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E3-20230407-JV-NF-ORI
 Contents

Cover
Title Page
Copyright
Dedication
Epigraph

Introduction: A New Gilded Age

PART I: HOW THEY MAKE THEIR MONEY

1 Other People’s Money, and How They Use It: The Tactics of Private
Equity
2 Ending Homeownership as We Know It: Private Equity in Housing
3 Profiting off Bankruptcy: Private Equity in Retail
4 Deadly Care: Private Equity in Nursing Homes
5 Making It All Worse: Private Equity in Health Care
6 This Time Will Be Different: Private Equity in Finance
7 Captive Audience: Private Equity in Prisons

PART II: HOW THEY GET THEIR WAY

8 Suing Their Own Customers: Private Equity in the Courts
9 Privatizing the Public Sector: Private Equity in Local Government
10 The Industry’s Strongest Advocates: Private Equity in Congress

PART III: HOW TO STOP THEM

 11 What We Must Do
12 An Agenda for Reform

Acknowledgments
Discover More
Notes
About the Author
Praise for Plunder
Explore book giveaways, sneak peeks, deals, and more.

Tap here to learn more.

To Mom
WE MUST BREAK THE MONEY TRUST OR THE MONEY
TRUST WILL BREAK US.

—Louis Brandeis, Other People’s Money and How the Bankers Use
It
 INTRODUCTION
A New Gilded Age

Private equity surrounds you. When you visit a doctor or pay a student loan,
buy life insurance or rent an apartment, pump gas or fill a prescription, you
may—wittingly or not—be supporting a private equity firm. These firms,
with obscure names like Blackstone, Carlyle, and KKR, are actually some
of the largest employers in America and hold assets that rival those of small
countries. Yet few people understand what these firms are or how they
work. This is unfortunate because private equity firms, which buy and sell
so many businesses you know, explain innumerable modern economic
mysteries. They explain, in part, why your doctor’s bill is so expensive and
why your veterinary clinic seems to be in decline. They explain why so
many stores are understaffed or closing altogether. They explain why there
are ever fewer companies in America and why those that remain are selling
ever lower-quality products. In fact, despite their relative anonymity, private
equity firms are poised to reshape America in this decade the way in which
Big Tech did in the last decade and in which subprime lenders did in the
decade before that. And as we will explore, they’re doing it all with the
government’s help.
Consider the pillaging of HCR ManorCare, which was once the second-
1
largest nursing home chain in America. In 2007, a private equity firm, the
Carlyle Group, bought ManorCare for a little over $6 billion, most of which
was borrowed money that ManorCare, not Carlyle, would have to pay back.
As the nursing home chain’s new owner, Carlyle sold nearly all of
ManorCare’s real estate and quickly recovered the money that it put into the
purchase. But the move forced ManorCare to pay nearly half a billion
dollars a year in rent to occupy buildings it once owned. Moreover, Carlyle
extracted over $80 million in transaction and advisory fees that ManorCare
paid for the privilege of being bought and owned by Carlyle. These sorts of
2
payments made Carlyle’s founders billionaires many times over. But they
drained ManorCare of the money it needed to operate and care for its
3
residents.
As a result of these financial machinations, ManorCare was forced to lay
4
off hundreds of workers and institute various cost-cutting programs. Health
code violations spiked. And an unknowable number of residents suffered.
The daughter of one resident told the Washington Post that “my mom would
call us every day crying when she was in there. It was dirty—like a run-
5
down motel. Roaches and ants all over the place.” Such cost cutting
eviscerated the business, and in 2018, the company filed for bankruptcy
6
with over $7 billion in debt. Yet despite the bankruptcy, the deal was
almost certainly profitable for Carlyle. It recovered the money it invested
7
through the sale of the real estate and made millions more in various fees.
That the business itself collapsed was, in a sense, immaterial to Carlyle. (In
statements to the Post, ManorCare denied that the quality of its care had
declined, while Carlyle claimed that changes in how Medicare paid nursing
homes, not its own actions, caused the chain’s bankruptcy.)
Moreover, Carlyle managed to avoid legal liability for the consequences
of its actions. For instance, the family of one resident, Annie Salley, sued
8
Carlyle after she died in an understaffed facility. Though she struggled to
go to the restroom by herself, Salley was nevertheless forced to do so and
fell and hit her head on a bathroom fixture. Afterward, nursing home staff
reportedly failed to order a head scan and failed to report her to a doctor,
even though in the days that followed, Salley showed confusion, vomited,
and thrashed around. Salley eventually died of subdural hematoma—
bleeding around the brain—and doctors found that blood had pushed her
brain fully to one side of her head. Yet when Salley’s family sued for
wrongful death, Carlyle managed to get the case against it dismissed. As a
private equity firm, Carlyle explained, it did not technically own
ManorCare. Rather, Carlyle merely advised a series of investment funds—
9
funds with names like Carlyle Partners V MC, L.P.—that did. In essence,
Carlyle performed a legal disappearing act, and the court dismissed the
10
Salley family’s case against the firm. Carlyle would not be held
responsible for Salley’s death, or for the sordid sorry outcomes that resulted
from its plunder of ManorCare.

THE STORY OF ManorCare and Carlyle is both common and confounding.

The leaders of this industry, including Carlyle, but also Blackstone, KKR,
Apollo, Warburg Pincus, Bain, and many other smaller firms are, at best,
only vaguely known to most Americans. But their companies fill and shape
our lives. If you rented an apartment, you may have done so through a
company owned by Blackstone. If you visited a doctor or rode in an
ambulance, you may have been billed by a company owned by KKR. If you
bought insurance, you may have done so through Apollo, or if you paid
your student loans, you might have done so through a Platinum Equity
company. If you bought contacts, pet food, slacks, or a new dress, you may
ultimately have paid KKR, BC Partners, Leonard Green & Partners, or
11
Sycamore Partners. In some municipalities, the very water you drink has
been provided by private equity. The industry is quite literally right in front
of you. The font used in this book is owned and licensed by a private equity
12
portfolio company.
Today, the industry owns more businesses than all those listed on US
13
stock exchanges combined. KKR’s portfolio companies employ over
14 15 16
800,000 people; Carlyle’s 650,000; and Blackstone’s 550,000.
Considered together, they would be the third-, fourth-, and fifth-largest
17
employers in America, behind only Walmart and Amazon.
Yet, few of us have heard of these firms, let alone understand how they
work. In a sense, their business is simple. Private equity firms invest a little
of their own money, a lot of investors’ money, and a whole lot of borrowed
money to buy up companies (typically making them the sole, or private
owner, hence the name). They then use various tactics to extract money
from those companies, with an eye toward reselling them for a profit a few
years later. Some of the companies that private equity firms buy go on to
great success. But many others collapse or limp along, gutted of the assets
that made them worth buying in the first place.
The basic business model of private equity firms often leads to disasters
like that at ManorCare for three fundamental reasons. First, private equity
firms typically buy businesses only for the short term. Second, they often
load up the companies they buy with debt and extract onerous fees. And
third, they insulate themselves from the consequences, both legal and
18
financial, of their actions. This leads to a practice of extraction, rather
than investment, of destruction, rather than creation. While not every
company owned by private equity firms goes bankrupt, the chance of
19
disaster meaningfully increases under their ownership.
Consider the following: J.Crew. Neiman Marcus. Toys “R” Us. Sears. 24
Hour Fitness. Aeropostale. American Apparel. Brookstone. Charlotte Russe.
Claire’s. David’s Bridal. Deadspin. Fairway. Gymboree. Hertz. KB Toys.
Linens ’n Things. Mervyn’s. Mattress Firm. Musicland. Nine West. Payless
ShoeSource. RadioShack. Shopko. Sports Authority. Rockport. True
Religion. Wickes Furniture. The list goes on. All these companies went
20
bankrupt after private equity firms bought them. Some were restructured,
often by firing workers or abandoning retirees’ pension obligations. Many
simply no longer exist. These bankruptcies, as we will see, are the
consequence of private equity’s business model. As we will see, though
these liquidations and restructurings are usually bad for consumers and
workers, counterintuitively, companies’ bankruptcies may be desirable,
even profitable, for their private equity owners.
The collapse of so many well-known companies is distressing by itself.
But more than the failure of specific businesses, private equity helps to
explain how whole industries and ways of life are being transformed. With
its reliance on debt and fees and its focus on short-term profits, private
equity is part of the reason why the quality of care at your dentist’s office is
going down and why your doctor seems perennially overbooked. It’s part of
the reason why so many people die in prisons and in nursing homes, why
it’s so hard to buy a house, and why so many companies are suing their own
customers. These aren’t unhappy accidents: they are fundamental to the
industry’s business model.
Moreover, private equity helps to explain our ever-widening economic
inequality. These firms take money from productive companies, their
employees, and their customers and redistribute it to themselves. Typically,
they load up the businesses they buy with debt and often impose fees on
their companies for the privilege of being owned by them. The result of this
wealth transfer is that the leaders of the largest private equity firms are
some of the richest people in America: the cofounders of KKR, Apollo, and
21
Blackstone are worth $7 billion, $9 billion, and $29 billion, respectively.
22
Their wealth is more than the gross domestic product of some countries
and an order of magnitude greater than that of the merely absurdly rich.
While the CEO of the investment bank JP Morgan made a little over $80
million in 2021, the CEO of the private equity firm Blackstone made over
23
ten times that: $1 billion.
As the chapters in this book explain, private equity firms also hasten the
“financialization” of the American economy through the increased power of
banks and other financial institutions over companies that make and sell
useful products and tangible goods. Today, the finance industry gets a
quarter of all corporate profits, up from a tenth in the “greed is good”
24
1980s. At the same time, it employs just 5 percent of the country’s
workforce and largely fails to deliver a useful product for many Americans:
25
a quarter of households, for instance, don’t have access to a bank account.
By controlling the operation of companies in the rest of the economy,
private equity hastens this trend toward financial control.
The predatory practices of private equity exacerbate inequality and
eviscerate our economy by taking money from productive businesses and
giving it to largely unproductive ones. But private equity firms have done
more, by taking on much of the work in lending to big businesses that was
once the domain of investment banks before the financial crisis of 2007. In
other words, private equity firms you may not have heard of—Blackstone,
Apollo, and so forth—are replacing the investment banks you probably
know: Goldman Sachs, JP Morgan, and others. These private equity firms
are taking on much of the work of the very institutions that precipitated the
Great Recession and are now doing so with vastly less oversight—if such a
thing were possible—than the investment banks faced before that crisis.

THAT SOME BUSINESSES may be rapacious or even dangerous is concerning

yet unsurprising. The new and important point—and the subject of this
book—is that the stunning success of private equity is all happening with
the support of the government, whose various arms—from courts and
Congress to the executive branch, states, and localities—have not only
allowed private equity to grow and dominate but have actively encouraged
it. This is unsurprising, in part, because the industry has given hundreds of
26
millions of dollars to politicians and has welcomed untold senior
government officials into its employment after their careers in public
service came to an end. These have included
• Timothy Geithner, former treasury secretary under President
27
Obama, now president of Warburg Pincus
• Jacob Lew, another former Obama treasury secretary, now a
28
managing partner at Lindsay Goldberg
• Newt Gingrich, former Speaker of the House, now a strategic
29
partner at JAM Capital
• Paul Ryan, another former Speaker of the House, now a partner at
30
Solamere Capital
• David Petraeus, former general and CIA director, now chairman of
31
the KKR Global Institute
• Leon Panetta, former secretary of defense, now an adviser at
32
Cerberus Capital Management
 • Kelly Ayotte and Evan Bayh, former senators and now director of
33
Blackstone and senior adviser to Apollo, respectively
Other luminaries in the private equity–government complex include
34
former vice president Dan Quayle; generals Barry R. McCaffrey and
35
Anthony Zinni; former cabinet members James Baker, John F. Kelly, Dan
Coats, and John Snow; former FCC chairmen William Kennard, Julius
Genachowski, and Ajit Pai; and former SEC chairmen Arthur Levitt and Jay
36
Clayton, among so many others.
As a cause and effect of this cross-pollination, the government has been
extraordinarily solicitous of private equity firms. Whole private equity–
owned businesses have been built based on getting government money.
Where regulations stood in the way of these companies, they have been
removed. As described in future chapters, Fannie Mae helped private equity
firms buy up foreclosed homes and flip them into rentals. Local police
departments helped private equity–owned companies buy prison phone,
food, and health care operations and gut their quality of care. Courts helped
private equity firms slough off pension obligations, and federal regulators
helped them access 401(k) funds. Cities sold their own water systems to
private equity–owned firms, and Congress gave them billions of dollars.
What is perhaps most ironic is that those who have the most to lose from
private equity are enabling it. Pension funds—the investments of unions
and middle-class workers—are some of private equity’s largest investors.
Private equity firms then use the money of these funds to buy companies in
which they often cut wages and abandon pension obligations.
Extraordinarily, we appear to be creating the tools of our own destruction.

