Homes-Covid.pdf.
61. O’Grady, supra note 52, at 7 (“Regency’s West Oaks Nursing and
Rehabilitation Center experienced the deadliest coronavirus outbreak at a
nursing home in Austin, TX, where at least 18 patients died and 72 of its 98
current patients were infected.”); Anita Chabria & Melissa Gomez, How
Nursing Homes Became California Coronavirus Hot Zones, L.A. TIMES (May 2,
2020), https://www.latimes.com/california/story/2020-05-02/how-nursing-
homes-became-coronavirus-hot-zones-in-california (Plum Healthcare Group
had the nursing home with the biggest outbreak in California).
62. 6 Most Common Nursing Injuries, UNITEKCOLLEGE (Dec. 15, 2020),
https://www .unitekcollege.edu/blog/most-common-nursing-injuries/.
63. Occupational Injuries and Illnesses Resulting in Musculoskeletal
Disorders (MSDs), BUREAU OF LABOR STATISTICS (May 2020),
https://www.bls.gov/iif/oshwc/case/msds.htm; Daniel Zwerdling, Hospitals Fail
to Protect Nursing Staff from Becoming Patients, NPR (Feb. 4, 2015),
https://www.npr.org/2015/02/04/382639199/hospitals-fail-to-protect-nursing-
staff-from-becoming-patients.
64. Testimony of Milly Silva, executive vice president, 1199SEIU United
Healthcare Workers East before the House Ways and Means Oversight
Subcommittee (Mar. 25, 2021),
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/M
65. Id.
66. Id.
 67. Gupta et al., supra note 56, at 34.
68. Id. at 20 (“In our data, more than 90% of the billed amount is paid by
taxpayers through Medicare and patients pay the balance.”).
69. Investor-Owned Nursing Homes Draw Scrutiny as Deals Flourish,
BLOOMBERG LAW (April 6, 2021), https://news.bloomberglaw.com/health-law-
and-business/investor-owned-nursing-homes-draw-scrutiny-as-deals-flourish.
70. Nursing Home Law Basics, FINDLAW (May 17, 2021),
https://www.findlaw.com/elder/elder-care-law/nursing-home-law-basics.html;
MaryBeth Musumeci & Priya Chidambaram, Key Questions About Nursing
Home Regulation and Oversight in the Wake of COVID-19, KAISER FAMILY
FOUNDATION (Aug. 3, 2020), https://www.kff.org/coronavirus-covid-19/issue-
brief/key-questions-about-nursing-home-regulation-and-oversight-in-the-wake-
of-covid-19/ (“Certification of nursing home compliance with federal Medicare
and/or Medicaid requirements generally is performed by states through regular
inspections known as surveys.”).
71. LTCCC Report: Identification of Resident Harm in Nursing Home
Citations, LONG TERM CARE COMMUNITY COALITION 3 (Feb. 2017),
https://nursinghome411.org/identification-of-resident-harm-in-nursing-home-
citations/ (“[I]t is highly unlikely that a facility will face a penalty for deficient
care unless a violation is identified as having caused harm or immediate
jeopardy to a resident.”).
72. Id. at 5.
73. House Ways & Means Committee Issues Testimony from Long Term Care
Community Coalition, INSURANCE NEWSNET (Nov. 16, 2019),
https://insurancenewsnet.com/oarticle/house-ways-means-committee-issues-
testimony-from-long-term-care-community-coalition; EJ-Issue-Guide-Fall-
2019, LONG TERM CARE COMMUNITY COALITION (2019),
https://nursinghome411.org/wp-content/uploads/2019/12/EJ-Issue-Guide-Fall-
2019.xlsx.
74. EJ-Issue-Guide-Fall-2019, supra note 73.
75. Id.
76. Interview with Lori Smetanka, executive director, National Consumer
Voice (Oct. 12, 2021).
77. Robert Gebeloff et al., How Nursing Homes’ Worst Offenses Are Hidden
from the Public, N.Y. TIMES (Dec. 10, 2021),
https://www.nytimes.com/2021/12/09/business/nursing-home-abuse-
inspection.html.
 78. Interview with Lori Smetanka, supra note 76.
79. American Health Care Assn, OPEN SECRETS,
https://www.opensecrets.org/orgs/american-health-care-assn/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle
=2022&outspendcycle=2022&id=D000000192&topnumcycle=A.
80. Genesis Healthcare, OPEN SECRETS,
https://www.opensecrets.org/orgs/genesis-healthcare/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=2022&id=D000022
ManorCare Inc., OPEN SECRETS, https://www.opensecrets.org/orgs/manor-care-
inc/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=2022&id=D000022
=A; Golden Living, OPEN SECRETS, https://www.opensecrets.org/orgs/golden-
living/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=2022
&id=D000066613&topnumcycle=A.
81. Matthew Cunningham-Cook, Nursing Home Industry Avoids Scrutiny for
Covid-19 Deaths as Powerful Lobby Goes to Work, INTERCEPT (Feb. 20, 2021),
https://theintercept .com/2021/02/20/covid-nursing-home-cuomo-clyburn/.
82. Robert Gebeloff et al., How Nursing Homes’ Worst Offenses Are Hidden
from the Public, N.Y. TIMES (Dec. 10, 2021),
https://www.nytimes.com/2021/12/09/business/nursing-home-abuse-
inspection.html.
83. Id.
84. Ryan Mills & Melanie Payne, Neglected: Florida’s Largest Nursing
Home Chain Survives Despite Legacy of Poor Patient Care, NAPLES DAILY
NEWS (Jan. 24, 2019), https://www.naplesnews.com/story/news/special-
reports/2018/05/31/neglected-fraud-and-abuse-nursing-homes-
florida/542609002/.
85. Id.
86. Interview with Nicole Snapp-Holloway, attorney (Oct. 15, 2021).
87. Id.
88. Interview with Ernest C. Tosh, attorney (Oct. 8, 2021).
89. Id.
90. David G. Stevenson et al., Nursing Home Ownership Trends and Their
Impact on Quality of Care: A Study Using Detailed Ownership Data from Texas,
25 J. AGING & SOC. POL’Y 30 (2013).
 91. Jordan Rau, Care Suffers as More Nursing Homes Feed Money into
Corporate Webs, N.Y. TIMES (Jan. 2, 2018),
https://www.nytimes.com/2018/01/02/business/nursing-homes-care-
corporate.html. See, e.g., Mills & Payne, supra note 84 (“Despite the big money
generated from Medicare and Medicaid programs serving the poor and elderly,
Consulate’s nursing homes are designed to appear cash-strapped. While
individual nursing home LLCs are essentially empty shells, they pay rent,
management and rehabilitation service fees to Consulate or Formation Capital–
affiliated companies.”).
92. Stevenson, supra note 90, at 30.
93. Rau, supra note 91.
94. Id.
95. Id.
96. Id.
97. Mills & Payne, supra note 84.
98. Margaret Cronin Fisk, Nursing Home Neglect Trial Fights Shell
Company Transfers, BLOOMBERG (Sept. 22, 2014),
https://www.bloomberg.com/news/articles/2014-09-22/nursing-home-neglect-
trial-fights-shell-company-transfers#xj4y7vzkg.
99. In re: Fundamental Long Term Care Inc., No. 11-bk-22258 (M.D. Fla.
Bankr. 2011).
100. Ed Williams, “An Anything-Goes Situation”: Assessing Arbitration
Agreements at Nursing Homes, LAS CRUCES SUN NEWS (July 12, 2020),
https://www.lcsun-news.com/story/news/2020/07/11/an-anything-goes-
situation/5421301002/.
101. The Truth About Forced Arbitration, AMERICAN ASSOCIATION FOR
JUSTICE 27 (Sept. 2019), https://www.justice.org/resources/research/the-truth-
about-forced-arbitration.
102. About Us, AMERICAN HEALTH CARE ASSOCIATION,
https://members.ahcancal.org/About-Us/NCAL-Board (Michael Wylie of
Genesis was the immediate past chair of the AHCA); AHCA/NCAL Elects Board
of Governors, Directors, AMERICAN HEALTH CARE ASSOCIATION (Oct. 7, 2020),
https://www.ahcancal.org/News-and-Communications/Press-
Releases/Pages/AHCANCAL-Elects-Board-of-Governors,-Directors.aspx (Phil
Fogg of Marquis served as AHCA vice chair).
103. Alex Spanko, CMS Finalizes Reversal of Arbitration Ban in Nursing
Homes, Proposes Partial Phase 3 RoP Delay, SKILLED NURSING NEWS (July 16,
2019), https://skillednursingnews .com/2019/07/cms-finalizes-reversal-of-
arbitration-ban-in-nursing-homes-proposes-partial-phase-3-rop-delay/.
104. Scott Loftin & Ragini A. Acharya, Federal District Court Upholds
CMS Pre-Dispute Arbitration Rule, HUSCH BLACKWELL (April 13, 2020 ),
https://www.healthcarelawinsights .com/2020/04/federal-district-court-upholds-
cms-pre-dispute-arbitration-rule/.
105. Christopher Rowland, Long-Term-Care Facilities Are Using the
Pandemic as a Shield, Even in Lawsuits Unrelated to Covid-19, WASH. POST
(Aug. 20, 2021), https://www
.washingtonpost.com/business/2021/08/20/nursing-home-immunity-covid-
lawsuits/.
106. Debbie Cenziper et al., As Nursing Home Residents Died, New Covid-
19 Protections Shielded Companies from Lawsuits. Families Say That Hides the
Truth, WASH. POST (June 8, 2020),
https://www.washingtonpost.com/business/2020/06/08/nursing-home-immunity-
laws/.
107. Id.
108. Id.
109. Interview with Ernie Tosh (Oct. 5, 2021).
110. O’Grady, supra note 52, at 15.
111. Jessica Silver-Greenberg & Robert Gebeloff, Maggots, Rape and Yet
Five Stars: How U.S. Ratings of Nursing Homes Mislead the Public, N.Y. TIMES
(Aug. 4, 2021), https://www.nytimes.com/2021/03/13/business/nursing-homes-
ratings-medicare-covid .html.
112. Amended Complaint ¶ 27, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Aug. 2, 2012), ECF No. 16; Mills &
Payne, supra note 84.
113. Amended Complaint ¶ 36, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Aug. 2, 2012), ECF No. 16.
114. Second Amended Complaint ¶ 164–184, US ex rel. Ruckh v. La Vie
Health Care Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. June 3, 2013), ECF No.
75.
115. Mills & Payne, supra note 84.
116. Id.
117. Id. The company was also organized so that, in practice, it was difficult
to immediately understand who actually is the owner of a nursing homes’
owners. For instance, Ruckh’s initial suit was not against Consulate, but “La Vie
Health Care Centers, Inc.,” only later identified to be the nursing home chain.
Compare Amended Complaint, US ex rel. Ruckh v. La Vie Health Care Centers,
Inc. No. 8:11-cv-1303 (M.D. Fla. Aug. 2, 2012), ECF No. 16 with Second
Amended Complaint ¶ 164–184, supra note 114.
118. Mills & Payne, supra note 84.
119. Docket, US ex rel. Ruckh v. La Vie Health Care Centers, Inc. No. 8:11-
cv-1303 (M.D. Fla. June 10, 2011).
120. Jury Verdict, US ex rel. Ruckh v. La Vie Health Care Centers, Inc. No.
8:11-cv-1303 (M.D. Fla. Feb. 15, 2017), ECF No. 430; Order Granting
Judgment as a Matter of Law, US ex rel. Ruckh v. La Vie Health Care Centers,
Inc., No. 8:11-cv-1303 (M.D. Fla. Jan. 11, 2018), ECF No. 468.
121. Angela Ruckh v. Salus Rehabilitation, LLC, et al., No. 18-10500 (11th
Cir. June 25, 2020).
122. Order on Damages, US ex rel. Ruckh v. La Vie Health Care Centers,
Inc. No. 8:11-cv-1303 (M.D. Fla. Feb. 8, 2021), ECF No. 562.
123. The complaint was filed on June 10, 2011, and judgment was issued on
Feb. 8, 2021.
124. Order Staying Proceedings, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Feb. 8, 2021), ECF No. 570.
125. Danielle Brown, Approved: Consulate Health Care to Pay Just $4.5
Million of $258 Million Judgment in Inherited Upcoding Case, MCKNIGHTS
LONG-TERM CARE NEWS (Sept. 30, 2021),
https://www.mcknights.com/news/approved-consulate-health-care-to-pay-just-
4-5-million-of-258-million-judgment-in-inherited-upcoding-case/; Christopher
Rowland, How One of the Largest Nursing Home Chains in Florida Could
Avoid Nearly All of $256 Million Fraud Judgment, WASH. POST (Sept. 14,
2021), https://www .washingtonpost.com/business/2021/09/14/nursing-home-
bankruptcy-fraud/.
126. Verdict, US ex rel. Ruckh v. La Vie Health Care Centers, Inc. No. 8:11-
cv-1303 (M.D. Fla. Feb. 15, 2017), ECF No. 430 (Finding over $80 million in
Medicare fraud, the Medicaid verdict was vacated).
127. About, FORMATION CAPITAL, https://formationcapital.com/about/ (May
19, 2022).
128. Interview with Lori Smetanka, supra note 76.
129. Id.
130. Id.
 CHAPTER 5: MAKING IT ALL WORSE
1. Alex Montero et al., Americans’ Challenges with Health Care Costs, KFF
(July 14, 2022), https://www.kff.org/health-costs/issue-brief/americans-
challenges-with-health-care-costs/.
2. Id.
3. Charlotte Morabito, Why Health-Care Costs Are Rising in the U.S. More
Than Anywhere Else, CNBC (Feb. 28 2022),
https://www.cnbc.com/2022/02/28/why-health-care-costs-are-rising-in-the-us-
more-than-anywhere-else-.html.
4. Nirad Jain et al., Healthcare Private Equity Market 2021: The Year in
Review, BAIN (Mar. 16, 2022), https://www.bain.com/insights/year-in-review-
global-healthcare-private-equity-and-ma-report-2022/.
5. See Erin C. Fuse et al., Private Equity Investment as a Divining Rod for
Market Failure: Policy Responses to Harmful Physician Practice Acquisitions,
BROOKINGS INSTITUTION (Oct. 5, 2021),
https://www.brookings.edu/essay/private-equity-investment-as-a-divining-rod-
for-market-failure-policy-responses-to-harmful-physician-practice-acquisitions/.
6. Sally Tan et al., Trends in Private Equity Acquisition of Dermatology
Practices in the United States, 155 JAMA DERMATOL 1013 (2019).
7. Heather Perlberg, How Private Equity Is Ruining American Health Care,
BLOOMBERG (May 20, 2020), https://www.bloomberg.com/news/features/2020-
05-20/private-equity-is-ruining-health-care-covid-is-making-it-
worse#xj4y7vzkg.
8. Id.
9. Id.
10. Fuse et al., supra note 5.
11. Kara Grant, Is Private Equity a Dangerous Employer?, MEDPAGE TODAY
(Oct. 14, 2021), https://www.medpagetoday.com/special-
reports/exclusives/95022.
12. See, e.g., Dermatologist, Not Private Equity, Group, CHEGG INTERNSHIPS,
https://www .internships.com/posting/bug_39194282087 (“Dermatologist, Not
Private Equity, Group”); Dermatologist, NOT Private Equity, Permanent Group
Position (Physician), WBOY12 (Aug. 4, 2022),
https://jobs.wboy.com/jobs/dermatologist-not-private-equity-permanent-group-
position-physician-naperville-illinois/677322663-2/; Dermatologist—Private
Group, NOT Private Equity—Sunset Beach (Physician), KRQE (Aug. 4, 2022),
https://jobs.krqe .com/jobs/dermatologist-private-group-not-private-equity-
sunset-beach-physician-california/677295888-2/; Houston, TX Dermatology—
NOT Private Equity (Physician), WANE (Aug. 18, 2022),
https://jobs.wane.com/jobs/houston-tx-dermatology-not-private-equity-
physician-texas/688815409-2/.
13. See Alexander Borsa, When Private Equity Firms Invest in Women’s
Health Clinics, Who Benefits?, STAT NEWS (Sept. 14, 2020),
https://www.statnews.com/2020/09/14/private-equity-firms-invest-womens-
health-clinics-who-benefits/ (“The industry has set its sights on women’s health
in part because of its high profitability and the limited regulation of fertility
services”); EILEEN APPELBAUM & ROSEMARY BATT, PRIVATE EQUITY BUYOUTS IN
HEALTHCARE: WHO WINS, WHO LOSES? 52–53 (Mar. 15, 2020),
https://www.ineteconomics .org/uploads/papers/WP_118-Appelbaum-and-Batt-
2-rb-Clean.pdf; Alpesh Patel, Private Equity and Its Emergence in
Orthopaedics, 29 J. AM. ORTHO. SURG. (2021), https://journals
.lww.com/jaaos/Abstract/2021/10150/Private_Equity_and_Its_Emergence_in_Orthopaedics.4
P-4; Fuse et al., supra note 5; Jane M. Zhu et al., Private Equity Acquisitions of
Physician Medical Groups Across Specialties, 2013-2016, JAMA (Feb. 18,
2020), https://jamanetwork.com/journals/jama/fullarticle/2761076?
guestAccessKey =4eb6959c-7cec-43f1-95b3-93a8c6ea6f6b; Justin Doshi et al.,
Healthcare Providers: New Roll-Up Candidates and a New Look for Risk-
Bearing Providers, BAIN (Mar. 16, 2021),
https://www.bain.com/insights/providers-global-healthcare-private-equity-and-
ma-report-2021/; Private Equity Investing in Dental Companies, PRIVATE
EQUITY INFO (Sept. 9, 2021),
https://blog.privateequityinfo.com/index.php/2021/09/09/private-equity-
investing-in-dental-companies/; Jane M. Zhu, Private Equity Investment in
Physician Practices, PENN LDI (Feb. 15, 2020), https://ldi.upenn.edu/our-
work/research-updates/private-equity-investment-in-physician-practices/.
14. Appelbaum & Batt, supra note 13. (Eileen Appelbaum and Rosemary
Batt estimate that private equity firms have bought 2,500 health care clinics and
service. Together, private equity firms bought 2,500 clinics and small health
care services over twenty years and spent over $150 billion to do so.); Fuse et
al., supra note 5 (estimating private equity purchase of 1,283 clinics over eleven
years).
15. BAIN & CO., GLOBAL HEALTHCARE PRIVATE EQUITY A N D M&A REPORT
2022 (2022), https://www.bain.com/insights/topics/global-healthcare-private-
equity-ma-report/.
 16. The Blackstone Group Completes Major Investment in Vanguard Health
Systems, Inc., BLACKSTONE (Sept. 23, 2004),
https://www.blackstone.com/news/press/the-blackstone-group-completes-major-
investment-in-vanguard-health-systems-inc/.
17. Blackstone Buying Majority of Vanguard Health Systems, PHOENIX BUS.
J. (July 26, 2004),
https://www.bizjournals.com/phoenix/stories/2004/07/26/daily14.html.
18. Kevin Dowd, This Day in Buyout History: KKR, Bain Capital Complete
the Biggest LBO Ever, PITCHBOOK (Nov. 17, 2027),
https://pitchbook.com/news/articles/this-day-in-buyout-history-kkr-bain-capital-
complete-the-biggest-lbo-ever.
19. Appelbaum & Batt, supra note 13.
20. Jack O’Brien, Steward Health Care Buys Back Control from Cerberus,
HEALTHLEADERS (June 2, 2020),
https://www.healthleadersmedia.com/finance/steward-health-care-buys-back-
control-cerberus.
21. John Hechinger & Sabrina Willmer, Life and Debt at a Private Equity
Hospital, BLOOMBERG (August 6, 2020),
https://www.bloomberg.com/news/features/2020-08-06/cerberus-backed-
hospitals-face-life-and-debt-as-virus-rages#xj4y7vzkg.
22. Appelbaum & Batt, supra note 13.
23. Regionals: Vanguard Health Systems Acquires Two Hospitals and More
News, MOD. HEALTHC. (Aug. 9, 2010),
https://www.modernhealthcare.com/article/20100809/MAGAZINE/308099981/regionals-
vanguard-health-systems-acquires-two-hospitals-and-more-news (Vanguard
bought two hospitals in 2010); HCA Healthcare, WIKIPEDIA,
https://en.wikipedia.org/wiki/HCA_Healthcare#United_States. In 2017, HCA
made a number of acquisitions. The company had gone public a number of
years earlier, but KKR continued to hold a small stake in it. KKR Rep Leaves
