At Democratic Debate for Illinois Governor, Billionaire's Business in Spotlight

by | March 15, 2018

By Rick Pearson and Kim Geiger

Leading Democratic governor candidate J.B. Pritzker was called a "liar" and a "fraud" by two rivals as the billionaire businessman's ties to secret offshore shell companies became the focus of the final forum of the campaign Wednesday night.

For his part, Pritzker avoided getting into specifics of his financial holdings, and claimed the offshore companies were investment instruments of family trusts established long ago and that charity was the beneficiary, not himself.

"I have no control over those trusts, the entities that are created. Just like all trusts, they make investments, so they were created by the people who control those trusts. And remember, those trusts are focused on charitable giving," said Pritzker, who has declined to make available his complete tax returns or any returns from the trusts.

Rival Daniel Biss called Pritzker's explanation an "unbelievable mess of word salad" in contending the Hyatt Hotel fortune heir was trying to "avoid taxes" through the offshore companies "and spent the last year lying about it."

"This is just exposing the fraud that is the J.B. campaign for governor," said Biss, a state senator from Evanston.

And another contender, Kenilworth developer Chris Kennedy, said voters should consider Pritzker's words as if they were conducting a job interview for governor.

"I've hired a lot of people and I can tell you just one piece of advice to the voters of this state: You should never hire someone who lies to you during a job interview. If they'll lie to you to get the job, they'll lie to you to keep the job. And you do not want a liar as the governor of the state of Illinois," said Kennedy, a member of the iconic Massachusetts political family.

Sharp attacks from all three candidates dominated the final televised debate before Tuesday's primary election, a campaign where Pritzker's wealth and the $63.2 million self-funding of his bid are a recurring source of jabs from Kennedy and Biss.

Unlike other debates featuring the entire field of six candidates on the ballot, the forum sponsored by WTTW's "Chicago Tonight" and the City Club of Chicago featured only the top three candidates in the polls.

Pritzker and his relationship with offshore trusts and shell companies served as the forum's dominant theme.

A Chicago Tribune investigation published Wednesday found several shell companies created between 2008 and 2011 in the Bahamas that are either owned by Pritzker, his brother and business partner Anthony Pritzker, or list other close associates as executives.

Wealthy people often use complicated offshore financial structures to avoid paying taxes and to hide their assets from public scrutiny, financial experts told the Tribune.

Pritzker has said that his grandfather set up offshore trusts decades ago. Many of the records about Pritzker's more recent secretive offshore interests were obtained by the Tribune through a reporting partnership with the International Consortium of Investigative Journalists, which maintains a database of millions of leaked offshore financial records collectively known as the Paradise Papers.

One of the shell companies that city records show Pritzker wholly owns -- Moreau Capital Holdings Ltd. -- has a 9.4 percent stake of Entertainment Cruises. The cruise company is owned by the Pritzker Group, the investment company formed by Pritzker and his brother.

An Entertainment Cruises subsidiary, Seadog Ventures, is buying city-owned land along the Chicago River to launch amphibious duck boat tours downtown.

During Wednesday night's forum, Pritzker tried to draw a distinction between Entertainment Cruises and Moreau, the shell company, saying it was Entertainment Cruises that's trying to do business with the city.

"There's no shell companies here," he said.

As part of the campaign, Pritzker filled out a required statement of economic interest listing more than 360 entities, but not the value of those investments. He also has not released complete copies of his tax returns or any tax returns involving the trusts but said that over the last three years "that federal and state taxes paid by trusts for my benefit and personally" totaled $150 million.

During the debate, Kennedy acknowledged that he invested in a fund similarly named to one of Pritzker's offshore investments. But Kennedy said his investment fund "files in the U.S."

That fund, Anchorage Illiquid Opportunities IV Access, LP, was incorporated in Delaware and lists a principal place of business as Grand Cayman, Cayman Islands, according to a U.S. Securities and Exchange Commission filing. Any income Kennedy receives from his investment is taxable in the U.S., and his campaign said he files the necessary forms with the Internal Revenue Service for the investment.

Pritzker accused his rivals of attacking him because he's the front-runner as Election Day approaches.

"We're in the last five days of a campaign. It's clear they're behind and this is how they intend to run the rest of the campaign. In fact, they've been running it this way all along -- quite negatively," Pritzker said.

"They need to answer for their records -- their voting records and their record of either failed accomplishment or just utter, outright failure," he said.

One of the most heated exchanges came when Kennedy said Pritzker was spending his millions of dollars without being truthful about his challengers.

"The truth is, when you can't win by telling the truth about yourself in a competition, sometimes you have to try to tell lies about your competitors in order to win and that's exactly what he's doing. Time and again," Kennedy said of Pritzker.

Pritzker interjected, "These two went on the attack."

The prompted Kennedy to respond: "Lie, lie, lie, lie, lie."

Kennedy also lashed out at Biss, who is seeking support from backers of Vermont Sen. Bernie Sanders' unsuccessful presidential campaign. Biss sponsored 2013 legislation to cut benefits for public pensioners -- a law later ruled unconstitutional. Biss has acknowledged the move was a mistake.

But Kennedy said Biss "fell" under Springfield's spell as a state lawmaker in pushing the legislation.

"There's nothing that a Democrat can do that's worse than what you did," said Kennedy, calling Biss' move "disqualifying" for governor.

Earlier Wednesday, Republican Gov. Bruce Rauner, himself a wealthy private equity investor, accused Pritzker of "tax dodging on a massive scale."

"He has personally set up accounts in the Cayman Islands and Bahamas, hiding income taxes to not pay his fair share of income taxes. He's done it personally. And what's clear is that he was not honest in his past statements," Rauner said of Pritzker. "He can't be trusted on this issue. And he wants to hide from taxing himself. He wants to put the onus on the people of Illinois so that the people of Illinois foot the bill."

Rauner has acknowledged that some of "hundreds of investments" had "small investments in some overseas accounts, and it's a tiny fraction of what I do." Rauner said he personally never set up any off-shore accounts and does not have control over them.

Chicago Tribune's Todd Lighty and David Heinzmann contributed.

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