WE CAN STOP the industry’s worst abuses. But we have to act now. Policies
by the Federal Reserve before and during the pandemic to lower interest
rates made it vastly easier for private equity firms to buy up companies.
While many businesses struggled during the pandemic, private equity spent
$1.2 trillion in 2021—over $500 billion more than it spent the year before
37
—to buy them up. Meanwhile, deregulation by the Trump administration
allowed private equity to access potentially trillions more dollars in
people’s 401(k) accounts, including, possibly, yours. This will give the
industry vastly more money with which to buy up companies.
Yet, despite its size, we can stop the ever-outward movement of the
industry. We can do so because we’ve done it before. Today’s private equity
industry bears a striking resemblance to the great “money trusts” that Louis
Brandeis denounced a century ago in his book Other People’s Money and
How the Bankers Use It. Then, as now, financiers captured productive
38
companies with the savings of others. Then, as now, they gutted their
portfolio companies, extracted fees, and forced partnerships among their
39
various businesses. And then, as now, the financiers—often ignorant of
the actual operations of the companies they bought—arrested the
development of their businesses. As private equity firms buy companies
across the disparate industries of health care, construction, retail, and
leisure, so it is today.
But then—and perhaps now—people organized to break the great trusts
of their time, including the money trusts. The government banned
anticompetitive acquisitions and “interlocking directorates” between
competing companies. It created the Federal Trade Commission and
investigated, and eventually destroyed, monopolies in steel, sugar, tobacco,
and elsewhere. We can do so again, and this book endeavors to show us
how.
The chapters that follow proceed in three parts.
Part I explains how private equity firms make their money: both their
tactics of extraction and their businesses of focus, from mobile homes and
nursing facilities to retailers and prisons. A recurring theme of these
chapters is that, surprisingly, private equity firms buy businesses that target
the very poor, rather than the very rich, because, in a sense, these customers
have no recourse when quality falls and prices rise.
Part II explains how the industry has advanced its agenda across
virtually every arm of government, from Congress and courts to regulators
and localities. As these chapters describe, sometimes private equity firms
have lobbied directly to change laws and regulations: for instance, to fight
rent control laws or to preserve tax advantages. At other times, the industry
has benefited from larger trends over several decades: the reshaping of
antitrust law, for instance, or the rise of forced arbitration.
Part III explains how we can stop the industry’s worst excesses. These
chapters offer a specific agenda for what we must accomplish and a path for
how we might effect change—through litigation, regulation, and state and
local legislation—at a time of extraordinary political dysfunction.
To the arguments thus far, and those to come, a world-weary reader may
offer three skeptical replies.
First, the skeptic may say, “for better or worse, private equity is just an
extreme form of free-market capitalism.” The debt that private equity forces
onto companies, and the short deadlines it demands for profits, force
sluggish companies to reform and demand the survival of the fittest. Or so
the argument goes. As the chapters that follow show, private equity firms do
not offer simply an extreme version of capitalism but, rather, something
much darker: a twining of big business and big government that finds
profits by creating and exploiting legal gaps and obscure government
programs. When forced to actually run businesses, private equity firms
often show surprising ineptitude. Their executives’ talents often come not
from operating the levers of business but from the levers of power: securing
financing, identifying regulatory holes, and creating them when they don’t
exist. Capitalists and socialists, and everyone in between, should all be
united in their concern over this business philosophy.
Second, the skeptic may ask, “Yes, private equity is bad, but is it
meaningfully different from other parts of the finance industry?” Yes, it is.
Hedge funds might short businesses. Investment banks may create ruinous
bubbles. But private equity firms can do both and more. Because their
business model—which requires short-term thinking, leverage and
extractive fees, and escape from liability—produces uniquely bad
outcomes, they are uniquely worthy of your attention.
Third, the skeptic may say, “Yes, private equity is uniquely bad, but it is
inevitable, or at least irremediable.” And this is the most important point of
the book, namely, that we can stop this from happening. We do indeed live
in a second Gilded Age, a time of gaping inequality and aching political
dysfunction. But a century ago, we rejected immiserating poverty and
politics in favor of populist and progressive reforms: unions, suffrage,
antitrust, worker and environmental protections, and graduated taxation. We
can do so again. We just need the collective will to act.
And that is the final message of this book, a message of hope. Private
equity is part of the larger financialization of our economy, and perhaps its
worst exemplar. It was created with the active support of our government,
and as the pages that follow show, it has transformed whole industries and
upended lives. But if we created private equity, we can also contain it. I am
here to tell you that we can write our own future. A better world is possible.
The following chapters show us how.
 PART I
HOW THEY MAKE THEIR MONEY
 CHAPTER ONE

OTHER PEOPLE’S MONEY, AND HOW THEY

USE IT
The Tactics of Private Equity

In 2005, Sun Capital bought Shopko for a little over a billion dollars. A
regional retailer like Fred Meyer, Gabe’s, or Bi-Mart, Shopko’s operations
1
were focused primarily in the Midwest. Its first store opened in Green Bay,
Wisconsin, in 1962 and began what a commemorative plaque at the site
2
later called “a new era in retailing.” The company’s innovation: putting
3
pharmacies and, later, groceries in their larger stores. Over time, the
4
business expanded to other states, like Minnesota, Michigan, and Iowa.
Eventually, it became a regional institution. “Shopko was at the heart of our
5
community,” said Sarah Godlewski, Wisconsin’s state treasurer. “As a kid
my mom would ask me if I needed anything for school. I would mention
different supplies, and she would say, ‘OK, go put it on your Shopko list.’ It
6
was never a shopping list, it was always a Shopko list.”
Despite its regional importance, in 2019, Shopko filed for bankruptcy
7
and, shortly thereafter, ceased operations entirely. How did this happen?
How did a respected institution flail and eventually fail? The short answer
8
was that a private equity firm bought it. Over nearly fifteen years of
ownership, Sun Capital bankrupted Shopko while making hundreds of
millions of dollars for itself. It did so through a variety of tactics that
drained Shopko of assets, locked the chain into unfavorable deals, denied
employees pay, and transferred money that the retailer needed to modernize
and grow. These tactics were surprising—perhaps even shocking—but they
were not unusual, for as the pages below explain, they are often the means
by which private equity firms succeed, even if the very companies they buy
fail.
First, Sun Capital made Shopko sell most of its property. It’s important
for a retailer to own its own stores, if it can: it saves the company from
having to pay rent in good times and gives the company something to
borrow against in bad times. By forcing the chain to give up most of its
9
stores, Sun Capital made Shopko a quick $815 million. But it also saddled
Shopko with paying rent on the very stores it once owned, an expensive and
unending obligation. To compound the problem, Sun Capital locked Shopko
10
into fifteen- and twenty-year leases, which made it hard for Shopko’s
management to move stores.
Then Sun Capital began extracting fees. It forced Shopko to borrow
nearly $180 million to pay Sun Capital “dividends”: financial rewards to
11
owners usually given only in good times. It also required Shopko to pay a
quarterly $1 million “consulting” fee, and a 1 percent fee on certain large
transactions. The latter fee applied to Shopko’s dividend payments, so that
12
Shopko actually had to pay Sun Capital a fee just for paying Sun Capital.
And while Sun Capital was extracting this money, under its watch, Shopko
skirted its tax obligations: in 2019, the Wisconsin Department of Revenue
alleged that the company failed to pay over $13 million in sales taxes and
13
penalties. (The Department ultimately withdrew its claim after reaching
an undisclosed settlement with the holding corporation for Shopko’s
14
bankrupted assets.)
Then Sun Capital began layoffs. In December 2018, Shopko announced
15
that it would close thirty-nine stores. In January the next year, Sun Capital
pushed Shopko into bankruptcy and closed an additional thirty-eight. And
in March, unable to find a new buyer, Shopko announced that it was
liquidating entirely and closing its remaining 360 or so locations. At the
 16
time, Shopko had fourteen thousand employees: most all of them would
lose their jobs.
As Shopko’s employees were fired and the company’s assets liquidated
—even the plaque commemorating the company’s first location was sold—
Sun Capital asked some employees to stay on through the bankruptcy
process. But after they did so, Sun Capital reneged on its promise to pay
them severance. “We risked losing potential job opportunities by sticking
17
around,” one former employee told the Green Bay Press-Gazette. “Then
the day we officially found out about not getting the severance was the last
18
day we were open. It felt like a false promise.” Ultimately, a bankruptcy
judge approved $3 million in pay for nearly four thousand workers, but only
after labor organizers filed a class action lawsuit. And even then, the
agreement excluded thousands of employees who were among the last to
work at the company.
The effects of Shopko’s collapse lived on in the company’s former
workers. At a memorial event a year after the bankruptcy, Trina McInerney,
tearing up, explained to the Washington Examiner that “Sun Capital left me
jobless, with nothing.… The devastation was real, the heartbreak was real,
having no income, losing your work family, losing your work dignity—all
19
real.” Linda Parker, who managed several Payless ShoeSource stores
housed within Shopkos, said that she had to take on three part-time jobs that
20
together didn’t make as much as her old one. “Holding Wall Street and
private equity and hedge fund billionaires accountable is crucial,” she said.
“It’s just going to get worse. They feel no empathy for us, they feel no guilt
over what they’re doing.… It’s time to take action and do something to stop
21
these horrible business practices.”
But who are these private equity billionaires? Sun Capital is run by two
Wharton classmates, Rodger Krouse and Marc Leder. Both men are worth
hundreds of millions of dollars, though Leder is the public face of the
company and by far the brasher of the two. The New York Post described
22
him as the “Hugh Hefner of the Hamptons” and alleged that he threw
parties in which “guests cavorted nude in the pool and performed sex acts,
scantily dressed Russians danced on platforms and men twirled lit torches
23
to a booming techno beat.” Said one acquaintance, “So many girls think
24
they’re dating him. There are [at] least three that I know of.”
Despite his lavish lifestyle, Leder supports the politics of austerity.
Recall when Mitt Romney declared that “47 percent of the people” would
vote for President Obama “no matter what” because they “believe the
government has a responsibility to care for them, who believe that they are
25
entitled to health care, to food, to housing, to you-name-it.” Romney
made that statement at a private fundraiser that Leder hosted in his Boca
26 27
Raton home. Leder has also given money to David Perdue, Marco
28 29 30 31
Rubio, Jason Chaffetz, Clay Shaw, and Mitch McConnell, who have
all attempted to cut various cables of the social safety net on which so many
32
of Leder’s former employees now rely.
It is important to understand that Shopko is not some fluke, a rare failure
in Sun Capital’s otherwise brilliant investments. In 2005, the firm bought
Garden Fresh Restaurant Corporation, but pushed it into bankruptcy in
33
2016. In 2006, it bought Marsh Supermarkets, which filed for bankruptcy
in 2017. In 2007, Sun Capital bought a majority stake in Limited Stores,
which filed for bankruptcy a decade later. And in 2008, it bought
Gordmans, which went bankrupt in 2017, but not before Sun Capital forced
the company to borrow $45 million to pay in dividends. And yet despite
these failures, Sun Capital continued to prosper, making over $1.4 billion in
34
the most recent year for which it published data.
The point is that Sun Capital’s—and private equity’s—success does not
always depend on the success of the companies they own. Through a range
of tactics described below, they can extract money from the businesses they
buy, whether or not those businesses thrive or die. In this way, the whole
industry of private equity is unnervingly similar to the “money trusts” of the
early twentieth century, when financiers like George F. Baker and J. P.
Morgan oversaw disparate empires of railroads, banks, steel mills, shipping,
35
and insurance companies. In 1914, Louis Brandeis observed that the men
of the money trust “start usually with ignorance of the particular business
 36
which they are supposed to direct.” When the Steel Trust was signed into
existence, one of the lawyers present declared that, “[t]hat signature is the
last one necessary to put the Steel industry, on a large scale, into the hands
37
of men who do not know anything about it.” So it is today, as a firm like
38
Sun Capital invests in businesses as diverse as an industrial manufacturer,
39 40
a dermatology network, a chain of barbecue restaurants, and a high-end
41
women’s clothing retailer. Like the money trusts of the Gilded Age, Sun
Capital, as with private equity firms, lacks the institutional skills necessary
to manage the operations of such a diverse set of companies. But it isn’t just
that private equity firms lack the knowledge to improve their companies’
operations; often, they lack the interest. As shortly explained, their skill
frequently comes not in making companies better but in extracting more
money from them.
Today’s private equity firms bear another similarity to the money trusts
of a century ago, namely, that their power is obtained not, as Brandeis
wrote, through “the possession of extraordinary ability” but through “the
42
savings and quick capital of others.” Which is to say that private equity
titans are rarely themselves masters of running companies but rather
geniuses at getting and spending other people’s money. The difference now
is simply a matter of scale. When the Gilded Age financier George F. Baker,
reportedly twice as rich as J. P. Morgan, died in 1931, he was worth an
43
estimated $1.4 billion in today’s money. Now, Stephen Schwarzman of
44
Blackstone is worth nearly twenty times that.
What accounts for this increase in these men’s wealth is not the quality
of people running private equity firms but the availability of money, which
is largely the decision of the government. In 1979, Congress reduced the
capital gains rate—the tax on money made from investments—and in 1981
45
did so again. Along the way, the Labor Department permitted pension
funds to make riskier investments, clarifying that while such funds must
exercise the caution of a “prudent man” as a whole, individual speculative
46
purchases “may be entirely proper” under the standard. These two
changes allowed a flood of investment in venture capital and the emerging
business of leveraged buyouts. One of the first was Gibson Greetings. In
1981, a consortium of investors led by former Nixon treasury secretary
William E. Simon bought the company—a manufacturer of greeting cards
47
—for $80 million. Simon and his investors put up just $1 million of their
own money (Simon himself contributed about a third of that) and borrowed
the remaining $79 million. Sixteen months later, they turned the company
public at a valuation of $290 million. In a little over a year, Simon had
made himself $66 million on a $330,000 investment. His astounding
success inspired others. “I didn’t know what a leveraged buyout was,” said
David Rubenstein, the founder of the behemoth Carlyle Group, “but it
48
sounded more attractive than practicing law.”
Between 1979 and 1989, there were some two thousand leveraged
49
buyouts worth $250 million or more, capped at the end of the decade by
Kohlberg Kravis Roberts & Co.’s (later called KKR) $24 billion takeover of
50
RJR Nabisco. During this time, the story of leveraged buyouts was told in
tandem with that of junk bonds: speculative investments that promised high
yields but also high risks of failure. These bonds financed leveraged
buyouts and made the whole industry possible. But by the end of the 1980s,
the market collapsed: as foreshadowed by its very name, a number of junk
bond–financed buyouts prominently failed. Drexel Burnham Lambert, the
investment firm that powered much of the junk bond industry, imploded,
51
and several of its most prominent bankers were criminally prosecuted.
Meanwhile, hundreds of savings and loan associations (S&Ls), which had
been primary purchasers of junk bonds, were closed, with the subsequent
52
bailout costing taxpayers over $100 billion.
But leveraged buyouts didn’t die after this first frenzy; they were simply
rebranded as “private equity.” After a fallow period in the early 1990s, firms
53
in this renamed business bought big companies like Snapple, Burger
54 55 56 57
King, Houghton Mifflin, Harrah’s Entertainment, MGM, and Toys
58
“R” Us. The industry found new sources of money: in 2006, KKR was the
first firm to take itself public, followed by Blackstone, Apollo, and Carlyle.
Countries like Russia and Saudi Arabia created “sovereign wealth funds” to
invest their oil fortunes in private equity. And a secondary market
developed, so that institutions that invested with private equity companies
could in turn sell those investments to others. Shorn of its rougher public
associations with junk bonds, S&Ls, and Drexel Burnham Lambert, this
59
“superior form of capitalism,” as the former leader of Yale’s endowment
once described it, entered a new golden age.
The Great Recession briefly depressed private equity, and the 2012
presidential campaign scoured some of the gilding off the industry, such
that its leading firms no longer even describe themselves primarily in terms
of private equity. Blackstone generically calls itself “a leading global
60
investment business,” while Apollo claims simply to be an “alternative
61
asset management business.” But whatever its reputation, after each crisis,
private equity emerged more powerful than before. In fact, while the
COVID-19 pandemic was a disaster for most Americans, it was a boon to
private equity. Private equity firms need borrowed money to buy
companies, the interest rates for which are determined in large part by the
Federal Reserve. At the outset of the pandemic, the Fed’s chairman, Jerome
Powell (himself a private equity alum), helped drive interest rates to nearly
zero. As a result, and coupled with the pandemic struggles of many ordinary
businesses, private equity spent an astounding $1.2 trillion on acquisitions
62
in 2021, or about one-twentieth of gross domestic product of the entire
63
country. KKR’s “assets under management”—the money it controls to
64
invest—grew 87 percent that year, to $471 billion. Blackstone’s rose to
65
nearly twice that: $881 billion. These are stores of wealth bigger than the
economies of many countries. And they are big enough to change the world.

