A Bumpy Stretch for McAuliffe

Once billed as evidence of his business acumen, an electric-car company has become a headache for the Virginia Democrat

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Jahi Chikwendiu / The Washington Post/Getty Images

Virginia gubernatorial candidate Terry McAuliffe

Corrections appended, Aug. 15

When he launched his bid to become governor of Virginia, Terry McAuliffe billed his recent stint at an electric-car company as evidence of his business acumen. Instead, the Democratic nominee’s ties to the company are emerging as a potential liability ahead of the November election.

McAuliffe’s campaign has been haunted by a swirl of controversy surrounding GreenTech Automotive, which has drawn criticism from Republicans for its failure to hit sales, production and job targets. The headache intensified this month when several news outlets, including the New York Times and Washington Post, reported that GreenTech was entangled in a Securities and Exchange Commission investigation.

Earlier this month, Republican Senator Charles Grassley of Iowa released documents “raising questions” about whether a government official nominated to a top Homeland Security post had allegedly provided “preferential treatment” to McAuliffe’s company. The SEC, citing internal policy, declined to confirm or deny to TIME whether reports that the commission was investigating the company were accurate.

McAuliffe, a former Democratic Party chairman and close friend of President Bill Clinton, has denied wrongdoing, as have GreenTech executives. But politicos in the commonwealth say the questions enveloping the venture could affect the Democrat’s chances in a tight race against Ken Cuccinelli, Virginia’s Republican attorney general.

Democrats in the state are “beginning to question Terry’s role in not just GreenTech, but also other ventures and activities,” says Virginia Democratic strategist Dave “Mudcat” Saunders, who suggests the probes could depress Democratic turnout. “In a low-turnout election, which I fully expect this one to be, the greatest political tool is enthusiastic support of the ground,” Saunders says. “How Terry is going to regain that enthusiasm in less than 100 days is beyond me.”

McAuliffe’s tenure as chairman of GreenTech, based in Horn Lake, Miss., ended in December 2012. (His departure from the company was revealed in April.) By then, it had become clear the firm was falling far short of its sales and production forecasts. Company officials, like Democratic operatives, have sought to cast the company’s struggles as common in a weak economy. “There are are a lot of small business owners who are finding that the success of their business is happening more slowly than they originally would have liked, than they would have predicted,” says Mo Elleithee, the DNC’s communications director. “To call anyone in that position a failure just demonstrates to me a lack of understanding business.”

Cuccinelli has been dogged by damaging ties of his own. Virginia’s Republican Governor, Bob McDonnell, has been rocked by investigations into whether a wealthy donor provided he and his family large, unreported gifts. In a close race between two flawed candidates, observers don’t see the bumpy stretch for the Democrat’s business as a decisive factor. “McAuliffe isn’t doomed by GreenTech any more than Cuccinelli is finished” because of his ties to the same McDonnell donor, says Larry Sabato, director of the University of Virginia’s Center for Politics. “My summary of the Virginia governor’s race so far: I’ll see your scandal and raise you an embarrassment.”

Due to an editor’s error, the original version of this story was posted unedited. It incorrectly stated that GreenTech was under investigation by the SEC for alleged visa fraud. The story also incorrectly reported that GreenTech was under investigation by the Department of Homeland Security for allegedly conspiring with immigration officials.