HCA Board, NASHV. POST (May 17, 2016), https://www.nashvillepost.com/kkr-
rep-leaves-hca-board/article_1bd2e76f-584e-5cd5-87ea-9ff7418b4847.html;
Steward Health Care Completes Acquisition of Five South Florida Hospitals
Bringing Physician-Led Care to More Communities in the Region, ST.
ELIZABETH’S MEDICAL CENTER (Aug. 2, 2021), https://www.semc.org/domain-
specific/720191/newsroom/2021-08-02/steward-health-care-completes-
acquisition-five-south-florida-hospitals-bringing (Steward bought five
additional hospitals).
 24. Appelbaum & Batt, supra note 13, at 22–23.
25. Josh Kosman, Bain’s Huge HCA IPO Gain, N.Y. POST (Mar. 11, 2011),
https://nypost.com/2011/03/11/bains-huge-hca-ipo-gain/.
26. Hechinger & Willmer, supra note 21.
27. Id.
28. Id.
29. Id.
30. Id.
31. Id.
32. Envision estimates that about 65 percent of hospitals outsource their
emergency staffing to a third-party company. Envision Healthcare Holdings,
Inc., Form 10-K (Mar. 2, 2015),
https://www.sec.gov/Archives/edgar/data/1578318/000104746915001498/a2223319z10-
k.htm. TeamHealth estimates that it controls about 20 percent of the emergency
department and hospital medicine market. It says that the fragmented market
“represents an attractive opportunity for further consolidation.” TeamHealth,
Ex.-99.1,
https://www.sec.gov/Archives/edgar/data/1082754/000119312517003669/d267388
dex991.htm.
33. Ellie Kincaid, Envision Healthcare Infiltrated America’s ERs. Now It’s
Facing a Backlash, FORBES (May 15, 2018),
https://www.forbes.com/sites/elliekincaid/2018/05/15/envision-healthcare-
infiltrated-americas-ers-now-its-facing-a-backlash/?sh=6853c2c4284f.
34. IPO of Onex’s Emergency Medical Services Priced, CBC NEWS (Dec. 6,
2005), https://www.cbc.ca/news/business/ipo-of-onex-s-emergency-medical-
services-priced-1.539892; Onex Sells U.S. Medical Investment, CBC NEWS
(Feb. 14, 2011), https://www .cbc.ca/news/business/onex-sells-u-s-medical-
investment-1.1102276.
35. Clayton, Dubilier & Rice Completes $3.2 Billion Acquisition of
Emergency Medical Services Corporation, CLAYTON, DUBILIER & RICE (May 25,
2011), https://www.cdr-inc.com/news/press-release/clayton-dubilier-rice-
completes-3.2-billion-acquisition-emergency-medical.
36. Gretchen Morgenson, Doctor Fired from ER Warns About Effect of For-
Profit Firms on U.S. Health Care, NBC NEWS (Mar. 28, 2022),
https://www.nbcnews.com/health/health-care/doctor-fired-er-warns-effect-
profit-firms-us-health-care-rcna19975.
 37. Aisha Al-Muslim, KKR to Acquire Envision Healthcare for $5.5 Billion,
WALL ST. J. (June 11, 2018), https://www.wsj.com/articles/kkr-to-acquire-
envision-healthcare-for-5-5-billion-1528718957.
38. Brovont vs. KS-I Medical Services, P.A. et al., 622 S.W.3d 671 (Mo. Ct.
App. Oct. 13, 2020).
39. Id.
40. Id.
41. Id.
42. Id.
43. Id.
44. Id.
45. Id.
46. William Sullivan, $26M Judgment Against EmCare in Wrongful
Termination Lawsuit, EMERGENCY PHYSICIANS MONTHLY (Aug. 2, 2021),
https://epmonthly.com/article/26m-judgment-against-emcare-in-wrongful-
termination-lawsuit/.
47. Dan Margolies, Appeals Court Restores Most of $29M Verdict to ER
Doctor Who Complained of Staffing Shortages, KCUR 89.3 (Oct. 13, 2020),
https://www.kcur.org/health/2020-10-13/appeals-court-restores-most-of-29m-
verdict-to-er-doctor-who-complained-of-staffing-shortages.
48. Ming Lin, I just sent this letter to our cmo, FACEBOOK (Mar. 15,
2020),https://m.facebook.com/story.php?
story_fbid=10216583796603708&id=1122938346.
49. Id.
50. Complaint ¶ 3.37, Lin v. Peacehealth et al., No. 20-2-00700 (Wash. Sup.
Ct. May 28, 2020).
51. Gretchen Morgenson & Emmanuelle Saliba, Private Equity Firms Now
Control Many Hospitals, ERs and Nursing Homes. Is It Good for Health Care?,
NBC NEWS (May 13, 2020), https://www.nbcnews.com/health/health-
care/private-equity-firms-now-control-many-hospitals-ers-nursing-homes-
n1203161; Docket, Lin v. Peacehealth et al., No. 20-2-00700 (Wash. Sup. Ct.
May 28, 2020).
52. Isaac Arnsdorf, Overwhelmed Hospitals Face a New Crisis: Staffing
Firms Are Cutting Their Doctors’ Hours and Pay, PROPUBLICA (Apr. 3, 2020),
https://www.propublica.org/article/overwhelmed-hospitals-face-a-new-crisis-
staffing-firms-are-cutting-their-doctors-hours-and-pay.
53. Id.
 54. Edited Transcript, Q4 2018 KKR & Co Inc Earnings Call, KKR 10 (Feb.
1, 2019) (KKR’s head of investor relations, Craig Larson, said that “Envision is
an investment where we’re going to be focused together with management on a
series of operational improvement initiatives.”); Kiran Stacey, US Doctors Fear
Patients at Risk as Cost Cuts Follow Private Equity Deals, FIN. TIMES (Nov. 11,
2021), https://www.ft.com/content/9eac6649-2df5-4663-aecf-632885462288
(Envision subsequently put doctors on new salary plans, which it estimated
would lower pay by 15% and link pay to doctors’ ability to bill patients. Also
increasingly relied on the use of nurses.); TeamHealth, Ex.-99.1,
https://www.sec.gov/Archives/edgar/data/1082754/000119312517003669/d267388dex991
.htm. (According to SEC filings, Blackstone decided to reinvest in TeamHealth
in 2016 (it previously owned the company in 2005) because of “near-term cost
reduction opportunities.”)
55. Isaac Arnsdorf, How Rich Investors, Not Doctors, Profit from Marking
Up ER Bills, PROPUBLICA (June 12, 2020),
https://www.propublica.org/article/how-rich-investors-not-doctors-profit-from-
marking-up-er-bills.
56. Interview with Robert McNamara, chief medical officer, Temple
University Physicians (Jan. 7, 2022).
57. Id.
58. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals (The offending conduct occurred
between 2008 and 2012. The private equity firm Onex bought EmCare in 2004);
EmCare, WIKIPEDIA, https://en.wikipedia.org/wiki/EmCare; IPO of Onex’s
Emergency Medical Services priced, CBC NEWS (Dec. 6, 2005), https://www
.cbc.ca/news/business/ipo-of-onex-s-emergency-medical-services-priced-
1.539892; Onex Sells U.S. Medical Investment, CBC NEWS (Feb. 14, 2011),
https://www.cbc.ca/news/business/onex-sells-u-s-medical-investment-
1.1102276.
59. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals.
60. See Robert W. Derlet et al., Corporate and Hospital Profiteering in
Emergency Medicine: Problems of the Past, Present, and Future, 50 J. EMERG.
MED. 902, 905 (2016) (“Hospital stays of any length of time increase the risk of
infection and medical mishaps.”).
61. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals.
62. Julie Creswell & Reed Abelson, Hospital Chain Said to Scheme to
Inflate Bills, N.Y. TIMES (Jan. 23, 2014),
https://www.nytimes.com/2014/01/24/business/hospital-chain-said-to-scheme-
to-inflate-bills.html
63. Jeff Lagasse, TeamHealth Wins Lawsuit Against UnitedHealth,
HEALTHCARE FIN. (Nov. 30, 2021),
https://www.healthcarefinancenews.com/news/teamhealth-wins-lawsuit-against-
unitedhealth.
64. Complaint ¶ 9, United Healthcare Services, Inc. et al., v. Team Health
Holdings, Inc. et al., No. 3:21-cv-00364 (E.D. Tenn. Dec. 27, 2021) ECF No. 1.
TeamHealth largely denied United’s allegations. Answer, United Healthcare
Services, Inc. et al., v. Team Health Holdings, Inc. et al., No. 3:21-cv-00364
(E.D. Tenn. June 9, 2022) ECF No. 49.
65. Paige Minemyer, UnitedHealth Lawsuit Claims TeamHealth Upcoded
Claims for $100M in Fraud, FIERCE HEALTHCARE (Oct. 28, 2021),
https://www.fiercehealthcare.com/payer/unitedhealth-lawsuit-claims-
teamhealth-upcoded-claims-for-100m-fraud.
66. Scheduling Order, United Healthcare Services, Inc. et al., v. Team Health
Holdings, Inc. et al., No. 3:21-cv-00364 (E.D. Tenn. Feb. 16, 2022) ECF No.
43.
67. Yeganeh Torbati, How Private Equity Extracted Hundreds of Millions of
Dollars from a Firm Accused of Medicare Fraud, WASH. POST (Mar. 1, 2021),
https://www.washingtonpost .com/business/2021/03/01/blackstone-healthcare-
private-equity-dividend-apria/.
68. Acting Manhattan U.S. Attorney Announces $40.5 Million Settlement
with Durable Medical Equipment Provider Apria Healthcare for Fraudulent
Billing Practices, DEPARTMENT OF JUSTICE (Dec. 21, 2020),
https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-attorney-announces-
405-million-settlement-durable-medical-equipment. In a statement to the
Washington Post, Apria said that “[w]e fully cooperated throughout the review
and are pleased to have resolved this civil matter.… As always, our patients are
our top priority and we remain committed to providing outstanding care and
exceptional service.” Torbati, supra note 67.
69. Matthew Goldstein, Private Equity Firms Are Piling on Debt to Pay
Dividends, N.Y. TIMES (Feb. 19, 2021),
https://www.nytimes.com/2021/02/19/business/private-equity-dividend-
loans.html.
70. Torbati, supra note 67.
71. Id. (Nominally the Trump administration did this in response to the
pandemic, but Apria Healthcare had been lobbying on the issue for years.)
72. Torbati, supra note 67.
73. Jacob T. Elberg, Health Care Fraud Means Never Having to Say You’re
Sorry, PROGRAM ON CORPORATE COMPLIANCE AND ENFORCEMENT (Apr. 28,
2021), https://wp.nyu.edu/compliance_enforcement/2021/04/28/health-care-
fraud-means-never-having-to-say-youre-sorry/.
74. Issue Brief: Corporate Practice of Medicine, AMERICAN MEDICAL
ASSOCIATION (2015), https://www.ama-assn.org/media/7661/download.
75. Janice Davis & Banee Pachuca, Private Equity and Physician Practice
Acquisitions: Key Legal Considerations, MORGAN LEWIS 9 (Apr. 13, 2021),
https://www.morganlewis .com/-
/media/files/publication/presentation/webinar/2021/private-equity-and-
physician-practice-acquisitions-key-legal-considerations.pdf; Rosemary Batt &
Eileen Appelbaum, Private Equity Tries to Protect Another Profit Center, AM.
PROSPECT (Sept. 9, 2019), https://prospect.org/power/private-equity-tries-
protect-another-profit-center/.
76. AHealthcareZ, Private Equity Owning Doctor Practices… Corporate
Practice of Medicine Laws Explained, YOUTUBE,
https://www.youtube.com/watch?v=2epmk4_-kUI.
77. Redacted First Amended Complaint at 8, American Academy of
Emergency Medicine Physician Group, Inc. v. Envision Healthcare Corporation
et al., No. 3:22-cv-421 (N.D. Cal. Feb. 18, 2022), ECF No. 18-2.
78. Complaint at ¶ 26, American Academy of Emergency Medicine Physician
Group, Inc. v. Envision Healthcare Corporation et al., No. 3:22-cv-421 (Jan. 21,
2022), ECF No. 1; Redacted First Amended Complaint at 32, American
Academy of Emergency Medicine Physician Group, Inc. v. Envision Healthcare
Corporation et al., No. 3:22cv421 (N.D. Cal. Feb. 18, 2022), ECF No. 18-2;
Gretchen Morgenson, Doctor Fired from ER Warns About Effect of For-Profit
Firms on U.S. Health Care, NBC NEWS (Mar. 28, 2022),
https://www.nbcnews.com/health/health-care/doctor-fired-er-warns-effect-
profit-firms-us-health-care-rcna19975 (describing a figurehead doctor at
EmCare facilities in Missouri).
79. Complaint at ¶ 26, American Academy of Emergency Medicine Physician
Group, Inc. v. Envision Healthcare Corporation et al., No. 3:22-cv-421 (Jan. 21,
2022), ECF No. 1.
80. Id. at ¶ 38.
81. Redacted First Amended Complaint at ¶ 45, American Academy of
Emergency Medicine Physician Group, Inc. v. Envision Healthcare Corporation
et al., No. 3:22-cv-421 (N.D. Cal. Feb. 18, 2022), ECF No. 18-2.
82. Id. at ¶ 38.
83. AAEM-PG Files Suit Against Envision Healthcare Alleging the Illegal
Corporate Practice of Medicine, AMERICAN ACADEMY OF EMERGENCY MEDICINE
(Dec. 21, 2021), https://www.aaemphysiciangroup.com/news-and-
updates/aaem-pg-files-suit-envision-healthcare-alleging-the-illegal-corporate-
practice-of-medicine.
84. Docket, American Academy of Emergency Medicine Physician Group,
Inc. v. Envision Healthcare Corporation et al., No. 3:22-cv-421 (N.D. Cal. Jan.
1, 2022) (as of Oct. 6, 2022, the parties were litigating over a motion to
dismiss).
85. Cory Capps, Physician Practice Consolidation Driven by Small
Acquisitions, so Antitrust Agencies Have Few Tools to Intervene, 36 HEALTH
AFFAIRS (Sept. 2017), https://www
.healthaffairs.org/doi/full/10.1377/hlthaff.2017.0054.
86. Id.
87. FTC Requires Community Health Systems, Inc. to Divest Two Hospitals
as a Condition of Acquiring Rival Hospital Operator, FTC (Jan. 22, 2014),
https://www.ftc.gov/news-events/news/press-releases/2014/01/ftc-requires-
community-health-systems-inc-divest-two-hospitals-condition-acquiring-rival-
hospital.
88. Melanie Evans, Steward Health Care to Buy Iasis Healthcare for $1.9
Billion, WALL ST. J. (May 19, 2017), https://www.wsj.com/articles/steward-
health-care-to-buy-iasis-healthcare-for-1-9-billion-1495199135.
89. Vince Gallaro, FTC Won’t Block Vanguard-DMC Deal, MODERN
HEALTHCARE (Sept. 8, 2010),
https://www.modernhealthcare.com/article/20100908/NEWS/309089983/ftc-
won-t-block-vanguard-dmc-deal; Melanie Evans, Steward Health Care to Buy
Iasis Healthcare for $1.9 Billion, WALL ST. J. (May 19, 2017),
https://www.wsj.com/articles/steward-health-care-to-buy-iasis-healthcare-for-1-
9-billion-1495199135.
90. Eileen Applebaum, How Private Equity Makes You Sicker, AM. PROSPECT
(Oct. 7, 2019), https://prospect.org/health/how-private-equity-makes-you-
sicker/; The Courage to Learn, AMERICAN ECONOMIC LIBERTIES PROJECT 9
(2021), https://www.economicliberties.us/wp-content/uploads/2021/01/Courage-
to-Learn-Final.pdf.
91. Northern Pacific Railroad Co. v. U.S., 356 U.S. 1, 4 (1958).
92. William Howard Taft, WIKIPEDIA,
https://en.wikipedia.org/wiki/William_Howard_Taft; Peri Arnold, William Taft:
Domestic Affairs, https://millercenter.org/president/taft/domestic-affairs.
93. Einer Elhauge, Horizontal Shareholding, 129 HARV. L. REV. 1267, 1286
(2016).
94. Id. at 1287 (citing Joseph Alsop & Robert Kintner, Trust Buster: The
Folklore of Thurman Arnold, SATURDAY EVENING POST, Aug. 12, 1939, at 5, 7).
95. Tim Wu, THE CURSE OF BIGNESS 107 (2018).
96. Christopher R. Leslie, Antitrust Made (Too) Simple, 79 ANTITRUST L. J.
917 (2014), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2589598.
97. Modern Antitrust Enforcement, THURMAN ARNOLD PROJECT,
https://som.yale.edu/centers/thurman-arnold-project-at-yale/modern-antitrust-
enforcement.
98. Fred Barbash, Big Corporations Bankroll Seminars for U.S. Judges,
WASH. POST (Jan. 20, 1980),
https://www.washingtonpost.com/archive/politics/1980/01/20/big-corporations-
bankroll-seminars-for-us-judges/8385bf9f-1eb7-451a-8f3d-bdabb4 648452/.
99. William E. Kovacic, The Antitrust Paradox Revisited: Robert Bork and
the Transformation of Modern Antitrust Policy, 36 WAYNE L. REV. 1413, 1434
n.97 (1990).
100. Henry N. Butler, The Manne Programs in Economics for Federal
Judges, 50 CASE WESTERN L. REV. 351, 352 (1999).
101. Barbash, supra note 98.
102. Mason Judicial Education Program, ANTONIN SCALIA LAW SCHOOL
LAW & ECONOMICS CENTER, https://masonlec.org/divisions/mason-judicial-
education-program/.
103. Kovacic, supra note 99.
 104. Reiter v. Sonotone Corp., 442 U.S. 330 (1979).
105. Matsushita v. Zenith Radio Corp., 475 U.S. 574 (1986).
106. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209
(1993).
107. Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S.
398, 407 (2004).
108. In 2001, the Antitrust Division of the Justice Department had a budget
of approximately $121 million; in 2021, $185 million. Appropriation Figures
for the Antitrust Division, DEPARTMENT OF JUSTICE (Feb. 2020),
https://www.justice.gov/atr/appropriation-figures-antitrust-division. Accounting
for inflation, funding for the office actually shrank at a time when merger and
acquisition activity exploded. Similarly, in 2020, the FTC actually had fewer
than 1,200 people working for it, 600 fewer than it had in 1979. Appropriation
and Full-Time Equivalent (FTE) History, FTC, https://www.ftc.gov/about-
ftc/bureaus-offices/office-executive-director/financial-management-office/ftc-
appropriation (last visited Oct. 7, 2022).
109. 1968 Merger Guidelines, DEPARTMENT O F JUSTICE (Aug. 4, 2015),
https://www .justice.gov/archives/atr/1968-merger-guidelines.
110. Id.
111. Id.
112. Modern Antitrust Enforcement, THURMAN ARNOLD PROJECT,
https://som.yale .edu/centers/thurman-arnold-project-at-yale/modern-antitrust-
enforcement.
113. Horizontal Merger Guidelines, DEPARTMENT OF JUSTICE AND FTC (Aug.
19, 2010), https://www.justice.gov/atr/horizontal-merger-guidelines-08192010.
114. Robert H. Lande & Sandeep Vaheesan, Preventing the Curse of Bigness
Through Conglomerate Merger Legislation, 52 ARIZONA STATE L. J. 75 (2020).
115. Summary of Antitrust Division Health Care Cases (Since August 25,
1983), DEPARTMENT O F JUSTICE,
https://www.justice.gov/atr/page/file/1077686/download.
116. Domestic market share of leading U.S. airlines from January to
December 2021, STATISTA (Mar. 2022),
https://www.statista.com/statistics/250577/domestic-market-share-of-leading-us-
airlines/.
117. Wireless subscriptions market share by carrier in the U.S. from 1st
quarter 2011 to 2nd quarter 2022, STATISTA (July 2022),
https://www.statista.com/statistics/199359/market-share-of-wireless-carriers-in-
the-us-by-subscriptions/.
118. Corey Stern, CVS and Walgreens Are Completely Dominating the US
Drugstore Industry, BUSINESS INSIDER (July 29, 2015),
https://www.businessinsider.com/cvs-and-walgreens-us-drugstore-market-share-
2015-7.
119. Harris Meyer, Biden’s FTC Has Blocked 4 Hospital Mergers and Is
Poised to Thwart More Consolidation Attempts, KAISER HEALTH NEWS (July 17,
2022), https://khn.org/news/article/biden-ftc-block-hospital-mergers-antitrust/.
120. David McCabe, Justice Dept. Sues to Block $13 Billion Deal by
UnitedHealth Group, N.Y. TIMES (Feb. 24, 2022),
https://www.nytimes.com/2022/02/24/business/doj-antitrust-lawsuit-
unitedhealth.html.

