Ted Cruz Failed To Disclose Ties To Caribbean Holding Company

An old college friendship led to financial entanglement with a Jamaican private equity firm and a British Virgin Islands holding company. Neither was disclosed during his 2012 campaign.

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Texas Republican Senator Ted Cruz potentially violated ethics rules by failing to publicly disclose his financial relationship with a Caribbean-based holding company during the 2012 campaign, a review of financial disclosure and company documents by TIME shows. The relationship originated with a $6,000 investment Cruz made more than a decade ago in a Jamaican private equity firm founded by his college roommate.

When Cruz later reported the financial relationship in 2013, he failed to comply with Senate rules requiring full identification of the holding company and its location, triggering an inquiry by Senate Select Committee on Ethics staff and a second amended disclosure. After additional inquiries by TIME this week, Cruz said he is now in the process making further corrections to his disclosure.

Cruz told TIME Thursday that the initial failure to report the financial relationship was an oversight that he corrected last May on his own initiative in his first filing after his election to the Senate. “It was an omission that was inadvertent,” Cruz said.

He said the later amendment to the May filing was part of the normal interaction with Senate ethics committee staffers. “There is a routine back and forth with the staff with whom you file the report where they make inquiries,” Cruz says. He provided TIME with copies of a number of relevant documents supporting his explanation of the incorrect disclosures.

The legally required disclosures arise from an apparently dormant business relationship, according to documents reviewed by TIME. When his wife, Heidi Nelson Cruz, served in George W. Bush’s Treasury Department in 2003, Ted Cruz went to considerable lengths to disclose his positions to the government, and to divest himself of his Caribbean holdings. But there was one exception.

(MORE: Democrats’ Biggest 2014 Weapon: Ted Cruz)

In an amended financial disclosure form filed Oct. 1, Cruz said he still holds a promissory note from a Kingston-based company called Caribbean Equity Partners Investment Holdings LTD, worth between $100,000 and $250,000. No company with that name is registered in Jamaica. There is however a dormant Jamaica-based private equity firm called Caribbean Equity Partners Limited of which Cruz was a founding director and preferential shareholder, according to documents filed with the Jamaican government and reviewed by TIME. The firm held $100 million in assets under management in the mid-2000s, according to local news reports, with a focus on service and tourism investments in Jamaica and the Caribbean.

Cruz says he has not had any relationship with the private equity firm since he cashed out an initial investment of $6,000 for a total return of $100,000 a decade ago in a private agreement with his former college roommate, a Jamaican Rhodes scholar named David Panton, with whom Cruz co-founded the firm. Cruz says the agreement yielded him $25,000 in cash and $75,000 in the form of a promissory note on the holding company. The agreement included an oral provision for the accrual of reasonable interest on the debt, Cruz says. He says he initially deferred and then paid capital gains taxes on his profits from the investment.

After inquiries from TIME, Cruz provided a copy of the promissory note, which gives the name of the holding company as CEP Investments Holdings Limited. Cruz says the agreement is effectively an IOU to him from Panton, who is the owner of the holding company. Cruz says that while the holding company operates out of Jamaica, it is in fact domiciled in the British Virgin Islands.

Cruz says he failed to include the promissory note among his assets on his first financial disclosure in July 2012 when he was a candidate for the U.S. Senate because he had forgotten about it. “In 2011, there was an inadvertent omission of this promissory note, and after a conversation with my college roommate I remembered it,” Cruz says. Cruz’s initial filing was made in the heat of his campaign. He was fined $200 for filing the document late.

On his financial disclosure form for the year 2012, filed in May this year, Cruz listed the promissory note and said he received no income from it or the company. Cruz identified the note as a non-publicly traded asset among other holdings, which he listed by their ticker symbols. Cruz said the asset was a “Promissory Note from CEP investments holdings LTD.” Caribbean Equity Partners has no connection to Constellation Energy Partners, the American company with the ticker symbol CEP.

Cruz then received an inquiry from the Senate ethics committee staff about the listing, Cruz and his staff told TIME. The ethics staff told Cruz to amend his filing to indicate the nature of the promissory note, the entity that had issued it, the city in which the entity was located and the date the note had been issued.

Cruz did so in his Oct. 1 amendment, but that filing also contained errors, misnaming the holding company, incorrectly saying it was domiciled in Jamaica, and giving the wrong date for the promissory note. In the filing, Cruz, a former lawyer and magna cum laude graduate of Harvard Law School, lists a wide variety of assets held jointly with his wife, including mutual funds and blue chip stocks totaling between $1.5 million and $4 million. Heidi Nelson Cruz is now an executive at Goldman Sachs.