THE CHAPTERS THAT follow describe how private equity spends its money,
how it transforms industries, and how the arms of the government helped at
every step. But before examining the details, it is important to understand
the larger matter of just how private equity works, for while the term
private equity is frequently used, its meaning is rarely understood.
Private equity firms are different from investment banks, which
originally centered on helping other businesses buy one another or issue
stock. They are also different from hedge funds, which tend to buy and sell
public securities, such as stocks and bonds. Rather than buying individual
securities, private equity firms buy whole companies. And rather than doing
so on behalf of other businesses, they do so for themselves. The line
between different kinds of financial institutions is porous: firms that call
themselves hedge funds sometimes engage in private equity, and as a future
chapter explains, private equity firms are increasingly taking on the
business of investment banks. Nevertheless, the general division is that
while banks and hedge funds tend to invest in companies, private equity
firms tend to buy them.
Private equity firms’ basic business model is simple. In a typical case, a
private equity firm—or, more accurately, a legally separate fund that the
66
firm controls—buys a company. The separate fund helps to insulate the
firm from liability, as we saw with ManorCare, and is generally the sole, or
private, owner of the company, hence the “private” in private equity.
Through a series of operational and financial changes, the private equity
firm works to make the company more valuable and, after a few years, tries
to sell it or take it public at a profit.
To make its business model work, the private equity firm needs money,
which it gets from three sources. The firm itself contributes a small
percentage of the funds needed to buy the company, while the firm’s
investors—pension funds, sovereign wealth funds, wealthy individuals, and
the like—provide some of the rest necessary for the acquisition. The firm
then leverages all those assets (hence the “leveraged” in leveraged buyout)
to borrow most of the money it needs from banks and other lenders.
Crucially, the responsibility for paying back the money the firm borrows
sits not with the firm itself but with the company it buys. Thus, if the
company fails, the private equity firm loses only its small initial investment.
But why would the company agree to take on this debt? And why would
banks and other investors lend this money in the first place? Executives at
the acquired company may agree to borrow money because they stand to
make a great deal from the sale to a private equity firm. With the prospect
of a windfall, they may authorize borrowing that, ordinarily, they might not.
As for the banks and lenders, when interest rates are low, they are often
willing to make riskier loans in an effort to make more than inflation.
Furthermore, lenders are often able to “syndicate” their loans to others,
meaning that those who make loans often are not responsible for getting
that money back.
But while private equity firms stand to lose only a little if their
investments fail, they stand to make enormous sums if they succeed. As
mentioned above, firms make their purchases through legally separate
funds, each of which has money, provided by investors, with which to buy
companies. Private equity firms are typically entitled to 2 percent of that
money every year, no matter how well or poorly their funds do. This means,
for instance, that a firm with a billion-dollar fund is guaranteed to make $20
67
million—2 percent—every year, even if its investments fail. On top of
this, a firm usually takes 20 percent of the fund’s profits once it clears a
certain hurdle, often an 8 percent rate of return.
As private equity experts Eileen Appelbaum and Rosemary Batt have
explained, there are three fundamental problems with the business model
68
just described. First, because private equity firms own the companies they
buy for just a few years, they must extract money from them exceedingly
fast; there’s simply not much reason for them to consider the long-term
health of the companies they buy. Second, because private equity firms
invest little of their own money but receive an outsized share of potential
profits, they are encouraged to take huge risks. In practice, this means
loading companies up with debt and extracting onerous fees. And third,
partly because legally separate funds technically own the companies,
private equity firms are rarely held responsible for the debts and actions of
the companies they run. These facts of short-term, high-risk, and low-
consequence ownership explain why private equity firms’ efforts to make
companies profitable so often prove disastrous for everyone except the
private equity firms themselves.
But how exactly does a private equity firm make money? In theory, it
should make a company’s operations more efficient by bringing in new
management and modern business practices. This may be so for the small
and midsized companies that private equity firms acquire, which are often
run by families or first-time entrepreneurs. But it is rarely so for big
companies, whose professional managers are schooled in best practices and
experienced in running large organizations; in other words, there is only so
much need for outside assistance. Instead of offering better management,
firms often use a range of tactics described below—leasebacks, dividend
recaps, strategic bankruptcies, rollups, forced partnerships, tax avoidance,
and layoffs—to extract money from businesses. These tactics are endemic
to the industry and fundamental to the way it operates.

LEASEBACKS
After Sun Capital bought Shopko in 2005, it forced the company to sell
most of its stores and lease in perpetuity the property that it once owned.
This leaseback tactic is a great source of revenue for private equity because
it allows the firm to post a quick profit and often take a transaction fee
along the way. But it is often devastating for the underlying company,
which is permanently shorn of assets. And it is particularly hard for
businesses in cyclical industries. As mentioned, owning property saves
companies from having to pay rent and gives them something to borrow
69
against in bad times. Without assets, and burdened with an ongoing
expense, companies that merely survive when demand waxes may die when
it wanes.
There is a darker purpose to leasebacks too. A few decades ago, private
equity firms began buying nursing homes, and today they own between 5
70
and 11 percent of all facilities in America. To save money, these firms
often gut homes’ quality of care. Studies have found that after private equity
firms buy nursing homes, average nursing and staff hours fall while
71
violations of industry protocols increase. Hospital readmission rates—the
pace at which residents are sent back to hospitals within thirty days of
72
discharge—also rise, a sign of declining care. As a result, more than
twenty thousand people are estimated to have died due to private equity
73
firms’ ownership of such homes.
 And this is where leasebacks come in. After buying nursing homes,
private equity firms often sell their underlying assets and separately
74
incorporate each facility in a nursing home chain. This means that if there
is negligence in one facility—if a resident dies needlessly—that resident’s
family often can only recover assets from that facility. And because that
facility no longer owns its own property, there often aren’t many assets to
recover. The result is that nursing home residents are needlessly dying and
families are failing to get damages, and because of sale-leasebacks, there is
little legal incentive for private equity firms to ever change their ways.

DIVIDEND RECAPS
Private equity firms use dividend recapitalizations, or recaps, to take
companies’ borrowed money and give it to themselves. Ordinarily, a
company’s shareholders will take an occasional cut of its profits, called a
dividend, as a reward for the risks of ownership. They usually do so when
times are good and the company can afford to shed the money. Private
equity firms are different. They often force the companies they own to
borrow money, in good times or in bad, to pay themselves. It’s like using
someone else’s credit card to pay yourself. And like using someone else’s
75
credit card, the practice often damages the company’s credit rating.
Consider the case of Hertz. When the rental car company filed for
bankruptcy in 2020, Axios described it as “a Frankenstein of financial
76
engineering.” Fifteen years earlier, the private equity firm Clayton,
Dubilier & Rice (CD&R) had led a consortium of investors to buy the
company from Ford for $14.8 billion, nearly half of which was debt.
Clayton quickly forced Hertz to borrow an additional $1 billion to pay it a
dividend. By loading Hertz up with debt, Clayton and its coinvestors
managed to make much of their initial money back while substantially
77
retaining control of the company. But in the opinion of observers, after
Hertz disastrously overpaid for its acquisition of rivals Thrifty and Dollar
under CD&R’s watch, the private equity firm sold its remaining stake in the
78
company in 2013. Hertz limped along for a number of years, but burdened
in part by the debt that CD&R had forced upon it, the company filed for
bankruptcy. When it did, Hertz owed over $24 billion, with barely $1
79
billion in cash on hand.
Stories like Hertz’s are not uncommon. But if private equity firms own
the companies they force to borrow money, don’t they ultimately have to
pay the loans back, one way or another? Not necessarily. Recall that private
equity firms buy companies with heaps of other people’s money. In other
words, these firms control companies while making only modest
investments themselves. Dividend recaps are a way for private equity firms
to make back their investments—eliminating all risk—while still
controlling the companies they buy. That’s what Sycamore Partners did
80
when it forced Staples to give it a $1 billion dividend recap. The office
supply store then had to pay $130 million a year on interest payments
81
alone. That fact was almost immaterial to Sycamore, however, given that
it made back through the recap most of what it paid to buy the company.
Dividend recaps can be devastating. The retailer Payless ShoeSource,
lab testing company Trident USA, and urinalysis firm Millennium Health,
82
for instance, all went bankrupt after being forced to make recaps. After
the hospital chain Prospect Medical Holdings was forced to pay its private
equity owner $457 million in 2018, it closed five facilities and fired over
one thousand employees. And after the Environmental Protection Agency
alleged that the medical device sterilization company Sterigenics was
potentially emitting toxic carcinogens around its suburban Illinois
83
production facility, a flood of lawsuits followed. According to plaintiffs,
however, Sterigenics had shoveled over $1 billion in dividend
recapitalizations to its private equity owners in the years before so that the
84
company would have less money to pay to its victims. Hundreds of cases
against the company remain ongoing.
Unfortunately, the federal government’s actions to stave off the worst
economic effects of the pandemic may have made recaps easier. By driving
interest rates down at the outset of the COVID-19 pandemic, the Federal
Reserve made it cheaper for private equity–owned companies to borrow
money. The effect was that in the second half of 2020, in the midst of a
global recession, private equity firms forced the companies they owned to
borrow an astonishing $27 billion to pay for dividend recaps or debt
85
restructurings. Reflecting later on this trend, Davide Scigliuzzo of
Bloomberg wrote that “[i]t looks likely billionaires and private equity firms
will keep loading up companies with debt to turn them into dividend-paying
86
ATMs.” Jim Baker of the Private Equity Stakeholder Project, which
researches and publicizes abuses in the industry, added that these recaps “do
nothing to help private equity–owned companies and only put those
87
companies at greater risk.”