CHAPTER 6: THIS TIME WILL BE DIFFERENT

1. Andrew F. Tuch, The Remaking of Wall Street, 7 HARV. BUS. L. REV. 315,
316–317, 333–334 (2017).
2. Id. at 319–320.
3. Id. at 366–367 (“For example, they [private equity] recruited proprietary
trading teams from BHCs that downsized in anticipation of the Volcker Rule’s
ban on engaging in proprietary trading.”).
4. Paul J. Davies, Private-Debt Funds Withstand Covid-19, but Bigger Test
Comes Next Year, WALL ST. J. (Dec. 23, 2020),
https://www.wsj.com/articles/private-debt-funds-withstand-covid-19-but-bigger-
test-comes-next-year-11608732001.
5. Report to Congress on Regulation A/Regulation D Performance, SEC 3
(Aug. 2020), https://www.sec.gov/files/report-congress-regulation-a-d.pdf.
6. Michael Wursthorn & Gregory Zuckerman, Fewer Listed Companies: Is
That Good or Bad for Stock Markets?, WALL ST. J. (Jan. 4, 2018),
https://www.wsj.com/articles/fewer-listed-companies-is-that-good-or-bad-for-
stock-markets-1515100040?mod=article_inline.
7. Miriam Gottfried, Sixth Street Partners Amasses One of the Largest
Private-Capital Funds, WALL ST. J. (Aug. 16, 2020),
https://www.wsj.com/articles/sixth-street-partners-amasses-one-of-the-largest-
private-capital-funds-11597575600.
 8. Debora Vrana, Ares Management to Take New Fund Public, L.A. TIMES
(Apr. 22, 2004), https://www.latimes.com/archives/la-xpm-2004-apr-22-fi-
ares22-story.html.
9. Investor Day, ARES 17 (Aug. 12, 2021),
https://s1.q4cdn.com/524527723/files/doc_downloads/2021/08/Ares-Investor-
Day-8.12.21-vF.pdf.
10. Arleen Jacobins, Blackstone AUM Skyrockets 42% in Year to $880.9
Billion, PENSION & INVESTMENTS (Jan. 27, 2022),
https://www.pionline.com/alternatives/blackstone-aum-skyrockets-42-year-
8809-billion.
11. Growth of Private Credit Has Systemic Implications, MOODY’S (Nov. 3,
2021), https://www.moodys.com/web/en/us/about/insights/podcasts/moodys-
talks-focus-on-finance/growth-of-private-credit-has-systemic-implications.html.
12. Id.
13. Daniel Rasmussen & Greg Obenshain, High-Yield Was Oxy. Private
Credit Is Fentanyl, INSTITUTIONAL INVESTOR (Jan. 28, 2020),
https://www.institutionalinvestor .com/article/b1k369v2lg69qt/High-Yield-Was-
Oxy-Private-Credit-Is-Fentanyl.
14. Interview with Dan Rasmussen, founder, Verdad (Dec. 8, 2021).
15. Private Credit’s Rapid Growth: A Secular Trend, BLACKSTONE (Apr.
2022), https://www.bcred.com/wp-content/uploads/sites/11/2020/10/Private-
Credits-Rapid-Growth_A-Secular-Trend.pdf?v=1649296149.
16. Elisabeth de Fontenay, The Deregulation of Private Capital and the
Decline of the Public Company, 68 HASTINGS L. J. 445, 467–468 (2017).
17. Id. at 467–468.
18. Id. at 468.
19. National Securities Markets Improvement Act of 1996, H.R. 3005, 104th
Cong. (1996).
20. de Fontenay, supra note 16, at 445, 468–469.
21. Jumpstart Our Business Startups, H.R. 3606, 112th Cong. (2011).
22. Critics argue that it was actually the overregulation of the stock market,
rather than the deregulation of the private credit market, that led to the fall in
public companies. But this tells, at best, only part of the story, given that the
number of public companies started falling years before then. Why Are There So
Few Public Companies in the U.S.?, NBER (Sept. 2015),
https://www.nber.org/digest/sep15/why-are-there-so-few-public-companies-us.
And even if overregulation burdened public companies, borrowers would have
had no place to go without the deregulation around syndication and solicitation
in the private credit markets.
23. 2018 Blackstone Investor Day, BLACKSTONE 5 (Sept. 21, 2018),
https://www.blackstone .com/wp-content/uploads/sites/2/2018/10/2018-
blackstone-investor-day-conference_pdfdownload_2.pdf.
24. Blackstone Life Sciences (BXLS), BLACKSTONE,
https://www.blackstone.com/our-businesses/life-sciences/.
25. Tuch, supra note 1, at 315, 343; Shawn Tully, How Blackstone Became
the World’s Biggest Corporate Landlord, FORBES (Feb. 17, 2020),
https://fortune.com/2020/02/17/blackstone-commercial-real-estate-business-
brep-breit/.
26. See, e.g., Investor Day, KKR & CO. INC. 16 (Apr. 13, 2021),
https://ir.kkr.com/app/uploads/2021/05/April-2021-Investor-Day.pdf (KKR lists
private equity as just one of its businesses, which include real estate,
infrastructure, credit, and hedge funds); Deutsche Bank Global Financial
Services Conference, CARLYLE 3 (June 2022), https://ir.carlyle .com/static-
files/84a996cd-9328-4772-9914-70af12a4b0df (Carlyle’s business is organized
around private equity, credit, and “investment solutions”); Investor Presentation,
APOLLO GLOBAL MANAGEMENT 3 (2020) (Apollo describes four groups of assets
under management: institutional, retail, capital markets, and retirement
services).
27. Apollo Closes Second Dedicated Infrastructure Fund with More Than
$2.5 Billion in Capital Commitments, APOLLO GLOBAL MANAGEMENT (Jan. 6,
2022), https://www.apollo .com/media/press-releases/2022/01-06-2022-
130444186.
28. Health Care Growth, KKR, https://www.kkr.com/businesses/health-care-
growth.
29. Id.
30. Davies, supra note 4. See, e.g., Jeanine Prezioso, Blackstone Eyes More
Funding for Prop Trading, REUTERS (Sept. 28, 2010),
https://www.reuters.com/article/us-blackstone-creditsuisse/blackstone-eyes-
more-funding-for-prop-trading-idUSTRE68R3YH 20100928; Steve Eder &
Megan Davies, Goldman Proprietary Traders Jump to KKR, REUTERS (Oct. 21,
2010), https://www.reuters.com/article/us-kkr-goldman/goldman-proprietary-
traders-jump-to-kkr-idUSTRE69K3A020101021.
31. Tuch, supra note 1, at 315, 344.
 32. See, e.g., The Carlyle Group Completes Acquisition of Diversified Global
Asset Management, CARLYLE GROUP (Feb. 4, 2014),
https://www.carlyle.com/media-room/news-release-archive/carlyle-group-
completes-acquisition-diversified-global-asset (Carlyle describes itself as an
“alternative asset manager”); Ares Management Corporation, ARES,
https://www.aresmgmt.com/ (Ares describes itself as an “alternative asset
manager”).
33. Tuch, supra note 1, at 315, 337–349.
34. Id. at 341.
35. Id. at 349.
36. William Alden, A Mad Scramble for Young Bankers, N.Y. TIMES (July 5,
2014), https://www.nytimes.com/2014/07/06/business/wall-street-banks-and-
private-equity-firms-compete-for-young-talent.html (Private equity firms pay
“around $300,000 a year, including salary and bonus, roughly double what a
second-year banker might earn at Goldman.”).
37. Tomi Kilgore, Goldman Sachs CEO David Solomon Total Compensation
Slipped 3% to Below $24 Million in 2020, MKT. WATCH (Mar. 19, 2021),
https://www.marketwatch.com/story/goldman-sachs-ceo-david-solomon-total-
compensation-slipped-3-to-below-24-million-in-2020-2021-03-19.
38. Blackstone (BX) CEO Receives 20% Hike in 2020 Compensation,
YAHOO!, https://www.yahoo.com/now/blackstone-bx-ceo-receives-20-
165704021.html (“Blackstone’s president, Jonathan Gray received a total pay
package of $216.1 million. This consisted of $123.2 million in compensation
and $92.8 million in dividends.”).
39. Mark Vandevelde, How Private Equity Came to Resemble the Sprawling
Empires It Once Broke Up, FIN. TIMES (Oct. 15, 2021),
https://www.ft.com/content/2c56a7da-6435-469c-90d8-28e966f20379.9.
40. The CEOs of the largest full-service investment banks are Jamie Dimon
(JP Morgan Chase), David Solomon (Goldman Sachs), Brian Moynihan (BofA
Securities), Jamie Gorman (Morgan Stanley), and Jane Fraser (Citigroup). Jamie
Dimon is worth an estimated $1.9 billion. Jamie Dimon, FORBES,
https://www.forbes.com/profile/jamie-dimon/?sh=6c4e32135063. None of the
rest appear on Forbes’s list of billionaires.
41. Davies, supra note 4.
42. KKR & Co. Inc., Form 425 (June 1, 2009), https://ir.kkr.com/sec-filings-
annual-letters/sec-filings/?attchment=1&secFilingId=38ea3895-0b6e-47dd-
8a6c-f88e8b9c40 b6&format=convpdf.
 43. Davies, supra note 4.
44. FACTBOX-Blackstone IPO Reveals Firm’s Financials, REUTERS (Mar.
22, 2007), https://www.reuters.com/article/blackstone-ipo-stats/factbox-
blackstone-ipo-reveals-firms-financials-idUSN2239653520070322.
45. BLACKSTONE 2020 LETTER 1 (on file); APOLLO INVESTOR DAY
PRESENTATION 23 (2020) (on file); Apollo Aims to Double Its Asset Under
Management to $1 Trillion by 2026, REUTERS (Oct. 19, 2021),
https://www.reuters.com/business/finance/apollo-aims-double-its-asset-under-
management-1-trillion-by-2026-2021-10-19/.
46. Unless stated otherwise, I refer to life insurance and annuity companies
interchangeably.
47. Miriam Gottfried, Carlyle Signs New Advisory Deal with Fortitude Re,
WALL ST. J. (Mar. 31, 2022), https://www.wsj.com/articles/carlyle-signs-new-
advisory-deal-with-fortitude-re-11648720800.
48. Katherine Chiglinsky & Heather Perlberg, Blackstone to Buy an Allstate
Life Insurance Business for $2.8 Billion, BLOOMBERG (Jan. 27, 2021),
https://www.bloomberg .com/news/articles/2021-01-26/blackstone-to-buy-an-
allstate-life-business-for-2-8-billion#xj4y7vzkg.
49. KKR Closes Acquisition of Global Atlantic Financial Group Limited,
GLOBAL ATLANTIC FINANCIAL GROUP (Feb. 1, 2021),
https://www.globalatlantic.com/news/KKR-closes-acquisition-of-Global-
Atlantic-Financial-Group-Limited.
50. Apollo Completes Merger with Athene and Finalizes Key Governance
Enhancements, APOLLO (Jan. 3, 2022), https://www.apollo.com/media/press-
releases/2022/01-03-2022-120051006.
51. Alwyn Scott, Analysis: Chasing Yield, U.S. Private Equity Firms Nudge
Up Risk on Insurers, REUTERS (June 1, 2021),
https://www.reuters.com/business/finance/chasing-yield-us-private-equity-firms-
nudge-up-risk-insurers-2021-06-01/.
52. Alexander R. Cochran et al., Insurance Investments: Key Considerations
for Investors in the United States, Europe and Asia, DEBEVOISE & PLIMPTON
(May 2021),
https://www.debevoise.com/insights/publications/2021/05/insurance-
investments-key-considerations-for.
53. Michael J. Mishak, Drinks, Junkets and Jobs: How the Insurance
Industry Courts State Commissioners, WASH. POST (Oct. 2, 2016),
https://www.washingtonpost.com/investigations/drinks-junkets-and-jobs-how-
the-insurance-industry-courts-state-commissioners/2016/10/02/1069e7a0-6add-
11e6-99bf-f0cf3a6449a6_story.html.
54. Id.
55. See, e.g., Alwyn Scott & David French, U.S. Insurance Asset Sales
Attract New Private Equity Players, Strategies, REUTERS (Feb. 8, 2021),
https://www.reuters.com/article/us-insurance-m-a/u-s-insurance-asset-sales-
attract-new-private-equity-players-strategies-idUSKBN2A811G (Apollo
charges Athene for identifying higher yielding assets).
56. Greg Iacurci, Private Equity Is Buying Up Annuity and Life Insurance
Policies. That May Be Bad for Consumers, CNBC (Apr. 24 2021),
https://www.cnbc.com/2021/04/24/private-equity-is-buying-up-annuity-and-life-
insurance-policies.html.
57. Kerry Pechter, Bermuda’s Role in a Changing Annuity Industry,
RETIREMENT INCOME J. (Sept. 10, 2021),
https://retirementincomejournal.com/article/bermudas-role-in-a-changing-
annuity-industry/.
58. Id.; Leslie Scism, Private-Equity Firms Put Retirees’ Annuities in Higher
Risks but Also More Cash, WALL ST. J. (July 1, 2021),
https://www.wsj.com/articles/private-equity-firms-put-retirees-annuities-in-
higher-risks-but-also-more-cash-11625130001.
59. Zachary R. Mider, Apollo-to-Goldman Embracing Insurers Spurs State
Concerns, BLOOMBERG (Apr. 22, 2013),
https://www.bloomberg.com/news/articles/2013-04-22/apollo-to-goldman-
embracing-insurers-spurs-state-concerns#xj4y7vzkg.
60. Id.
61. Miriam Gottfried, A $433 Billion Wall Street Giant Has a Reputation
Problem. It’s Josh Harris’s Job to Fix It., WALL ST. J. (Oct. 31, 2020),
https://www.wsj.com/articles/a-433-billion-wall-street-giant-has-a-reputation-
problem-its-josh-harriss-job-to-fix-it-11604116827; Sabrina Willmer et al., A
Brawl Between Billionaire Founders at Apollo Sidelines One of Its Own,
BLOOMBERG (April 30, 2021), https://www.bloomberg.com/news/articles/2021-
04-30/apollo-apo-billionaire-founders-brawl-shunting-aside-josh-harris;
Matthew Goldstein, Leon Black Leaves Apollo Sooner Than Expected, N.Y.
TIMES (Mar. 26, 2021), https://www .nytimes.com/2021/03/22/business/leon-
black-apollo.html.
62. Miriam Gottfried, A $433 Billion Wall Street Giant Has a Reputation
Problem. It’s Josh Harris’s Job to Fix It., WALL ST. J. (Oct. 31, 2020),
https://www.wsj.com/articles/a-433-billion-wall-street-giant-has-a-reputation-
problem-its-josh-harriss-job-to-fix-it-11604116827.
63. Daniel Davies, Morning Coffee: 28 Year-Olds Working 20 Hour Days for
$450k Salaries Decide to Quit. The Biggest Egomaniacs in Banking,
EFINANCIALCAREERS (Mar. 18, 2021),
https://www.efinancialcareers.com/news/2021/03/working-hours-private-equity.
64. Willmer et al., supra note 61.
65. Matthew Goldstein & Steve Eder, What Jeffrey Epstein Did to Earn $158
Million from Leon Black, NEW YORK TIMES (Jan. 26, 2021),
https://www.nytimes.com/2021/01/26/business/jeffrey-epstein-leon-black-
apollo.html; Sabrina Willmer & Miles Weiss, Apollo Co-Founder Harris Steps
Back After Missing Out on CEO, BLOOMBERG (May 20, 2021),
https://www.bloomberg.com/news/articles/2021-05-20/apollo-co-founder-harris-
stepping-back-after-missing-out-on-ceo#xj4y7vzkg.
66. Matthew Goldstein et al., The Billionaire Who Stood by Jeffrey Epstein,
N.Y. TIMES (Oct. 13, 2020),
https://www.nytimes.com/2020/10/12/business/leon-black-jeffrey-epstein.html;
Memorandum from Dechert LLP to Apollo Conflicts Committee (Jan. 22,
2021),
https://www.sec.gov/Archives/edgar/data/1411494/000119312521016405/d118102dex991.htm
67. @GuzelGanieva3, TWITTER, https://twitter.com/guzelganieva3?lang=en;
Reuters, Woman’s Lawsuit Accuses Leon Black of Defamation, Violent Behavior,
CNBC (June 2, 2021), https://www.cnbc.com/2021/06/02/womans-lawsuit-
accuses-leon-black-of-defamation-violent-behavior.html.
68. Miriam Gottfried & Leslie Scism, Apollo Reabsorbs Athene in All-Stock
Deal That Values Firm at $11 Billion, WALL ST. J. (Mar. 8, 2021),
https://www.wsj.com/articles/apollo-strikes-11-billion-all-stock-merger-with-
athene-11615211824.
69. Athene Holding Ltd., Athene Announces $4.9 Billion Pension Risk
Transfer Transaction with Lockheed Martin, CISION (Aug. 3, 2021),
https://www.prnewswire.com/news-releases/athene-announces-4-9-billion-
pension-risk-transfer-transaction-with-lockheed-martin-301347561.html.
70. Athene Holding Ltd., Athene Completes Significant Pension Risk
Transfer Transaction with JCPenney, CISION (Apr. 1, 2021),
https://www.prnewswire.com/news-releases/athene-completes-significant-
pension-risk-transfer-transaction-with-jcpenney-301261013 .html.
71. Gottfried & Scism, supra note 68.
 72. Id.; Paul J. Davies, Apollo Wants to Be a Bit Like Buffett, But It’s
Complicated, WASH. POST (Nov. 1, 2021),
https://www.washingtonpost.com/business/apollo-wants-to-be-a-bit-like-buffett-
but-its-complicated/2021/10/29/42677550-387e-11ec-9662-
399cfa75efee_story.html.
73. Tom Gober, http://tomgober.com/.
74. Email with Tom Gober, forensic accountant (Mar. 8, 2022).
75. Interview with Tom Gober, forensic accountant (Feb. 17, 2022).
76. Email with Tom Gober, supra note 74.
77. Guaranty Funds Safeguard Consumers When Insurance Companies Fail,
NATIONAL CONFERENCE OF INSURANCE GUARANTY FUNDS (Oct. 10, 2018),
https://www.ncigf.org/about-us/guaranty-funds-safeguard-consumers-when-
insurance-companies-fail/.
78. John Pitlosh, Are You Protected if Your Insurance Company Goes Belly-
Up?, INVESTOPEDIA (Aug. 31, 2021),
https://www.investopedia.com/articles/insurance/09/insurance-company-
guarantee-fund.asp.
79. See Miriam Gottfried, Blackstone, Other Large Private-Equity Firms
Turn Attention to Vast Retail Market, WALL ST. J. (June 7, 2022),
https://www.wsj.com/articles/blackstone-other-large-private-equity-firms-turn-
attention-to-vast-retail-market-11654603201.
80. Andrew Ackerman, Labor Nominee Scalia Earned More Than $6 Million
as Corporate Law Partner, WALL ST. J. (Aug. 30, 2019),
https://www.wsj.com/articles/labor-nominee-scalia-earned-more-than-6-million-
as-corporate-law-partner-11567179475.
81. Noam Scheiber, Trump’s Labor Pick Has Defended Corporations, and
One Killer Whale, N.Y. TIMES (July 19, 2019),
https://www.nytimes.com/2019/07/19/business/economy/eugene-scalia-labor-
lawsuits.html.
82. Ackerman, supra note 80.
83. Eyal Press, Trump’s Labor Secretary Is a Wrecking Ball Aimed at
Workers, NEW YORKER (Oct. 19, 2020),
https://www.newyorker.com/magazine/2020/10/26/trumps-labor-secretary-is-a-
wrecking-ball-aimed-at-workers (“This fall, however, OSHA informed
employers that they no longer have to report COVID-19 hospitalizations unless
an employee was admitted within twenty-four hours of a workplace exposure—
a highly unlikely scenario, given that symptoms are usually delayed.”).
 84. Sarah Chaney, Labor Secretary Eugene Scalia Opposes Extension of
Extra $600 in Unemployment Benefits, WALL ST. J. (June 9, 2020),
https://www.wsj.com/articles/labor-secretary-eugene-scalia-opposes-extension-
of-extra-600-in-unemployment-benefits-11591728182.
85. Ben Protess & Matthew Goldstein, Trump’s S.E.C. Nominee Disclosure
Offers Rare Glimpse of Clients and Conflicts, N.Y. TIMES (Mar. 8, 2017),
https://www.nytimes .com/2017/03/08/business/dealbook/sec-nominee-jay-
clayton-client-list-conflicts-interest .html.
86. Dave Michael & Liz Hoffman, SEC Pick Jay Clayton Is a 180 from
Chairman Mary Jo White, WALL ST. J. (Jan. 4, 2017),
https://www.wsj.com/articles/president-elect-trump-to-nominate-jay-clayton-
securities-and-exchange-commission-chairman-1483545999; About Us,
PHILADELPHIA CRICKET CLUB, https://www.philacricket.com/about-us (Oct. 7,
2022).
87. Joseph Walter Clayton, Executive Branch Personnel Public Financial
Disclosure Report (OGE Form 278e) 2 (Mar. 10, 2017),
https://s3.documentcloud.org/documents/4388156/Jay-Clayton-Financial-
Disclosure.pdf (Jay Clayton was directly invested in funds from Apollo,
Warburg Pincus, TPG, Bain, Centerbridge Hellman & Friedman, and Thoma
Bravo).
88. Dave Michaels, SEC Chair Nominee Clayton’s Ethics Report Reveals
Range of Possible Conflicts, WALL ST. J. (Mar. 8, 2017),
https://www.wsj.com/articles/sec-chair-nominee-claytons-ethics-report-reveals-
range-of-possible-conflicts-1488988744.
89. Tom Dreisbach, Under Trump, SEC Enforcement of Insider Trading
Dropped to Lowest Point in Decades, NPR (August 14, 2020),
https://www.npr.org/2020/08/14/901862355/under-trump-sec-enforcement-of-
insider-trading-dropped-to-lowest-point-in-decade.
90. Id.
91. Mark Schoeff Jr., Clayton Wants Retirement Investors to Have More
Access to Private Funds, INV. NEWS (Apr.9, 2019),
https://www.investmentnews.com/clayton-wants-retirement-investors-to-have-
more-access-to-private-funds-79000.
92. Id.
93. Chris Cumming, U.S. Labor Department Allows Private Equity in 401(k)
Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-labor-
department-allows-private-equity-in-401-k-plans-11591229396; Warren Rojas,
Private Equity Cracks 401(k)s with Teamwork, Help from D.C. Firm,
BLOOMBERG TAX (June 19, 2020), https://news
.bloombergtax.com/crypto/private-equity-cracks-401ks-with-teamwork-help-
from-d-c-firm?context=article-related (Bloomberg reports that Clayton “len[t]
his support” to advocate for the information letter).
94. Chris Cumming, U.S. Labor Department Allows Private Equity in 401(k)
Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-labor-
department-allows-private-equity-in-401-k-plans-11591229396.
95. Private Equity Trend Report 2020, PRICEWATERHOUSECOOPERS (2020),
https://www
.mergermarket.com/assets/42033_PETR_2020_200225_SCREEN.pdf.
96. Chris Cumming, U.S. Labor Department Allows Private Equity in 401(k)
Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-labor-
department-allows-private-equity-in-401-k-plans-11591229396.
97. Melissa Mittelman, Schwarzman’s “Dream” Tested as Private Equity
Eyes Your Nest Egg, BLOOMBERG (Apr. 20, 2017),
https://www.bloomberg.com/news/articles/2017-04-20/schwarzman-s-dream-
tested-as-private-equity-eyes-your-nest-egg.
98. What They Are Saying: Expanding Access to Private Equity Will
Strengthen Retirement Security for Millions of Americans, AM. INV. COUNCIL
(June 10, 2020), https://www .investmentcouncil.org/what-they-are-saying-
expanding-access-to-private-equity-will-strengthen-retirement-security-for-
millions-of-americans/.
99. Id.
100. David Bradley Isenberg, Wall Street Is Looting the American Retirement
System. The Trump Administration Is Helping, ROLLING STONE (Aug. 23, 2020),
https://www.rollingstone .com/politics/politics-features/retirement-private-
equity-trump-administration-wall-street-1047576/.
101. Id.
102. Jay Clayton (Attorney), WIKIPEDIA,
https://en.wikipedia.org/wiki/Jay_Clayton_(attorney).
103. Noor Zainab Hussain & Chibuike Oguh, Leon Black Leaves Apollo
Executive Roles After Epstein Investigation, REUTERS (Mar. 22, 2021),
https://www.reuters.com/business/apollo-names-ex-sec-chief-clayton-non-
executive-chairman-2021-03-22/.
104. Former U.S. Secretary of Labor Eugene Scalia Returns to Gibson
Dunn, GIBSON DUNN (Mar. 30, 2021), https://www.gibsondunn.com/former-u-s-
secretary-of-labor-eugene-scalia-returns-to-gibson-dunn/.
105. Eugene Scalia, Biden’s Policies Will Hurt America’s Laborers in the
Long Run, WALL ST. J. (Sept. 2, 2021), https://www.wsj.com/articles/american-
laborers-unemployment-trump-biden-jobs-11630597010.
106. Daniel Rasmussen & Greg Obenshain, High-Yield Was Oxy. Private
Credit Is Fentanyl., INSTITUTIONAL INV. (Jan. 28, 2020),
https://www.institutionalinvestor.com/article/b1k369v2lg69qt/High-Yield-Was-
Oxy-Private-Credit-Is-Fentanyl.
107. Tuch, supra note 1 at 357. (“Accordingly, if a firm’s funds suffered
significant losses or failed, the firm’s management fees would dry up, cutting off
its primary revenue source. It would lose its (typically modest) investments in
those funds, but the bulk of the funds’ losses would be borne by outside
investors and creditors, rather than by the firm.”).
108. William J. Marx & Julie K. Stapel, Department of Labor Waves Caution
Flag for 401(k) Private Equity Investing, MORGAN LEWIS (Jan. 4, 2022),
https://www.morganlewis .com/blogs/mlbenebits/2022/01/department-of-labor-
waves-caution-flag-for-401k-private-equity-investing.
109. Austin R. Ramsey, Private Equity Firms Are Winning the Fight for Your
401(k), BLOOMBERG L. (Jan. 31, 2022), https://news.bloomberglaw.com/daily-
labor-report/private-equity-firms-are-winning-the-fight-for-your-401k.