(VIDEO: Ted Cruz Humorously Deals With Speech)

There are no absolute Senate prohibitions on being a director of a company or holding shares in, or notes on, a private equity firm or a holding company, according to the Senate ethics rules. However, Senators are not allowed to receive remuneration for directorships or any other positions outside of their government service. While some serve pro bono on the boards of charities, the Senate Ethics Committee advises Senators not to serve on any boards because of potential conflicts of interest that might arise during their service on Senate committees of jurisdiction.

The ethics committee requires [pdf] full disclosure of all financial holdings including any subsidiary investments held by private equity firms and holding companies. The committee requires Senators to provide sufficient information to indicate the locations and nature of the businesses in which they invest.

The Senate ethics committee, which is governed by the Ethics in Government Act, routinely and frequently reviews and requests clarification of public disclosure filings from Senators, and there is nothing unusual about their doing so in the case of Cruz’s May filing. But ethics experts and Cruz’s staff agree that the nature of the relationship Cruz disclosed is unusual.

Cruz’s relationship with Caribbean Equity Partners LTD stems from his long-time friendship with Panton, who was Cruz’s debating partner and roommate at Princeton and Harvard. Panton and Cruz co-founded the company in 1998, and Cruz took a large minority share in the company, according to the firm’s articles of association.

Earlier this year, Panton discussed the relationship in an interview with TIME for a magazine profile of Cruz. When Panton set up a business in Jamaica, he said Cruz was working for a small law firm and “wasn’t making a lot of money.” But, Panton added, “Ted invested a fairly sizable amount of money in my business.”

In 2003, Panton told an established Jamaican newspaper, the Gleaner, that the firm focused on buyouts and mergers and acquisitions in the Caribbean basin and had $100 million in investments under management. The firm’s investments included a $6 million stake in the “Atlantis” tourist attraction in the Caribbean, and positions in a Jamaica-based coffee distributor as well as a hotel chain, according to the newspaper.

Among the firm’s additional sources of capital, according to the paper, were international development organizations, including the Inter-American Development Bank and the Caribbean Development Bank, which contributed to an investment fund established by the Jamaican government that was managed by Caribbean Equity Partners. Other investors included Delta Airlines, according to the paper.

Cruz says that he was only involved in the management of the firm part-time at its early stages. Cruz remains one of four preferential shareholders in Caribbean Equity Partners, according to the firm’s last filing with the Jamaican Office of the Registrar of Companies, which was made on Dec. 31, 2001. Annual filings are required by Jamaican law, according to officials at the Ministry of Industry, Investment and Commerce. Cruz says he does not know the current state of the private equity firm. Cruz says he has not had any relationship with the private equity firm in a decade, is no longer a director or a shareholder, and never received any remuneration other than the $25,000 and the promissory note.

(MORE: How Ted Cruz Wins By Losing)

Cruz says he severed his ties with the company when his wife went to work at the Treasury Department during the administration of George W. Bush. “I sold my interest in it years ago,” he says. He provided TIME with a letter from an official at the Office of Government Ethics certifying his divestiture from three blocks of shares in two separate firms. The letter allowed Cruz to defer taxes on the capital gains from his initial $6,000 investment when he rolled the cash profits into another investment, Cruz says. Eventually, he says, he paid capital gains on the profits, using a $6,000 basis for the calculation.

One of the firms listed on the divestiture certification was Caribbean Equity Partners Limited (Jamaica), the firm in which Cruz was a director and in which he held ordinary and preferential shares. The other was Caribbean Equity Partners Limited (British Virgin Islands), an entity about which little is known. Cruz says it is not the same as CEP Investment Holdings Limited, the company on which Cruz currently holds the promissory note.

Panton now lives in Atlanta, Ga., where he is a partner and co-founder of Navigation Capital Partners. He did not return repeated calls requesting an interview this week. Cruz said he spoke with Panton this week to clarify his disclosure. Company documents list two directors of Caribbean Equity Partners in addition to Cruz and Panton. Neither returned calls for this story.

With reporting by Alex Altman/Washington, D.C.

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1268 comments
jrawlings99
jrawlings99

In a private meeting today Senator Cruz agreed to back down on his threats to shut down the government and take it into default due to a Republican investigation of the Senator.  This small ethic violation is nothing compared to other involvements by Cruz and his wife and Father.   Senator Cruz calls himself the anointed one Jesus but his pass has more criminal  names in the US an Cuba.  Attention was also brought to his wife who works for the corrupt Goldman Sachs. 

eyeofnewt2
eyeofnewt2

Pale-rider.  How about ,  Pole-rider.