STRATEGIC BANKRUPTCIES
Private equity firms sometimes push the companies they own into
bankruptcy to avoid paying debts to their employees, retirees, and creditors.
Such seemed to be the case with Sun Capital and Marsh Supermarkets,
which Sun Capital bought in 2006. Marsh, a regional institution in Indiana,
was the kind of place where generations of employees could spend decades
working. It was also something of an innovator: in the 1970s, it was the first
grocery store in the world to use a barcode scanner (the first purchase was a
88
pack of gum).
As reported by Peter Whoriskey of the Washington Post, when Sun
Capital bought Marsh, it did not bring any particular expertise in the
grocery industry to the purchase. Amy Gerken, a former assistant manager
at a Marsh Supermarket, told the Post that Sun Capital “didn’t really know
how grocery stores work. We’d joke about them being on a yacht without
89
even knowing what a UPC code is.” But Sun Capital did execute some of
its now-familiar tactics. For instance, it forced Marsh to sell many of its
stores for $260 million and then had the grocer lease back the stores it once
owned. It also collected transaction fees from Marsh for selling various
assets, on top of a $1 million annual management fee for the privilege of
being owned by the firm.
At the same time, Sun Capital was unable or unwilling to make the
investments necessary for Marsh to succeed. Perhaps this is because
Marsh’s property was reportedly worth more than the cash Sun Capital paid
90
for the company, making the survival of the business a pleasant but
ultimately unnecessary proposition. Instead, Sun Capital pushed the
company into bankruptcy. When Marsh filed for bankruptcy, it owed $62
million in pension fund obligations to its warehouse workers, plus millions
91
more to its store employees. (A separate pension for Marsh’s most senior
executives remained fully funded.) Through bankruptcy, Sun Capital was
able to heave Marsh’s unfunded pension obligations onto a government
agency, the Pension Benefit Guaranty Corporation, or PBGC, which pays a
portion of promised benefits for retirees when pension funds become
insolvent. In Marsh’s case, the PBGC was able to pay nearly the entirety of
the store employees’ pension obligations but not the warehouse workers’,
92
whose benefits were cut by a quarter. “They did everyone dirty,” Kilby
Baker, a retired warehouse worker, told the Post. “We all gave up wage
increases so we could have a better pension. Then they just took it away
93
from us.” Said another worker who had been with the company since
1967: “If I lose my pension, what am I going to do? Who’s going to hire a
94
75-year-old man?”
Marsh was not an isolated incident. In 2005, Sun Capital bought
Indalex, an aluminum parts manufacturer. After taking a multimillion-dollar
dividend for itself, the firm forced Indalex into bankruptcy and pushed the
95
pensions of thousands of employees onto the PBGC and taxpayers.
Similarly, in 2006, Sun Capital bought Powermate, a manufacturer of
electric generators. Two years later, it pushed Powermate into bankruptcy
too, and the PBGC was forced to pay the underfunded pensions of some six
hundred employees. Sun Capital did the same with Fluid Routing Systems
and the restaurant chain Friendly’s, and both times it improbably managed
to keep running the companies after bankruptcy. The whole thing is
“pension laundering,” Joshua Gotbaum, the former director of the PBGC,
claimed to the Post. “What we’ve seen is that financial firms essentially
take the money and run, leaving their employees and the PBGC holding the
96
bag.” All of which is to say that Sun Capital and others used the
bankruptcy system to slough off the obligations to employees that they did
97
not want to pay, while continuing to extract money for themselves.
 FORCED PARTNERSHIPS
Private equity firms can also extract money by forcing the companies they
buy into arranged marriages with other businesses in their portfolio. For
instance, in 2012, Sycamore Partners bought the midmarket women’s
98
clothier Talbots. At the time of its acquisition, Talbots had sold smart,
preppy women’s clothes for over sixty years, having developed its initial
99
specialty selling to women moving to the suburbs after World War II. For
100
women “looking for classic styles at affordable prices,” as the New York
Times put it, Talbots was an institution. After Sycamore bought the
company, however, it executed some now-familiar tactics. It cut the
101
company’s staff and narrowed its product selection. It gutted Talbot’s
assets by selling the company’s credit card receivables: that is, its promise
102
of future payments. It made over half a billion dollars for itself.
(Sycamore’s managing director declined to comment to the Wall Street
Journal on his firm’s tactics.)
As relevant here, Sycamore also forced Talbots to work with MGF
103
Sourcing Holdings, a supply agent it owned. In the clothing industry,
supply agents broker transactions between factories and retailers. By
forcing Talbots to use MGF Sourcing, Sycamore ensured that it would make
money on the clothes that Talbots bought, whether or not it was ultimately
able to sell them. The arrangement created a perverse incentive for
Sycamore to push Talbots to buy clothes it didn’t need, and by 2021, the
104
company had a junk rating of CCC–, indicating a high risk of default.
Sycamore was accused of using this tactic to push another retailer into
bankruptcy. In 2013, it took a minority stake in the teen retailer Aeropostale
and offered the company a substantial loan in exchange for, among other
105
things, using MGF as its supply agent. But after negotiating the deal,
Sycamore imposed harsh new payment terms through MGF. As
subsequently alleged by Aeropostale, Sycamore’s true purpose was to push
the company into bankruptcy, which Sycamore could then purchase at a
discount. And Sycamore’s tactics—for instance, demanding full payment on
the delivery of goods, an unusual practice in the clothing industry—
successfully disrupted the company’s supply chain and cost Aeropostale an
alleged $25 million per year.
Sycamore denied the allegation, and ultimately, a judge rejected
Aeropostale’s argument that Sycamore purposefully pushed the company
106
into bankruptcy to buy it at a discount. But whether Sycamore
intentionally tried to sabotage the company or not, the effect was the same:
Aeropostale filed for bankruptcy in March 2016, about a month after MGF
107
began making its demands, and ultimately, the company was forced to
108
close over one hundred stores.

TAX AVOIDANCE
Private equity firms, their investors, and their executives also use a number
of tactics to avoid paying taxes. Many of these tactics are legal, but some
are not. Most famously, there is the carried interest loophole.
Most private equity firms are paid on the 2-and-20 model: a 2 percent
annual fixed fee on all the money it invests and 20 percent of all profits
above a certain threshold. The United States taxes money made from
investments—so-called capital gains—at a lower level than money made
through ordinary labor, whether at a factory or in an office. The distinction
is ambiguous and unfair, but even more so, private equity firms have
convinced the IRS that their 20 percent income should be taxed at the lower
109
capital gains rate than at the higher ordinary income rate. This means that
many private equity executives often pay a lower effective tax rate than the
retail employees, secretaries, and factory workers they employ. But the
industry as a whole has fought hard, and successfully, to defend this
imbalance.
Private equity firms use so-called management fee waivers to give more
of their income this preferential treatment. Here, private equity firms waive
some or all of their 2 percent management fee (which is taxed at a higher
rate) in exchange for a priority claim on the profits earned (which is taxed
at a lower rate). Through a variety of tactics, however, the firms virtually
110
guarantee that they will make this money back. Some of the biggest
firms—KKR, Apollo, and TPG Capital—used these fee-waiver
 111
provisions. Many of these schemes might violate the spirit, if not the
letter, of the law. The IRS investigated fee waivers during the Obama
administration but very little came of it. An audit of Thoma Bravo for use of
the tactic, for instance, took four years and resulted in no actual adjustments
to the company’s tax returns. In 2015, the Obama administration proposed
regulations to bar the most aggressive forms of fee waivers. But nothing
came of that either: the regulations were never finalized. Ultimately, both of
President Obama’s treasury secretaries—Tim Geithner and Jack Lew—left
the government to work for private equity firms.
More daringly, private equity firms use offshoring tactics to reduce the
tax obligations on themselves and their investors. For instance, most public
corporations must, in theory, pay the federal corporate tax rate on their
income. There is an exception, however, for companies that make most of
their money through dividends, interest, or capital gains. Private equity
firms are active businesses, but they try to get this preferential treatment by
112
establishing blocker corporations in offshore tax havens. The income due
to the private equity firm instead goes to the blocker corporation, which
pays the low local corporate tax rate. The blocker corporation then pays the
money to the private equity firm as dividends or interest, on which the
private equity firm pays a lower rate in the United States than it otherwise
would. While this tax arbitrage lowers the effective rate paid by the private
equity firm, it does nothing to improve the operational efficiency of the
companies it owns and gives tax revenues to haven nations that would
ordinarily go to the United States.
Finally, at least some private equity executives engage in ordinary tax
evasion. For instance, Robert Smith, the cofounder of Vista Equity Partners,
113
is worth an estimated $8 billion and was number 125 on the Forbes 2020
114
list of wealthiest Americans. That same year, however, Smith admitted to
115
evading more than $200 million in income taxes over fifteen years. As
part of his agreement with the government, Smith disclosed that he
funneled money into hidden or undeclared bank accounts in Belize, Nevis,
116
Switzerland, and the British Virgin Islands. He also revealed that he paid
a Houston lawyer $800,000 to maintain a false paper trail for these accounts
 117
(the lawyer died by suicide the day before his own trial was to begin).
Smith negotiated a plea deal to avoid prison time—an astonishing feat
given that he evaded paying $200 million in taxes—but his business partner
was not so fortunate. The United States charged Vista Equity cofounder
Robert Brockman with hiding an extraordinary $2 billion in income from
the IRS. (Brockman, who had been ill for several years, died before trial.)

ROLLUPS
Private equity firms also make money by rolling up small companies in
given industries to merge or otherwise control them. For instance, as
described in later chapters, firms have bought up local medical practices,
with a focus on specialties like dermatology, anesthesiology, and obstetrics
and gynecology, all of which offer opportunities for specialty services and
large out-of-pocket payments. With such market power, private equity firms
may be able to raise prices and cut care for patients. Doctors in private
equity–owned dermatology practices, for instance, complained that they
were pressured to meet quotas for procedures, sell acne creams and
118
antiaging goods, and make expensive referrals. Others complained that
they were forced to have unsupervised physician assistants deliver services
that doctors ordinarily would provide.
Outside of physicians’ offices, private equity firms are rolling up dentist
practices, drug treatment centers, hospitals, board game companies,
portable toilet providers, mobile home parks, and veterinary clinics, among
many others. By buying up these companies, private equity firms can
achieve some operational efficiencies by using common suppliers or
services to reduce costs. But they can also use their increased market power
to charge more and give less.
Consider the case of cheerleading competitions. Varsity Brands is the
country’s leading organizer of these events. As alleged in a class action
complaint, between 2015 and 2018, Varsity bought its three largest rivals,
all of which are now owned by Varsity, which in turn is owned by Bain
119
Capital. By controlling 90 percent of the cheerleading competition
market, Varsity gained control over the sport’s governing body and now
decides which events entitle winners to participate in the country’s premier
competitions. Varsity also allegedly increased participation fees and made
money by, for instance, forcing competitors to wear only Varsity-approved
uniforms and equipment and stay only in Varsity-approved hotels.
“Cheerleading uniform prices have gone through the roof,” one local gym
owner complained to the Federal Trade Commission. “Competition costs
120
are so high that many athletes have to quit the sport.” Varsity and Bain
largely deny the allegations of the class action complaint, and the lawsuit
121
remains ongoing.
Or consider the example of veterinary clinics. Today, just six private
equity firms own over five thousand practices or over 10 percent of the
122
whole industry. The result: lower job satisfaction and lower quality of
care. Back in 2005, over three-quarters of surveyed veterinarians would
recommend the profession. Ten years later, that percentage fell to less than
123
half. After PetSmart, which both sold pets and cared for them, was
acquired by a private equity firm, an employee said that he “left this
company in early 2015 after being bought by BC Partners. The whole
124
company focus shifted from pets and its employees to making money.”
Another veterinarian said, “It’s pet-icide… the systematic destruction of
125
pets by corporations for profit.” In other words, by buying up companies,
combining them, and reducing competition, private equity firms are able to
raise prices, lower wages, and increase profits for themselves. Whether such
rollups specifically violate the antitrust laws, the effects, as described, are
apparent in all these and many other industries.

OPERATIONAL EFFICIENCIES: LAYOFFS, PRICE HIKES, AND QUALITY CUTS

The fundamental promise of private equity is that, through professional
management and superior insight, firms can bring operational efficiencies to
underperforming companies. But what are those operational efficiencies?
In practice, they are often layoffs. After KKR, Bain, and Vornado Realty
Trust bought Toys “R” Us in 2005, the company fired thousands of
126
workers. This isn’t to say that the actual work of the company shrank:
employees said that the company just required those who remained to take
 127
on the tasks of their former coworkers. “The amount of work was—you
128
couldn’t do it,” one former employee told Retail Dive. “In the end, I lost
my career, my retirement, and my financial stability that took me 29 years
to build up. At the age of 60 I’m still not able to find a full-time job 18
129
months after my store closed.” Ultimately, Toys “R” Us’s private equity
owners liquidated the entire company and fired thirty-three thousand
employees.
Toys “R” Us is far from exceptional. Over the past decade, nearly six
hundred thousand people working for retail companies owned by private
equity firms have been laid off, at a time when the industry added over one
130
million jobs. In large companies, 10 percent of employees tend to lose
131
their jobs within two years of a private equity firm’s acquisition.
At the same time, private equity firms often cut the quality of the
products their companies sell. For instance, Eileen Appelbaum and
Rosemary Batt explain that after Catterton Partners bought the company in
2005, it shut down the company’s plant in Oakland. The move cost 230
employees their jobs and increased the amount of time between when
132
cookies were baked and when they reached retailers. Suppliers
complained that their packages were no longer properly sealed: “One of my
last loads, I got a pallet of Taffy cookies and they were all open. Unsealed,”
133
a former driver for the company told the New York Times. And the
company reportedly changed its recipes and started using cheaper
ingredients. “Our cookies turned to crap,” said a former employee. “They
134
were nowhere near as good as they used to be.”
With products like cookies, consumers can choose what and whether to
buy. But consider the case of a literally captive audience. As described in
Chapter 7, private equity–owned companies make over $40 billion in
revenue a year providing services to prisons, where customers—inmates—
135
have little choice but to accept the services they’re offered. The three
largest prison phone companies, for instance, are all private equity owned
136
and have charged as much as $25 for a fifteen-minute call. Two of the
largest prison medical care providers are owned by private equity firms and
together have been sued about 1,500 times over just five years for allegedly
137
inadequate patient care. And several prison cafeteria companies are
private equity owned too. One in particular has been accused of serving
meals with maggots, potatoes with “crunchy dirt,” and moldy apple crisp
138
and pancakes.
More generally, from retail to snacks to prison services, the idea of
“operational efficiencies” belies a certain arrogance in the private equity
industry, the idea that in three to seven years, well-educated dilettantes can
run a company better than those who’ve often spent a lifetime doing so.
“What they thought was that people who live here are stupid, and that’s the
way they treated us,” a former employee of Payless ShoeSource told the
New York Times, after the shoe seller was bought by Alden Global
139
Capital. “It didn’t matter how great you were in your field or what other
140
stuff you had done, it was, ‘You live in Kansas, so you’re an idiot.’” This
arrogance—forged in business schools, sharpened by industry conferences
and its own propaganda—allows private equity to convince the world, and
perhaps itself, that it really is a “superior form of capitalism” and to
disguise the ways it really makes its money.

