Lynn Tilton is the CEO of Patriarch Partners, LLC. Tilton is also an entrepreneur and owner of a number of businesses.
Tilton comes from the Bronx and raised in Teaneck, New Jersey. But she also gained an ivy-league education from Yale (BA) and Columbia University (MBA in finance). Her career started on Wall Street in 1981 with Morgan Stanley, later working at Goldman, Sachs & Company and Merrill Lynch.
Later she worked as an executive at a special situations investment fund, Long Drive Management Trust. Then she became the Executive Managing Director for Papillion Partners, Inc., a firm doing custom research, valuation, and closure services to those selling high-yield bonds and bank loans.
Tilton founded Patriarch Partners in 2000. As CEO, she’s gained partial ownership in over 240 companies with assets totaling more than $100 billion. One or more of those companies directly controlled by her as CEO functions with military contracts. There would seem no shortage of funds available, but … here’s the next part of Patriarch’s story.
Recently, she and her firm also find themselves subject to an SEC investigation regarding her controversial financing ideas including the original funding for Patriarch with investor capital.
The company bought $2.5 billion of collateralized loan obligations (CLOs) and then charged investors more than $200 million in fees. Most of the CLOs did not require regular interest payments and only partial principal payments were needed to keep them active in most cases.
Ms. Tipton’s firm then separated the assets of the CLOs into bundles of varying risk levels. After establishing the bundles, management fees became the way to charge investors for overseeing the assets.
The problem, as seen by the SEC, is Patriarch Partners owns the CLOs, financed the loans made on the CLOs, and charged the investors for managing the CLOs. Tilton didn’t even bother establishing shell companies to own, manage or loan the funds. That wouldn’t necessarily have been any better, but her route seems a bit blatant.
One observer commented it is like having a beauty contest with one contestant, and her parents are the only judges.
Big controversy – one fit for a big-time PR team.
Barbara Laidlaw, her primary spokesperson, works for Edelman, the largest PR firm in the world. A few months ago, Sol Levine and Stan Callender at Qorvis Communications issued a statement and appear to still be consulting on Patriarch Partners’ behalf.
Then, you also have a team at RLM Finsbury in New York, led by Steven Goldberg, a financial restructuring and asset-based lending attorney who now works as a strategic and financial communications expert. Mr. Goldberg has a list of his current and recent clients, including Lynn Tilton and Patriarch Partners (litigation support and reputation management) at RRDonnelley.com.
Finally, Patriarch Partners employs an in-house PR and communications department with Richard White as its Director. So we ask: what is it about this woman and her company needing so many PR firms and PR support? She’s outspoken on her own.
Big-time PR firms working on a big-time PR Problem.