CHAPTER 7: CAPTIVE AUDIENCE

1. Marcus Henderson, US Prison Commissary Giants Are Set to Merge, SAN
QUENTIN NEWS (Jan. 31, 2017), https://sanquentinnews.com/us-prison-
commissary-giants-merge/; H.I.G. Capital Acquires Trinity Services Group,
MERGR, https://mergr.com/h.i.g.-capital-acquires-trinity-services-group.
2. Aventiv, PLATINUM EQUITY, https://www.platinumequity.com/our-
portfolio/portfolio/2017/aventiv.
3. David Shepardson, Inmate Calling Services Companies Drop Merger Bid
After U.S. Regulatory Opposition, REUTERS (Apr. 2, 2019),
https://www.reuters.com/article/us-fcc-inmate-merger/inmate-calling-services-
companies-drop-merger-bid-after-u-s-regulatory-opposition-idUSKCN1RE2L7.
4. Global Tel Link Acquired by American Securities, CRUNCHBASE,
https://www .crunchbase.com/acquisition/american-securit-acquires-global-tel-
link--ddf38327.
5. Wellpath, H.I.G. CAPITAL, https://higcapital.com/portfolio/company/403.
 6. Matt Blois, Investment Firm Acquires Corizon, NASHV. POST (June 30,
202), https://www.nashvillepost.com/investment-firm-acquires-
corizon/article_eeba5a0a-486c-5779-886c-2d50b1befc5a.html.
7. 3M Sells Israeli Subsidiary to Apax for $200M, GLOBES (Oct. 10, 2017),
https://en .globes.co.il/en/article-3m-sells-israeli-subsidiary-to-apax-for-200m-
1001207560.
8. Release Cards, PRISON POLICY INITIATIVE,
https://www.prisonpolicy.org/releasecards/.
9. Aventiv, supra note 2.
10. Pay-per-Minute E-Readers in West Virginia Prisons Jeopardize Access to
Literature, PEN AMERICA (Nov. 22, 2019), https://pen.org/press-release/pay-per-
minute-e-readers-in-west-virginia-prisons-jeopardize-access-to-literature/.
11. Eli Hager, Debtors’ Prisons, Then and Now: FAQ, THE MARSHALL
PROJECT (Feb. 24, 2015),
https://www.themarshallproject.org/2015/02/24/debtors-prisons-then-and-now-
faq.
12. Convict Leasing, WIKIPEDIA,
https://en.wikipedia.org/wiki/Convict_leasing.
13. Recovering Correctional Costs Through Offender Fees, NATIONAL
INSTITUTE OF JUSTICE 1 (June 1990),
https://www.ojp.gov/pdffiles1/Digitization/125084NCJRS .pdf.
14. Steven J. Jackson, Ex-Communication: Competition and Collusion in the
U.S. Prison Telephone Industry, CRITICAL STUD. IN MEDIA COMMC’NS 263, 267
(2005).
15. Id. at 268; Stephen Raher, The Company Store and the Literally Captive
Market: Consumer Law in Prisons and Jails, 17 HASTINGS RACE & POVERTY L.
J. 3, 24 (2020) (“The Commission’s involvement with the industry dates back to
1993, when ICS carriers asked the FCC to deregulate payphone rates in
correctional facilities. The FCC ultimately granted the request mere days before
the entire telecommunications industry changed with the enactment of the
Telecommunications Act of 1996.”).
16. Jackson, supra note 14, at 268.
17. Id.
18. H.I.G. Capital Acquires Evercom Holdings, Inc.—Forms Securus
Technologies, Inc., H.I.G. CAPITAL (Sept. 10, 2004),
https://higcapital.com/news/release/h.i.g.-capital-acquires-evercom-holdings-
inc.-forms-securus-technologies-inc.
 19. Castle Harlan Acquires Securus Technologies, CASTLE HARLAN (Nov. 10,
2011), http://castleharlan.com/news/item/194-castle-harlan-acquires-securus-
technologies.
20. Greg Roumeliotis, Platinum Equity Nears Deal to Buy Prison Phone
Company Securus: Sources, REUTERS (May 16, 2017),
https://www.reuters.com/article/us-securus-tech-m-a-abrypartners/platinum-
equity-nears-deal-to-buy-prison-phone-company-securus-sources-
idUSKCN18C2FU.
21. Aventiv, supra note 2.
22. Global Tel Link Acquired by American Securities, supra note 4.
23. Davide Scigliuzzo, HIG Plans Spinoff of Prison Phone Operator After
Failed Merger, BLOOMBERG (Jan. 24, 2020),
https://www.bloomberg.com/news/articles/2020-01-24/hig-plans-spinoff-of-
prison-phone-operator-after-failed-merger?leadSource=uverify %20wall.
24. See Tom McLaughlin, “Families Die by a Thousand Cuts.” Companies
Like JPay Make Big Bucks Billing Florida Inmates for Essentials, NW. FLA.
NEWS (May 5, 2022),
https://www.nwfdailynews.com/story/news/2021/12/22/companies-like-jpay-
make-big-bucks-billing-florida-inmates-essentials/5469115001/.
25. Peter Wagner & Alexi Jones, The Biggest Priorities for Prison and Jail
Phone Justice in 40 States, PRISON POLICY INITIATIVE (Sept. 11, 2019),
https://www.prisonpolicy.org/blog/2019/09/11/worststatesphones/.
26. Tim Requarth, How Private Equity Is Turning Public Prisons into Big
Profits, NATION (Apr. 30, 2019),
https://www.thenation.com/article/archive/prison-privatization-private-equity-
hig/.
27. Timothy Williams, The High Cost of Calling the Imprisoned, N.Y. TIMES
(Mar. 30, 2015), https://www.nytimes.com/2015/03/31/us/steep-costs-of-inmate-
phone-calls-are-under-scrutiny.html.
28. Omari Sankofa II & Angie Jackson, Detroit Pistons Owner Tom Gores
Speaks About Controversy over Securus, DETROIT FREE PRESS (Feb. 6, 2021),
https://www.freep .com/story/sports/nba/pistons/2021/02/04/tom-gores-detroit-
pistons-securus-prison-phone-calls/4139871001/.
29. Id.
30. Colin Lecher, Criminal Charges, VERGE,
https://www.theverge.com/a/prison-phone-call-cost-martha-wright-v-
corrections-corporation-america (May 11, 2016).
 31. Id.
32. Saneta deVuono-powell et al., Who Pays? The True Cost of
Incarceration on Families, ELLA BAKER CENTER, FORWARD TOGETHER,
RESEARCH ACTION DESIGN 30 (2015), http://whopaysreport.org/wp-
content/uploads/2015/09/Who-Pays-FINAL.pdf.
33. Requarth, supra note 26.
34. Tom Gores, WIKIPEDIA, https://en.wikipedia.org/wiki/Tom_Gores; Buyout
Buccaneer, FORBES (July 9, 2001),
https://www.forbes.com/forbes/2001/0723/065.html?sh =1716ef9562f9.
35. Tom Gores, supra note 34; Steven Bertoni, Meet Tom Gores: The Detroit
Piston’s New Billionaire Boss, FORBES (June 3, 2011),
https://www.forbes.com/sites/stevenbertoni/2011/06/03/meet-tom-gores-the-
detroit-pistons-new-billionaire-boss/?sh=4a380 e52069c.
36. Steven Bertoni, Ready to Play, FORBES (Oct. 2, 2009),
https://www.forbes.com/forbes/2009/1019/forbes-400-rich-list-09-buyout-firms-
gores-ready-to-play.html?sh =6357fc611464.
37. McGraw-Hill, PLATINUM EQUITY,
https://www.platinumequity.com/mcgraw-hill.
38. Jostens, PLATINUM EQUITY, https://www.platinumequity.com/jostens.
39. Lisa Bannon, Gores Brothers Jockey for Same Deals in Grown-Up Game
of Sibling Rivalry, WALL ST. J. (Apr. 9, 2002),
https://www.wsj.com/articles/SB1018299410443735120; Jason Dean, Tom
Gores: Balancing Family, Business, and the Detroit Pistons, CSQ (July 9,
2011), https://csq.com/2011/07/tom-gores-balancing-family-business-detroit-
pistons/#.YW ShzRDMIUQ.
40. Bianca Barragan, Ridiculous Holmby Hills Spec House Now Belongs to
Detroit Pistons Owner Tom Gores, CURBED L.A. (Oct. 24, 2016),
https://la.curbed.com/2016/10/24/13388372/detroit-pistons-tom-gores-la-spec-
house.
41. Id.
42. Id.; Neal J. Leitereg, Tom Gores Buys Holmby Hills Spec House in $100-
Million Deal Involving Multiple Properties, L.A. TIMES (Oct. 21, 2016),
https://www.latimes.com/business/realestate/hot-property/la-fi-hotprop-100-
million-home-sale-los-angeles-20161021-snap-story.html.
43. Roumeliotis, supra note 20.
44. See Jabari Young, Detroit Pistons Owner Tom Gores Has a New
Perspective as Team Tries to Restore Its Brand and Culture, CNBC (Oct. 8,
2021), https://www.cnbc.com/2021/10/08/pistons-owner-tom-gores-has-a-new-
perspective-as-team-enters-restoration-process.html.
45. Vince Ellis, Pistons Owner Gores to Taise $10M for Flint Crisis,
DETROIT FREE PRESS (Jan. 28, 2016),
https://www.freep.com/story/sports/nba/pistons/2016/01/28/flint-water-crisis-
tom-gores/79452146/.
46. Young, supra note 44.
47. Statement from Tom Gores and the Detroit Pistons, NBA (June 2, 2020),
https://www.nba.com/pistons/news/statement-tom-gores-and-detroit-pistons.
48. Interview with Bianca Tylek, executive director, Worth Rises (Oct. 26,
2021).
49. Letter from Bianca Tylek, director, Corrections Accountability Project, to
commissioner’s secretary, FCC (July 16, 2018),
https://ecfsapi.fcc.gov/file/10717225630127/2018.07.16%20-
%20Corrections%20Accountability%20Project%2018-193%20Comment
%20.pdf.
50. Chairman Pai Statement on Withdrawal of Inmate Calling Merger, FCC
(Apr. 2, 2019), https://www.fcc.gov/document/chairman-pai-statement-
withdrawal-inmate-calling-merger.
51. Stephen Caruso, State Employee Retirement Board Balks at Investing in
Prison-Linked Private Equity Firm, PA. CAPITAL-STAR (Sept. 27, 2019),
https://www.penncapital-star.com/blog/state-employee-retirement-board-balks-
at-investing-in-prison-linked-private-equity-firm/.
52. Id.
53. Id.
54. Shiri, Tom Gores Resigns from Board of the LACMA, CANYON NEWS
(Oct. 11, 2020), https://www.canyon-news.com/tom-gores-resigns-from-the-
board-of-the-lacma/134727.
55. @scavendish, TWITTER (Dec. 20, 2020),
https://twitter.com/scavendish/status/1340699398242709504.
56. Eric Woodyard, As Nonprofit Group Pushes for Him to Sell Team, Detroit
Pistons Owner Tom Gores Says He’s Committed to Changing System, but Needs
Time, ESPN (Dec. 26, 2020),
https://www.espn.com/nba/story/_/id/30602718/as-nonprofit-group-pushes-sell-
team-detroit-pistons-owner-tom-gores-says-committed-changing-system-needs.
57. Sankofa II & Jackson, supra note 28.
 58. Victory: San Francisco Makes Jail Phone Calls Free and Eliminates Jail
Commissary Markups, WORTH RISES (June 21, 2019),
https://worthrises.org/pressreleases/2019/6/12/victory-san-francisco-makes-jail-
phone-calls-free-and-eliminates-jail-commissary-markups.
59. Campaigns, WORTH RISES, https://worthrises.org/ourcampaigns.
60. Connecticut Makes History as First State to Make Prison Calls Free,
WORTH RISES (June 16, 2021), https://worthrises.org/pressreleases/connecticut-
makes-history-as-first-state-to-make-prison-calls-free.
61. Families of Prisoners Sue Nation’s Largest Providers of Inmate Calling
Services for Fixing and Lying About Services, JUSTICE CATALYST LAW (July 20,
2021), https://catalystlaw .org/2020/06/30/prison-telecom-press-release/.
62. Keaton Ross, “Sued Every Way and Sunday.” New Prison Phone
Provider Has Troubled History, OKLAHOMA WATCH (Aug. 27, 2020),
https://oklahomawatch.org/2020/08/27/sued-every-way-and-sunday-new-prison-
phone-provider-has-troubled-history/.
63. Id.; Brigette Honaker, Securus Prison Call Recording Class Action
Settlement Gets OK, TOP CLASS ACTIONS (June 22, 2020),
https://topclassactions.com/lawsuit-settlements/jail-prison/securus-prison-call-
recording-class-action-settlement-gets-ok/ (The defendants admitted no
wrongdoing as part of the lawsuit); Final Approval Order and Judgment, Crane
v. Corrections Corporation of America et al., No. 4:16-cv-00947 (W.D. Mo.
Dec. 23, 2020), ECF No. 275; Largest Detention Communications Companies,
NATIONAL ASSOCIATION OF CRIMINAL DEFENSE LAWYERS,
https://www.nacdl.org/getattachment/da45649f-b63c-4fbd-a155-
c5243592fecb/detention-facilities-communication-companies .pdf; Karl Bode,
Securus Quietly Settles Lawsuit over Illegally Spying on Inmate Attorney
Conversations, TECHDIRT (June 1, 2020),
https://www.techdirt.com/2020/06/01/securus-quietly-settles-lawsuit-over-
illegally-spying-inmate-attorney-conversations/.
64. Dave Abel Named Chief Executive Officer of Aventiv Technologies and
Its Corrections Subsidiary Securus Technologies, CISION (Jan. 13, 2020),
https://www.prnewswire.com/news-releases/dave-abel-named-chief-executive-
officer-of-aventiv-technologies-and-its-corrections-subsidiary-securus-
technologies-300985675.html.
65. Sankofa II & Jackson, supra note 28.
66. Eric Woodyard, As Nonprofit Group Pushes for Him to Sell Team, Detroit
Pistons Owner Tom Gores Says He’s Committed to Changing System, but Needs
Time, ESPN (Dec. 26, 2020),
https://www.espn.com/nba/story/_/id/30602718/as-nonprofit-group-pushes-sell-
team-detroit-pistons-owner-tom-gores-says-committed-changing-system-needs.
67. Tyler J. Davis, Why Detroit Pistons’ Tom Gores Says It’s a “Blessing” to
Own Prison Telecom Firm, DETROIT FREE PRESS (Dec. 28, 2020),
https://www.freep.com/story/sports/nba/pistons/2020/12/28/tom-gores-detroit-
pistons-securus-worth-rises/4050901001/.
68. Woodyard, supra note 66.
69. Id.
70. Aventiv, supra note 2.
71. Wright, et al. v. Corrections Corp et al., No. 1:00-cv-293 (D.D.C. Feb.
16, 2000).
72. Lecher, supra note 30.
73. Interview with Mignon Clyburn, former FCC commissioner (Oct. 29,
2021).
74. Id.
75. Id.
76. Id.
77. Requarth, supra note 26.
78. Letter from Larry D. Amerson, president of the National Sheriff’s
Association to Marlene H. Dortch, secretary, FCC (Mar. 25, 2013),
https://www.sheriffs.org/sites/default/files/1.%202013.03.25%20NSA%20Comments.pdf.
79. Barbara Koeppel, The Prison Phone Rip-Off, WASH. SPECTATOR (July 5,
2021), https://washingtonspectator.org/the-prison-phone-rip-off/; Corporate
Partnership Information, NATIONAL SHERIFF’S ASSOCIATION,
https://www.sheriffs.org/partners/corporate-partnership-information.
80. Lecher, supra note 30.
81. Ann E. Marimow, FCC Made a Case for Limiting Cost of Prison Phone
Calls. Not Anymore., WASH. POST (Feb. 5, 2017),
https://www.washingtonpost.com/local/public-safety/fcc-made-a-case-for-
limiting-cost-of-prison-phone-calls-not-anymore/2017/02/04/9306fbf8-e97c-
11e6-b82f-687d6e6a3e7c_story.html.
82. Kate Rose Quandt, Lawsuit Reveals How Tech Companies Profit off the
Prison -Industrial Complex, THINKPROGRESS (Feb. 9, 2018),
https://archive.thinkprogress.org/prison-technology-companies-inmates-
9d4242805363/.
 83. Shepardson, supra note 3; Memorandum Opinion and Order, In the
Matter of Joint Application of Securus Investment Holdings, LLC, No. 17-126
(FCC Oct. 30, 2017).
84. Ajit Pai, LINKEDIN, https://www.linkedin.com/in/ajit-pai-bb014816a/.
85. Interview with Mignon Clyburn, supra note 73.
86. Marie Feyche, FCC Approves Plan to Lower Interstate and International
Jail and Prison Phone Call Rates, JURIST (May 23, 2021),
https://www.jurist.org/news/2021/05/fcc-approves-plan-to-lower-interstate-and-
international-jail-and-prison-phone-call-rates/.
87. Harper Neidig, Court Strikes Down FCC Caps on In-State Prison Phone
Rates, THE HILL (June 13, 2017), https://thehill.com/policy/technology/337593-
court-strikes-down-in-state-prison-call-rates/.
88. Marie Feyche, FCC Approves Plan to Lower Interstate and International
Jail and Prison Phone Call Rates, JURIST (May 23, 2021),
https://www.jurist.org/news/2021/05/fcc-approves-plan-to-lower-interstate-and-
international-jail-and-prison-phone-call-rates/.
89. Id.
90. Duckworth, Portman, Booker, Schatz Introduce Bipartisan Bill to Ensure
Just and Reasonable Phone Rates in Criminal Justice System, OFFICE OF
SENATOR TAMMY DUCKWORTH (May 10, 2021),
https://www.duckworth.senate.gov/news/press-releases/duckworth-port man-
booker-schatz-introduce-bipartisan-bill-to-ensure-just-and-reasonable-phone-
rates-in-criminal-justice-system.
91. Interview with Mignon Clyburn, supra note 73.
92. Id.
93. Léon Digard et al., VERA INST. OF JUST., CLOSING THE DISTANCE: THE
IMPACT OF VIDEO VISITS IN WASHINGTON STATE PRISONS (2017),
https://www.vera.org/downloads/publications/The-Impact-of-Video-Visits-on-
Washington-State-Prisons.pdf.
94. Wendy Sawyer, How Much Do Incarcerated People Earn in Each State?,
PRISON POLICY INITIATIVE (Apr. 10, 2017),
https://www.prisonpolicy.org/blog/2017/04/10/wages/.
95. Securus Ends Its Ban on In-Person Visits, Shifts Responsibility to
Sheriffs, PRISON POLICY INITIATIVE (May 6, 2015),
https://www.prisonpolicy.org/blog/2015/05/06/securus-ends-ban/ (70% of the
contracts the Prison Policy Initiative reviewed had terms saying that “[f]or non-
professional visitors, Customer will eliminate all face to face visitation through
glass or otherwise at the Facility.”).
96. Natasha Haverty, Video Calls Replace In-Person Visits in Some Jails,
NPR (Dec. 5, 2016), https://www.npr.org/2016/12/05/504458311/video-calls-
replace-in-person-visits-in-some-jails.
97. Id.
98. Securus Ends Its Ban on In-Person Visits, Shifts Responsibility to
Sheriffs, PRISON POLICY INITIATIVE (May 6, 2015),
https://www.prisonpolicy.org/blog/2015/05/06/securus-ends-ban/.
99. See, e.g., Teresa Mathew, How Jails Are Replacing Visits with Video, THE
APPEAL (Apr. 22, 2019), https://theappeal.org/how-jails-are-replacing-visits-
with-video/ (discussing two Missouri counties that ended in-person visits).
100. Nate Raymond, Private Equity Firm HIG Capital Settles Fraud Case
for $20 Million, REUTERS (Oct. 14, 2021),
https://www.reuters.com/legal/government/private-equity-firm-hig-capital-
settles-fraud-case-20-million-2021-10-14/.
101. David M. Reutter, Michigan’s New Prison Food Service Provider
Failing to Meet Contract Terms, PRISON LEGAL NEWS (Jan. 8, 2018),
https://www.prisonlegalnews.org/news/2018/jan/8/michigans-new-prison-food-
service-provider-failing-meet-contract-terms/.
102. Paul Egan, More Problems for State’s Prison Food Contractor:
Maggots Found in Chow Served to Inmates, DETROIT FREE PRESS (Nov. 6,
2017), https://www.freep.com/story/news/local/michigan/2017/11/06/maggots-
food-cotton-prison-jackson-michigan-trinity-services/825834001/ (Trinity
declined to comment); Michigan Prison Food Worker Says He Was Fired for
Refusing to Serve Rotten Potatoes, CBS NEWS DETROIT (Aug. 25, 2017),
https://www.cbsnews.com/detroit/news/rotten-prison-potatoes/.
103. Paul Egan, Prison Food Worker: “I Was Fired for Refusing to Serve
Rotten Potatoes,” DETROIT FREE PRESS (Aug. 25, 2017),
https://www.freep.com/story/news/local/michigan/2017/08/25/prison-trinity-
kinross-fired-rotten-potatoes/596849001/ (Trinity did not respond to a request
for comment).
104. Tom Perkins, Michigan’s Failed Effort to Privatize Prison Kitchens and
the Future of Institutional Food, SALON (Aug. 29, 2018),
https://www.salon.com/2018/08/29/michigans-failed-effort-to-privatize-prison-
kitchens-and-the-future-of-institutional-food_partner/ (Trinity did not respond to
a request for comment).
 105. Tom Perkins, Something Still Stinks in Michigan and Ohio’s Prison
Kitchens, CLEVE SCENE (Feb. 17, 2016),
https://www.clevescene.com/news/empty-promises-something-still-stinks-in-
michigan-and-ohios-prison-kitchens-4705549.
106. Reutter, supra note 101.
107. Tom Perkins, We Spoke with Michigan Inmates About Rotten Food,
Maggots, and More Prison Kitchen Problems, METRO TIMES (Jan. 18, 2018),
https://www.metrotimes.com/food-drink/we-spoke-with-michigan-inmates-
about-rotten-food-maggots-and-more-prison-kitchen-problems-8686387.
108. Id.
109. Paul Egan, Riot or Reined-In? Prison Officials Disagree on U.P.
Skirmish, DETROIT FREE PRESS (Sept. 20, 2016),
https://www.freep.com/story/news/local/michigan/2016/09/20/disturbance-
kinross-prison-riot/90742082/ (according to the Detroit Free Press, two issues
that motivated the riot were poor food and low wages).
110. Tom Perkins, Michigan’s Failed Effort to Privatize Prison Kitchens and
the Future of Institutional Food, SALON (Aug. 29, 2018),
https://www.salon.com/2018/08/29/michigans-failed-effort-to-privatize-prison-
kitchens-and-the-future-of-institutional-food_partner/.
111. Paul Egan, Prison Worker Fired After Kitchen Sex with Inmate, WUSA9
(May 11, 2017), https://www.wusa9.com/article/news/local/michigan/prison-
worker-fired-after-kitchen-sex-with-inmate/69-438865568.
112. April Stevens, MDOC Ends Contract with Private Food Service, Going
Back to State-Run Resources, WZZM13 (Feb. 7, 2018),
https://www.wzzm13.com/article/news/local/michigan/mdoc-ends-contract-
with-private-food-service-going-back-to-state-run-resources/69-51566592.
113. Perkins, supra note 110.
114. Elizabeth Whitman, Arizona Prison Food Was Labeled “Not for Human
Consumption,” Ex-Inmates Say, PHOENIX NEW TIMES (Sept. 25, 2019),
https://www.phoenixnewtimes .com/news/ex-inmates-arizona-prison-food-was-
not-for-human-consumption-11362468.
115. Id. Trinity said in a statement to the Phoenix New Times that “[w]e have
never intentionally bought expired food. Just as in any food service operation or
high end restaurant, on occasion, a vendor may deliver a product that does not
meet our quality standard and in such an instance, that product is either
discarded or returned.”
 116. Complaint at 9, Young v. Trinity Services Group, Inc. et al., No. 3:19-cv-
2465 (N.D. Oh. Oct. 22, 2019), ECF No. 1 (Trinity largely denied the
allegations, and the litigation remains ongoing); Answer, Young v. Trinity
Services Group, Inc. et al., No. 3:19-cv-2465 (N.D. Oh. Nov. 5, 2019), ECF No.
5.
117. Mark Shenefelt, Maggots, Mold and Dirt Reported in Weber Jail Food,
STANDARD EXAM’R (Jan. 14, 2018), https://www.standard.net/police-
fire/2018/jan/14/maggots-mold-and-dirt-reported-in-weber-jail-food/ (Trinity
did not comment).
118. Alan Judd, Jail Food Complaints Highlight Debate over Outsourcing
Public Services, ATLANTA J.-CONST. (Jan. 1, 2015),
https://www.ajc.com/news/public-affairs/jail-food-complaints-highlight-debate-
over-outsourcing-public-services/PpVFFB46k OLExOmv6UX7SJ/ (Trinity said
that the company’s dieticians ensure prisoners “the right product in the right
amount and served correctly.”); letter from Sarah Geraghty, Southern Center for
Human Rights, to Sheriff Mitch Ralston, Gordon County sheriff’s office (Oct.
28, 2014), https://www.schr.org/files/post/files/SCHR%20to%20Sheriff
%20Ralston%2010%2028%2014.pdf.
119. Judd, supra note 118.
120. See, e.g., Lyons v. Trinity Servs. Grp., Inc., 401 F. Supp. 2d 1290 (S.D.
Fla. 2005).
121. See, e.g., Spurling v. Trinity Servs. Grp., Inc., No. 4:19-cv-2872, 2020
WL 1862674, at *2 (N.D. Ohio Apr. 14, 2020).
122. Cradle v. Trinity Food Servs., No. 2:10-cv-1962, 2010 WL 4340336, at
*2 (D.S.C. Aug. 9, 2010), Report and Recommendation Adopted, No. 2:10-cv-
01962, 2010 WL 4281790 (D.S.C. Oct. 21, 2010).
123. Wilson v. White, No. 3:19-cv-441HTW, 2020 WL 5163528, at *2 (S.D.
Miss. Aug. 2, 2020), Report and Recommendation Adopted, No. 3:19-cv-441,
2020 WL 5121348 (S.D. Miss. Aug. 31, 2020).
124. Est. of Ricardez v. Cty. of Ventura, No. 20-cv-79, 2020 WL 3891460, at
*4 (C.D. Cal. June 24, 2020), cert. denied sub nom. Ricardez v. Cty. of Ventura,
No. 20-cv-79, 2020 WL 7862129 (C.D. Cal. Aug. 6, 2020).
125. Steve Coll, The Jail Health-Care Crisis, NEW YORKER (Feb. 25, 2019),
https://www.newyorker.com/magazine/2019/03/04/the-jail-health-care-crisis.
126. Jason Szep, Special Report: U.S. Jails Are Outsourcing Medical Care—
and the Death Toll Is Rising, REUTERS (Oct. 26, 2020),
https://www.reuters.com/article/us-usa-jails-privatization-special-repor/special-
report-u-s-jails-are-outsourcing-medical-care-and-the-death-toll-is-rising-
idUSKBN27B1DH.
127. Coll, supra note 125.
128. Beth Schwartzapfel, How Bad Is Prison Health Care? Depends on
Who’s Watching, MARSHALL PROJECT (Feb. 26, 2018),
https://www.themarshallproject.org/2018/02/25/how-bad-is-prison-health-care-
depends-on-who-s-watching. The litigation in which this was alleged remains
ongoing. Docket, Jensen et al. v. Shinn et al., No. 2:12-cv-601 (D. Ariz. 2022).
129. Inmate Correctional Healthcare Contract Awarded, ARIZONA
DEPARTMENT OF CORRECTIONS (Jan. 18, 2019),
https://corrections.az.gov/article/inmate-correctional-healthcare-contract-
awarded.
130. Schwartzapfel, supra note 128.
131. Notice of Impending Death, Parsons v. Ryan, No. 2:12-cv-601 (D. Ariz.
Aug. 29, 2017), ECF No. 2262.
132. Schwartzapfel, supra note 128.
133. AFT, Private Prisons and Investment Risks: How Private Prison
Companies Fuel Mass Incarceration—and How Public Pension Funds Are at
Risk, AMERICAN FEDERATION OF TEACHERS 6 (2020),
https://www.aft.org/sites/default/files/media/2020/private-prisons-invest-2019-
part2.pdf.
134. Kristine Phillips, “Something Is Eating My Brain,” an Inmate Said. A
Lawsuit Claims He Was Left to Die, WASH. POST (Oct. 30, 2017),
https://www.washingtonpost .com/news/post-nation/wp/2017/10/27/something-
is-eating-my-brain-an-inmate-said-a-lawsuit-says-he-was-left-to-die/.
135. Order Granting Motion for Summary Judgment, Walker et al. v. Corizon
Health, Inc. et al., No. 2:17-cv-2601 (D. Kans. June 3, 2022), ECF No. 311 (The
matter is now on appeal).
136. Marsha McLeod, The Private Option, ATLANTIC (Sept. 12, 2019),
https://www.theatlantic.com/politics/archive/2019/09/private-equitys-grip-on-
jail-health-care/597871/; Mark Lungariello, Controversies Swirl as Westchester
County Jail Considers New Health Care Provider, LOHUD (Apr. 12, 2019),
https://www.lohud.com/story/news/local/westchester/2019/04/12/westchester-
county-jail-health-care-correct-care-correct-care-solutions-wellpath-tennessee-
mcnulty/3237201002/.
137. Blake Ellis & Melanie Hicken, Dangerous Jail Births, Miscarriages,
and Stillborn Babies Blamed on the Same Billion Dollar Company, CNN (May
7, 2019), https://www.cnn .com/2019/05/07/health/jail-births-wellpath-ccs-
invs/index.html; David M. Reutter, Medical, Mental Health Care Lacking at
Florida Jail Despite 43 Years of Court Oversight, PRISON LEGAL NEWS (Dec. 10,
2019), https://www.prisonlegalnews.org/news/2019/dec/10/medical-mental-
health-care-lacking-florida-jail-despite-43-years-court-oversight/.
138. Coll, supra note 125.
139. Susan Sharon, Maine State Prison Inmate Files Suit, Says Hundreds of
Inmates Were Denied Hepatitis C Treatment, MAINE PUBLIC (June 26, 2019),
https://www .mainepublic.org/courts-and-crime/2019-06-26/maine-state-prison-