LEASEBACKS. DIVIDEND RECAPS. Bankruptcies. Forced partnerships. Tax

avoidance. Rollups. Layoffs. These are the tools by which private equity
makes its money. Dangerous in any hands, they are especially so for an
industry that, by its very design, is encouraged to think short term and take
huge risks, while sharing little financial responsibility if those risks fail to
pay off.
Given this, you may wonder: Are all companies that private equity firms
buy doomed to failure? Certainly not. Some companies acquired by private
equity grow and prosper, and the industry’s advocates point to these
successes as evidence of private equity’s virtues. But while private equity
doesn’t doom a company to failure, the chance of failure dramatically
increases. Roughly one in five large companies acquired through leveraged
141
buyouts go bankrupt in a decade. This is vastly more than the roughly 2
percent of comparable companies not acquired by private equity firms that
do. And even among the many companies that survive, private equity often
changes their cultures, from ones focused on the long term to the short,
from investment to extraction, and from responsibility to recklessness and,
at times, lawlessness.
When private equity firms are appropriately restrained—that is, when
they do not act like private equity firms—they can actually do real good.
Recall the three fundamental flaws in the industry: firms invest for the short
term, they load companies up with debt and extract fees, and they insulate
themselves from the financial and legal consequences of their actions.
When private equity firms do good, when they improve the performance of
the companies they acquire and not just reap financial benefits for
themselves, it is usually the result of fixing one or more of these flaws.
Look at Blue Wolf Capital and the Caddo River mill. Blue Wolf is a
smaller private equity firm that acquires middle-market businesses in a
handful of industries. Unlike most of its competitors, it welcomes
engagement with labor, declaring on its website that “forging a constructive
relationship between employees and management isn’t just good for
142
business—it’s the right thing to do.” In 2017, Blue Wolf and a
consortium of investors bought the abandoned Caddo River lumber mill in
Glenwood, Arkansas. The mill had closed in 2010—a victim of the Great
143
Recession and collapsing housing prices —and its failure meant that in a
144
town of just 2,500 people, hundreds lost their jobs. In 2017, Blue Wolf’s
145
consortium helped to revive the mill, paying to restore its infrastructure.
They reportedly spent millions of dollars on new equipment and, in
reopening, hired over one hundred workers who were paid, on average,
over sixteen dollars an hour. Retirees from the plant’s earlier iteration were
rehired: one former employee, who had worked at the mill for a quarter
century before it first closed, told the Arkansas Democrat-Gazette that
146
getting the call to return was “one of the best days of my life.” “You
could feel the excitement in town,” another former worker said. “With it
closed for so long, people just didn’t think it would be cranked back up
147
again.”
The reopening had ripple effects. City Cafe, which had been closed for
years, briefly reopened, where the proprietor hoped that a $7.99 buffet
148
would attract returning millworkers. And the leaders of Blue Wolf
showed personal, even emotional investment. Charles Miller, a partner at
the firm, said that “I’ve told anyone who wants to hear it that other than
meeting my wife and having my children, this is my greatest
149
accomplishment.”
In short, what made Blue Wolf different was that it eschewed most of
the fundamental problems of private equity. It bought the company entirely
with its own and investors’ money rather than, as is so often the case, by
150
loading the mill up with debt. This meant that the business could afford
to invest in its own operations, rather than service its loans. After reviving
151
the plant, the firm sold its stake to Conifex Timber for $258 million. But
again, unlike so many private equity firms, it remained invested in the
project. Though it sold its ownership stake, it remained Conifex’s largest
minority shareholder and took two seats on the company’s board. This
meant that it had an incentive to think beyond its short period of official
ownership and was invested in the business’s long-term future. Success was
not guaranteed—during an economic downturn, the mill had to cut down to
152
a single shift —but the business is now owned by a new timber
153 154
company, which employs over 150 people at the mill.
These differences changed the perspective of Blue Wolf and, in turn,
changed the Caddo River timber mill. All of which is to say that investment
—risking money to help businesses grow and prosper—is necessary and
helpful. Problems occur when private equity turns from investment to
extraction.
The leading private equity firms—Blackstone, Apollo, KKR, and the
Carlyle Group and hundreds of other, smaller players such as TPG, Vista
Equity, Thoma Bravo, Sun Capital, and Platinum Equity—are all different.
Some are more extractive, others less so. Some invest for a quick payout;
others are more patient. An indictment against one is not necessarily an
indictment against all. But they are all bound, to a greater or lesser degree,
by a common business model that is fundamentally dangerous. And each
has tens of billions of dollars, often more, to effect its agenda.
Perhaps the tactics and the successes and failures of these companies
would be less frightening—eddies in the great river of capitalism—were it
not for the populations that private equity firms make their money from.
These firms focus much of their labor on extracting money from industries
that target the most vulnerable people: single-family rental properties,
nursing homes, and prison services, among others. It is to these industries,
and the lessons they teach us about private equity’s tactics, that we now
turn.
 CHAPTER TWO

ENDING HOMEOWNERSHIP AS WE KNOW IT

Private Equity in Housing

Stephen Schwarzman’s seventieth birthday party was, in a word,

spectacular. The CEO of the private equity firm Blackstone had spent a year
and a reported $10 million to plan the affair, with help from the same
company that did events for Calvin Klein, Madonna, and the billionaire
David Koch’s own seventieth celebration.
Coming as it did shortly after the 2016 election, the party was something
of a refuge for a subset of the American elite. “The world is an uncertain
place, a lot of people are unhappy with a lot of other people, there are a lot
of things that people are upset about,” Howard Marks, the cochairman of
Oaktree Capital Management, told Bloomberg. “So it’s nice to have an
1
evening where everybody’s happy, harmonious, and upbeat.”
Harmonious indeed. The six hundred guests included leaders of
business, fashion, and art, three cabinet secretaries, and literal and
figurative royalty: Princess Firyal of Jordan came, as did the president’s
2
daughter and son-in-law, Ivanka Trump and Jared Kushner. President
Trump himself, a close friend of Schwarzman’s and a neighbor—his Mar-a-
Lago estate was less than two miles from Schwarzman’s in Palm Beach—
was unable to attend, though the men were already in frequent contact.
Schwarzman’s invitations promised what a reporter called “an exotic
3
journey,” which in practice meant a goulash of different cultural homages.
Schwarzman hired actors—some to wear traditional Japanese dress, others
Mongolian, along with real camels—to greet guests as they arrived at his
fifteen-thousand-square-foot mansion. A balcony of trapeze artists
performed as friends and colleagues crossed over what were ordinarily the
4
estate’s tennis courts. Dinner itself was hosted in a specially constructed
Chinese temple, where Schwarzman’s birthday cake, sculpted to resemble
the temple, was served.
After dinner, guests were led to yet another temple, where Gwen Stefani
5
and the cast of Jersey Boys performed. Stefani sang “Happy Birthday” and
6
danced (presumably a little awkwardly) with Schwarzman himself. The
evening ended with a fireworks display that etched across the skies of the
Intracoastal Waterway. As one guest put it, “it really was the party of the
7
century.”
How did Schwarzman afford to fete himself in this way, welcoming
celebrities to his home and building literal temples to celebrate himself? In
part, the answer lies in housing. Over the past fifteen years, private equity
firms like Schwarzman’s have helped to lead what one commentator called
8
“the biggest land grab since the Manifest Destiny.” In 2011, no landlord in
America owned more than a thousand single-family home rental
9
properties. By 2013, Schwarzman’s firm, Blackstone, bought more than
that in a single day, at a cost of over $100 million. One of Blackstone’s
companies, Invitation Homes, became the largest renter of single-family
10
homes in America. More generally, in just two years, private equity firms
11
and hedge funds bought about 350,000 bank-owned homes and, with the
industry’s help, between 2006 and 2017, 5.4 million single-family homes
12
transitioned from owner occupied to rentals. Now, nearly a third of all
13
rentals in the United States are single-family homes. These statistics help
to explain how Schwarzman was able to celebrate himself as he did. And
they help to explain how the very nature of homeownership in America is
changing, and how private equity has helped to lead the way.
IT ALL BEGAN in 2007, when the housing market collapsed. Over the
previous years, low-interest loans and the rise of a “shadow” banking
system that issued, bundled, and sold risky mortgages led to huge increases
in housing purchases and prices. Like all manias, the system depended upon
there always being another buyer, one willing to pay more for a house than
the last. And eventually, the music stopped.
In a matter of months, communities like Bakersfield, California; Reno,
14
Nevada; and Cape Coral, Florida, were transformed. In Las Vegas, one in
twenty homes went into foreclosure. In Tampa, a single judge might have
15
three thousand foreclosure cases on her docket at any given time. And in
Stockton, California, white notices on empty houses bore the messages,
16
“This is a bank-owned property” and “Bank-owned: no trespassing.”
“Whenever you see a brown lawn, it’s a foreclosure,” a local activist told
17
the Guardian as he drove down suburban streets. “Look, three in a row.”
As the housing crisis metastasized into a broader banking crisis, the
economy was fundamentally shaken. Nearly nine million people lost their
18 19
jobs. Roughly as many lost their homes. And those who stayed in their
houses often did so with mortgages demanding more than their properties
were worth.
In the face of this calamity, one institution, more than practically any
other, was actually positioned to address it: Fannie Mae. Unlike most
centers of power in Washington, Fannie Mae’s headquarters at the time sat
far from downtown, in an enormous colonial revival building whose brick
façade was more reminiscent of a college campus than an ordinary office
building. And unlike most centers of power in Washington, Fannie Mae was
not technically a government agency but rather an independent government-
sponsored entity that operated with the implicit financial backing of the
United States. Chartered by Congress during the Great Depression, Fannie’s
purpose then and now was to stabilize the housing market, by buying up
individual mortgages from banks, bundling (or “securitizing”) them, and
selling them to investors. In buying mortgages, Fannie gave money to banks
to issue more loans, which in turn gave more people the chance to buy
homes. Over eight decades, under various configurations with the
government, Fannie and its sidekick agency Freddie Mac (which was
created to spur competition within the mortgage securitization industry)
grew enormously, and by 2008, the two owned or guaranteed about half of
20
America’s $12 trillion mortgage market.
Fannie and Freddie, almost alone among American institutions, actually
had the power to keep people in their homes, by reducing the principal on
the millions of mortgages they owned or guaranteed. Doing so would have
cut homeowners’ monthly bills and, for those whose mortgages were larger
than their homes were worth, made it rational for them to stay. Doing so
would have also reduced the ripple effect of foreclosures, in which the
value of whole neighborhoods fell when a few homes in it were
dispossessed.
In fact, the Obama administration did propose a modest version of this
idea. Under its Principal Reduction Alternative program, the federal
government offered financial incentives to investors to reduce the total
21
amount owed on the mortgages they held. And the Treasury Department
22
offered to extend the program to Fannie and Freddie. But stunningly,
Edward DeMarco, the acting director of the agency overseeing both,
refused. DeMarco looked like the man he was—a career civil servant—and
at congressional hearings, the sharp gaze of his blue, bird-like eyes pierced
his rimless glasses. Over and over, DeMarco refused to accept the Principal
Reduction Alternative program for the Federal Housing Finance Agency, or
FHFA, which oversaw Fannie and Freddie, arguing that to do otherwise
23
would constitute a grave “moral hazard.” This was a confusion of the
term. Helping homeowners would create a moral hazard only if people
knew that buying a home was a risky investment (historically, it had not
been) and if they expected a government bailout when their investment
soured (there was no reason for them to expect this). But it was clear from
DeMarco’s public statements that he had a deeper, almost emotional
reaction against principal reduction. “Fundamentally, principal forgiveness
rewrites a contract,” he told the Senate. And rewriting a contract, he said,
“risks creating a longer-term view by investors that the mortgage contract is
24
less secure than ever before.”
 Treasury Secretary Timothy Geithner publicly implored DeMarco to act,
estimating that principal reduction during the housing crisis could help up
25
to five hundred thousand homeowners and save taxpayers up to $1 billion.
A petition on Change.org called him the “single largest obstacle to
26
meaningful economic recovery.” Paul Krugman demanded his
resignation. But it was to no avail. Through the entirety of the Great
Recession, DeMarco and the FHFA refused to implement the principal
reduction program, saying that its “anticipated benefits do not outweigh the
27
costs and risks.”
DeMarco went even further, not only refusing to implement principal
reduction in his institution but working hard to force others from doing the
same in theirs. In particular, local governments in some of the communities
hit hardest by the recession considered a radical step: seizing underwater
home loans through eminent domain and then helping homeowners
28
refinance those loans at lower prices. DeMarco and his agency acted
quickly and took the extraordinary step of using the Federal Register—the
official public record of the federal government—to threaten the
municipalities. The FHFA said that it had “significant concerns” about the
use of eminent domain to reduce mortgage principals and that “action may
be necessary” to “avoid a risk to safe and sound operations at its regulated
29
entities and to avoid taxpayer expense.” The FHFA invited public
criticism of the cities’ proposals, which organizations like the Americans for
Prosperity Foundation (created by Charles and David Koch) were happy to
provide. DeMarco and his allies ultimately prevailed. Just one city—
Richmond, California—got close to using eminent domain, and even there
the progressive mayor was ultimately stymied. No municipality ever
reduced homeowners’ principals through eminent domain.
There’s little point in speculating about DeMarco’s motivations during
this time. Like all of us, he was perhaps moved by a mixture of genuine
belief and personal interest: after leaving the FHFA, DeMarco became
president of the Housing Policy Council, a lobbying organization for
30
America’s mortgage lenders and servicers. His precise motivation is
irrelevant because the outcome was the same: tens of thousands of people
likely lost their homes because the FHFA failed to act boldly, when
boldness was needed most.
But while DeMarco and the FHFA were hostile to reducing
homeowners’ principals, there was one group to whom they showed
tremendous solicitude: large investors and, in particular, private equity
firms. With the collapse of the housing market, millions of Americans lost
their homes, and Fannie and Freddie found themselves owning many of
them. Rather than reselling these homes to families, potentially at a loss, the
31 32
FHFA and Federal Reserve hoped that these houses could be flipped
into rental properties, properties that investors, not individuals, could buy.
In explaining this position, Ben Bernanke, the chairman of the Federal
Reserve, surmised that creditors could potentially make more money by
renting rather than selling properties. Bernanke suggested that “involuntary
renters” could benefit by buying the homes they rented, though offered little
33
sense as to how, exactly, that would happen.
And this is where private equity enters the story. Historically, single-
family homes had not been a part of private equity firms’ portfolios: they
were too disparate and too small to make much money. But bought in bulk,
homes presented an opportunity. Private equity firms could convert the
houses into rental properties and then derive a steady cash flow with which
to pay the debt used to purchase them. Moreover, homeowners, turned into
home renters, were something of a captive audience. While a person might
leave a studio or one-bedroom apartment with relative ease, a family could
move from a home only with great difficulty. The financial crisis—and the
solicitous attitude of Fannie Mae and its regulator—were thus an enormous
opportunity for private equity firms. And they acted accordingly.
In 2012, the FHFA launched a series of auctions of foreclosed homes,
with the intention that the purchased houses be converted into rental
34
properties. Investors developed new software that estimated the best
purchases based on a neighborhood’s schools, crime, and nearness to
transit, as well as possible maintenance costs. Such software allowed
investors to participate in thousands of auctions and identify those
35
properties likely to make the most money.
 Additionally, by selling the properties in bundles, the FHFA precluded
individual homeowners and likely all but the largest and most sophisticated
36
institutional investors from participating. And that is precisely what
happened. In the FHFA’s first round of auctions, Colony Capital, a private
equity firm run by Tom Barrack (a close friend of Donald Trump’s who
chaired his inaugural committee), bought 970 properties in California,
37
Arizona, and Nevada. Barrack later called his investment strategy “the
38
greatest thing I’ve ever done in my professional life.”
Barrack had reason to be jubilant. Buyers for Barrack’s Colony and
39
Stephen Schwarzman’s Invitation Homes, along with their peers, fanned
across America to purchase dozens and hundreds of houses at a time. At
times, the fevered activity felt like it was from another century. At the
Gwinnett County courthouse in Georgia, for instance, buyers paid for
foreclosed homes on the spot, and Colony’s employees brought an actual
40
box full of cashier’s checks—$3 million in total—to the courthouse steps.
41
“Game on,” said Colony’s bidder as the auction began.
Fannie’s solicitous support for the single-family home rental industry
didn’t stop with its pilot project. In 2012, Fannie entered into a joint
partnership with Barrack’s Colony to operate, lease, and manage a portfolio
42
of over a thousand homes, primarily in Arizona, California, and Nevada.
Colony agreed to pay Fannie $35 million, and in exchange, Fannie agreed
to give Colony 20 percent or more of the cash flow generated from the
43
properties. Colony said that it expected to make a million dollars a month
from the deal.
Fannie Mae was especially kind to Stephen Schwarzman’s firm
Blackstone and its portfolio company, Invitation Homes. In 2017, Fannie
agreed to “secure” a $1 billion loan for Invitation. Under the deal, Invitation
borrowed the enormous sum from Wells Fargo, and Fannie in turn agreed to
44
pay Wells Fargo if Invitation ever defaulted. There was little obvious
reason for Fannie—which operates with the implicit financial backing of
the government—to enter into the deal, and a consortium of 136 nonprofits
 45
opposed it. But it proceeded, nevertheless, allowing Invitation to borrow
money at a lower rate and thus acquire more houses to rent. In other words,
having refused to do all it could to help people keep their homes, Fannie
was now using all its powers to help private equity firms buy those homes
up.
Ultimately, the magnitude of these companies’ acquisitions was
astounding. As mentioned above, in just two years, private equity firms and
hedge funds bought about 350,000 bank-owned homes, and by 2015, the
46
number of single-family home rentals had grown by nearly three million.
“We recognized the unique opportunity created by the housing crisis,” an
executive from Barrack’s company triumphantly declared, “and acted upon
47
it in a bold way.”

