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updated: 1/31/2011 5:50 PM

Getting to the bottom of Foster's 'toxic asset' claims about Hultgren

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  • Bill Foster

      Bill Foster

 
 

If you believe 14th District Congressman Bill Foster, Randy Hultgren is a salesman for "toxic assets" that helped cause the collapse of the housing market. If you believe Hultgren, Foster's Republican challenger, he promoted only one investment fund.

Foster's most recent TV ad, and accompanying news conference, attempted to link Hultgren and a company he works for, Performance Trust Investment Advisors, to the collapse of the housing market. Foster's ad claims Hultgren is the "top salesman" for a company that "sold the very products that undermined our economy."

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Hultgren is now running an ad saying those claims are a lie. So what's a voter to believe?

Without a thorough paper trail of every sales pitch Hultgren made for Performance Trust, or a client coming forward to say Hultgren tried to get him to invest in a fund filled with "toxic assets," voters don't have definitive proof of who is telling the truth. But the existing paper trail does provide some useful facts.

It's a fact that Performance Trust marketed a fund called the Performance Trust TALF Fund, Ltd., incorporated in the Cayman Islands. The fund sold TALF-eligible securities. TALF is a program created by the Federal Reserve to help banks get rid of bad investments, like subprime mortgages, by loaning would-be buyers of those investments almost the full purchase price at a very low interest rate. The TALF program was backed by the Troubled Asset Relief Program, which became commonly known as "the bailout."

Hultgren has made statements about how the bailout and federal stimulus were big mistakes he would never vote for, while Foster did. That contrast is the central theme of Hultgren's campaign.

SEC documents don't connect Hultgren to the Performance Trust TALF Fund in any direct fashion. There is no reported sales compensation for any broker or dealer associated with the fund. Hultgren's name is not listed as a director of the fund. However, he has been listed as a vice president of sales and marketing for Performance Trust, suggesting he might have marketed the fund.

Hultgren says that title is a misnomer.

"My role is really as an ambassador for them," Hultgren said. "I can sell, but I've been solely involved with (another fund the company offers). My role is very specific. My fund never had anything to do with toxic assets or subprime assets. The fund is very full disclosure. Every single month, every single investor got a full list of every single bond that was in (my) fund. It had nothing to do with the bailout and nothing to do with subprime mortgages."

Hultgren's financial disclosure form lists a $50,000 salary for his work with Performance Trust, perhaps suggesting more of an ambassador role than head salesman for a company that lists nearly $85 million in total assets, according to a recent annual audit.

At that salary, Hultgren doesn't even qualify to be an investor in the fund he said he markets for Performance Trust. In fact, other than an IRA valued at less than $50,000, Hultgren has no stock or bond investments.

"I'm not embarrassed by that at all," Hultgren said. "Between the state senate and Performance Trust, my family and I make a good living, but we're not getting rich. My biggest asset right now is my home."

Hultgren doesn't even report a checking or savings account on his financial disclosure. He said he has two checking accounts, but they both only maintain enough of a balance to pay his monthly bills.

That said, the employees of Performance Trust, and some of their wives, have put some of the profits they've earned at the company toward benefiting Hultgren's campaign. The employees, including the three directors of the Performance Trust TALF Fund in question, have kicked in at least $56,000 toward Hultgren's Congressional campaign fund.

That at least raises the question: Would Hultgren have promoted Performance Trust's TALF Fund if his bosses told him to?

"I don't know enough about the fund to even say what I would've done," Hultgren said. "I respect the company. Their customers are very pleased with the work that they do. But I am against the bailouts and the stimulus plans. All these allegations are just not true. It's hard to prove a negative, but I never received any benefit from any bailout money."

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