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Friendship and Money


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By Joe Duffus

Today’s show is about friendship. Well… friendship and money. Well, friendship, money, and the great Obama corruption scandal you never heard about.

Last week was the ground-breaking ceremony for the Obama Presidential Center, which will feature a 235-foot tower wrapped with words from speeches by former president Barack Obama. The center will also include a fruit and vegetable stand and a teaching kitchen, perhaps as a nod to former First Lady Michelle Obama’s school lunch crusade. It will also have a branch of the Chicago Public Library.

On the latest edition of the Drill Down podcast, hosts, Peter Schweizer and Eric Eggers wonder whether the library shelves will carry a copy of Peter’s 2018 book, “Secret Empires,” which includes a story you might never have heard before… the story of how Obama’s best friend, Marty Nesbitt, got rich.

Presidential libraries are a common way of marking a politician’s time in office, but the rhetoric at the ground-breaking was particularly purple. President Joe Biden, who had served as Obama’s vice president, told the smiling crowd of dignitaries they were “breaking ground on the very idea of America as a place of possibilities.”

Indeed it is! But maybe not for the rest of us as much as for the president’s BFF, Marty Nesbitt.

Back in November of 2012, after Obama’s re-election, Nesbitt created a new company called Vistria Group, LLC, and took it public. The company was an investment firm, whose business model was to buy and sell companies. Then, in early 2013, the Obama administration announced it would be looking to rein in with regulations two different industries – for-profit colleges and payday lenders. The Defense Department (DoD) announced that money given for education under the G.I. Bill to veterans could not go to for-profit schools like the University of Phoenix, which it determined were “harmful to students” for their predatory loan practices.

Around this time, as luck would have it, the former number two man in the Department of Education, Tony Miller, went to work for Nesbitt at Vistria. Several months later, Obama’s first education secretary, Arne Duncan, left the administration and set up an office at Vistria’s Chicago headquarters.

As you can imagine, this decimated the value of the company that owned that school, dropping its value from $9 billion to about $1 billion. Guess who then stepped in and bought that company? Marty Nesbitt.

Shortly after the purchase, the DoD backed off the regulation and the administration decided to shelve its planned regulations for the industry. Peter calls this the “smash-and-grab” strategy and wrote about it in detail in Secret Empires.

It’s hard to overstate how close the Nesbitt and Obama families are. The two men met each other playing basketball back in the 1990s as Barack Obama was beginning his political rise, and they became fast friends. The two families vacation together frequently. Nesbitt was a smart businessman who owned a company that managed the parking lots around O’Hare Airport in Chicago and was already doing very well. He would become Barack Obama’s most prolific fundraiser.

The smash-and-grab of the University of Phoenix was no one-off. The same year, Nesbitt purchased another company that was involved in the payday loan business, ForwardLine Financial, LLC, also at a distressed price, also following threats from the Obama administration to impose new heavy regulations on that industry.

It is important to remember two things, as Peter notes. First, these kinds of corrupt deals hurt people. People who had held investments in the Univ. of Phoenix saw their value plummet before Nesbitt swept in. Competitors to that company went out of business when the regulatory rumors dropped their value below sustainable levels. Some of those payday lender companies went under as well, although perhaps that is not as sad a story. Second, very little attention was paid to these coincidences at the time by the media, which goes to show that just because the press doesn’t cover something doesn’t mean it isn’t going on.

Friendship is a two-way street, right? And Marty Nesbitt is a good friend. First, he became the chairman of the Obama Foundation and the leading fundraiser for the Obama Center project, which began with a budget of $500 million but has now increased to $830 million. Then he bought the Magnum PI house in Hawaii.

Magnum PI was a tv show in the 1980s featuring actor Tom Selleck. The opening sequence featured handsome Tom emerging from the ocean in front of a beautiful house owned by a character on the show. That is the house Marty Nesbitt purchased in 2015. He later announced he was going to divide the expansive property in two and build a second home on the property. Guess who that second home is for? A later report by ProPublica quotes an unnamed source with firsthand knowledge of the sale as saying that the property was being developed, in part, for the Obamas, and other Hawaii state officials refer to the estate as Obama’s property.

Aloha!