inmate-files-suit-says-hundreds-of-inmates-were-denied-hepatitis-c-treatment;
Susan Sharon, Maine Expands Chronic Hepatitis C Treatment for Prisoners
After Lawsuit Settlement, MAINE PUBLIC (Oct. 1, 2020),
https://www.mainepublic.org/health/2020-10-01/maine-expands-chronic-
hepatitis-c-treatment-for-prisoners-after-lawsuit-settlement.
140. Letter from Grace Kingman, Office of the Pierce County Prosecuting
Attorney, to Keith Kubik, Kubik Mediation 2 (Mar. 26, 2016),
https://www.documentcloud .org/documents/5978547-Pierce-County-March-
2016-memo-to-CCS.html.
141. Id. at 3.
142. Id.
143. Jury Sides with Pierce County in Jail Health Care Lawsuit, ASSOCIATED
PRESS (Mar. 9, 2019),
https://apnews.com/article/f8f7558ae11c49429515ad7f386aed3a; Blake Ellis &
Melanie Hicken, Jail Heath Care CSS Investigation, CNN (June 25, 2019),
https://www.cnn.com/interactive/2019/06/us/jail-health-care-ccs-invs/ (Correct
Care Solutions appealed the decision).
144. See e.g., Sanchez v. Oliver, 995 F.3d 461, 472 (5th Cir. 2021)
(Predecessor to Wellpath had an indemnification clause); Crawford v. Corizon
Health, Inc., No. 17-cv-113, 2019 WL 3208001, at *1 (W.D. Pa. July 15, 2019)
(Corizon had an indemnification clause).
145. For instance, Corizon repeatedly relies on the law firm O’Connor
Kimball, LLP to handle its defense, see, e.g., Rosado v. Aramark et al., No.
2:14cv3033 (E.D. Pa. May 29, 2014); Rodriguez v. Corizon Health, Inc. et al.,
No. 2:12cv7250 (E.D. Pa. Dec. 31, 2012), while Wellpath repeatedly relied on
Cassiday Schade LLP; see, e.g., Hall-Adejola v. Will County et al., No. 1:20-cv-
2699 (N.D. Ill. May 4, 2020); Hirsch v. Will County et al., No. 1:19-cv-7398
(N.D. Ill. Nov. 7, 2019).
 146. HIG Capital’s and Wellpath’s Correctional Healthcare Investment
Risks, PRIVATE EQUITY STAKEHOLDER PROJECT (July 2019),
https://pestakeholder.org/wp-content/uploads/2019/07/HIG-Capitals-
Correctional-Healthcare-Investment-Risks-PESP-070819 .pdf (CMFG was
bought by H.I.G. Capital and eventually merged into Wellpath).
147. Rupert Neate, Welcome to Jail Inc: How Private Companies Make
Money off US Prisons, GUARDIAN (June 16, 2016),
https://www.theguardian.com/us-news/2016/jun/16/us-prisons-jail-private-
healthcare-companies-profit.
148. Order Granting Motion to Dismiss at 2, Bible-Marshall et al. V.
Montgomery County et al., No. 4:20-cv-28 (S.D. Tex. June 1, 2021), ECF No.
47.
149. Id. at 7.
150. Id.
151. Complaint, Reichert et al., v. Keefe Commissary Network, LLC et al.,
No. 3:17-cv-5848 (W.D. Wash. Oct. 20, 2017), ECF No. 1. Keefe largely
initially denied the accusations, though as noted below, it ultimately settled a
portion of the case and agreed to repay a percentage of the fees it took from
prisoners. See Answer by Defendant Keefe Commissary Network, LLC,
Reichert et al., v. Keefe Commissary Network, LLC et al., No. 3:17-cv-5848
(W.D. Wash. May 15, 2018), ECF No. 55.
152. Complaint at ¶ 74–75, Reichert et al., v. Keefe Commissary Network,
LLC et al., No. 3:17-cv-5848 (W.D. Wash. Oct. 20, 2017), ECF No. 1.
153. Id. at ¶ 82–83.
154. Quandt, supra note 82.
155. Unopposed Motion for Approval of Settlement Agreement at 1–2,
Reichert et al. v. Keefe Commissary Network, LLC et al., No. 3:17-cv-5848
(W.D. Wash. June 9, 2022), ECF No. 166.
156. Aaron Gregg, CFPB Orders Prison Banker to Pay $6 Million for
Charging Inmates ‘Unfair’ Fees, WASH. POST (Oct. 19, 2021),
https://www.washingtonpost.com/business/2021/10/19/cfpb-jpay-fine/.
157. Id.
158. An Introduction to Platinum Equity, PLATINUM EQUITY 4 (July 2022),
https://www .platinumequity.com/wp-content/uploads/2022/08/Platinum-
Equity-Introduction-July-2022.pdf.
 CHAPTER 8: SUING THEIR OWN CUSTOMERS
1. Complaint, Castellanos v. Mariner Finance, LLC, No. 1:17-cv-3168 (D.
Md. Oct. 27, 2017) ECF No. 2.
2. Id.
3. Id.
4. Id.
5. Id.
6. Santoni, Vocci, & Ortega, https://www.svolaw.com/.
7. Motion to Compel Arbitration at 4, Castellanos v. Mariner Fin., LLC, No.
17-cv-3168 (D. Md. Nov. 3, 2017), ECF No. 7-2.
8. Motion to Compel Arbitration at 15, Castellanos v. Mariner Fin., LLC,
No. 17-cv-3168 (D. Md. Nov. 3, 2017), ECF No. 7.
9. Opposition to Motion to Compel Arbitration at 5–7, Castellanos v.
Mariner Fin., LLC, No. 17-cv-3168 (D. Md. Nov. 15, 2017), ECF No. 12.
10. Castellanos v. Mariner Fin., LLC, No. 17-cv-3168, 2018 WL 488725, at
*1 (D. Md. Jan. 19, 2018).
11. Marginal Order Granting Stipulation of Dismissal with Prejudice,
Opposition to Motion to Compel Arbitration, Castellanos v. Mariner Fin., LLC,
No. 17-cv-3168 (D. Md. May 8, 2018), ECF No. 19.
12. Mariner Finance, WARBURG PINCUS,
https://warburgpincus.com/investments/mariner-finance/.
13. Curo Financial Technologies, FFL PARTNERS,
https://www.fflpartners.com/investments/curo-financial-technologies.
14. PRIV. EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES INTO PAYDAY
LENDING AND OTHER SUBPRIME CONSUMER LENDING (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
15. David French, Blackstone to Sell Lendmark Financial to Lightyear
Capital: Sources, REUTERS (June 24, 2019), https://www.reuters.com/article/us-
lendmarkfinancial-m-a-lightyearcapita/blackstone-to-sell-lendmark-financial-to-
lightyear-capital-sources-idUSKCN1TP2C7.
16. Lone Star Funds Completes Acquisition of DFC Global Corp., BUSINESS
WIRE (June 13, 2014),
https://www.businesswire.com/news/home/20140613005800/en/Lone-Star-
Funds-Completes-Acquisition-of-DFC-Global-Corp.
 17. Consumer Financial Protection Bureau, CFPB DATA POINT: PAYDAY
LENDING 4 (2014),
https://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf.
18. JLL Partners Completes Acquisition of ACE Cash Express, Inc.,
TMCNET (Oct. 5, 2006),
https://www.tmcnet.com/usubmit/2006/10/05/1961548.htm; Populous Financial
Group, JLL PARTNERS, https://www.jllpartners.com/our-companies/populus-
financial-group/ (JLL continues to own the company through Populus Financial
Group).
19. Advance America, ZOOMINFO, https://www.zoominfo.com/c/advance-
america-cash-advance-centers-inc/1985111 (estimating $2 billion in annual
revenue for Advance America); ACE Cash Express, ZOOMINFO,
https://www.zoominfo.com/c/ace-cash-express-inc/427413.
20. Consumer Complaint Database—Advance America, CONSUMER
FINANCIAL PROTECTION BUREAU (Oct. 7, 2022),
https://www.consumerfinance.gov/data-research/consumer-complaints/search/?
chartType=line&dateInterval=Month&date_received_max=2022-01-
01&date_received_min=2012-01-
01&lens=Overview&searchField=all&searchText
=%22advance%20america%22&tab=Trends.
21. Complaint Database—ACE Cash Express, CONSUMER FINANCIAL
PROTECTION BUREAU (Oct. 7, 2022), https://www.consumerfinance.gov/data-
research/consumer-complaints/search/?
chartType=line&dateInterval=Month&date_received_max=2022-01-
01&date_received_min=2012-01-
01&lens=Overview&searchField=all&searchText
=%22ace%20cash%22&tab=Trends.
22. Complaint 5287308, CONSUMER FINANCIAL PROTECTION BUREAU (Mar. 4,
2022), https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5287308; Complaint 5199725, CONSUMER FINANCIAL
PROTECTION BUREAU (Feb. 8, 2022), https://www.consumerfinance.gov/data-
research/consumer-complaints/search/detail/5199725.
23. Complaint 5195180, CONSUMER FINANCIAL PROTECTION BUREAU (Feb. 7,
2022), https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5195180.
 24. Complaint 5249656, CONSUMER FINANCIAL PROTECTION BUREAU (Feb.
22, 2022), https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5249656.
25. Danielle Douglas, Payday Lender Ace Cash Express to Pay $10 Million
over Debt-Collection Practices, WASH. POST (July 10, 2014),
https://www.washingtonpost.com/business/economy/payday-lender-ace-cash-
express-fined-over-abusive-debt-collection-practices/2014/07/10/04e9fa08-
0858-11e4-8a6a-19355c7e870a_story.html.
26. Consumer Complaint Database—Lendmark, CONSUMER FINANCIAL
PROTECTION BUREAU (Oct. 7, 2022), https://www.consumerfinance.gov/data-
research/consumer-complaints/search/?
chartType=line&dateInterval=Month&dateRange=All&date_received_max=2022-
10-07&date_received_min=2011-12-01&lens=Overview&search
Field=all&searchText=lendmark&tab=Trends.
27. Search for “Plaintiff-Litigant (Mariner Ginance),” LEXIS COURTLINK,
https://advance.lexis.com/search/?pdmfid=1519217&crid=a4e6f7ec-90ff-438d-
9d28-390925e3 cf61&pdsearchterms=plaintiff-
litigant(mariner+finance)&pdstartin=hlct%3A1%3A1&pdcaseshlctselectedbyuser=false&pdty
&pdqttype=and&pdpsf=hlct%3A1%3A1&pdquerytemplateid=&ecomp=pbrwk&earg
=pdpsf&prid=69facea1-c07b-43dc-b9fd-a272a9ad5557.
28. Bailey McCann, Fortress Backed Springleaf to Acquire OneMain,
PRIVATE EQUITY INTERNATIONAL (Mar. 3, 2015),
https://www.privateequityinternational.com/fortress-backed-springleaf-to-
acquire-onemain/.
29. Search for “Plaintiff-Litigant (OneMain),” LEXIS COURTLINK,
https://advance.lexis .com/search/?pdmfid=1519217&crid=9bea117a-6d62-
4da5-b4f9-dfc6ae9e75e0&pdsearchterms=plaintiff-
litigant(onemain)&pdstartin=hlct%3A1%3A1&pdcaseshlctse
lectedbyuser=false&pdtypeofsearch=searchboxclick&pdsearchtype=SearchBox&pdqttype
=and&pdpsf=hlct%3A1%3A1&pdquerytemplateid=&ecomp=pbrwk&earg=pdpsf
&prid=a4e6f7ec-90ff-438d-9d28-390925e3cf61.
30. See, e.g., Writ of Attachment on a Judgment, SUPERIOR COURT OF THE
DISTRICT OF COLUMBIA, https://www.dccourts.gov/sites/default/files/pdf-
forms/writ_wages.pdf.
31. Arbitration Schedule of Fees and Costs, JAMS,
https://www.jamsadr.com/arbitration-fees.
 32. See, e.g., Mark D. Gough, The High Costs of an Inexpensive Forum: An
Empirical Analysis of Employment Discrimination Claims Heard in Arbitration
and Civil Litigation, 35 BERKELEY J. EMP. & LAB. L. 91, 91 (2014); Arbitration
Study, CONSUMER FINANCIAL PROTECTION BUREAU (Mar. 2015),
https://files.consumerfinance.gov/f/201503_cfpb_arbitration-study-report-to-
congress-2015.pdf.
33. Scott Horsley, Payday Loans—and Endless Cycles of Debt—Targeted by
Federal Watchdog, NPR (Mar. 26, 2015),
https://www.npr.org/2015/03/26/395421117/payday-loans-and-endless-cycles-
of-debt-targeted-by-federal-watchdog.
34. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A Look
Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/.
35. Aliyyah Camp, What Is the Community Financial Services Association of
America?, FINDER (Oct. 16, 2021), https://www.finder.com/community-
financial-services-association-of-america. Private equity-backed lenders
included Community Choice Financial and Speedy Cash.
36. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A Look
Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/; PRIV. EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES INTO
PAYDAY LENDING AND OTHER SUBPRIME CONSUMER LENDING 7 (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
37. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A Look
Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/; PRIVATE EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES INTO
PAYDAY LENDING AND OTHER SUBPRIME CONSUMER LENDING 7 (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
38. Jackie Wattles, Cordray Resignation Sets Off Scramble over Consumer
Financial Protection Bureau, CNN MONEY (Nov. 25, 2017),
https://money.cnn.com/2017/11/24/news/cfpb-richard-cordray-
resignation/index.html.
 39. Emily Stewart, Mick Mulvaney Once Called the CFPB a “Sick, Sad”
Joke. Now He Might Be in Charge of It, VOX (Nov. 16, 2017),
https://www.vox.com/policy-and-politics/2017/11/16/16667266/mick-
mulvaney-cfpb-cordray-omb-joke.
40. Client Profile: JLL Partners, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000052577.
41. Client Profile: Lendmark Financial Services, OPEN SECRETS,
https://www.opensecrets .org/federal-lobbying/clients/summary?
cycle=2018&id=D000071049.
42. Client Profile: Mariner Finance, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000084066.
43. Client Profile: OneMain Financial, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000020937.
44. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A Look
Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/.
45. Congress Overturns CFPB Arbitration Rule, BAKER & HOSTETLER (Nov.
1, 2017), https://www.bakerlaw.com/alerts/congress-overturns-cfpb-arbitration-
rule.
46. Cotton Statement on the CFPB’s New Arbitration Rule, OFFICE OF
SENATOR TOM COTTON (July 11, 2017),
https://www.cotton.senate.gov/news/press-releases/2017/07/11/cotton-
statement-on-the-cfpb-and-146s-new-arbitration-rule.
47. AFR Report: Payday Lobbying and Campaign Spending Top $15 Million
for 2014 Election Cycle, AMERICANS FOR FINANCIAL REFORM (July 7, 2015),
https://ourfinancialsecurity .org/2015/07/payday-lender-lobbying-and-
campaign-spending-top-15-million-for-2014-election-cycle-afr-report-finds/.
48. Search for “Cotton for Senate, Inc,” “Cotton Victory,” and “Blackstone,”
FEDERAL ELECTION COMMISSION, https://www.fec.gov/data/receipts/individual-
contributions/?
committee_id=C00499988&committee_id=C00571018&contributor_employer
=blackstone.
 49. Jessica Silver-Greenberg, Consumer Bureau Loses Fight to Allow More
Class-Action Suits, N.Y. TIMES (Oct. 24, 2017),
https://www.nytimes.com/2017/10/24/business/senate-vote-wall-street-
regulation.html.
50. Letter from Keith A. Noreika, acting comptroller of the currency, to
Richard Cordray, director, Consumer Financial Protection Bureau (July 10,
2017), https://finservblog .bakerhostetlerblogs.com/wp-
content/uploads/sites/20/2017/11/07-10-2017.pdf.
51. Jeffrey L. Hare & Adam Dubin, Congress Overturns CFPB’s Arbitration
Rule, DLA PIPER (Nov. 1, 2017),
https://www.dlapiper.com/en/us/insights/publications/2017/11/congress-
overturns-cfpb-arbitration-rule/.
52. Cotton Statement on Senate Vote to Repeal the CFPB’s Arbitration Rule,
OFFICE OF SENATOR TOM COTTON (Oct. 24, 2017),
https://www.cotton.senate.gov/news/press-releases/cotton-statement-on-senate-
vote-to-repeal-the-cfpb-and-146s-arbitration-rule.
53. Tom Cotton, OPEN SECRETS https://www.opensecrets.org/members-of-
congress/tom-cotton/summary?cid=N00033363&cycle=2018&type=I.
54. Peter Whoriskey, “A Way of Monetizing Poor People”: How Private
Equity Firms Make Money Offering Loans to Cash-Strapped Americans, WASH.
POST (July 1, 2018, https://www.washingtonpost.com/business/economy/a-way-
of-monetizing-poor-people-how-private-equity-firms-make-money-offering-
loans-to-cash-strapped-americans/2018/07/01/5f7e2670-5dee-11e8-9ee3-
49d6d4814c4c_story.html.
55. Wendi C. Thomas et al., A Private Equity–Owned Doctors’ Group Sued
Poor Patients Until It Came Under Scrutiny, NPR (Nov. 27, 2019),
https://www.npr.org/sections/health-shots/2019/11/27/783449133/a-private-
equity-owned-doctors-group-sued-poor-patients-until-it-came-under-scru.
56. Id.
57. Jordan Rau, Patients Eligible for Charity Care Instead Get Big Bills,
KAISER HEALTH NEWS (Oct. 11, 2019), https://khn.org/news/patients-eligible-
for-charity-care-instead-get-big-bills/.
58. Thomas et al., supra note 55.
59. Id.
60. Consent Order ¶ 15, In the Matter of: Transworld Systems, Inc., No.
2017-CFPB-0018, (US Consumer Financial Protection Bureau, Sept. 18, 2017)
(Transworld provided documentation in support of the National Collegiate
Student Loan Trusts’ lawsuits).
61. PRIV. EQUITY STAKEHOLDER PROJECT, PLATINUM EQUITY-OWNED
TRANSWORLD SYSTEMS FINED $2.5 MILLION FOR ILLEGAL STUDENT DEBT
COLLECTION LAWSUITS, DRAWS THOUSANDS OF CONSUMER COMPLAINTS 1 (2019),
https://pestakeholder.org/wp-content/uploads/2019/07/Platinum-Equity-Owned-
Transworld-Systems-Fined-2.5-Million-PESP-071619.pdf.
62. Id.
63. Ori Lev, CFPB Suffers Embarrassing Court Loss, MAYER BROWN (June
4, 2020), https://www.mayerbrown.com/en/perspectives-
events/blogs/2020/06/cfpb-suffers-embarrassing-court-loss; Transworld
System’s Motion to Intervene, CFPB v. National Collegiate Master Student
Loan Trust, et al., 1:17-cv-1323 (D. Del. Sept. 22, 2017), ECF No. 9.
64. Platinum Equity-Owned Transworld Systems Fined $2.5 Million for
Illegal Student Debt Collection Lawsuits, Draws Thousands of Consumer
Complaints, PRIVATE EQUITY STAKEHOLDER PROJECT 4 (July 2019),
https://pestakeholder.org/wp-content/uploads/2019/07/Platinum-Equity-Owned-
Transworld-Systems-Fined-2.5-Million-PESP-071619.pdf (Transworld bought
Nationwide Credit, Inc. and NCC Business Services). It also bought debt
collection management company Altisource. PE-backed Transworld Systems to
acquire Altisource’s financial services business, S&P GLOBAL (Mar. 29, 2019),
https://www.spglobal.com/marketintelligence/en/news-
insights/trending/3QTPWjMZlN 9q1P7Hs21fjg2.
65. Pilar Sorensen, Pandemic Evictor: Don Mullen’s Pretium Partners Files
to Evict Black Renters, Collects Billions from Investors, PRIVATE EQUITY
STAKEHOLDER PROJECT (Apr. 2021), https://pestakeholder.org/wp-
content/uploads/2021/04/Pandemic-Evictor-Pretium-Partners-PESP-041421.pdf.
66. See, e.g., Vero Beach v. Harvey Smith Jr., No. 05-2018-CC-027948 (Fla.
Cir. Ct., Brevard Cty., May 11, 2018) (suit by consulate to collect unpaid debts
of resident and demanding attorney’s fees).
67. See, e.g., Dowell Properties v. Ellen Balentine and Justin Balentine, No.
SC-2012-2915 (Okla. Dist. Ct. July 13, 2012) (suit alleging indebtedness of
resident).
68. James Fontanella-Khan, Sujeet Indap & Barney Thompson, How a
Private Equity Boom Fuelled the World’s Biggest Law Firm, FIN. TIMES (June 6,
2019), https://www .ft.com/content/13696928-86d5-11e9-a028-86cea8523dc2.
69. Id.
 70. Id.
71. Id.
72. See, e.g., Private Equity, LATHAM & WATKINS,
https://www.lw.com/practices/private equity; Private Equity, HOGANLOVELLS,
https://www.hoganlovells.com/en/service/private-equity; Private Equity Fund
Litigation, QUINN EMANUEL URQUHART & SU L L I V A N , LLP,
https://www.quinnemanuel.com/practice-areas/investment-fund-
litigation/private-equity-fund-litigation/; Private Equity, GIBSON DUNN,
https://www.gibsondunn.com/practice/private-equity/; Private Equity,
GREENBERG TRAURIG, https://www.gtlaw.com/en/capabilities/corporate/private-
equity.
73. Private Equity Fund Litigation, QUINN EMANUEL URQUHART & SULLIVAN,
LLP, https://www.quinnemanuel.com/practice-areas/investment-fund-
litigation/private-equity-fund-litigation/.
74. Private Equity Litigation, SIDLEY AUSTIN,
https://www.sidley.com/en/services/commercial-litigation-and-disputes/private-
equity-litigation.
75. Complaint, Salley v. Heartland-Charleston of Hanahan, SC, LLC et al.,
No. 2:10-cv-791 (D.S.C. Mar. 29, 2010), ECF No. 1.
76. Id.
77. Id.
78. Motion to Dismiss at 4, Salley v. Heartland-Charleston of Hanahan, SC,
LLC et al., No. 2:10-cv-791 (D.S.C. June 25, 2010), ECF No. 15.
79. Order on Motion to Dismiss at 9, Salley v. Heartland-Charleston of
Hanahan, SC, LLC et al., No. 2:10-cv-791 (D.S.C. Dec. 10, 2010), ECF No. 45.
80. Id.
81. David G. Stevenson, Nursing Home Ownership Trends and Their Impact
on Quality of Care: A Study Using Detailed Ownership Data from Texas, 25 J.
AGING SOC. POL’Y (2013),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4825679/.
82. Scott Brass Overview, PITCHBOOK,
https://pitchbook.com/profiles/company/10474-03#overview.
83. Sun Capital Acquires Scott Brass, MERGERS & ACQUISITIONS (Feb. 19,
2007), https://www.themiddlemarket.com/news/sun-capital-acquires-scott-brass.
84. Complaint, Sun Capital Partners III, LP, et al. v. New England Teamsters
& Trucking Industry Pension Fund, (D. Mass. June 4, 2010), ECF No. 1.
 85. Federal Court Finds Investment Funds Not Liable for Portfolio
Company-Employer’s Withdrawal Liability, AKIN GUMP (Nov. 9, 2012),
https://www.akingump.com/en/news-insights/federal-court-finds-investment-
funds-not-liable-for-portfolio.html.
86. First Circuit Sun Capital Decision Increases ERISA Exposure for Private
Equity Funds, DAVIS POLK (Aug. 6, 2013),
https://www.davispolk.com/sites/default/files/08.06.13.Sun_.Capital.pdf.
87. First Circuit Overturns Sun Capital Decision, SULLIVAN & CROMWELL
LLP (Dec. 2, 2019), https://www.sullcrom.com/files/upload/SC-Publication-
First-Circuit-Overturns-Sun-Capital-Decision.pdf.
88. Martina Barash, Sun Capital Advisors Wins Battle over Teamsters
Pension Fund, BLOOMBERG LAW (Nov. 22, 2019),
https://news.bloomberglaw.com/employee-benefits/teamsters-pension-fund-
cant-recover-from-private-equity-funds.
89. Maria Glover, Mass Arbitration, 74 STAN. L. REV. 1283 (2022); Myriam
Giles, The Day Doctrine Died: Private Arbitration and the End of Law, U. ILL.
L. REV. 371, 278–290 (2016).
90. Robert H. Klonoff, The Decline of Class Actions, 90 WASH. U. L. REV.
729 (2013).
91. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011); Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (“Section 2
is a congressional declaration of a liberal federal policy favoring arbitration
agreements.”).
92. AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).
93. American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304
(2013).
94. Epic Systems v. Lewis, 138 S. Ct. 1612, 1626 (2018).
95. Glover, supra note 89.
96. Id.; Scott Medintz, Forced Arbitration: A Clause for Concern,
CONSUMER REPORTS (Jan. 30, 2020),
https://www.consumerreports.org/mandatory-binding-arbitration/forced-
arbitration-clause-for-concern.
97. Glover, supra note 89.
98. See, e.g., Ed Williams, “An Anything-Goes Situation”: Assessing
Arbitration Agreements at Nursing Homes, LAS CRUCES SUN NEWS (July 11,
2020), https://www.lcsun-news.com/story/news/2020/07/11/an-anything-goes-
situation/5421301002/ (Discussing arbitration agreements at the private equity–
owned Genesis nursing home chain).
99. Preston Darron v. Invitation Homes, No. 2020-M6-001029 (Ill. Cir. Jan.
23, 2020) (compelling case to arbitration).
100. Complaint at ¶ 206, Mayberry et al., v. KKR & Co., LP, et al., No. CI-
17-1348 (Ky. Cir. Ct. Feb. 26, 2018).
101. Overstreet v. Mayberry, 603 S.W.3d 244, 256 (Ky. 2020).
102. Id.
103. Kentucky Supreme Court Dismisses $50 Billion Derivative Action
Against Hedge Fund Managers for Lack of Standing, PAUL WEISS,
https://www.paulweiss.com/practices/transactional/investment-
management/publications/kentucky-supreme-court-dismisses-50-billion-
derivative-action-against-hedge-fund-managers-for-lack-of-standing?id =37533.
104. E.g., Michael Corkery, Amazon Ends Use of Arbitration for Customer
Disputes, N.Y. TIMES (Sept. 28, 2021),
https://www.nytimes.com/2021/07/22/business/amazon-arbitration-customer-
disputes.html (Noting that “Amazon faces potentially tens of millions of dollars
in fees that it will have to pay the private arbitrators to have those cases
heard.”); Alison Frankel, Forced into Arbitration, 12,500 Drivers Claim Uber
Won’t Pay Fees to Launch Cases, REUTERS (Dec. 6, 2018),
https://www.reuters.com/article/legal-us-otc-uber/forced-into-arbitration-12500-
drivers-claim-uber-wont-pay-fees-to-launch-cases-idUSKBN1O52C6. (“Under
Uber’s arbitration provisions, it’s up to the company to pay initial arbitration
fees.”); Nicholas Iovino, DoorDash Ordered to Pay $9.5M to Arbitrate 5,000
Labor Disputes, COURTHOUSE NEWS (Feb. 10, 2020),
https://www.courthousenews.com/doordash-ordered-to-pay-12m-to-arbitrate-
5000-labor-disputes/ (“DoorDash refused to pay its share of fees”).
105. Glover, supra note 89; FanDuel Announces Series E Financing of $275
Million from KKR, Google Capital and Time Warner, BUSINESS WIRE (July 14,
2015),
https://www.businesswire.com/news/home/20150714005506/en/FanDuel-
Announces-Series-E-Financing-of-275-Million-from-KKR-Google-Capital-and-
Time-Warner9/26/2022; Ben Penn, Buffalo Wild Wings Case Tests Future of
Class Action Waivers, BLOOMBERG L. (July 12, 2018),
https://news.bloomberglaw.com/daily-labor-report/buffalo-wild-wings-case-
tests-future-of-class-action-waivers.
 106. Alison Frankel, “This Hypocrisy Will Not Be Blessed”: Judge Orders
DoorDash to Arbitrate 5,000 Couriers’ Claims, REUTERS (Feb. 11, 2020),
https://www.reuters.com/article/us-otc-doordash/this-hypocrisy-will-not-be-
blessed-judge-orders-doordash-to-arbitrate-5000-couriers-claims-
idUSKBN2052S1.
107. Id.
108. Glover, supra note 89; Michael Holecek, As Mass Arbitrations
Proliferate, Companies Have Deployed Strategies for Deterring and Defending
Against Them, GIBSON DUNN (May 24, 2021), https://www.gibsondunn.com/as-
mass-arbitrations-proliferate-companies-have-deployed-strategies-for-deterring-
and-defending-against-them/.
109. Order on Motion to Dismiss at 2, In re: Nine West LBO Securities
Litigation, No. 1:20-md-2941 (S.D.N.Y. Dec. 4, 2020), ECF No. 423.
110. Id. at 6.
111. Id. at 29.
112. William D. Cohan, The Private Equity Party Might Be Ending. It’s
About Time., N.Y. TIMES (Feb. 28, 2021),
https://www.nytimes.com/2021/02/28/opinion/private-equity-reckoning.html.
113. Stipulation of Voluntary Dismissal, In re: Nine West LBO Securities
Litigation, No. 1:20-md-2941 (S.D.N.Y. Dec. 4, 2020), ECF No. 429.
114. Cohan, supra note 112.
115. Interview with Cathy Hershcopf, partner, Cooley (Jan. 12, 2022).
116. Gillian Tan, Debt Rises in Leveraged Buyouts Despite Warnings, WALL
ST. J. (May 20, 2014),
https://www.wsj.com/articles/SB10001424052702304422704579574184101045614;
Chibuike Oguh, Analysis: Private Equity Investors Fret over Record U.S.
Buyout Prices, REUTERS (Mar. 16, 2021),
https://www.reuters.com/business/private-equity-investors-fret-over-record-us-
buyout-prices-2021-03-16.

