Democratic U.S. Senate candidate Alan Grayson said more than two months ago that he had closed down the Cayman Islands-based hedge funds that helped prompt ethics complaints against the populist congressman from Orlando.
Grayson declined to provide documentation to the Tampa Bay Times when asked for it in early October, just as he did with the Hill newspaper several weeks ago: "Feel free to check with Cayman Islands authorities, if you regard that as relevant or useful," Grayson spokesman Ken Scudder told the Hill.
So we did.
Grayson's Cayman-based investment companies remained open as of this week, according to official records provided to the Tampa Bay Times by the Cayman Islands Government General Registry. The interconnected investment vehicles Grayson set up in the Caymans — Grayson Fund (Cayman), Ltd.; Grayson Master Fund (Cayman) LP and Sybilline Fund General Partner LLC — are still listed as active.
Scudder said Thursday those records are wrong, and he forwarded an Oct. 14 letter from the Cayman Islands Monetary Authority, which oversees financial services on the territory, confirming that Grayson Fund (Cayman), Ltd. was dissolved.
However, Grayson Master Fund (Cayman) LP remains listed as "currently licensed or registered" by the Monetary Authority.
Scudder said he could not address why that's the case or why the Cayman Islands Government General Registry shows three of Grayson's investment companies as active. Registry records note that companies it lists as "active" are not necessarily in good standing.
Since the Tampa Bay Times first revealed in May that he had created offshore investment accounts, Grayson, 57, has repeatedly denied what public records on those funds appear to show:
• No money was ever invested in a Cayman Islands account, Grayson has said, although his own Securities and Exchange Commission filings in 2014 stated that Cayman Islands-incorporated Grayson Master Fund (Cayman) LP had more than $13.2 million in assets under management.
• He has never received "one penny of compensation," for managing the funds, Grayson says, despite filing documents with the SEC this year stating that "ongoing" management fees and incentive payments are being paid to the fund manager. Grayson runs the fund management company.
• His funds have the standard structure — with a 2 percent annual management fee and also a 20 percent "incentive allocation" — to ensure hedge fund managers pay a lower tax rate than most Americans. Grayson, who has supported ending that so-called "carried interest" tax break, says he never benefited from it.
Grayson has railed against tax dodgers even as he set up his own hedge funds in a notorious tax haven.
Worth as much as $105 million, according to his handwritten financial disclosure reports, Grayson founded a telecom company in the 1990s and later worked as a lawyer specializing in whistle-blower cases. In 2011 — after losing a congressional seat and running for a new district — he created the hedge funds.
That same year he wrote in the Huffington Post that the IRS should audit every Fortune 500 company because so many appear to be "evading taxes through transfer pricing and offshore tax havens."
After critics earlier this year filed the still-pending ethics complaint, accusing the congressman of improperly using his name on an investment partnership, he removed "Grayson" from the title of the funds. He now calls them the Sibylline Funds although the Cayman Islands records show Grayson's name still on them.
Grayson has declined to say why he went with "Sibylline," which usually refers to oracles and female prophets from classical antiquity.
He has also declined to identify any partners or investors in his funds or release tax documents relating to them.
His main rival for the Democratic Senate nomination is U.S. Rep. Patrick Murphy of Jupiter, but Grayson's campaign appears to have hit a rocky patch. Three top staffers — his campaign manager, deputy campaign manager and campaign spokesman — this week confirmed they have quit the campaign or are about to depart.
Grayson shrugged that off in a radio interview with Tampa's WMNF-FM 88.5 on Thursday.
"The media dramatizes everything. Things are going quite well actually," he said of the staff departures. "What happened is they took three independent incidents that happened over the course of several months and they conflated it. Doesn't matter at all."
Times researchers John Martin and Caryn Baird contributed to this report. Contact Adam Smith at email@example.com. Follow @AdamSmithTimes.