Sorry-ass Republican.  Suck my liberal d--k.

eyeofnewt2
eyeofnewt2

To Pailrider 1957- All scumbag neo-kons should be drowned at birth.

Ted Cruz cost President Obama and the American people, over 24 billion $

He should be hog-tied and put in leg irons.  Same goes for that drunk from Ohio, Bohner.

Obama owns you 1957.  you are his 'Bitch'.

EconomicHostage
EconomicHostage

If this story gets any traction and folks are able to dig up some real dirt on Crud, errr umm I mean Cruz..... His as sss will be out like a blowed out light bulb.  Couldn't happen to a more deserving creep, crook, oh shucks you know what I mean.

MitchKumstein
MitchKumstein

Is Time still publishing? Maybe it should join  Newsweek in the dumpster?

Juan4uwhiteguys
Juan4uwhiteguys

Ohoh, senor cruz should we get your one way tick it to Canada now caballero? Oh you act surprised that the white man has used you as a scape goat, or a see we "love minorities token" hahaha, you are such a disgrace to your family and its roots, how could you side with the clan!


fitty_three
fitty_three

Somaya are just crack-o-dawn bat fart bent calliope insane.

That is all.

This has been a public service amusement.

CharleneBuck
CharleneBuck

Does anyone else see Ted Cruz's ears are sort of pointy?

Palerider1957
Palerider1957

I have been reading all the crap you bed-wetting Libturds are posting. You complain about Republicans or Cruz not following the law, yet do not say squat about how O'Blowhole ignores the law, or "repeals" a law (not within is enumerated Constitutional power), how he disregards our laws, and even tells law enforcement to NOT enforce laws he doesn't like (immigration) and you pukes have the audacity to say ANYTHING about Republican, Conservatives or the Tea Party!!?
But that's okay, when the shooting starts, and it IS going to start, O'Blowhole will see to it, all you bed-wetting Libturds will be UNARMED and PRIME TARGETS!!! OH wait, no you won't, you will be too busy getting on the bus/train to the FEMA Camps.
Yeah, good luck with that!
Not a single one of you Libtard Demon-rats posted one thing with truth in it, or you put part of the truth followed by lies. No sense argueing with single digit IQ dolts like you A-holes.

jennlynn1173
jennlynn1173

SWAMP LAND!!  the name says it!!  How about spending time reporting facts rather than fiction!! Gotta  lie and smear someone's good name to win political points.   How about being a mouthpiece for the American people with your journalism rather than you back alley meetings with the liberals who are rabid about gaining more control of American freedom and individualism.  BE CAREFUL WHAT YOU WISH FOR AMERICA you just might get it.  You keep taking to HEART what SWAMPLAND has to say.  If it came down to me or anyone of you that sided with the liberals to take my freedom away I can guarantee you right now... they would get you and not me!  Have fun!  God bless America  

JohnBays
JohnBays

OK - Clarence Thomas expects America to "Understand" he just "Forgot" to report his wifes750K income from her Management of a Koch Brothers PAC - just prior to Clarence rendering his "Opinion" on "Citizens United". Now Ted Cruz expects us to understand he "Forgot" making 250K on a 6K Investment.

There are "Understanding" People - Then there are "Moron's - which are they appealing to????? 

mrwillchill
mrwillchill

CRUZ IS JUST AS CROOKED AS ALL THE REST OF THE PUBS AND BAGGERS

paulejb
paulejb

The debt limit on October 16 was $16.7 trillion. One day into the debt limit suspension and the debt suddenly became $17.075 trillion. Bernie Madoff will be green with envy over Barry 0's shenanigans.

paulejb
paulejb

This is a real joke. Time is worried about Ted Cruz's $6000 investment while Barry 0 pulls a Bernie Madoff with the national debt. One day into the suspension of the debt limit, the debt rises by $328 billion. No one cooks the books like Barry 0.

"U.S. debt jumps a record $328 billion — tops $17 trillion for first time"

"U.S. debt jumped a record $328 billion on Thursday, the first day the federal government was able to borrow money under the deal President Obama and Congress sealed this week.

The debt now equals $17.075 trillion, according to figures the Treasury Department posted online on Friday."

http://www.washingtontimes.com/news/2013/oct/18/us-debt-jumps-400-billion-tops-17-trillion-first-t/

PatrickWells
PatrickWells

You just know this was leaked to the times by a Republican source. After the govt shutdown debacle, they need a fall guy so they can attempt to save their brand, and Cruz is it. They want him GONE! You don't screw up that badly and not get forced to resign.

lurch
lurch

The big story in this piece is turning $6000 into $100,000 to $250,000. We all need to quit our jobs and become one of them moneychangers who push money around & get richy rich. 