CHAPTER 9: PRIVATIZING THE PUBLIC SECTOR

1. Julianne Mattera, Middletown Approves 50-Year Water, Sewer Lease with
United Water, PENN-LIVE (Sept. 30, 2014),
https://www.pennlive.com/midstate/2014/09/middletown_approves_50-
year_wa.html.
 2. Comprehensive Annual Financial Report for the Fiscal Year Ended
December 31, 2014, TOWNSHIP OF MIDDLETOWN 19 (2015),
https://www.middletownbucks.org/Departments/Finance/Financial-
Reports/Reports/CAFR_2014.
3. Middletown, Dauphin County, Pennsylvania, WIKIPEDIA,
https://en.wikipedia.org/wiki/Middletown,_Dauphin_County,_Pennsylvania.
4. Middletown Borough, Pennsylvania, CENSUS BUREAU,
https://www.census.gov/quick
facts/fact/table/middletownboroughpennsylvania,US/SEX255221 (the
Middletown per capita income is $29,575; the US per capita income is $37,638).
5. Complaint at ¶ 59, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018), ECF No. 1.
6. Mattera, supra note 1.
7. Id.
8. Complaint at ¶ 12, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
9. Memorandum on Order on Motion to Dismiss at 4, Middletown Borough
v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D. Pa. Mar. 27,
2019), ECF No. 66 (Middletown Water ultimately made a final offer of a $43
million payment, with annual payments of $750,000).
10. United Water and KKR Sign Utility Partnership with Borough of
Middletown, BUSINESS WIRE (Dec. 11, 2014),
https://www.businesswire.com/news/home/20141211006533/en/United-Water-
and-KKR-Sign-Utility-Partnership-with-Borough-of-Middletown-PA.
11. Memorandum on Order on Motion to Dismiss at 2, Middletown Borough
v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D. Pa. Mar. 27,
2019), ECF No. 66.
12. Complaint at ¶ 56, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18cv861 (M.D. Pa. Apr. 20, 2018).
13. Jackie Foster, FACEBOOK (Mar. 8, 2018).
https://www.facebook.com/middletown .borough/posts/1263031863827564.
14. Sheila Hinkson, FACEBOOK (Mar. 9, 2018),
https://www.facebook.com/middletown .borough/posts/1263031863827564.
15. Tom Buck, FACEBOOK (Mar. 9, 2018),
https://www.facebook.com/middletown .borough/posts/1263031863827564.
16. Julianne Mattera, Middletown Approves 50-Year Water, Sewer Lease with
United Water, PENNLIVE 9 (Sept. 30, 2014)
https://www.pennlive.com/midstate/2014/09/middletown_approves_50-
year_wa.html; Benjamin Kapenstein, LINKEDIN,
https://www.linkedin.com/in/benjamin-kapenstein-798a3756/.
17. Complaint at ¶ 24-27, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
18. Docket, Middletown Borough v. Middletown Water Joint Venture LLC,
No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
19. Memorandum on Order on Motion to Dismiss at 13, Middletown
Borough v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D. Pa.
Mar. 27, 2019), ECF No. 66 (Middletown Water ultimately made a final offer of
a $43 million payment, with annual payments of $750,000).
20. Public Notice, SUEZ (2018), https://middletownborough.com/wp-
content/uploads/2018/07/Middletown-Boil-Water-Advisory-FAQs.pdf.
21. Andrew Vitelli, KKR Makes Splash with US Water PPP Exits,
INFRASTRUCTURE INVESTOR (Jan. 26, 2018),
https://www.infrastructureinvestor.com/66833-2/.
22. A Tale of Two Public-Private Partnership Cities, KNOWLEDGE AT
WHARTON (June 10, 2015), https://knowledge.wharton.upenn.edu/article/a-tale-
of-two-public-private-partnership-cities/.
23. United Water and KKR Sign Unique Utility Partnership with City of
Bayonne, NJ, KKR (Dec. 20, 2012), https://media.kkr.com/news-details/?
news_id=a371ff23-5bc6-48ab-8ca8-c4b8769837d0&type=1&download=1.
24. United Water, United Water Announces Commitment to Action at 2012
Clinton Global Initiative Annual Meeting, CISION (Sept. 25, 2012),
https://www.prnewswire.com/news-releases/united-water-announces-
commitment-to-action-at-2012-clinton-global-initiative-annual-meeting-
171193121.html; United Water and KKR Sign Unique Utility Partnership with
City of Bayonne, NJ, BUSINESS WIRE (Dec. 20, 2012), https://www
.businesswire.com/news/home/20121220005674/en/United-Water-and-KKR-
Sign-Unique-Utility-Partnership-with-City-of-Bayonne-NJ.
25. Peter D’Auria, Frustration over Bayonne’s Water Contract Has Reached
a Boiling Point. Can the City Find a Way Out?, JERSEY J. (June 8, 2021),
https://www.nj.com/hudson/2021/06/frustration-over-bayonnes-water-contract-
has-reached-a-boiling-point-can-the-city-find-a-way-out.html.
26. Dan Israel, Come Hell or High Water, HUDSON RPTR. (May 19, 2021),
https://hudsonreporter.com/2021/05/19/come-hell-or-high-water/.
 27. Corey W. McDonald, Bayonne Hit with 9 Percent Water Rate Hike—
Second Highest Increase Since 2012 Contract, JERSEY J. (Feb. 13, 2019),
https://www.nj.com/hudson/2019/02/bayonne-hit-with-9-percent-water-rate-
hike-second-highest-increase-since-2012-contract.html.
28. Andrew Vitelli, KKR Makes Splash with US Water PPP Exits,
INFRASTRUCTURE INV. (Jan. 26, 2018),
https://www.infrastructureinvestor.com/66833-2/.
29. Israel, supra note 26.
30. D’Auria, supra note 25.
31. Danielle Ivory et al., In American Towns, Private Profits from Public
Works, N.Y. TIMES (Dec. 24, 2016),
https://www.nytimes.com/2016/12/24/business/dealbook/private-equity-
water.html.
32. Ray C. Fair, U.S. Infrastructure: 1929–2019 (Cowles Foundation
Discussion Paper No. 2187, July 2019),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=343 2670.
33. Michael A. Pagano & Christopher W. Hoene, City Budgets in an Era of
Increased Uncertainty, BROOKINGS INSTITUTION 4–5 (July 2018),
https://www.brookings.edu/wp-content/uploads/2018/07/20180718_Brookings-
Metro_City-fiscal-policy-Pagano-Hoene-final.pdf.
34. Carlyle Commits Over $100 Million in Battery Storage and Electric
Vehicle Infrastructure Technologies to Accelerate the Energy Transition,
CARLYLE (Jan. 14, 2022), https://www.carlyle.com/media-room/news-release-
archive/carlyle-commits-over-100-million-battery-storage-electric-vehicle-
infrastructure-energy-transition.
35. KKR Portfolio, KKR, https://www.kkr.com/businesses/private-
equity/kkr-portfolio (KKR invested in Genesis Energy, LP and Rocky Mountain
Midstream).
36. As Climate Change Requires Cuts to Coal, Private Equity Buys More,
PRIVATE EQUITY STAKEHOLDER PROJECT (June 2020),
https://pestakeholder.org/wp-content/uploads/2020/07/PESP-As-Coal-Declines-
PE-Buys-More.pdf.
37. Blackstone Infrastructure Partners Acquires Stake in Phoenix Tower
International, BLACKSTONE (Jan. 18, 2022),
https://www.blackstone.com/news/press/blackstone-infrastructure-partners-
acquires-stake-in-phoenix-tower-international/.
 38. Macky Tall & Pooja Goyal, Addressing the Global Infrastructure
Funding Gap, CARLYLE (Oct. 15, 2021), https://www.carlyle.com/global-
insights/addressing-global-infrastructure-funding-gap-macky-tall-pooja-goyal.
39. Greg Roumeliotis, KKR Joins Private Equity Charge in U.S. Water,
REUTERS (Dec. 20, 2012), https://www.reuters.com/article/us-kkr-water/kkr-
joins-private-equity-charge-in-u-s-water-idUSBRE8BJ0GL20121220.
40. Investor Group Buys West Corp., N.Y. TIMES (June 1, 2006),
https://www.nytimes .com/2006/06/01/business/01west.html. Despite several
changes, the company stayed in the hands of private equity. Lee and Quadrangle
took the company public again in 2013, though along with the companies’
founders, continued to hold a near majority of shares in the business. West
Corporation Enters into Definitive Agreement to Be Acquired by Certain Funds
Affiliated with Apollo Global Management for $23.50 per Share in Cash,
THOMAS H. LEE PARTNERS (May 10, 2017), https://thl .com/news-post/west-
corporation-enters-into-definitive-agreement-to-be-acquired-by-certain-funds-
affiliated-with-apollo-global-management-for-23-50-per-share-in-cash/. In
2017, Apollo Global Management bought the business outright, taking it private
once again. Apollo Global to Buy West Corp for About $2 billion, REUTERS
(May 8, 2017), https://www.reuters.com/article/us-west-m-a-apollo-
global/apollo-global-to-buy-west-corp-for-about-2-billion-idUSKBN1852RN.
41. April 2014 Multistate 911 Outage Report, FCC 4 (Oct. 17, 2014),
https://www.fcc .gov/document/april-2014-multistate-911-outage-report.
42. Order, In the Matter of Intrado Communications Inc., No. EB-SED-14-
00017191 (FCC Apr. 6, 2015),
https://apps.fcc.gov/edocs_public/attachmatch/DA-15-421A1.pdf.
43. Colin Wood, 911 Vendor Intrado Takes Responsibility for Widespread
Outage, STATESCOOP (Oct. 2, 2020), https://statescoop.com/911-outage-intrado/.
44. Phil Harvey, CenturyLink, West Safety Agree to Pay Up for 911 Outage,
LIGHT READING (Nov. 5, 2019),
https://www.lightreading.com/automation/centurylink-west-safety-agree-to-pay-
up-for-911-outage/d/d-id/755381; WSC Settles for $175K over Multi-State 911
Outage in Aug 2018, FCC (Nov. 4, 2019), https://www.fcc.gov/document/wsc-
settles-175k-over-multi-state-911-outage-aug-2018.
45. FCC Report on CenturyLink Network Outage, FCC 3 (Aug. 19, 2019),
https://www.fcc.gov/document/fcc-report-centurylink-network-outage.
46. Colin Wood, 911 Vendor Intrado Takes Responsibility for Widespread
Outage, STATE SCOOP (Oct. 2, 2020), https://statescoop.com/911-outage-intrado/.
 47. FCC Reaches Settlement of Intrado 911 Outage Investigation, FCC (Dec.
17, 2021), https://www.fcc.gov/document/fcc-reaches-settlement-intrado-911-
outage-investigation.
48. West Corporation Reports Fourth Quarter and Full Year 2006 Results,
WEST CORPORATION (Jan. 31, 2007), https://ir.intrado.com/static-files/240d47fc-
e3e4-48b2-839a-8669d88924f3.
49. West Corporation Annual Report 2016, WEST CORPORATION 31 (2017),
https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_WSTC_2016_0e
50. Apollo Global to Buy West Corp for About $2 Billion, REUTERS (May 9,
2017), https://www.reuters.com/article/us-west-m-a-apollo-global/apollo-global-
to-buy-west-corp-for-about-2-billion-idUSKBN1852RN.
51. Fitch Downgrades Intrado’s IDR to “B-,” Outlook Stable, FITCHRATINGS
(Aug. 25, 2021), https://www.fitchratings.com/research/corporate-finance/fitch-
downgrades-intrado-idr-to-b-outlook-stable-25-08-2021.
52. Robin A. Johnson, The Future of Local Emergency Medical Service:
Ambulance Wars or Public-Private Truce?, REASON PUBLIC POLICY INSTITUTE
(2001), https://reason.org/wp-
content/uploads/2001/08/02987706670b6394141064d6c60f0d80.pdf.
53. Id.
54. Steven Potter, Sounding the Alarm, PROGRESSIVE MAGAZINE (Feb. 1,
2019), https://progressive.org/magazine/sounding-the-alarm/.
55. Tom Corrigan, Ambulance Operator Controlled by Lynn Tilton Files for
Bankruptcy, WALL ST. J. (Feb. 25, 2016),
https://www.wsj.com/articles/ambulance-operator-controlled-by-lynn-tilton-
files-for-bankruptcy-1456438453; Olivia Webb, Private Equity Chases
Ambulances, AM. PROSPECT (Oct. 3, 2019), https://prospect.org/health/private-
equity-chases-ambulances-emergency-medical-transport/; Chris Anderson,
Private Equity Firm Buys Emergency Medical Services for $3.2 Billion,
HEALTHCARE FINANCE (Feb. 15, 2011),
https://www.healthcarefinancenews.com/news/private-equity-firm-buys-
emergency-medical-services-32-billion; KKR Buys AMR for $2.4bn, FINANCIER
WORLDWIDE (Oct. 2017), https://www.financierworldwide.com/kkr-buys-amr-
for-24bn.
56. John Tozzi, Air Ambulances Are Flying More Patients Than Ever, and
Leaving Massive Bills Behind, BLOOMBERG (June 11, 2018),
https://www.bloomberg.com/news/features/2018-06-11/private-equity-backed-
air-ambulances-leave-behind-massive-bills.
 57. Danielle Ivory et al., When You Dial 911 and Wall Street Answers, N.Y.
TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-911-
and-wall-street-answers.html. (Envision Healthcare, which bought Rural/Metro,
told the New York Times that “[w]e are continuing to hire paramedics and
E.M.T.s,” while Warburg Pincus said that “[d]espite several initiatives
undertaken by the company’s board and management team… [the] challenges
Rural/Metro faced were too difficult to overcome.”).
58. Id.
59. See, e.g., PatientCare EMS Solutions Acquires MedFleet Ambulance
Service, A&M CAPITAL PARTNERS (Feb. 12, 2020), https://www.a-
mcapital.com/patientcare-ems-solutions-acquires-medfleet-ambulance-service;
Harbour Point Capital Completes Investment in Midwest Medical Transport,
PRIVATE EQUITY WIRE (Jan. 27, 2022),
https://www.privateequitywire.co.uk/2022/01/27/311601/harbour-point-capital-
completes-investment-midwest-medical-transport.
60. Rebecca Pifer, Ground Ambulance Costs Continue to Soar, Study Finds,
HEALTH CARE DIVE (Feb. 22, 2022),
https://www.healthcaredive.com/news/ground-ambulance-costs-continue-to-
soar-study-finds/619195/.
61. Analysis: Half of Emergency Ambulance Rides Lead to Out-of-Network
Bills for Privately Insured Patients, KAISER FAMILY FOUNDATION (June 24,
2021), https://www.kff .org/health-costs/press-release/analysis-half-of-
emergency-ambulance-rides-lead-to-out-of-network-bills-for-privately-insured-
patients/.
62. Loren Adler, High Air Ambulance Charges Concentrated in Private
Equity–Owned Carriers, BROOKINGS INSTITUTION (Oct. 13, 2020),
https://www.brookings.edu/blog /usc-brookings-schaeffer-on-health-
policy/2020/10/13/high-air-ambulance-charges-concentrated-in-private-equity-
owned-carriers/.
63. David Lohr, Arizona Firefighters Charge Family Nearly $20,000 After
Home Burns Down, HUFFPOST (Nov. 11, 2013),
https://www.huffpost.com/entry/justin-purcell-fire_n_4242734.
64. Id.
65. Ivory et al., supra note 57.
66. Henry Kravis, BLOOMBERG,
https://www.bloomberg.com/billionaires/profiles/henry-r-kravis/.
 67. Two Decades of Change in Federal and State Higher Education
Funding, PEW CHARITABLE TRUST (2019),
https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/10/two-
decades-of-change-in-federal-and-state-higher-education-funding.
68. Id. (In 1990, state per student funding was almost 140 percent more than
federal government. As of 2018, state per student funding was 18 percent more
than the federal government.)
69. Tuition Costs of Colleges and Universities, NATIONAL CENTER FOR
EDUCATION STATISTICS, https://nces.ed.gov/fastfacts/display.asp?id=76.
70. Richard D. Kahlenberg et al., Policy Strategies for Pursuing Adequate
Funding of Community Colleges, CENTURY FOUNDATION (Oct. 25, 2018),
https://tcf.org/content/report/policy-strategies-pursuing-adequate-funding-
community-colleges/; Melanie Hanson, Average Cost of Community College,
EDUCATION DATA INITIATIVE (Dec. 27, 2021), https://educationdata.org/average-
cost-of-community-college.
71. Alex Goldstein & Jim Baker, Private Equity’s Failing Grade: Private
Equity Investment in For-Profit Colleges, PRIVATE EQUITY STAKEHOLDER
PROJECT 10 (Mar. 2018), https://pestakeholder.org/wp-
content/uploads/2018/03/Private-Equitys-Failing-Grade-PESP-AFR-032218-
2.pdf.
72. Stephanie Hall, The Students Funneled into For-Profit Colleges,
CENTURY FOUND. (May 11, 2021), https://tcf.org/content/report/students-
funneled-profit-colleges/.
73. 10 Key Facts About Student Debt in the United States, PETER G.
PETERSON FOUNDATION (May 5, 2021), https://www.pgpf.org/blog/2021/05/10-
key-facts-about-student-debt-in-the-united-states.
74. Hall, supra note 72.
75. Stephanie Riegg Cellini, The Alarming Rise in For-Profit College
Enrollment, BROOKINGS INSTITUTION (Nov. 2, 2020),
https://www.brookings.edu/blog/brown-center-chalkboard/2020/11/02/the-
alarming-rise-in-for-profit-college-enrollment/.
76. Charlie Eaton et al., When Investor Incentives and Consumer Interests
Diverge: Private Equity in Higher Education 2 (Nat’l Bureau of Econ. Rsch.,
Working Paper No. 24976, 2019) https://www.nber.org/papers/w24976.
77. Complaint ¶ 26, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
 78. Bridgepoint Education, Inc.: A Case Study in For-Profit Education and
Oversight, S. Hrg. 112-774 (Mar. 10, 2011),
https://www.govinfo.gov/content/pkg/CHRG-112shrg81200/html/CHRG-
112shrg81200.htm.
79. Id.
80. Complaint, California v. Ashford University, LLC et al., No. 37-2018-
00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
81. Id. at ¶ 29.
82. Id. at ¶ 116.
83. Veterans Education Success, VETERAN AND SERVICEMEMBER COMPLAINTS
ABOUT MISCONDUCT AND ILLEGAL PRACTICES AT ASHFORD UNIVERSITY 12 (2017),
https://vetsedsuccess.org/wp-content/uploads/2018/09/VES-Ashford-Report-
2017-Fall.pdf.
84. Id.
85. Complaint at ¶ 37, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017). Ashford was
eventually found guilty. Statement of Decision, California v. Ashford University,
LLC et al., (Cal. Super. Ct., San Diego Cty Nov. 8, 2021).
86. Complaint ¶ 107, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
87. Id.
88. Id. at ¶ 34.
89. Trends in College Pricing and Student Aid 2021, COLLEGE BOARD 3
(2021), https://research.collegeboard.org/media/pdf/trends-college-pricing-
student-aid-2021.pdf.
90. Complaint, California v. Ashford University, LLC et al., No. 37-2018-
00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
91. Veteran and Servicemember Complaints About Misconduct and Illegal
Practices at Ashford University, VETERANS EDUCATION SUCCESS 8 (2017),
https://vetsedsuccess.org/wp-content/uploads/2018/09/VES-Ashford-Report-
2017-Fall.pdf.
92. Id. at 12.
93. Complaint ¶ 48, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
94. Id. at ¶ 8.
95. Id. at ¶ 3.
96. Id. at ¶ 43.
 97. Attorney General Bonta: Ashford University Must Pay $22 Million in
Penalties for Defrauding California Students, CALIFORNIA DEPARTMENT OF
JUSTICE (Mar. 7, 2022), https://oag.ca.gov/news/press-releases/attorney-general-
bonta-ashford-university-must-pay-22-million-penalties.
98. See, e.g., Bridgepoint Education, Inc., supra note 78 (In their materials to
U.S. News & World Report, the college said that “[f]ounded in 1918, Ashford
University is committed to providing accessible, affordable, innovative, high-
quality degree programs to its campus, online, and accelerated students.”).
99. Shellie Nelson, Ashford University to Close Campus in Clinton, Iowa,
WQAD NEWS 8 (July 9, 2015),
https://www.wqad.com/article/news/education/ashford-university-to-close-
campus-in-clinton-iowa/526-f5b9cde9-b200-496b-84a9-07890263f254.
100. Tamar Lewin, Hearing Sees Financial Success and Education Failures
of For-Profit College, N.Y. TIMES (Mar. 10, 2011),
https://www.nytimes.com/2011/03/11/education/11college.html.
101. Bridgepoint Education, Inc., supra note 78.
102. Id.
103. Consumer Financial Protection Bureau Takes Action Against
Bridgepoint Education, Inc. for Illegal Student Lending Practices, CONSUMER
FINANCIAL PROTECTION BUREAU (Sept. 12, 2016),
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-takes-action-against-bridgepoint-education-inc-illegal-
student-lending-practices/.
104. Ashford University and Parent Company Bridgepoint Education Agree
to $7.25 Million Payment and Major Changes After Miller Alleges Consumer
Fraud, OFFICE OF THE IOWA ATTORNEY GENERAL (May 16, 2014),
https://www.iowaattorneygeneral.gov/newsroom/ashford-university-and-parent-
company-bridgepoint-education-agree-to-7-25-million-payment-and-majo.
105. Law Enforcement Actions Against Predatory Colleges, DEPARTMENT OF
EDUCATION (2018), https://sites.ed.gov/naciqi/files/2018/05/NACIQI-Enclosure-
1-law-enforcement .pdf.
106. Jake Steinberg, UA Acquires For-Profit Ashford University, Launches
New Online “Campus.” ARIZ. PUB. MEDIA (Dec. 1, 2020),
https://news.azpm.org/p/news-splash/2020/12/1/184791-ua-acquires-for-profit-
ashford-university-launches-new-online-campus/ (Ashford was sold for a
symbolic one dollar, but Zovio, Ashford’s parent, was entitled to over 19
percent of the tuition revenue coming from the school).
 107. Bridgepoint Education, Inc., PROSPECTUS (Aug. 3, 2011),
https://www.sec.gov/Archives/edgar/data/1305323/000119312511208297/d424b3.htm
(“In January 2004, our principal investor, Warburg Pincus Private Equity VIII,
L.P. (‘Warburg Pincus’), and our CEO and president, Andrew Clark, as well as
several other members of our current executive management team, launched
Bridgepoint Education, Inc. to establish a differentiated postsecondary education
provider.”). Andrew Clark, How I Did It: Andrew Clark, Bridgepoint Education,
INC.COM (Sept. 1, 2008), https://www.inc.com/magazine/20080901/how-i-did-it-
andrew-clark-bridgepoint-education.html (Andrew Clark, cofounder of
Bridgepoint’s parent company, said that “I started knocking on the doors of
investors and soon forged a relationship with Warburg Pincus.”).
108. Melissa Korn, Bridgepoint Investor Files for Stake Sale, WALL ST. J.
(July 25, 2011),
https://www.wsj.com/articles/SB10001424053111903591104576468193396752056;
Megha Mandavia, Investors Seen as Too Tough on Bridgepoint, REUTERS (July
23, 2012), https://www.reuters.com/article/us-bridgepoint-
accreditation/investors-seen-as-too-tough-on-bridgepoint-
idUSBRE86M12I20120723.
109. Bridgepoint Education, Inc., U.S. SENATE COMMITTEE ON HEALTH,
EDUCATION, LABOR AND PENSIONS 2,
https://www.help.senate.gov/imo/media/for_profit_report/PartII/Bridgepoint.pdf.
110. Senator Harkin’s hearing was in March 2011. Warburg Pincus filed
papers to divest in July of that year. Tamar Lewin, Hearing Sees Financial
Success and Education Failures of For-Profit College, N.Y. TIMES (Mar. 10,
2011), https://www.nytimes .com/2011/03/11/education/11college.html; Melissa
Korn, Bridgepoint Investor Files for Stake Sale, WALL ST. J. (July 25, 2011),
https://www.wsj.com/articles/SB10001424053111903591104576468193396752056.
111. Bridgepoint Education, Inc., supra note 78.
112. Bridgepoint Education (BPI) Prices 7.56M Share Secondary Offering
by Warburg Pincus LLC; Announces 2.1M Share Buyback, STREET INSIDER
(Nov. 17, 2017), https://www
.streetinsider.com/Corporate+News/Bridgepoint+Education+
(BPI)+Prices+7.56M+Share
+Secondary+Offering+by+Warburg+Pincus+LLC;+Announces+2.1M+Share+Buyback/13521
113. Zovio, WIKIPEDIA, https://en.wikipedia.org/wiki/Zovio (“On November
15, 2017, Bridgepoint suspended enrolling GI Bill students for Ashford
University after a controversial exposé on the school appeared in the Chronicle
of Higher Education. On November 17, 2017, Warburg Pincus, Bridgeport
Education’s major underwriter, announced its complete divestment from
Bridgepoint.”).
114. Bridgepoint Education, Inc., supra note 78.
115. Goldstein and Baker, supra note 71, at 2.
116. Ben Unglesbee, Private Equity’s Role in the Rise—and Fall—of For-
Profit Colleges, HIGHER ED DEEP DIVE (May 6, 2019),
https://www.highereddive.com/news/private-equitys-role-in-the-rise-and-fall-of-
for-profit-colleges/554077/.
117. For-Profit College Company to Pay $95.5 Million to Settle Claims of
Illegal Recruiting, Consumer Fraud and Other Violations, DEPARTMENT OF
JUSTICE (Nov. 16, 2015), https://www.justice.gov/opa/pr/profit-college-
company-pay-955-million-settle-claims-illegal-recruiting-consumer-fraud-and
(As part of the settlement, Education Management did not admit to any
liability).
118. For-Profit Education Company to Pay $13 Million to Resolve Several
Cases Alleging Submission of False Claims for Federal Student Aid,
DEPARTMENT OF JUSTICE (June 24, 2015), https://www.justice.gov/opa/pr/profit-
education-company-pay-13-million-resolve-several-cases-alleging-submission-
false (As part of the settlement, Education Affiliates did not admit to any
liability).
119. Hayley Brown, Private Equity in Higher Education: A Full Ride at
Student and Taxpayer Expense?, CENTER FOR ECONOMIC AND POLICY RESEARCH,
https://cepr.net/private-equity-in-higher-education-a-full-ride-at-student-and-
taxpayer-expense/; Vatterott College System Closes All 15 Campuses,
ASSOCIATED PRESS (Dec. 18, 2018), https://apnews .com/article/us-news-
education-st-louis-us-department-of-education-71a07fb863bf4e459
a7f1c2417cb1ecd; Major For-Profit College Chain Abruptly Announces Closure
of Dozens of Schools, NBC NEWS (Dec. 6, 2018),
https://www.nbcnews.com/news/education/major-profit-college-chain-abruptly-
announces-closure-dozens-schools-n944696.
120. Complaint ¶ 30, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017) (specifically,
Ashford got between 80.9 and 86.8 percent of its revenue from the federal
government).
121. Goldstein & Baker, supra note 71, at 2.
 122. Allie Bidwell, Education Department’s Gainful Employment Rules
Rebuffed, U.S. NEWS & WORLD REPORT (Oct. 30, 2014),
https://www.usnews.com/news/articles/2014/10/30/obama-administrations-
gainful-employment-rules-upset-student-groups-for-profits.
123. Danielle Douglas-Gabriel, Biden Administration Clashes with
Consumer Groups over the Reinstatement of Obama-Era Career Training
Regulation, WASH. POST (Nov. 18, 2021),
https://www.washingtonpost.com/education/2021/11/17/gainful-employment-
rule-biden-administration/.
124. Goldstein & Baker, supra note 71, at 5; Paul Fain, Some U of Phoenix
Programs Fail Gainful Employment Standard, INSIDE HIGHER ED (Nov. 28,
2016), https://www.insidehighered.com/quicktakes/2016/11/28/some-u-phoenix-
programs-fail-gainful-employment-standard.
125. Goldstein & Baker, supra note 71, at 6.
126. Fain, supra note 124.
127. Jackie Roberts, Erie’s Fortis Institute to Close Its Doors, YOUR ERIE
(July 18, 2018), https://www.yourerie.com/news/local-news/eries-fortis-
institute-to-close-its-doors/; Fortis Institute-Baltimore, COLLEGE TUITION
COMPARE, https://www.collegetuition compare.com/edu/450076/fortis-institute-
baltimore/.
128. Karen Campbell & Tim Tooten, Brightwood College Suddenly Closes
Leaving Students Frustrated, WBAL-TV (Dec. 6, 2018),
https://www.wbaltv.com/article/brightwood-college-suddenly-closes-leaving-
students-frustrated/25425539.
129. Institute for College Access & Success, Fact Sheet: What to Know
About the Gainful Employment Rule, HIGHER ED NOT DEBT (August 12, 2019),
https://higherednotdebt .org/blog/fact-sheet-what-to-know-about-the-gainful-
employment-rule.
130. Eric Lichtblau, With Lobbying Blitz, For-Profit Colleges Diluted New
Rules, N.Y. TIMES (Dec. 9, 2011),
https://www.nytimes.com/2011/12/10/us/politics/for-profit-college-rules-scaled-
back-after-lobbying.html.
131. Russ Choma, Rep. Kline Turns Chairmanship into Profitable For-Profit
Haul, OPEN SECRETS (July 15, 2013),
https://www.opensecrets.org/news/2013/07/for-profit-education/; The Gainful
Employment Regulation: Limiting Job Growth and Student Choice, House
SUBCOMMITTEE ON REGULATORY AFFAIRS OF THE COMMITTEE ON OVERSIGHT AND
GOVERNMENT RE F O R M ET AL., 11th Cong. (2012),
https://www.govinfo.gov/content/pkg/CHRG-112hhrg71822/html/CHRG-
112hhrg71822.htm; Education Regulations: Roadblocks to Student Choice in
Higher Education, HOUSE COMMITTEE ON EDUCATION AND THE WORKFORCE,
112th Cong. (2011), https://www.govinfo.gov/content/pkg/CHRG-
112hhrg65011/html/CHRG-112hhrg65011.htm.
132. Joseph Ax, Judge Upholds U.S. “Gainful Employment” Rules for For-
Profit Colleges, REUTERS (May 25, 2015), https://www.reuters.com/article/us-
usa-education-lawsuit/judge-upholds-u-s-gainful-employment-rules-for-for-
profit-colleges-idUSKBN0 OC2J520150527.
133. Id.; Andy Thomason, Federal Court Upholds Gainful-Employment
Rule, Dealing For-Profit Group Another Loss, CHRONICLE OF HIGHER
EDUCATION (Mar. 8, 2016), https://www .chronicle.com/blogs/ticker/federal-
court-upholds-gainful-employment-rule-dealing-for-profit-group-another-loss.
134. Danielle Douglas-Gabriel, Biden Administration Clashes with
Consumer Groups over the Reinstatement of Obama-Era Career Training
Regulation, WASH. POST (Nov. 18, 2021),
https://www.washingtonpost.com/education/2021/11/17/gainful-employment-
rule-biden-administration/.
135. Erica L. Green, DeVos Repeals Obama-Era Rule Cracking Down on
For-Profit Colleges, N.Y. TIMES (June 28, 2019),
https://www.nytimes.com/2019/06/28/us/politics/betsy-devos-for-profit-
colleges.html.
136. Douglas-Gabriel, supra note 134.
137. Ben Miller & Laura Jimenez, Inside the Financial Holdings of
Billionaire Betsy DeVos, CENTER FOR AMERICAN PROGRESS (Jan. 27, 2017),
https://www.americanprogress .org/article/inside-the-financial-holdings-of-
billionaire-betsy-devos/.
138. Hayley Brown, Private Equity in Higher Education: A Full Ride at
Student and Taxpayer Expense?, CENTER FOR ECONOMIC AND POLICY RESEARCH,
https://cepr.net/private-equity-in-higher-education-a-full-ride-at-student-and-
taxpayer-expense/.
139. Patricia Cohen, Betsy DeVos’s Hiring of For-Profit College Official
Raises Impartiality Issues, N.Y. TIMES (Mar. 17, 2017),
https://www.nytimes.com/2017/03/17/business/education-for-profit-robert-
eitel.html; Erin Dooley, Exclusive: Former For-Profit College Executive Shaped
Education Department Policy That Could Benefit Former Employers:
Documents, ABC NEWS (May 15, 2018), https://abcnews.go.com/US/exclusive-
profit-college-executive-shaped-education-department-policy/story?
id=55108981. Eitel began working for the Department of Education without
leaving his old job, simply taking an unpaid leave of absence. He finally gave
up his private employment in April 2018, after being hired to work full-time as a
senior adviser to Secretary DeVos.
140. Stacy Cowley, Delayed Obama-Era Rule on Student Debt Relief Is to
Take Effect, N.Y. TIMES (Oct. 16, 2018),
https://www.nytimes.com/2018/10/16/business/student-loan-debt-relief.html.
141. Danielle Douglas-Gabriel, House Falls Short of Overriding Trump’s
Veto of Measure to Overturn Student Loan Forgiveness Rule, WASH. POST (June
26, 2020), https://www.washingtonpost.com/education/2020/06/26/house-falls-
short-overriding-trumps-veto-measure-overturn-student-loan-forgiveness-rule/.
142. Id.