WHAT WAS IT like to live in one of the hundreds of thousands of homes

converted into rental properties by Invitation Homes, Colony, and other
48
private equity–owned firms? In a word: hard.
For one thing, living in a single-family home rental tended to get more
expensive each year, given that such homes were often excluded from local
rent control laws. In Los Angeles, more than three-quarters of surveyed
residents of rental homes reported rent increases, which averaged over
49
$2,000 annually, or roughly 9 percent more than the year before. In large
cities—often those that had been hardest hit by the Great Recession—the
increases were even larger: 9.3 percent in Las Vegas, 10.6 percent in
50
Tucson, 12.2 percent in Phoenix. To the working-class families that lived
in these homes, these were devastating increases: “For me to work 12–14
hour days and barely have enough to pay increasing rents to a multi-billion
dollar Wall Street giant, it’s like sharecropping all over again,” said a tenant
51
of one of Colony’s subsidiaries.
 Moreover, rent captured only part of the cost of living in these homes.
Companies like Invitation and Colony loaded up tenants with fees to extract
more money from them. Invitation, for instance, charged utility expenses
52
back to renters, as well as a $9.95 conveyance fee for each bill. It added
landscaping fees, pool fees, pet fees, and “smart lock” fees.
Many of these were legal, but some may not have been: class action
lawsuits in Texas and California alleged that Blackstone’s Invitation
53
charged illegal, excessive late fees to its residents. As of December 2022,
the Texas case remains ongoing, but the court in California declined to
certify the class of plaintiffs and dismissed the action. It did so in part
because the lead plaintiff had signed his lease with Invitation’s predecessor
54
companies, which Invitation absorbed through various acquisitions. In
other words, the companies’ various mergers with one another had the
incidental effect of insulating them from liability for their alleged past
wrongdoing.
Despite all these expenses, tenants weren’t getting much in return.
Private equity landlords often placed the burden of maintaining their
properties on their residents, either in ordinary lease agreements or in dodgy
55
rent-to-own programs. In such programs, tenants were given the option to
buy the properties they rented. But in return, the tenants, not the landlords,
were required to make major repairs. It’s hard to track the scope of these
efforts, but anecdotally, the New York Times reports that “few rent-to-own
agreements end in actual purchases,” and in fact, rent-to-own arrangements
56
are illegal in some states.
When tenants fell behind on their expenses, they faced firms’ aggressive
and slapdash tactics for collecting money, which ranged from degrading to
devastating. Among other things, tenants complained that debt collectors
placed menacing phone calls and ruined their credit. After one tenant fell
behind on rent, Invitation Homes wrapped caution tape around their house,
57
presumably to shame the tenant into payment. Another found herself
bouncing between Waypoint (owned by Blackstone and Colony at various
times) and its debt collector over a previously unknown—and potentially
 58
erroneous—$8,000 charge. Neither would take responsibility for
correcting the debt, and as a result, “[n]obody would rent to me,” the tenant
59
said. “I had to find a co-signer to help me buy a house because they
60
ruined my credit from that $8,000 charge.”
And when collections didn’t work, there were evictions. Lots of them. A
study by the Federal Reserve Bank of Atlanta found that, in a single year,
Colony sent eviction notices to nearly one-third of its tenants around the
61
city, far more than any other company. Corporate landlords—those that
owned fifteen or more homes in Fulton County—were 68 percent more
likely than smaller property owners to file eviction notices, even controlling
62
for property, tenant, and neighborhood characteristics. In some zip codes,
over 40 percent of all rental households got an eviction notice, and over 15
percent received a judgment or were forcibly removed. African Americans
and women were especially likely to be evicted.
Yet such evictions may have been preferable for some residents of
private equity–owned homes, for many of those who stayed faced threats to
their health. There was, for instance, the problem of lead, which, when
exposed to children, can cause cognitive deficiencies, developmental
delays, reduced academic performance, seizures, coma, and death.
Researchers in Detroit found that children living in homes owned by large
investors (those with fifty or more properties) were significantly more
likely to have elevated concentrations of lead in their blood than were other
63
children. There was also the problem of mold, which, indoors, can induce
64
asthma attacks. Thirteen percent of surveyed residents in Los Angeles, for
65
instance, complained of mold in their building.
Here, the story of Monica Lisboa is instructive because it illustrates both
the health problems in these buildings and how private equity–owned
66
companies responded. In 2013, Lisboa rented an apartment in Florida
operated by the private equity–owned Colony American Homes. As alleged
in her subsequent lawsuit, when Lisboa and her family moved in, she noted
a “musty odor” that she assumed would fade with time. It did not, however,
and over the months and years that followed the smell grew more intense.
Lisboa and her son began to experience rashes, nausea, itchy eyes,
headaches, vomiting, and trouble breathing.
Eventually, Lisboa found significant patches of black mold in the
property, which she reported to Colony, but which she alleged Colony
67
ignored. Lisboa then paid for her own do-it-yourself mold test, which
revealed toxic levels of black mold spores. This finally prompted Colony to
hire its own testing company, but when Lisboa sought the results, the
testing company said that Colony had instructed it not to release them.
Instead, Colony itself allegedly told her that the test results showed that
there was no mold on the property. If Lisboa’s complaint is accurate, either
the testing company had grievously erred, or Colony was lying to Lisboa.
Not trusting Colony, Lisboa reported she paid for yet another test—this
one by a professional—who confirmed that there were, indeed, toxic levels
68
of mold on the property. As all this was happening, Lisboa’s son had a
seizure and had to be hospitalized. There, the doctor said that her son’s
health issues were caused by toxic mold exposure. But incredibly, while
Lisboa and her son were at the hospital, she said she received a phone call:
it was Colony, inquiring about her rent payment.
Eventually, according to her complaint, Lisboa and her children had to
69
flee the property to protect themselves. Yet even after they left, and even
after Colony was put on notice of the dangerous mold levels in the house,
Colony filed an eviction against Lisboa. Colony largely denied Lisboa’s
allegations, but the ultimate truth of the matter was never resolved: the
company settled the case out of court without any admission of
wrongdoing.
Lisboa’s story is illustrative because it shows how apparent corporate
neglect can lead to crises and how distant companies can ignore those crises
to their tenants’ detriment. Neglect was endemic to the private equity
business model, whose focus on short-term profits necessitated abandoning
the long-term care of its properties and residents. Or as one resident of
another private equity–owned home put it, “Living in a Waypoint property
has been an actual nightmare. No family should have to pay to live like
70
this.”
LOOKING MORE BROADLY, it’s worth asking whether private equity firms are
actually worse than other landlords. Most of us remember when a building
super never returned our calls or refused to repair a sink. These mom-and-
pop landlords are not saints; quite the opposite. But private equity firms
have something that smaller landlords do not: billions of dollars. And they
71
have put that money to use lobbying against broader tenant protections.
For instance, in 2014, Starwood Waypoint Homes, alongside
Blackstone’s Invitation Homes, created the National Rental Home Council,
72
whose agenda included plans to fight further control initiatives. A few
years later, Blackstone and Invitation spent millions of dollars to defeat
Proposition 10 in California, which would have allowed localities to decide
whether rent stabilization laws should extend to single-family homes. The
law, if passed, would have been transformative, as about 45 percent of
residents in California rent their properties and about a quarter of tenants
73
nationally spend more than half their income on rent. Extending tenant
protections to single-family homes—or even giving cities the opportunity to
do so—would have been a crucial respite for these people. But naturally,
this posed a threat to the business model of private equity firms and the
companies they owned. And so, Schwarzman’s Blackstone and its portfolio
company, Invitation Homes, contributed nearly $7 million to oppose the
74 75
measure. Much of this money went to the No on Prop 10 PAC, whose
ads featured a narrator proclaiming, over pictures of concerned California
residents, that the proposition would put “unelected bureaucrats in charge of
what you can and can’t do with your own home” and would make housing
76
“even more expensive for renters.” Opponents of Proposition 10 spent
$72 million campaigning against it, more than double what its supporters
77
spent in its favor. Unsurprisingly, the proposition failed.
This sort of influence—the scale of money spent, the focus and
organization of the group that spent it—simply would not be possible
among more dispersed owners. By concentrating economic power, private
equity firms centralized their political power and codified their influence to
the detriment of the many tenants who were giving them money in rent and
fees every month. Moreover, private equity firms’ power—the power that
comes from their size—is only growing. In 2016, Tom Barrack’s Colony
American Homes merged with Starwood Waypoint. The merged company
in turn was bought by Blackstone’s Invitation Homes in 2017, forming a
78
behemoth single-family home rental operation. Blackstone took Invitation
public that year and then, in 2021, bought another home rental company for
79
$6 billion. The result was that more homes were being turned into rentals,
and those rentals were owned by ever-larger and more powerful companies.
Private equity firms also got in the business of not just buying single-
family home rentals themselves but of also providing the financing for
smaller investors to do the same. KKR invested in a company that financed
80
home flippers. Blackstone, meanwhile, created a program to lend to
81
smaller landlords to buy up single-family homes and rent them. This gave
Blackstone an opportunity to profit off of rented homes, even those they did
not own. And these programs ensured that more homes would be rentals
and that there would be more institutional owners—big and small—
naturally allied with one another to protect their incomes, often at the
expense of their tenants.
There is another sense in which private equity owners were worse than
mom-and-pop landlords, namely, that by their very scale, they managed to
transform the nature of housing in America. As mentioned above, between
2006 and 2017, 5.4 million single-family homes transitioned from owner-
82
occupied units to rentals. Single-family home rentals now account for
83
more than half of the national rental market. And now, investors buy one
84
in seven homes for sale in large metropolitan cities. Private equity firms
account for only a fraction of these sales: for instance, Invitation Homes,
previously owned by Blackstone, owns about seventy-five thousand
85
houses. But while private equity firms are responsible for only a minority
of purchases, they are the crucial innovators and partners with the
government in spurring this broader trend.
 It is also important to understand where this is happening. Cities hit
86
hardest by the Great Recession saw the largest increase in rentals. In fact,
private equity firms concentrated their acquisitions not just on specific
cities but on specific neighborhoods or what one executive called “strike
87
zones.” In one Atlanta zip code, for instance, Blackstone’s Invitation
88
Homes bought 90 percent of the homes sold over a year and a half. This
should be no surprise: these were the places where Fannie Mae owned
foreclosed homes, which Fannie auctioned off to investors in the process
that started the entire rental boom. But it meant that the people who lost the
most during the Recession were the ones who regained the least in the years
that followed. In fact, according to one credit rating agency, Colony’s
tenants were typically former homeowners themselves, people who could
no longer afford a home but who often retained some ties to the
89
neighborhood. By concentrating their purchases—by exercising control
over local markets—private equity firms made it difficult for people to
leave. Or as Jennifer St. Denis, a single mother and renter in Atlanta, told
the Mercury News, “At this point I’m stuck in a renting pattern because rent
90
increases keep going up and moving out is expensive.” She noted that
Invitation owned most of the homes in the area that she would want to live
in anyway.
The effect was that, quite simply, fewer people own homes. In the early
2000s, over 70 percent of households owned their own houses. Today, that
91
number is around 63 percent, levels not last seen since the 1980s. For
African American and other minority communities, the percentage is vastly
lower: Black homeownership rates, for instance, have returned to what they
92
were in the 1960s. The change is also particularly dramatic among young
people. In 1960, 44 percent of people aged twenty to thirty-four owned a
93
home. In 2017, barely a quarter did. This is not a change in preferences—
94
two-thirds of renters said that they would own a home if they could —but
a change in means. “It’s creating a greater divide between the haves and
have-nots,” one analyst told Vox. “Homeowners are getting sizable wealth
95
gain. Renters are getting left out.”