That ain't working, that's the way you do it. Money for nothin' & the the cash is free. Lemme tell ya them guys ain't dumb, maybe get a blister on your little finger, maybe get a blister on your thumb.

lurch
lurch

I'm always forgetting I have between $100,000 and $250,000 just laying around the house somewhere. Happens all the time.

MariaAshot
MariaAshot

"Give Ted a pass"? Mrs. Ted, a former US Treasury official and now an executive at Goldman Sachs, is the wife and presumably soulmate & confidante of a man who leads 162 US Congressfolk (18 Senators and 144 Representatives) who imagine it is a good thing for the US to default on its sovereign debt and thereby blow up the planet's financial system.

Give these Goldman Sachs employees a pass? No, I don't think so.


tsvskibum
tsvskibum

I'd be inclined to give ol' Ted a pass on this one, but because he's a tea bagger, if the tables were reversed and I were in his place, he'd "run me through"  and I'd be hanging from the highest yard arm.  He'd be saying I was an example of another corrupt Democratic Senator ( I am a Democrat but not a Senator).  So no pass: make him walk the plank!


MrTemecula
MrTemecula

@MitchKumstein If you are commenting, you must be reading Times. And if you are reading, then the Times will probably still be publishing. So thank yourself for the Times remaining in business.

Juan4uwhiteguys
Juan4uwhiteguys

again, these GOP ba st er Ds do not want me to like my own comment, no don't think for your self little minority man, I will do that for you....

dectra
dectra

@Palerider1957 

Wow. 

What a load of Christian Hatred, Ms. Rider.

You make Jesus so proud.....

Juan4uwhiteguys
Juan4uwhiteguys

@Palerider1957 yes white man, keep going down the path of the dark side, hate it all, hate it more, you are correct and all others are so so so so so wrong. The time has come, pick up your arms and follow your destiny white man, you must smell hell from your seat......


mantisdragon91
mantisdragon91

@Palerider1957 When the shooting starts? Go ahead and start shooting tough guy. It is obvious that you have never served and have no clue of what a modern military can do to a band of anarchist militia. I'd be happy to reenlist just to give you traitors that reality check.

MattDylan
MattDylan

@Palerider1957 Pretty funny post polerider.  Please remember to take your court ordered meds.  We're all counting on you.

j45ashton
j45ashton

@Palerider1957 Why in the world would anyone other than another pig listen to the ravings of a lunatic like you?

j45ashton
j45ashton

@jennlynn1173 Take your freedom away.  Sure.  Give some examples, any examples of how you've lost your freedom from 30 yrs ago, 20 yrs ago, 10, 5 or last week.  More delusional right-wing paranoia unsubstantiated by any facts.

mantisdragon91
mantisdragon91

@paulejb This has what exactly to do with an article on Cruz? And his point was that it was unpatriotic to give a tax cut for the rich, while deferring paying for two wars.

barneydidit
barneydidit

@paulejb Difference being of course, Obama inherited a debt, existing policies that were compounding the debt, and a tanked economy...while Cruz screwed up all on his own. 

manlyman
manlyman

Cruz resign? Ooooookay...

TyPollard
TyPollard

@tsvskibum 

slight correction: He would use the grammatically incorrect "DemocRAT Senator" intentionally to poke a stick in the eye of civility.

fitty_three
fitty_three

@j45ashton

Pigs are actually very smart and very choosy animals. They wouldn't get near that swill

paulejb
paulejb

@jamesgordon @paulejb 

No one does it like Barry 0. Barry knows more scams than the entire population of Sing Sing prison.

paulejb
paulejb

@barneydidit @paulejb 

$328 billion in one day, Barney? You buy that? If you do, I have some oceanfront property in Utah that might interest you.

Denesius
Denesius

@paulejb @jamesgordon @barneydidit The replies to this thread could go on forever, however there are a couple of glaring omissions that need to be addressed: first of all @paulejb I don't know where you get the math, but the body count is way off. Second- Afghanistan was home to the worst mass murderer in history. There was absolutely no justification for the Iraq invasion.

mantisdragon91
mantisdragon91

@paulejb @barneydidit Yep 328 Billion in one day. Its expensive to run a country when you have domestic terrorists hampering the recovery and killing jobs by constantly threatening to shut down the government.

jamesgordon
jamesgordon

@paulejb @barneydidit  I love  to see the  people who  point  fingers at  obama, There are three  fingers pointing back at  you .People  use to  ask  me  how i was  doing , I would  answer 3 /12  (meaning  3  billion  was  spent that  week in  Iraq that week and 12  U.S  soldiers  had  died . I am so  ashamed i  voted  for  bush as  Governor and  president . It will NEVER  happen again.