CHAPTER 10: THE INDUSTRY’S STRONGEST ADVOCATES

1. Totals, OPEN SECRETS, https://www.opensecrets.org/industries/totals.php?
cycle =2022&ind=F2600.
2. Id.
3. Client Profile: KKR & Co, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/lobbyists?
cycle=2022&id=D000000358 (former reps. Dennis Cardoza and Scott Klug
lobbied for KKR); Client Profile: Apollo Global Management, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/lobbyists?
cycle=2021&id=D000021845&t0-
Former+Members+of+Congress=Former+Members+of+Congress (former
senators Mark Pryor and Steven Symms lobbied for Apollo); Client Profile:
Blackstone Group, OPEN SECRETS, https://www.opensecrets.org/federal-
lobbying/clients/lobbyists?cy cle=2021&id=D000021873&t0-
Former+Members+of+Congress=Former+Members+of +Congress (former
representative Luke Messer lobbied for Blackstone); Client Profile: Carlyle
Group, OPEN SECRETS, https://www.opensecrets.org/federal-
lobbying/clients/lobbyists?cycle=2020&id=D000000810&t0-
Former+Members+of+Congress=Former+Members +of+Congress (former
representative Ileana Ros-Lehtinen lobbied for Carlyle).
 4. Employment History: Bayh, Evan, OPEN SECRETS,
https://www.opensecrets.org/revolving/rev_summary.php?id=76382 (former
senator Birch Bayh serves as a senior adviser to Apollo); Corporate
Governance, BLACKSTONE, https://ir.blackstone.com/corporate-
governance/default.aspx (former Senator Kelly Ayotte serves on the board of
Blackstone).
5. People who lobbied for Carlyle included Stacey A. Dion, former counsel
to the House Republican leader, Jeff Forbes, former chief of staff to Senator
Max Baucus; Libby Greer, former chief of staff to Congressman Allen Boyd,
Dan Tate, former special assistant to the president; Ryan Welch, former
legislative director to Richard Shelby; Client Profile: Carlyle Group, supra note
3; Lobbyist Profile: Stacey A Dion, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2022&id =Y0000037370L; Stacey Dion, LINKEDIN,
https://www.linkedin.com/in/staceydion/; Lobbyist Profile: Jeff Forbes, OPEN
SECRETS, https://www.opensecrets.org/federal-
lobbying/lobbyists/official_positions?cycle=2022&id=Y0000032896L; Lobbyist
Profile: Libby Greer, OPEN SECRETS, https://www.opensecrets.org/federal-
lobbying/lobbyists/official_positions ?cycle=2022&id=Y0000038065L;
Lobbyist Profile: Dan C Jr Tate, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2022 &id=Y0000040940L; Lobbyist Profile: Ryan Welch, OPEN SECRETS,
https://www.open secrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2022&id=Y0000042198L.
6. Chad Terhune, Life-Threatening Heart Attack Leaves Teacher with
$108,951 Bill, NPR (Aug. 27, 2018), https://www.npr.org/sections/health-
shots/2018/08/27/640891882/life-threatening-heart-attack-leaves-teacher-with-
108-951-bill.
7. Id.
8. Id.
9. Id.
10. Private Equity Is the Driving Force Behind Surprise Medical Billing,
AMERICANS FOR FINANCIAL REFORM (Oct. 2021),
https://ourfinancialsecurity.org/2021/10/fact-sheet-private-equity-is-the-driving-
force-behind-surprise-medical-billing/.
11. Rachel Bluth & Emmarie Huetterman, Investors’ Deep-Pocket Push to
Defend Surprise Medical Bills, KAISER HEALTH NEWS (Sept. 11, 2019),
https://khn.org/news/investors-deep-pocket-push-to-defend-surprise-medical-
bills/.
12. Eileen Appelbaum & Rosemary Batt, Private Equity and Surprise
Medical Billing, INST. FOR NEW ECON. THINKING (Sept. 4, 2019),
https://www.ineteconomics.org/perspectives/blog/private-equity-and-surprise-
medical-billing.
13. Karen Pollitz et al., An Examination of Surprise Medical Bills and
Proposals to Protect Consumers from Them, PETERSON-KFF HEALTH SYSTEM
TRACKER (Feb. 10, 2020), https://www.healthsystemtracker.org/brief/an-
examination-of-surprise-medical-bills-and-proposals-to-protect-consumers-
from-them-3/.
14. Air Ambulance: Available Data Show Privately-Insured Patients Are at
Financial Risk, GOVERNMENT ACCOUNTABILITY OFFICE 2 (Mar. 2019),
https://www.gao.gov/assets/gao-19-292.pdf.
15. Bluth & Huetterman, supra note 11.
16. Julie Creswell et al., Mystery Solved: Private-Equity-Backed Firms Are
Behind Ad Blitz on “Surprise Billing,” N.Y. TIMES (Sept. 13, 2019),
https://www.nytimes.com/2019/09/13/upshot/surprise-billing-laws-ad-spending-
doctor-patient-unity.html.
17. TeamHealth Named to Fortune Magazine’s List of “World’s Most
Admired Companies” for Third Consecutive Year, TEAMHEALTH,
https://www.teamhealth.com/news-and-resources/press-release/teamhealth-
named-to-fortune-magazines-list-of-worlds-most-admired-companies-for-third-
consecutive-year/?r=1.
18. Joel Stinnett, Completion of $9.9B Deal Leaves Nashville with One
Fewer Public Health Care Company, NASHV. BUS. J. (Oct. 11, 2018),
https://www.bizjournals.com/nashville/news/2018/10/11/completion-of-9-9b-
deal-leaves-nashville-with-one.html.
19. Envision Healthcare Corporation, Form 10-K (Feb. 23, 2018),
https://www.sec
.gov/Archives/edgar/data/1678531/000167853118000033/evhc10k20171231.htm.
20. Miriam Gottfried, Ill-Timed Health-Care Buyouts Bruise KKR and
Blackstone, WALL ST. J. (May 28, 2020), https://www.wsj.com/articles/ill-timed-
health-care-buyouts-bruise-kkr-and-blackstone-11590658201; Gretchen
Morgenson & Emmanuelle Saliba, Private Equity Firms Now Control Many
Hospitals, ERs and Nursing Homes. Is It Good for Health Care?, NBC NEWS
(May 13, 2020), https://www.nbcnews.com/health/health-care/private-equity-
firms-now-control-many-hospitals-ers-nursing-homes-n1203161.
21. Loren Adler et al., High Air Ambulance Charges Concentrated in Private
Equity–Owned Carriers, BROOKINGS INSTITUTION (Oct. 13, 2020),
https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-
policy/2020/10/13/high-air-ambulance-charges-concentrated-in-private-equity-
owned-carriers/.
22. Olivia Webb, Private Equity Chases Ambulances, AM. PROSPECT (Oct. 3,
2019), https://prospect.org/health/private-equity-chases-ambulances-emergency-
medical-transport/.
23. Adler et al., supra note 21.
24. Danielle Ivory et al., When You Dial 911 and Wall Street Answers, N.Y.
TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-911-
and-wall-street-answers.html.
25. Julie Creswell et al., The Company Behind Many Surprise Emergency
Room Bills, N.Y. TIMES (July 24, 2017),
https://www.nytimes.com/2017/07/24/upshot/the-company-behind-many-
surprise-emergency-room-bills.html.
26. Id.
27. Id.
28. Richard M. Scheffler, Soaring Private Equity Investment in the
Healthcare Sector: Consolidation Accelerated, Competition Undermined, and
Patients at Risk, AMERICAN ANTITRUST INSTITUTE 13 (May 2021),
https://publichealth.berkeley.edu/wp-content/uploads/2021/05/Private-Equity-I-
Healthcare-Report-FINAL.pdf.
29. Creswell et al., supra note 25.
30. Id.
31. Appelbaum & Batt, supra note 12.
32. Paul McLeod, A Deal to End Surprise Medical Billing Was Tanked at the
Last Minute, BUZZFEED NEWS (Dec. 19, 2019),
https://www.buzzfeednews.com/article/paulmcleod/surprise-billing-deal-
richard-neal.
33. Id.
34. Zack Cooper et al., Surprise! Out-of-Network Billing for Emergency
Care in the United States, 128 J. OF POLITICAL ECONOMY 3626–3677 (2020),
https://isps.yale.edu/research/publications/isps17-22.
 35. TeamHealth owes $2.7 billion by 2024, Envision owes $5.4 billion by
2021. Eileen Appelbaum & Rosemary Batt, Why It’s So Hard to End Surprise
Medical Bills, CENTER FOR ECONOMIC POLICY RESEARCH (Feb. 19, 2020),
https://cepr.net/report/why-its-so-hard-to-end-surprise-medical-bills/.
36. Eileen Applebaum, A Surprise Ending for Surprise Billing?, AM.
PROSPECT (Dec. 16, 2020), https://prospect.org/health/surprise-ending-for-
surprise-billing/.
37. Creswell et al., supra note 25.
38. Id.
39. Applebaum & Batt, supra note 35.
40. Jessie Hellman, Private Equity–Funded Doctors Coalition Spends $4
Million Lobbying on “Surprise” Medical Billing, THE HILL (Oct. 21, 2019),
https://thehill.com/policy/health care/466756-doctors-coalition-funded-by-
private-equity-spends-4-million-lobby ing-on/.
41. Physicians for Fair Coverage, POLITIFACT (Aug. 7, 2019),
https://www.politifact .com/factchecks/2019/aug/07/physicians-fair-
coverage/doctors-argue-plans-remedy-surprise-medical-bills-/.
42. Bob Herman, Doctors Flood Congress with Lobbyists on Surprise
Medical Bills, AXIOS (Aug. 20, 2019),
https://www.axios.com/2019/08/20/surprise-medical-billing-lobbying-congress;
Client: US Physician Partners (Informal Coalition), Lobbying Firm: Akin,
Gump, Strauss, Hauer & Feld, PROPUBLICA (July 1, 2019–June 30, 2022),
https://projects.propublica.org/represent/lobbying/r/301022149.
43. Herman, supra note at 42.
44. Adam Lewis, PE Digs in as Battle to End Surprise Medical Bills Rages
On, PITCHBOOK (Mar. 6, 2020), https://pitchbook.com/news/articles/pe-digs-in-
as-battle-to-end-surprise-medical-bills-wages-on.
45. Ways and Means Committee Surprise Medical Billing Plan, HOUSE
COMMITTEE ON WAYS AND MEANS,
https://waysandmeans.house.gov/sites/democrats.waysandmeans
.house.gov/files/documents/WM%20Surprise%20Billing%20Summary.pdf.
46. McLeod, supra note 32.
47. Paul McLeod, Surprise Medical Billing Is Finally Coming to an End
After Congress Reached a Last-Minute Deal, BUZZFEED NEWS (Dec. 22, 2020),
https://www.buzzfeednews.com/article/paulmcleod/suprise-medical-billing-
banned-congress-coronavirus; Akela Lacy, Effort to Take on Surprise Medical
Billing in Coronavirus Stimulus Collapses, THE INTERCEPT (Dec. 8 2020),
https://theintercept.com/2020/12/08/surprise-medical-billing-neal-covid/ (One
member of Congress said, “The one stumbling block has been of course, Richie
trying to scuttle it.” Neal himself said he wanted to wait another year to address
the issue).
48. McLeod, supra note 47.
49. Susannah Luthi & Rachel Roubein, How Powerful Health Providers
Tamed a “Surprise” Billing Threat, POLITICO (Dec. 21, 2020),
https://www.politico.com/news/2020/12/21/surprise-billing-health-providers-
congress-449759.
50. Andrew Hurst, Ambulance Rides Have Cost $1,189 on Average Since
2010—Totaling More Than $46 Billion, VALUEPENGUIN (Sept. 13, 2021),
https://www.valuepenguin.com/cost-ambulance-services.
51. Hailey Mensik, Ground Ambulances, Excluded from Surprise Billing
Ban, to Get Scrutiny from Federal Committee, HEALTHCARE DIVE (Nov. 22,
2021), https://www.healthcaredive .com/news/federal-committee-ground-
ambulances-no-surprises-act/610451/.
52. Luthi & Roubein, supra note 49.
53. Marty Stempniak, 150 Members of Congress Pressure Administration to
Fix Surprise Billing Rule They Say Favors Insurers, RADIOLOGY BUS. (Nov. 10,
2021), https://radiologybusiness.com/topics/healthcare-policy/congress-
administration-surprise-billing-insurers.
54. Thomas Suozzi (D-N.Y.) received $7,500 from US Anesthesia Partners;
Brad Wenstrup (R-Ohio) received $11,200 from Blackstone; Raul Ruiz (D-
Calif.) received $31,605 from KKR (his largest contribution that cycle); Larry
Bucshon (R-Ind.) received $12,500 from US Anesthesia Partners. US
Anesthesia Partners was in turned owned by Welsh, Carson, Anderson & Stowe.
Tom Suozzi, OPEN SECRETS, https://www.opensecrets.org/members-of-
congress/tom-suozzi/contributors?cid
=N00038742&cycle=2020&recs=100&type=I; Brad Wenstrup, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/brad-wenstrup/contributors?
cid =N00033310&cycle=2020&recs=100&type=I; Raul Ruiz, OPEN SECRETS,
https://www .opensecrets.org/members-of-congress/raul-ruiz/contributors?
cid=N00033510&cycle =2020&type=I; Larry Bucshon, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/larry-bucshon/contributors?
cid=N00031227&cycle=2020&recs=100&type=I; Welsh, Carson, Anderson &
Stowe and Healthcare Industry Veteran Announce Formation of U.S. Anesthesia
Partners, Inc., US ANESTHESIA PARTNERS, https://www.usap.com/news-and-
events/news/welsh-carson-anderson-stowe-and-healthcare-industry-veteran-
announce-formation.
55. Bill Cassidy, OPEN SECRETS, https://www.opensecrets.org/members-of-
congress/bill-cassidy/contributors?
cid=N00030245&cycle=2020&recs=100&type=I.
56. Maggie Hassan, OPEN SECRETS, https://www.opensecrets.org/members-
of-con gress/maggie-hassan/contributors?
cid=N00038397&cycle=2020&recs=100&type=I;
https://www.opensecrets.org/members-of-congress/maggie-hassan/contribu
tors?cid=N00038397&cycle=2020&recs=100&type=I. US Acute Care
Solutions was then owned by Welsh Carson Anderson & Stowe.
57. Austin Ahlman, Congressional Democrats Join Republicans to
Undermine Biden Administration’s Surprise Medical Billing Rule, THE
INTERCEPT (Jan. 17 2022), https://theintercept .com/2022/01/17/surprise-
medical-billing-lawsuit/.
58. Kevin Brady, OPEN SECRETS, https://www.opensecrets.org/members-of-
congress/kevin-brady/contributors?
cid=N00005883&cycle=2020&recs=100&type=I; Austin Ahlman,
Congressional Democrats Join Republicans to Undermine Biden
Administration’s Surprise Medical Billing Rule, THE INTERCEPT (Jan. 17, 2022),
https://theintercept.com/2022/01/17/surprise-medical-billing-lawsuit/.
59. Richard E Neal, OPEN SECRETS, https://www.opensecrets.org/members-
of-congress/richard-e-neal/contributors?
cid=N00000153&cycle=2020&recs=100&type=I.
60. AHA, AMA and Others File Lawsuit over No Surprises Act Rule That
Jeopardizes Access to Care, AMERICAN HOSPITAL ASSOCIATION (Dec. 9, 2021),
https://www.aha.org/news/news/2021-12-09-aha-ama-and-others-file-lawsuit-
over-no-surprises-act-rule-jeopardizes-access.
61. Victor Fleischer, Two and Twenty: Taxing Partnership Profits in Private
Equity Funds, 83 NYU L. REV. 1 (2008) (While published in 2008, the draft
article reached congressional staffers in 2006); Andrew Ross Sorkin, A
Professor’s Word on a Buyout Tax Battle, N.Y. TIMES (Oct. 3, 2007),
https://www.nytimes.com/2007/10/03/business/03tax.html.
62. H.R. 3970, Tax Reduction and Reform Act of 2007, 110th Cong. (2007);
Levin—Legislation Fixes Carried Interest Loophole, HOUSE WAYS & MEANS
COMMITTEE (Jan. 18, 2012), https://waysandmeans.house.gov/media-
center/press-releases/levin-legislation-fixes-carried-interest-loophole; Louis
Jacobson & Molly Moorhead, Tax Carried Interest as Ordinary Encome,
POLITIFACT (Jan. 2, 2013), https://www.politifact.com/truth-o-
meter/promises/obameter/promise/42/tax-carried-interest-as-ordinary-income/.
63. Client Profile: Blackstone Group, supra note 3.
64. Apollo Global Management, OPEN SECRETS,
https://www.opensecrets.org/orgs/apollo-global-management/lobbying?
id=D000021845; KKR & Co, OPEN SECRETS,
https://www.opensecrets.org/orgs/kkr-co/lobbying?id=D000000358; Carlyle
Group, OPEN SECRETS, https://www.opensecrets.org/orgs/carlyle-
group/lobbying?id=D000000810.
65. Peter Lattman, Carried Interest Tax Break Comes Under Fire Again,
N.Y. TIMES (Sept. 12, 2011),
https://archive.nytimes.com/dealbook.nytimes.com/2011/09/12/carried-interest-
tax-break-comes-under-fire-again/.
66. Richard Rubin, Obama Attacks Carried Interest Again to Shrugs in
Congress, BLOOMBERG (May 12, 2015),
https://www.bloomberg.com/news/articles/2015-05-12/obama-attacks-carried-
interest-again-to-shrugs-in-u-s-congress.
67. Id.
68. Alan Rappeport, Trump Promised to Kill Carried Interest. Lobbyists Kept
It Alive., N.Y. TIMES (Dec. 22, 2017),
https://www.nytimes.com/2017/12/22/business/trump-carried-interest-
lobbyists.html.
69. Justin Elliott & Theodoric Meyer, Susan Collins Backed Down from a
Fight with Private Equity. Now They’re Underwriting Her Reelection.,
PROPUBLICA (Oct. 29, 2020), https://www.propublica.org/article/susan-collins-
backed-down-from-a-fight-with-private-equity-now-theyre-underwriting-her-
reelection.
70. Susan Collins, OPEN SECRETS, https://www.opensecrets.org/members-of-
congress/susan-collins/contributors?cid=N00000491&cycle=2020&type=I.
71. Elliott & Meyer, supra note 69.
72. Alan Rappeport, Mnuchin’s Private Equity Fund Raises $2.5 Billion,
N.Y. TIMES (Oct. 28, 2021),
https://www.nytimes.com/2021/09/20/us/politics/mnuchin-saudi-private-
equity.html.
73. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
74. Id.
75. Nancy Cook & Bernie Beckert, Top Treasury Aide to Leave
Administration for Private Equity Trade Group, POLITICO (June 7, 2018),
https://www.politico.com/story/2018/06/07/drew-maloney-treasury-leaving-
white-house-631547.
76. Allyson Versprille, Carried-Interest Tax Break Shrinks, Survives in
Democrats’ Plan, BLOOMBERG (Sept. 13, 2021),
https://www.bloomberg.com/news/articles/2021-09-13/house-democrats-
maintain-a-scaled-back-private-equity-tax-break; Michael A. Bloom et al.,
Summer Update: Where Do We Stand on President Biden’s Proposal to
Eliminate the Carried Interest Loophole?, VENABLE (July 2021),
https://www.venable.com/insights/publications/2021/07/summer-update-where-
do-we-stand-on-pres.
77. Versprille, supra note 76.
78. Christina Wilkie, Lobbyists Shielded Carried Interest from Biden’s Tax
Hikes, Top White House Economist Says, CNBC (Sept. 30, 2021),
https://www.cnbc.com/2021/09/30/lobbying-kept-carried-interest-out-of-bidens-
tax-plan-bernstein-says.html.
79. Id.
80. Id.
81. Carlyle Group, supra note 64; Blackstone Group, OPEN SECRETS,
https://www.open secrets.org/orgs/blackstone-group/lobbying?id=D000021873;
KKR & Co, supra note 64.
82. Apollo Global Management, supra note 64.
83. Lobbyist Profile: Marc Lampkin, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000015980L5.
84. Lobbyist Profile: Brian Wild, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000009894L.
85. Lobbyist Profile: Nadeam Elshami, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000054026L.
86. Client Profile: Apollo Global Management, supra note 3.
87. Kyrsten Sinema, OPEN SECRETS, https://www.opensecrets.org/members-
of-congress/kyrsten-sinema/contributors?cid=N00033983&cycle=2022.
 88. Reckless Tax and Spend Spree Amendment Tracker, SENATE REPUBLICAN
POLICY COMMITTEE, https://www.rpc.senate.gov/policy-papers/reckless-tax-and-
spend-spree-amendment-tracker; Christopher Hickey, Not the Year for Women
and Parents, CNN (Aug. 12, 2022),
https://www.cnn.com/2022/08/12/politics/inflation-reduction-children-
families/index.html.
89. Jennifer L. Bragg, Senate Passes Landmark Bill with Climate, Tax,
Energy and Health Care Implications, SKADDEN (Aug. 7, 2022),
https://www.skadden.com/insights/publications/2022/08/senate-passes-
landmark-bill.
90. Oscar Valdes-Viera et al., Public Money for Private Equity: Pandemic
Relief Went to Companies Backed by Private Equity Titans, Anti-Corruption
Data Collective ET AL. 2 (2021), https://ourfinancialsecurity.org/wp-
content/uploads/2021/09/public-money-for-private-equity-9-13-21.pdf.
91. Id. at 8.
92. David Kocieniewski & Caleb Melby, Private Equity Lands Billion-
Dollar Backdoor Hospital Bailout, BLOOMBERG (June 2, 2020),
https://www.bloomberg.com/news/features/2020-06-02/private-equity-lands-
billion-dollar-backdoor-hospital-bailout.
93. Id.
94. Id.; CMS Announces New Repayment Terms for Medicare Loans Made to
Providers During COVID-19, CENTER FOR MEDICARE AND MEDICAID SERVICES
(Oct. 8, 2020), https://www .cms.gov/newsroom/press-releases/cms-announces-
new-repayment-terms-medicare-loans-made-providers-during-covid-19.
95. Kocieniewski & Melby, supra note 92.
96. Valdes-Viera et al., supra note 90, at 7.
97. Id. at 21.
98. Ryan Gallagher, SolarWinds Adviser Warned of Lax Security Years
Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
99. Drew Harris & Doug MacMillan, Investors in Breached Software Firm
SolarWinds Traded $280 Million in Stock Days Before Hack Was Revealed,
WASH. POST (Dec. 15, 2020),
https://www.washingtonpost.com/technology/2020/12/15/solarwinds-russia-
breach-stock-trades/.
 100. Ezequiel Minaya, SolarWinds to Be Bought by Silver Lake, Thoma
Bravo, WALL ST. J. (Oct. 21, 2015), https://www.wsj.com/articles/solarwinds-to-
be-bought-by-silver-lake-and-thoma-bravo-1445438835.
101. Miriam Gottfried, Orlando Bravo Rides Software Deals to Heights of
Private-Equity Industry, WALL ST. J. (Sept. 22, 2020),
https://www.wsj.com/articles/orlando-bravo-rides-software-deals-to-heights-of-
private-equity-industry-11600767001.
102. Antoine Gara, Buyout Firm Thoma Bravo Goes from Niche to Big
League, FIN. TIMES (Dec. 6 2021), https://www.ft.com/content/456f2fd7-f868-
4ea6-abd7-fce34e783333.
103. E.g., SolarWinds Worldwide, SolarWinds MSP Acquires SpamExperts to
Enhance Its Growing Product Portfolio, GLOBENEWSWIRE (Aug. 29, 2017),
https://www.globenewswire .com/news-
release/2017/08/29/1101687/0/en/SolarWinds-MSP-Acquires-SpamExperts-to-
Enhance-its-Growing-Product-Portfolio.html; SolarWinds Adds Access Rights
Management to Its IT Management Portfolio, Following the Acquisition of
8MAN, SOLARWINDS (Nov. 15, 2018),
https://investors.solarwinds.com/news/news-details/2018/SolarWinds-Adds-
Access-Rights-Management-to-Its-IT-Management-Portfolio-following-the-
Acquisition-of-8MAN/default.aspx; Frederic Lardinois, SolarWinds Acquires
Real-time Threat-Monitoring Service Trusted Metrics, TECHCRUNCH (July 10,
2018), https://techcrunch .com/2018/07/10/solarwinds-acquires-real-time-threat-
monitoring-service-trusted-metrics/; Frederic Lardinois, SolarWinds Acquires
Log-Monitoring Service Loggly, TECHCRUNCH (Jan. 8, 2018),
https://techcrunch.com/2018/01/08/solarwinds-acquires-log-monitoring-service-
loggly/.
104. The New York Times reported that the company shifted software
engineering resources to Poland, the Czech Republic, and Belarus. The last of
these appears to have occurred under Silver Lake and Thoma Bravo’s oversight.
In the company’s 2015 quarterly statement, its last year before its acquisition, it
makes no reference to operations in Belarus, while its 2021 financial statement
after acquisition does. Compare SolarWinds Corporation, Form 10-Q (Nov. 3,
2015),
https://www.sec.gov/Archives/edgar/data/1428669/000142866915000067/swi-
2015930x10q.htm with SolarWinds Corporation, Form 10-K (Feb. 24, 2021),
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001739942/48bd02f7-3c52-4abc-
a5e9-60401f9a4e8b.pdf.
 105. David E. Sanger et al., As Understanding of Russian Hacking Grows,
So Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html. This appears to have occurred during the private equity firms’
ownership of the company: between 2020 and 2021, for instance, the company
managed to reduce the overall cost of revenue. 2021 Analyst & Investor Day,
SOLARWINDS 75 (2021),
https://s22.q4cdn.com/673701899/files/doc_downloads/2021/11/Analyst-Day-
PDF-Version-(2).pdf.
106. Ryan Gallagher, SolarWinds Adviser Warned of Lax Security Years
Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
107. Consolidated Complaint ¶ 8, In re: SolarWinds Corporation Securities
Litigation, No. 1:21-cv-138 (W.D. Tex. (June 1, 2021), ECF No. 26.
108. Raphael Satte et al., Hackers Used SolarWinds’ Dominance Against It
in Sprawling Spy Campaign, REUTERS (Dec. 15, 2020),
https://www.reuters.com/article/global-cyber-solarwinds/hackers-at-center-of-
sprawling-spy-campaign-turned-solarwinds-dominance-against-it-
idUSKBN28P2N8.
109. Id.
110. Consolidated Complaint ¶ 111, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No. 26.
111. David E. Sanger et al., As Understanding of Russian Hacking Grows, So
Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html.
112. Consolidated Complaint ¶ 6, In re: SolarWinds Corporation Securities
Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No. 26.
113. Id.; Ryan Gallagher, SolarWinds Adviser Warned of Lax Security Years
Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
114. Dave Sebastian, SolarWinds Discloses Earlier Evidence of Hack, WALL
ST. J. (Jan. 12, 2021), https://www.wsj.com/articles/solarwinds-discloses-earlier-
evidence-of-hack-11610473937.
 115. Dina Temple-Raston, A “Worst Nightmare” Cyberattack: The Untold
Story of the SolarWinds Hack, NPR (Apr. 16, 2021),
https://www.npr.org/2021/04/16/985439655/a-worst-nightmare-cyberattack-the-
untold-story-of-the-solarwinds-hack.
116. Consolidated Complaint ¶ 151, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No. 26.
117. Julia Kisielius, Breaking Down the SolarWinds Supply Chain Attack,
SPYCLOUD (Mar. 11, 2021), https://spycloud.com/solarwinds-attack-breakdown/.
118. The federal agencies were the Treasury, State, Justice, Commerce,
Defense, and Energy Departments. Sanger et al., supra note 105; Catalin
Cimpanu, DOJ Says SolarWinds Hack Impacted 27 US Attorneys’ Offices,
RECORD (July 30, 2021), https://therecord .media/doj-says-solarwinds-hack-
impacted-27-state-attorneys-offices/.
119. David E. Sanger & Alan Rappeport, Treasury Department’s Senior
Leaders Were Targeted by Hacking, N.Y. TIMES (Jan. 6, 2021),
https://www.nytimes.com/2020/12/21/us/politics/russia-hack-treasury.html.
120. Alan Suderman & Eric Tucker, Justice Department Says Russians
Hacked Federal Prosecutors, ASSOCIATED PRESS (July 30, 2021),
https://apnews.com/article/technology-europe-russia-election-2020-
5486323e455277b39cd3283d70a7fd64.
121. Consolidated Complaint ¶ 150, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No. 26.
122. David E. Sanger et al., As Understanding of Russian Hacking Grows,
So Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html.
123. Hearings on the SolarWinds Hack and Possible Policy Responses,
NAT’L L. REV. (Oct. 9, 2022), https://www.natlawreview.com/article/hearings-
solarwinds-hack-and-possible-policy-responses; Prevention, Response, and
Recovery: Improving Federal Cybersecurity Post-SolarWinds, SENATE
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS (May 11,
2021), https://www.hsgac.senate.gov/hearings/prevention-response-and-
recovery-improving-federal-cybersecurity-post-solarwinds; SolarWinds and
Beyond: Improving the Cybersecurity of Software Supply Chains, HOUSE
COMMITTEE O N SC I E N C E , SPACE, AND TECHNOLOGY, SUBCOMMITTEE ON
INVESTIGATIONS AND OVERSIGHT & SUBCOMMITTEE RESEARCH AND TECHNOLOGY
(May 25, 2021), https://science.house.gov/hearings/solarwinds-and-beyond-
improving-the-cybersecurity-of-software-supply-chains.
124. Michael Novinson, $286M of SolarWinds Stock Sold Before CEO, Hack
Disclosures, CRN (Dec. 16, 2020), https://www.crn.com/news/security/-286m-
of-solarwinds-stock-sold-before-ceo-hack-disclosures?itc=refresh (Silver Lake
and Thoma Bravo together owned three-fourths of the company’s stock and
controlled a majority of its board).
125. Search for “SolarWinds,” 116th and 117th Cong., CONGRESS.GOV;
search for “Silver Lake,” 116th and 117th Cong., CONGRESS.GOV (all references
to Silver Lake are to geographies, not the private equity firm); search for
“Thoma Bravo,” CONGRESS.GOV.
126. Drew Harris & Doug MacMillan, Investors in Breached Software Firm
SolarWinds Traded $280 Million in Stock Days Before Hack Was Revealed,
WASH. POST (Dec. 15, 2020),
https://www.washingtonpost.com/technology/2020/12/15/solarwinds-russia-
breach-stock-trades/.
127. Douglas MacMillan & Aaron Schaffer, Breached Software Firm
SolarWinds Faces SEC Inquiry After Insider Stock Sales, WASH. POST (Mar. 1,
2021), https://www .washingtonpost.com/business/2021/03/01/solarwinds-sec-
inquiry/ (Thoma Bravo and Silver Lake declined to comment to the Washington
Post on the inquiry).
128. Miriam Gottfried, China’s Sovereign Fund Sells Out of Pre-Crisis
Blackstone Investment, WALL ST. J. (Mar. 13, 2018),
https://www.wsj.com/articles/chinas-sovereign-fund-sells-out-of-pre-crisis-
blackstone-investment-1520981281.
129. China’s Forex Investment Company to Invest US$3 BLN in Blackstone,
XINHUA (May 21, 2007),
http://en.people.cn/200705/21/print20070521_376576.html.
130. Alexandra Stevenson, China Sells Stake in Blackstone as Deal Scene
Turns Sour, N.Y. TIMES (Mar. 14, 2018),
nytimes.com/2018/03/14/business/blackstone-cic-china.html.
131. Michael Kranish, Trump’s China Whisperer: How Billionaire Stephen
Schwarzman Has Sought to Keep the President Close to Beijing, WASH. POST
(Mar. 12, 2018), https://www.washingtonpost.com/politics/trumps-china-
whisperer-how-billionaire-stephen-schwarzman-has-sought-to-keep-the-
president-close-to-beijing/2018/03/11/67e369a8-0c2f-11e8-95a5-
c396801049ef_story.html.
 132. E.g., Blackstone Completes Acquisition of Majority Stake in the Largest
Logistics Park in China’s Greater Bay Area, BLACKSTONE (Jan. 20, 2021),
https://www.blackstone.com/news/press/blackstone-completes-acquisition-of-
majority-stake-in-the-largest-logistics-park-in-chinas-greater-bay-area/; Carol
Zhong & Kane Wu, Blackstone Buys China -based Packager ShyaHsin in $800–
900 Million Deal—Sources, YAHOO NEWS (Nov. 10, 2017),
https://www.yahoo.com/news/blackstone-buys-china-based-packager-
072804958.html.
133. Miriam Gottfried, China’s Sovereign Fund Sells Out of Pre-Crisis
Blackstone Investment, WALL ST. J. (Mar. 13, 2018),
https://www.wsj.com/articles/chinas-sovereign-fund-sells-out-of-pre-crisis-
blackstone-investment-1520981281.
134. Kranish, supra note 131.
135. Simon Clark, American Billionaires Vanish from Russian Fund’s
Website, WALL ST. J. (Sept. 3, 2014), https://www.wsj.com/articles/names-of-u-
s-billionaires-vanish-from-russian-funds-website-1409747234.
136. Id.
137. Dylan Tokar & Kristin Broughton, Russian Fund Behind Coronavirus
Aid Shipment Is on U.S. Lending Blacklist, WALL ST. J. (Apr. 2, 2020),
https://www.wsj.com/articles/russian-fund-behind-coronavirus-aid-shipment-is-
on-u-s-lending-blacklist-11585873617.
138. Jessica Silver-Greenberg et al., The Benefits of Standing by the
President, N.Y. TIMES (Aug. 19, 2017),
https://www.nytimes.com/2017/08/19/business/the-benefits-of-standing-by-the-
president.html.
139. Kate Kelly & Andrew Ross Sorkin, Massive United States–Saudi
Infrastructure Fund Struggles to Get Going, N.Y. TIMES (Apr. 4, 2018),
https://www.nytimes .com/2018/04/04/business/blackstone-infrastructure-fund-
saudi.html.
140. Natasha Turak, What’s Happening in Saudi Arabia Is “Extraordinary,”
Says Blackstone CEO, CNBC (Jan. 25, 2018),
https://www.cnbc.com/2018/01/25/blackstone-ceo-schwarzman-saudi-arabia-
reforms-are-extraordinary.html.
141. Id.
142. Ben Hubbard, Saudis Say Arrests Target Foreign-Funded Dissidents,
N.Y. TIMES (Sept. 15, 2017),
https://www.nytimes.com/2017/09/15/world/middleeast/saudi-arabia-
arrests.html?mcubz=3&_r=0.
143. Kevin Sullivan & Kareem Fahim, A Year After the Ritz-Carlton
Roundup, Saudi Elites Remain Jailed by the Crown Prince, WASH. POST (Nov. 5,
2018), https://www .washingtonpost.com/world/a-year-after-the-ritz-carlton-
roundup-saudi-elites-remain-jailed-by-the-crown-prince/2018/11/05/32077a5c-
e066-11e8-b759-3d88a5ce9e19_story.html.
144. Jeanne Whalen, Finance CEOs Pull Out of Saudi “Davos in the
Desert” over Khashoggi, Risking Lucrative Role in Kingdom’s Economic
Reforms, WASH. POST (Oct. 15, 2018),
https://www.washingtonpost.com/business/economy/finance-ceos-pull-out-of-
saudi-davos-in-the-desert-over-khashoggi-risking-lucrative-role-in-kingdoms-
economic-reforms/2018/10/15/b10afea4-d0b8-11e8-b2d2-
f397227b43f0_story.html.
145. Third Quarter 2018 Earnings Investor Call, BLACKSTONE (Oct. 18,
2018), https://s23.q4cdn.com/714267708/files/doc_events/BLACKSTONE-
Third-Quarter-2018-Investor-Call.pdf (On an earnings call, Blackstone’s
president said that its investment with Saudi was set to grow, regardless of
“some near-term challenges,” that is, Khashoggi’s murder).
146. Nicholas Comfort, Women Were Scared of Working at Blackstone,
Schwarzman Says, BLOOMBERG (Oct. 26, 2021),
https://www.bloomberg.com/news/articles/2021-10-26/women-were-scared-of-
working-at-blackstone-schwarzman-says.
147. Cristina Alesci, Stephen Schwarzman Writes in New Book About His
Role as Trump Interlocutor with China, CNN BUSINESS (Sept. 17, 2019),
https://www.cnn.com/2019/09/17/economy/stephen-schwarzman-trump-china-
trade/index.html.
148. Kate Kelly, In Trump, Stephen Schwarzman Found a Chance to Burnish
His Legacy, N.Y. TIMES (Jan. 19, 2021),
https://www.nytimes.com/2021/01/19/business/schwarzman-blackstone-
trump.html.
149. Kranish, supra note 131.
150. Id.; Cristina Alesci, Stephen Schwarzman Writes in New Book About
His Role as Trump Interlocutor with China, CNN (Sept. 19, 2019),
https://www.cnn.com/2019/09/17/economy/stephen-schwarzman-trump-china-
trade/index.html; Kelly, supra note 148.
 151. Phleim Kine, From “Momentous” to “Meh”—Trump’s China Trade
Deal Letdown, POLITICO (Jan. 13, 2022),
https://www.politico.com/newsletters/politico-china-watcher/2022/01/13/from-
momentous-to-meh-the-phase-one-trade-deal-letdown-495705.
152. Silver-Greenberg et al., supra note 138.