A RECURRING DEFENSE of private equity is that its use of debt and its short-
term focus necessitate excellence and that the sheer intelligence of its
leaders improves outcomes for companies. But the industry’s foray into
aspects of the housing market suggests otherwise. Consider the case of the
private equity firm Fortress and its rollup of the mortgage-servicing
industry. Mortgage servicers are, in essence, debt collectors: they ensure
that homeowners pay their mortgages and pursue foreclosures when they
don’t. It’s an appealing industry for private equity, as it provides a steady
cash flow and a captive audience, given that mortgages are often sold from
one company to another, and borrowers have no real ability to choose their
servicer. Lone Star Capital, Bayview Asset Management, Selene Investment
Partners, and Fortress Investment Group all bought up mortgages to service,
96
either directly or through portfolio companies.
Fortress is instructive here. In 2006, just before the housing crisis, the
97
firm bought a mortgage servicing company, which it renamed Nationstar.
Consistent with private equity’s model of short-term success, Nationstar’s
—and Fortress’s—strategy was one of aggressive expansion, and in the
years after the Great Recession, the company bought billions of dollars of
mortgages that others no longer wanted to service. It bought whole
98 99
companies like Greenlight Financial Services and Residential Capital
100
and over $200 billion worth of mortgages from Bank of America. By
2020, it serviced three million loans, with an unpaid principal of about $500
101
billion. It was the largest nonbank mortgage servicer in the United States
and the third largest mortgage servicer overall.
But this aggressive growth, intrinsic to the private equity business
model, came at a price: Nationstar struggled with the basic tasks of
servicing its mortgages, a fact alleged over and over in media reports and in
lawsuits. In 2016, for instance, the New York Times reported that Nationstar
repeatedly lost customers’ files and recorded inaccurate information for
102
others. According to the Times, Nationstar often failed to detect its own
errors until after foreclosure processes had already begun. (Nationstar’s
CEO, Jay Bray, defended the company’s actions, saying that “[w]e are
103
proud of the work we’ve done to improve the customer experience.”)
The following year, the inspector general for the Great Recession bank
bailout reported on Nationstar’s failure to properly administer the
government’s Home Affordable Modification Program, or HAMP, which
helped struggling borrowers to reduce the principal on their mortgages.
“Nationstar has one of the worst track record[s] in HAMP,” the inspector
104
general wrote. The company’s rule violations “have been widespread
spanning multiple quarters. Nationstar has shown little improvement and,
105
even appears to be getting worse.” Among other things, the inspector
general found that Nationstar wrongfully denied homeowners’ admission
into HAMP, wrongfully kicked other homeowners out, and reported
homeowners as delinquent on their mortgages, when, in fact, they were not.
The errors got more serious. In 2020, without admitting wrongdoing,
Nationstar settled lawsuits with all fifty states, the District of Columbia, and
the Consumer Financial Protection Bureau to resolve allegations of the
106
company’s widespread abuse and incompetence. According to the
bureau, it was as if Nationstar failed nearly every aspect of the mortgage
servicing industry. The company allegedly foreclosed on borrowers, even
after explicitly promising it would not, while the borrowers’ loan
modifications were under review. It failed to pay people’s property taxes on
time, and as a result, borrowers faced late penalties. It required borrowers to
pay for private mortgage insurance longer than they needed to. And it
unilaterally—and improperly—increased borrowers’ monthly payments.
Heartbreakingly, as alleged, Nationstar even foreclosed on some borrowers
whose payments were impermissibly increased.
Rather than litigate, Nationstar settled with the federal and state
governments and agreed to pay $73 million to more than forty thousand
107
homeowners. In a separate settlement, the company agreed with the
Department of Justice to give over $40 million to another twenty thousand
borrowers whose accounts were mishandled during their personal
108
bankruptcies.
But these fines couldn’t undo the damage that Nationstar—and Fortress
—caused. In Texas, Normie and Derrick Brown got a temporary restraining
order against Nationstar to avoid what they believed was a wrongful
109
foreclosure. But Nationstar proceeded with the foreclosure anyway and
held an auction for the house even before the court’s restraining order was
set to expire. Nationstar removed the case to federal court and closed on the
sale before the new judge could rule. The Browns lost their house. “You
think all you have to do is show them where they did you wrong, and
basically justice will prevail,” Mr. Brown told the New York Times. “That
110
wasn’t the case.”
Why did Nationstar make so many mistakes? Why was it sued by all
fifty states and the federal government? The simplest answer is the most
likely: because of its aggressive acquisition campaign, Nationstar
apparently didn’t have time to properly manage the thousands of mortgages
it bought. This worked fine for its private equity owner Fortress: having
bought the company in 2006 for $450 million, it sold the business in 2018
111
—when it still held a nearly 70 percent stake—for $3.8 billion. But this
growth was a disaster for the literally tens of thousands of people who were
harmed, and sometimes devastated, by the company’s apparent
mismanagement. And this growth was inherent in the business model of
Fortress and others, which frequently depended on quickly buying and
rolling up companies. Disasters such as private equity acquisition of
Nationstar and the resulting fiasco undercut the narrative that private equity
owners, through incentives or sheer intelligence, make companies and
customers better.