CHAPTER 11: WHAT WE MUST DO

1. Lawrence Mishel & Jori Kandra, Wages for the Top 1% Skyrocketed 160%
Since 1979 While the Share of Wages for the Bottom 90% Shrunk, ECONOMIC
POLICY INSTITUTE (Dec. 1, 2020), https://www.epi.org/blog/wages-for-the-top-1-
skyrocketed-160-since-1979-while-the-share-of-wages-for-the-bottom-90-
shrunk-time-to-remake-wage-pattern-with-economic-policies-that-generate-
robust-wage-growth-for-vast-majority/.
2. How Does COVID Relief Compare to Great Recession Stimulus?,
COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET (July 1, 2020),
https://www.crfb.org/blogs /how-does-covid-relief-compare-great-recession-
stimulus; Juliana Menasce Horowitz et al., Trends in Income and Wealth
Inequality, PEW RESEARCH CENTER (Jan. 9, 2020),
https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-
wealth-inequality/.
3. Value Added by Industry: Manufacturing as a Percentage of GDP, ST.
LOUIS FEDERAL RESERVE, https://fred.stlouisfed.org/series/VAPGDPMA; Value
Added by Industry: Finance, Insurance, Real Estate, Rental, and Leasing:
Finance and Insurance as a Percentage of GDP, ST. LOUIS FEDERAL RESERVE,
https://fred.stlouisfed.org/series/VAPGDPFI.
4. Elizabeth Warren, End Wall Street’s Stranglehold on Our Economy,
MEDIUM.COM (July 18, 2019), https://medium.com/@teamwarren/end-wall-
streets-stranglehold-on-our-economy-70cf038bac76.
5. William M. Tsutsui & Stefano Mazzotta, The Bubble Economy and the
Lost Decade: Learning from the Japanese Economic Experience, 9 J. GLOBAL
INITIATIVES: POLICY, PEDAGOGY, PERSPECTIVE 57, 65 (2015),
https://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi ?
article=1164&context=jgi.
6. Id. at 71; Matt Jancer, How Eight Conglomerates Dominate Japanese
Industry, SMITHSONIAN MAG. (Sept. 7, 2016),
https://www.smithsonianmag.com/innovation/how-eight-conglomerates-
dominate-japanese-industry-180960356/.
7. Lost Decades, WIKIPEDIA, https://en.wikipedia.org/wiki/Lost_Decades.
8. Tsutsui & Mazzotta, supra note 5.
9. Bruce Stokes, Japanese More Satisfied with Economy, but Doubts About
Future Persist, PEW RESEARCH CENTER (Oct. 17, 2017),
https://www.pewresearch.org/global/2017/10/17/japanese-more-satisfied-with-
economy-but-doubts-about-future-persist/.
10. Kim Parker et al., America in 2050, PEW RESEARCH CENTER (Mar. 21,
2019), https://www.pewresearch.org/social-trends/2019/03/21/america-in-2050/
(An almost identical number—20 percent—of Americans believe that the
standard of living for the average American family will improve over the next
thirty years).
11. Daniel A. Crane, Antitrust and Democracy: A Case Study from German
Fascism 1, 16 (U. of Michigan Law & Econ. Research Paper No. 18-009, U. of
Michigan Public Law Research Paper No. 595, Apr. 17, 2018),
https://papers.ssrn.com/sol3/papers.cfm ?abstract_id=3164467.
12. Jack Beatty, AGE OF BETRAYAL: THE TRIUMPH OF MONEY IN AMERICA,
1865–1900, 12, 40–41, 33–34, 109 (2008).
13. Id. at 42, 157, 187, 218.
14. Id. at 219.
15. Id. at 476.
16. Adamson Act, WIKIPEDIA, https://en.wikipedia.org/wiki/Adamson_Act.
17. Hepburn Act, WIKIPEDIA, https://en.wikipedia.org/wiki/Hepburn_Act.
18. Federal Farm Loan Act, WIKIPEDIA,
https://en.wikipedia.org/wiki/Federal_Farm_Loan_Act.
19. United States Postal Savings System, WIKIPEDIA,
https://en.wikipedia.org/wiki/United_States_Postal_Savings_System.
20. Inspection, Enforcement, Compliance, DEPARTMENT OF LABOR,
https://www.dol.gov/general/aboutdol/history/mono-regsafepart03.
21. Progressive Ideas, DEPARTMENT OF LABOR,
https://www.dol.gov/general/aboutdol/history/mono-regsafepart03.
22. Bill Kovarik, Air Pollution, ENVIRONMENTAL HISTORY,
https://environmentalhistory .org/about/airpollution/ (Pittsburgh established
smoke abatement ordinances); Scott Klinger, Breathing Easier Because of the
Clean Air Act, CENTER FOR EFFECTIVE GOVERNMENT (Dec. 31, 2014),
https://www.foreffectivegov.org/blog/breathing-easier-because-clean-air-act
(1910, Massachusetts passes clean air laws regulating smoke output).
23. The Agrarian and Populist Movements, COURSE HERO,
https://www.coursehero .com/study-guides/boundless-ushistory/the-agrarian-
and-populist-movements/.
24. Our Labor History Timeline, AFL-CIO, https://aflcio.org/about-
us/history.
25. Henny Sender & Monica Langley, How Blackstone’s Chief Became $7
Billion Man, WALL ST. J. (June 13, 2007),
https://www.wsj.com/articles/SB118169817142333414.
26. Beatty, supra note 12, at 278; see generally Sven Beckert, THE MONIED
METROPOLIS: NEW YORK CITY AND THE CONSOLIDATION OF THE AMERICAN
BOURGEOISIE, 1850–1896 293–295 (2001).
27. James B. Stewart, The Birthday Party, NEW YORKER (Feb. 18, 2008).
28. Alec Tyson & Brian Kennedy, Two-Thirds of Americans Think
Government Should Do More on Climate, PEW RESEARCH CENTER (June 23,
2020), https://www.pewresearch .org/science/2020/06/23/two-thirds-of-
americans-think-government-should-do-more-on-climate/ (showing widespread
support for climate action, including among Republicans); Katherine Schaeffer,
Key Facts About Americans and Guns, PEW RESEARCH CENTER (Sept. 12, 2021),
https://www.pewresearch.org/fact-tank/2021/09/13/key-facts-about-americans-
and-guns/ (showing support for some gun control policies, including among
Republicans); Gaby Galvin, About 7 in 10 Voters Favor a Public Health
Insurance Option. Medicare for All Remains Polarizing, MORNING CONSULT
(Mar. 24, 2021), https://morningconsult.com/2021/03/24/medicare-for-all-
public-option-polling/ (showing large support for a public option, including
among Republicans).
29. Summary, OPEN SECRETS,
https://www.opensecrets.org/industries/indus.php?ind =F2600.

CHAPTER 12: AN AGENDA FOR REFORM

1. Brendan Ballou, The “No Collusion” Rule, 32 STAN. L. & POL’Y REV. 213
(2021).
2. Beth Schwartzapfel, How Bad Is Prison Health Care? Depends on Who’s
Watching, MARSHALL PROJECT (Feb. 26, 2018),
https://www.themarshallproject.org/2018/02/25/how-bad-is-prison-health-care-
depends-on-who-s-watching.
3. Elizabeth Whitman, Arizona Prison Food Was Labeled “Not for Human
Consumption,” Ex-Inmates Say, PHOENIX NEW TIMES (Sept. 25, 2019),
https://www.phoenixnewtimes .com/news/ex-inmates-arizona-prison-food-was-
not-for-human-consumption-11362468.
4. Alan Judd, Jail Food Complaints Highlight Debate over Outsourcing
Public Services, ATLANTA J. CONST. (Jan. 1, 2015), https://bit.ly/31wc8Tn.
5. Peter Whoriskey, As a Grocery Chain Is Dismantled, Investors Recover
Their Money. Worker Pensions Are Short Millions., WASH. POST (Dec. 28,
2018), https://www .washingtonpost.com/business/economy/as-a-grocery-chain-
is-dismantled-investors-recover-their-money-worker-pensions-are-short-
millions/2018/12/28/ea22e398-0a0e-11e9-85b6-41c0fe0c5b8f_story.html.
6. Stephen Miller, DOL Pulls Back on Private Equity in 401(k)s, SHRM
(Jan. 11, 2022), https://www.shrm.org/resourcesandtools/hr-
topics/benefits/pages/dol-pulls-back-on-private-equity-in-401k-plans.aspx.
7. Consumer Financial Protection Bureau Proposes Rule to End Payday
Debt Traps, CONSUMER FINANCIAL PROTECTION BUREAU (June 2, 2016),
https://bit.ly/31DQFrc.
8. Kate Berry, CFPB Poised to Reinstate Tough Stance on Payday Lenders,
AMERICAN BANKER (Mar. 29, 2021),
https://www.americanbanker.com/news/cfpb-poised-to-reinstate-tough-stance-
on-payday-lenders. But see Alan S. Kaplinsky, CFPB Issues Report on State
Payday Loan Extended Payment Plans, BALLARD SPAHR (Apr. 7, 2022),
https://www .consumerfinancemonitor.com/2022/04/07/cfpb-issues-report-on-
state-payday-loan-extended-payment-plans/ (“Perhaps more significant than
what the report says is what it does not say—namely, that the CFPB intends to
launch a new rulemaking in the payday lending space that would purport to
reinstate the “ability-to-repay” provisions in former Director Cordray’s original
payday lending rule.”).
9. Questions for the Record, Committee on Banking, Housing, and Urban
Affairs Nominations of the Honorable Gary Gensler and the Honorable Rohit
Chopra, SENATE BANKING COMMITTEE 8 (Mar. 2, 2021),
https://www.banking.senate.gov/imo/media/doc/Chopra%20Resp
%20to%20QFRs%203-2-211.pdf.
10. CFPB Penalizes JPay for Siphoning Taxpayer-Funded Benefits Intended
to Help People Re-enter Society After Incarceration, CONSUMER FINANCIAL
PROTECTION BUREAU (Oct. 19, 2021), https://www.consumerfinance.gov/about-
us/newsroom/cfpb-penalizes-jpay-for-siphoning-taxpayer-funded-benefits-
intended-to-help-people-re-enter-society-after-incarceration/.
11. Nursing Homes Need More Staff, NATIONAL CONSUMER VOICE,
https://theconsumer voice.org/uploads/files/issues/Consumer-Fact-Sheet-
Nursing-Home-Staffing.pdf
12. Fact Sheet: Protecting Seniors by Improving Safety and Quality of Care
in the Nation’s Nursing Homes, WHITE HOUSE (Feb. 28, 2022),
https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-
sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-
quality-of-care-in-the-nations-nursing-homes/.
13. Charlene Harrington et al., These Administrative Actions Would Improve
Nursing Home Ownership and Financial Transparency in the Post COVID-19
Period, HEALTH AFFAIRS (Feb. 11, 2021),
https://www.healthaffairs.org/do/10.1377/hblog20210208.597573/full/.
14. Ariel Gelrud Shiro & Richard V. Reeves, The For-Profit College System
Is Broken and the Biden Administration Needs to Fix It, BROOKINGS INSTITUTION
(Jan. 12, 2021), https://www.brookings.edu/blog/how-we-rise/2021/01/12/the-
for-profit-college-system-is-broken-and-the-biden-administration-needs-to-fix-
it/.
15. Id.
16. Id.
17. Stephanie Hall et al., What States Can Do to Protect Students from
Predatory For-Profit Colleges, CENTURY FOUND (May 26, 2020),
https://tcf.org/content/report/states-can-protect-students-predatory-profit-
colleges/.
18. Id.
19. Ben Miller, College Executives Need to Pay Up When Their Schools
Close Abruptly, CENTER FOR AMERICAN PROGRESS (Mar. 19, 2019),
https://www.americanprogress.org/article/college-executives-need-pay-schools-
close-abruptly/.
20. Shiro & Reeves, supra note 14.
21. Form PF Presentation, SEC (Sept. 13, 2013),
https://www.sec.gov/info/cco/cco-2013-09-13-presentation-form-pf.pdf.
22. Chris Witowsky, LPs Fear an “Erosion” of Fiduciary Duty in Fund
Contracts: ILPA Survey, BUYOUTS (July 13, 2020),
https://www.buyoutsinsider.com/lps-fear-an-erosion-of-fiduciary-duty-in-fund-
contracts-ilpa-survey/ (Limited partners are concerned about agreements with
general partners where the GPs eliminate their fiduciary duties to the fund.
Based on a survey by Institutional Limited Partners Association, 71% of LPs
have seen fiduciary duties modified or eliminated in the past year.).
23. SEC Proposes to Enhance Private Fund Investor Protection, SEC (Feb.
9, 2022), https://www.sec.gov/news/press-release/2022-19.
24. Id.; Chris Cumming, SEC Considering New Rules on Private-Fund Fees,
Conflicts, Gensler Says, WALL ST. J. (Nov. 10, 2021),
https://www.wsj.com/articles/sec-considering-new-rules-on-private-fund-fees-
conflicts-gensler-says-11636580410.
25. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L.
111-203, § 956, 124 Stat. 1905 (2010).
26. Victor Fleischer, Two and Twenty Revisited: Taxing Carried Interest as
Ordinary Income Through Executive Action Instead of Legislation (Working
Paper Sept. 16, 2015), https://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2661623.
27. Jesse Drucker & Danny Hakim, How Accounting Giants Craft Favorable
Tax Rules from Inside Government, N.Y. TIMES (Sept. 19, 2021),
https://www.nytimes.com/2021/09/19/business/accounting-firms-tax-loopholes-
government.html (For instance, Craig Gerson, who was a tax specialist at PwC
who specialized in advising PE firms, led the development of fee waiver
rulemaking, which was watered down and allowed some forms. Two months
after issuing the regulation, Gerson rejoined PwC).
28. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
29. Ryan Tracy, Feds Win Fight over Risky-Looking Loans, WALL ST. J.
(Dec. 2, 2015), https://www.wsj.com/articles/feds-win-fight-over-risky-looking-
loans-1449110383.
30. Joe Rennison, US Borrowers Breach Loan Limit Guidance at Record
Pace, FIN. TIMES (Dec. 16, 2021), https://www.ft.com/content/67b625e7-87ab-
478e-aca1-995f15 0e6b9c.
31. Maya Abood et al., Wall Street Landlords Turn American Dream into a
Nightmare, ACCE INSTITUTE ET AL . 41–43, https://www.publicadvocates.org/wp-
content/uploads/wallstreetlandlordsfinalreport.pdf.
32. Id.
 33. See, e.g., Duty to Serve Underserved Markets Plan: 2022–2024, FANNIE
MAE 8 (2021), https://www.novoco.com/sites/default/files/atoms/files/fannie-
mae-duty-to-serve-2022-24-proposed-052021.pdf (proposing to “[i]ncrease loan
purchases of MHCs [Mobile Home Communities] owned by government
entities, nonprofit organizations, or residents”); Duty to Serve Underserved
Markets Plan: For 2018–2021, FREDDIE MAC 40
https://www.freddiemac.com/sites/g/files/ynjofi111/files/about/duty-to-
serve/docs/Freddie-Mac-Underserved-Markets-Plan.pdf (proposing to “Develop
a New Offering for Resident-Owned Communities”).
34. Alan Rappeport, Former Top Financial Regulators Warn Against Move
to Ease Oversight of Firms, N.Y. TIMES (May 13, 2019),
https://www.nytimes.com/2019/05/13/us/politics/financial-regulation-trump-
administration.html.
35. Richard M. Scheffler, Soaring Private Equity Investment in the
Healthcare Sector: Consolidation Accelerated, Competition Undermined, and
Patients at Risk, AMERICAN ANTITRUST INSTITUTE 50 (May 2021),
https://publichealth.berkeley.edu/wp-content/uploads/2021/05/Private-Equity-I-
Healthcare-Report-FINAL.pdf.
36. Jack Hoadley et al., Surprise Billing Protections: Help Finally Arrives
for Millions of Americans, COMMONWEALTH FUND (Dec. 17, 2020),
https://www.commonwealthfund .org/blog/2020/surprise-billing-protections-
cusp-becoming-law.
37. Christopher J. Archibald, Ninth Circuit Upholds California’s Ban on
Mandatory Arbitration of Employment Disputes, BCLP (Sept. 24, 2021),
https://www.bclplaw.com/en-US/insights/blogs/bclp-at-work/ninth-circuit-
upholds-californias-ban-on-mandatory-arbitration-of-employment-
disputes.html.
38. David Seligman, Three June State Law Actions Helping Consumers
Fight Arbitration Requirements, NATIONAL CONSUMER LAW CENTER (July 31,
2019), https://library.nclc .org/three-june-state-law-actions-helping-consumers-
fight-arbitration-requirements.
39. Sam Cleveland, A Blueprint for States to Solve the Mandatory
Arbitration Problem While Avoiding FAA Preemption, 104 MINN. L. REV. 3266
(2020).
40. Seligman, supra note 38.
41. April Kuehnhoff, What States Can Do to Help Consumer Debt
Collection, NATIONAL CONSUMER LAW CENTER,
https://www.nclc.org/images/pdf/debt_collection/fact-sheets/fact-sheet-debt-
collection-state-reform.pdf.
42. Robert J. Hobbs, Model Family Financial Protection Act, NATIONAL
CONSUMER LAW CENTER 4 (2020), https://www.nclc.org/wp-
content/uploads/2022/08/model_family_financial_protection_act.pdf.
43. Common Defenses to Raise, NATIONAL CONSUMER LAW CENTER,
https://library.nclc .org/sd/0404 (“Ask that the debt buyer prove that your debt
has been properly transferred to it. Amazingly, debt buyers often do not have
that proof.”).
44. Joe Bousquin, How Rent Control Policies Could Impact the Single-
Family Market, BUILDER (Feb. 14, 2020),
https://www.builderonline.com/money/how-rent-control-policies-could-impact-
the-single-family-market_o.
45. Yonah Freemark et al., What Does the Rise in Single-Family Rentals
Mean for the Twin Cities?, URBAN INSTITUTE (June 11, 2021),
https://www.urban.org/research/publication/what-does-rise-single-family-
rentals-mean-twin-cities.
46. Id.
47. Will Parker, House Rents Pop Up as New Investors Pile In, WALL ST. J.
(Aug. 31, 2021), https://www.wsj.com/articles/house-rents-pop-up-as-new-
investors-pile-in-11630402201.
48. Policy Agenda 2019–2020, EQUITY I N PLACE (Jan. 2020),
http://thealliancetc.org/wp-content/uploads/2020/01/EIP-Policy-Agenda-final-
Jan-2020.pdf.
49. Id.
50. Hall et al., supra note 17.
51. Id.
52. Id.
53. Id.
54. Id.
55. Id.
56. Id.; Anthony Walsh, Obama-Era Rule Banning Mandatory Arbitration in
College Contracts Carries the Day, CENTURY FOUNDATION (Dec. 1, 2020),
https://tcf.org/content/commentary/obama-era-rule-banning-mandatory-
arbitration-college-contracts-carries-day/?session=1.
57. Hall et al., supra note 17.
 58. See, e.g., Memorandum Opinion, Frederick Hsu Living Trust v. ODN
Holding Corp., No. C.A. No. 12108-VCL (Del. Ch. Jan. 31, 2017) (Plaintiff
alleged that the board tried to maximize the VC firm’s redemption rights, rather
than the long-term value of the corporation. In its ruling, the court said that the
board had to promote the interests of the shareholders in the aggregate, without
regard to special rights). Julia Beskin & Samantha Yantko, Fiduciary Duties of
Directors Appointed by Private Equity Firms: Pitfalls and Best Practices,
FINANCIER WORLDWIDE (Oct. 2019), https://www.financierworldwide
.com/fiduciary-duties-of-directors-appointed-by-private-equity-firms-pitfalls-
and-best-practices#.Y0MTpOzMJKN.
59. Warren, Baldwin, Brown, Pocan, Jayapal, Colleagues Unveil Bold
Legislation to Fundamentally Reform the Private Equity Industry, OFFICE OF
SENATOR ELIZABETH WARREN (July 18, 2019),
https://www.warren.senate.gov/newsroom/press-releases/warren-baldwin-
brown-pocan-jayapal-colleagues-unveil-bold-legislation-to-fundamentally-
reform-the-private-equity-industry.
60. Public Money for Private Equity, OUR FINANCIAL SECURITY 39 (Sept. 13,
2021), https://ourfinancialsecurity.org/wp-content/uploads/2021/09/public-
money-for-private-equity-9-13-21.pdf.
61. Danielle Ivory et al., When You Dial 911 and Wall Street Answers, N.Y.
TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-911-
and-wall-street-answers.html.
 © Cynthia Barmore

Brendan Ballou is a federal prosecutor and served as Special Counsel for

Private Equity at the U.S. Department of Justice. He began his legal career in the
Department’s National Security Division, where he advised the White House on
counter-terrorism policy. He graduated from Columbia University and Stanford
Law School.
The views expressed in this book do not necessarily represent those of the
U.S. Department of Justice.
 Praise for Plunder

“As shorthand for the crazy unfairness of financialized modern capitalism, more
accurate than Wall Street or hedge fund is private equity—the state-of-the-art
corporate-takeover mode that has brought predatory greed and ruthlessness to
new levels, wrecking companies and workers’ lives as a matter of course.
Plunder is the right word, as Brendan Ballou lucidly explains in his infuriating,
illuminating, essential book. And his practical plan for reining in this monstrous
new centerpiece of our system makes total sense.”
—Kurt Anderson, author of Evil Geniuses: The
Unmaking of America
“As private equity has risen to seize everything from nursing homes to clothing
retailers to private prisons to our retirement savings, Ballou has written a cogent
and indispensable book on this strange financial world. Ballou shows how these
modern-day robber barons not only target the poor and serve themselves, but
also bore into the foundations of our economy and society, weakening it for
everyone. He ends with a stirring road map for reform.”
—Jesse Eisinger, ProPublica, author of The Chickenshit
Club: Why the Justice Department Fails to Prosecute
Executives
“Private equity might be the biggest economic story of the century, and yet so
few people understand what it is or how it’s crippling our economy and our
democracy. In Plunder, Ballou tells a complicated story clearly and explains how
private equity shapes your life and, importantly, how it can be stopped. For
anyone who wants to understand why our economy has become so broken and
so unjust—and for anyone who wants to fix it—Plunder is required reading.”
—Zephyr Teachout, professor of law, Fordham Law
School, and author of Break ’em Up: Recovering our
Freedom from Big Ag, Big Tech, and Big Money
“Plunder offers a clear and critical analysis of the private-equity industry. Ballou
shows how some private equity firms have ruined retail businesses, made
housing more expensive, reduced the quality of health care and nursing homes,
and wreaked havoc on families. If you’re interested in understanding the hidden
sources of our economic problems—and in fixing them—read this book.”
—Ganesh Sitaraman, professor of law, Vanderbilt
University, and author of The Crisis of the Middle-
Class Constitution
“Private equity firms don’t just transform our economy: they co-opt and
compromise our government and our democracy. As few other people can,
Ballou has shown how private equity has been so phenomenally successful in
advancing its agenda at every level of government, and how government has
been so tremendously solicitous of private equity. For anyone who wants to
understand what’s happening in our economy and our democracy, Plunder is
required reading.”
—Russ Feingold, former senator, president of the
American Constitution Society, and author of The
Constitution in Jeopardy: An Unprecedented Effort to
Rewrite Our Fundamental Law and What We Can Do
About It
“Despite owning companies with tens of millions of workers and impacting the
lives of tens of millions more by buying up hospitals, nursing homes, housing,
and other services we depend on, giant private-equity firms still largely operate
in the shadows—and prefer it that way. Ballou’s Plunder shines an important
light on these finance giants that have reshaped the global economy to their
advantage, connecting private equity firms’ actions directly to the lives of people
who are impacted, from workers, to patients, to students, and many more. Ballou
reminds us that in nearly all these cases, private equity firms have not acted
alone—instead they have been aided and abetted by, and profit massively from,
the willing assistance of government. Perhaps most importantly, Plunder points
us toward solutions—the concrete actions we can take to halt the doom loop of
private-equity-driven inequality and press for a more just economy.”
—Jim Baker, executive director, Private Equity
Stakeholder Project
“The mysterious private-equity industry is one of the most destructive forces in
American society—and one that too few people truly understand. Ballou’s
Plunder promises to change that. At a time when private equity has never been
more powerful, his book shines a floodlight on the corporate raiders ravaging
our economy and lays out a comprehensive road map for policymakers willing to
take them on. For people who want to understand why America suffers from
enormous disparities in wealth and power—and what we can do to change it
—Plunder is essential reading.”
—Sarah Miller, executive director, American Economic
Liberties Project
PublicAffairs is a publishing house founded in 1997. It is a tribute to the
standards, values, and flair of three persons who have served as mentors to
countless reporters, writers, editors, and book people of all kinds, including me.

I.F. STONE, proprietor of I. F. Stone’s Weekly, combined a commitment to the

First Amendment with entrepreneurial zeal and reporting skill and became one
of the great independent journalists in American history. At the age of eighty,
Izzy published The Trial of Socrates, which was a national bestseller. He wrote
the book after he taught himself ancient Greek.

BENJAMIN C. BRADLEE was for nearly thirty years the charismatic editorial leader
of The Washington Post. It was Ben who gave the Post the range and courage to
pursue such historic issues as Watergate. He supported his reporters with a
tenacity that made them fearless and it is no accident that so many became
authors of influential, best-selling books.

ROBERT L. BERNSTEIN, the chief executive of Random House for more than a
quarter century, guided one of the nation’s premier publishing houses. Bob was
personally responsible for many books of political dissent and argument that
challenged tyranny around the globe. He is also the founder and longtime chair
of Human Rights Watch, one of the most respected human rights organizations
in the world.

For fifty years, the banner of Public Affairs Press was carried by its owner
Morris B. Schnapper, who published Gandhi, Nasser, Toynbee, Truman, and
about 1,500 other authors. In 1983, Schnapper was described by The Washington
Post as “a redoubtable gadfly.” His legacy will endure in the books to come.
Peter Osnos, Founder