FINALLY, PRIVATE EQUITY’S foray into housing illustrates one more aspect of
the industry, namely, its frequent focus on businesses that target poor
people. For an industry built to make money, why target people with the
least? Because poor and working-class people often lack alternatives to
what they buy, and this gives private equity firms the chance to raise prices
or cut quality with impunity, knowing that their customers have few
alternatives. Nothing illustrates this more clearly than private equity firms’
purchase of mobile home parks.
Historically, mobile homes offered pockets of affordability in an
increasingly unaffordable housing market. Over nearly two decades,
beginning in 1990, the United States actually lost four million units of low-
112
cost housing. By 2019, however, the median home was unaffordable to
113
the average worker in three-fourths of the country. In this environment,
mobile homes offered a rare escape from these crushing expenses: used
units could cost as little as $10,000, and residents generally made less than
114
$50,000 a year. Fannie Mae called them “one of the few sources of
115
naturally occurring affordable housing” in America.
But mobile homes weren’t affordable by accident. The industry was
historically run by family businesses that, while far from altruistic, were
generally invested for the long term and free from the demands created by
short investment horizons and heavy debt loads, which enabled them to
keep prices low. But in the last decade, big companies came in, and that
started to change. Already by 2013, investors spent $1.2 billion buying
116
mobile home parks; by 2020, they spent $4.2 billion. Private equity firms
117 118 119 120
like Apollo, Carlyle, Stockbridge Capital, Centerbridge Capital,
121 122 123
TPG, Blackstone, and Brookfield Asset Management invested in
mobile home parks or bought them outright. And as these investors came in,
costs for residents began to rise: over a five-year period, the average price
124
of a mobile home increased 35 percent, to more than $61,000.
These were ideal businesses for private equity. They offered steady cash
flow with little responsibility: unlike apartments or even single-family
home rentals, private equity owners weren’t responsible for the upkeep of
the houses themselves, just the surrounding community. And the costs of
that upkeep—utilities and so forth—could often be pushed onto residents.
 Moreover, mobile home owners faced a number of disadvantages
relative to those who owned traditional homes. For one thing, they paid two
fees for the privilege of residence: a mortgage on the property itself and rent
for the lot on which the property sat. For another, they tended to have
higher interest rates on their mortgages, meaning that they had to pay more
just to get the same equity in their homes. And in fact, the very term mobile
home was something of a misnomer. Many were attached to concrete
125
foundations and moving them could cost $10,000 or more. As a result,
owners rarely did. Private equity firms depended on this fact to increase
rents and fees without consequence.
Unsurprisingly, these private equity firms often made terrible owners.
After Sunrise Capital Investors bought a park in Akron, Ohio, it tried to
126
double residents’ lot rents. The company’s plans would “economically
evict many of our neighbors,” a resident wrote (residents eventually
127
succeeded in stopping the increase). After TPG bought a community in
Urbana, Illinois, one resident managed to negotiate a payment plan with the
property manager. But “[e]ven a good manager can’t change the company
wide policies that are aiming to make as much money off of all of us as
128
possible,” she told the Private Equity Stakeholder Project. And after
Stockbridge Capital bought a park outside Nashville, neighbors complained
that the company failed to pick up couches and trash left lying in common
areas, while it simultaneously threatened eviction for residents who were
129
just six days late in their rent. “They’re almost like slumlords,” one
resident told the Washington Post. “If you point something out, they’re just
130
like… whatever. They just want the rent.” In essence, private equity
firms’ innovation was to realize that, because mobile homes were anything
but mobile, real money could be squeezed from Americans who had the
least.
A particularly wrenching aspect of these increased costs was that they
actually took money from residents in two ways. First, residents paid the lot
rents themselves. Second, by raising lot rents, firms made the homes less
attractive to future buyers, draining the equity that residents had put into
their own houses. In fact, for every $100 increase in rent, homes lost an
 131
estimated $10,000 in value. It was an economic pincer move, taking both
residents’ income and their wealth.
Importantly, the government helped. In 2016, Fannie Mae helped to
provide $1 billion in financing for Stockbridge Capital’s Yes! Communities.
The loan helped Yes! buy up more mobile homes and, crucially, did not
limit how much or how often the company could raise rents on the
132
properties it bought. Two years later, Fannie Mae provided $200 million
133
in financing for TPG Capital to buy dozens of mobile home parks itself.
George McCarthy, an affordable housing advocate, told National Public
Radio that “what’s ironic about it is that one of the missions of Fannie Mae
and Freddie Mac is to help preserve affordable housing. And they’re doing
exactly the opposite by helping investors come in and make the most
134
affordable housing in the United States less affordable all the time.” To
its credit, Fannie subsequently set for itself the goal of financing more
mobile home sales to nonprofits, and adding resident protections to future
135
loans. But the scale of its aspirations was small: it aimed to make just
136
three nonprofit deals in 2022, for instance.
Considering all this, it is helpful to see how private equity ownership
worked in one specific mobile home community: Plaza Del Rey, in
Sunnyvale, California. Sunnyvale sits in the center of Silicon Valley, and its
largest employers include Google, Apple, Lockheed Martin, and Amazon.
In 2015—the year that the Carlyle Group bought Plaza Del Rey—a typical
137
home in the city cost well over $1 million. In such an environment, the
mobile home park offered a pocket of affordability in a community of
extraordinary expense, a place where middle- and working-class people
could live and get to nearby jobs. For four decades, the park was owned by
a single family, until 2015, when the granddaughter sold it to Carlyle for
138
over $150 million. Residents already covered the utilities, property taxes,
and cost of upkeep. But within its first year as owner, Carlyle raised rents
7.5 percent, the largest increase in the park’s forty-seven-year history. For
new residents, Carlyle raised lot rents to $1,600, nearly 40 percent more
139
than the park average. This didn’t just hurt people who moved in: it made
it harder for existing owners to sell, eviscerating the equity in their homes
that they might have built up.
As reported by the Los Angeles Times, residents resisted but were
infuriatingly outmatched. Some collected cans to pay to meet with a lawyer:
after a morning of collection, they raised $46.55: “Enough to pay for a third
140
of an hour with an attorney!” one of them exclaimed. Others protested to
the city council, where one of Carlyle’s managing directors spoke against
them. “We are opposed to rent control in any form and do not believe it
furthers the objectives of the city or owners in the long term,” the Carlyle
141
executive exhorted.
The council, perhaps fearful of any action that might dampen investment
in the city (“The city council expressed no interest in helping us,” one
142
resident complained ), never imposed any rent control. But it did facilitate
a negotiation between Carlyle and the residents, the result of which was a
nominal limit on rent increases for those residents who signed on. Yet
according to Fred Kameda, a resident familiar with the deal, the rent that
Carlyle could charge for new lots was unaffected. This meant that residents
would still potentially lose equity in their homes and still struggle to sell
them. “Basically we didn’t do a very good job negotiating,” Kameda
143 144
said. “However we had no—how would you say it—leverage.”
Kameda suspects that Carlyle’s real intention was not simply to raise
rents but to push out residents and transform the whole park into higher-
density and much more profitable housing. Despite Carlyle’s protests to the
contrary, there was some limited evidence to support the theory. Forty miles
away, Carlyle had tried to evict owners in another mobile home park it
145
bought and turn the properties into more profitable rentals. And as part of
its deal with Plaza Del Rey residents, Carlyle negotiated the right to make
the first offer on homes that went up for sale, setting itself up to do the same
146
there. If that was Carlyle’s intention, it never succeeded, though it still
managed to make a fabulous profit. In 2019, four years after buying Plaza
Del Rey, Carlyle sold the park to another investor for $237.4 million.
147
Carlyle managed to make a 58 percent profit on the deal.
 Though Carlyle left, the problems didn’t stop for Plaza Del Rey’s
residents. The new owner increased rents for incoming residents to $2,380,
148
rendering homes, according to existing owners, “unsellable.” Residents
held protests and met with Representative Ro Khanna, though the new
owner barred TV and newspapers from covering Khanna’s visit to the
residents. “It’s outrageous that they didn’t allow the press to listen to the
149
residents’ concerns,” Khanna said, adding—perhaps aspirationally—that
“we don’t live in an oligarchy where private equity gets to destroy our
150
communities.”
Ultimately, the city imposed a memorandum of understanding that set
151
limits on rate increases for both new and existing owners. But this fell
short of an actual rent stabilization ordinance, which already existed in a
half dozen nearby towns. Instead, residents had to proactively sign the
memorandum, and under it, the new park owner could still substantially
152
increase rates for new mobile home owners.
The whole experience was illustrative. Carlyle was able to turn an
extraordinary profit on an investment, not by making a better company but
by increasing the costs for those least able to pay. Residents protested, but
their protests were largely ineffective, with a local government agonizingly
slow to act. And in large part, residents didn’t move because they couldn’t.
By increasing rents—and making properties less attractive to new buyers—
Carlyle actually made it harder for existing owners to leave.
It was a cruel system, cruel for everyone except Carlyle and its investing
peers. “I think they were carpetbagging scumbags,” one resident said of
153
Carlyle. “They don’t realize that these are peoples’ homes,” said another
to a local news station. She added, poignantly, “We’re not just numbers on a
154
spreadsheet.”
PRIVATE EQUITY FIRMS’ adventures in housing illustrate the industry’s worst
tendencies. They bought up hundreds of thousands of homes, raised prices,
and reduced quality. They did not demonstrate particular skill in
administration, as the follies of Nationstar illustrate. But they did
demonstrate enormous political strength, as shown by their defeat of
Proposition 10 in California. Finally, they targeted, not those with the most
money in America, but those with the least. Nowhere was this clearer than
in the case of mobile home parks. And all of this was accomplished with the
active support of the government, whose sponsored entity, Fannie Mae,
helped to start the fevered rush to acquire homes. We seem, in other words,
to be bringing this on ourselves. In so doing, we help to fund the lives and
lifestyles of men like Stephen Schwarzman, whose seventieth birthday was
described earlier. His “party of the century,” with its actors and camels,
singers and temples, was all made possible, in large part, by the housing
industry he helped to transform.
 CHAPTER THREE

PROFITING OFF BANKRUPTCY

Private Equity in Retail

Do you wonder why so many businesses around you are closing and why
retail spaces so often seem unoccupied? The common refrain is that
Amazon and other online sellers have displaced physical stores and
rendered them irrelevant. This is partly true, though it is only part of the
story. Another part is that private equity firms are buying up stores that,
collectively, employ millions of people and are often driving those stores
into bankruptcy. Some of this is simple mismanagement. But some of it is
deliberate, for, as the pages below describe, often these firms win in the
bankruptcy process when so many others—the companies they buy, the
creditors they use, and the employees they pay—lose. All this exacerbates
inequality, by shifting money from workers to executives, and from retailers
to financiers. And it’s happening all the time.
The case of Toys “R” Us is illustrative. The children’s superstore looms
large in many of our childhood memories, as it has for generations of grown
kids. Its founder, Charles P. Lazarus, started the business in his parents’
1 2
bicycle shop as Children’s Bargain Town, a place where parents of the
exploding baby boom could buy cribs and other children’s furniture. Over
time, Lazarus realized that though parents needed to buy cribs just once,
they needed to buy toys constantly. In 1957, he launched the first Toys “R”
Us in Rockville, Maryland, with its trademark backward “R,” written as a
child might.
Lazarus built his stores like giant supermarkets, and an early
advertisement promised “unlimited quantities” of toys, with “trailer loads
 3
arriving continuously.” Where other businesses had small showrooms and
limited inventory, Toys “R” Us promised to rarely, if ever, run out of the
toys that kids loved. And the company’s early adoption of computer
inventory systems allowed it to know what kids wanted before other
4
companies did.
In time, Toys “R” Us became a national icon. Generations of children
remember its advertising jingle, “I don’t wanna grow up, I’m a Toys ‘R’ Us
kid,” or the Super Toy Run on Nickelodeon, where contestants could win a
five-minute shopping spree in the store. In 2001, it opened a giant flagship
in Times Square, with an enormous indoor Ferris wheel, life-sized Barbie
5
Dreamhouse, and twenty-foot animatronic T. rex.
It’s true that Toys “R” Us was slow to adapt to online retailing, and it
committed an unforced error by partnering with Amazon in its first big push
6
into e-commerce. The project helped Amazon learn how to sell products to
children, and Toys inadvertently surrendered its competitive advantage.
7
Nevertheless, the company had over $11 billion in revenue when, in 2005,
it was purchased by a trio of private equity firms: Bain, KKR, and Vornado.
This is where the troubles began. The firms bought Toys “R” Us for over
$6 billion, most of it with debt that Toys—not its purchasers—would have
8
to pay. And the cost of servicing that debt was enormous: about half a
9
billion dollars a year on interest alone, not to mention millions in various
10
fees that the company would need to pay its new owners. This sucked
money away from the company that could have been spent making the
expensive—and necessary—transition to online retailing.
At the same time, under the private equity firms’ ownership, the
company bought several competitors, including FAO Schwarz and K-B
Toys. For each acquisition, Toys “R” Us paid the private equity firms a
11
transaction fee, which together totaled over $100 million. On top of this,
Toys paid Bain, KKR, and Vornado regular management fees—costs for the
privilege to be owned by them—and interest on debt that it owed the firms
directly. In total, the Private Equity Stakeholder Project estimates that over
12
thirteen years, Toys “R” Us paid Bain, KKR, and Vornado $464 million.
Along the way, the private equity firms drew down the company’s
assets. Before it was purchased, Toys “R” Us had over $2 billion in cash
and cash equivalents. By 2017, the year of the bankruptcy, it had less than
13
one-sixth that. Ann Marie Reinhart, who worked at Toys for twenty-nine
years, said that the private equity purchase “changed the dynamic of how
14
the store ran.” According to employees, benefits were cut, as were jobs,
and the employees who remained had to take on more responsibilities.
Stores became shabby as the ordinary work of maintaining a big business—
15
polishing floors, sweeping parking lots, and so forth—grew infrequent.
The fans, girders, and lights of the stores, where dust accumulated, were
cleaned less often. And the company fell behind on its internal information
technology, a part of the business where it had once excelled.
The heavy debt and the flow of cash to the private equity firms made it
impossible for Toys to make necessary changes. In 2014, the company
announced a TRU Transformation initiative, to improve the in-store and
online shopping experience, create exclusive partnerships with toy makers,
16
and reduce costs. But it wasn’t enough, and in 2017, the company filed
for Chapter 11 bankruptcy.
At the time, many commentators blamed Amazon. But this was, at best,
only part of the story. Toys’ sales remained steady, even during the Great
Recession, and in the year before it filed for bankruptcy, its $11 billion in
17
revenue accounted for an estimated one-fifth of all toy sales in the
18
country. The problem wasn’t market share; the problem was the debt. By
2017, Toys’ payment on the interest alone nearly matched its entire
operating income: the company had $460 million in operating income and
19
$457 million in interest expenses. Without money, the company couldn’t
make the necessary investments to compete online, couldn’t hire the best
people, and couldn’t keep its stores clean.
In the bankruptcy process, there were clear winners and losers. One of
the winners was the Toys’ CEO, David Brandon, who thrived as the
company struggled. Brandon was an ally of the company’s private equity
owners—Bain had previously chosen him to run Domino’s Pizza, another
20
of their investments —and at Toys “R” Us, he was treated extraordinarily
well. As subsequently alleged by a class of Toys’ creditors, while the CEOs
of comparable companies were typically paid around $1.1 million and the
ninetieth percentile were paid $1.56 million, Brandon was paid more than
21
twice that: $3.75 million. He spent that money well. For a while, he lived
22
in a luxurious building on New York’s Billionaire’s Row, in an apartment
23
with a listed rent of $45,000 a month. And in 2016, he paid over $15
million for a penthouse on the Upper East Side, with terrace views of
Central Park.
As his company collapsed, Brandon sought to secure his financial
future. The challenge, according to subsequent litigants, was that Toys’
lawyers had advised Brandon that his bonus likely would not be approved
24
once the company filed for bankruptcy. So he ordered that bonuses for
25
himself and other top executives be paid three days before then. Brandon
ultimately had the company pay him $2.8 million, with similar payouts for
26
other top executives.
Having secured his bonus, Brandon allegedly lied about it. According to
subsequent plaintiffs, Beth Burns, an employee at Babies “R” Us in Nashua,
New Hampshire, wrote to Brandon after her store was selected for closure.
Brandon had promised all of the laid-off employees a severance but then, a
week later, retracted the offer. Burns wrote to Brandon and asked him to
“please re-think your decision to hand out to the Executives and leave your
27
devoted Associates with nothing.” Brandon personally wrote to Burns that
“I did want you to know that there have not been millions of bonuses paid
28
to the executives at our company despite what you may have heard.”
Bonuses at the company were tied to financial performance, he explained,
and “based on our performance the past several years, there have not been
—nor will there be—any bonuses paid to executives or anyone else given
29
the current financial condition of our company.” Brandon, it appeared,
was not telling the truth: he was going to be paid millions of dollars and had
spent much energy designing his exit package to avoid the restrictions of
the bankruptcy laws. Having secured his financial future, Brandon was
apparently unwilling to admit as much to his employees.
Beyond Brandon, another winner was Toys’ law firm Kirkland & Ellis,
which had established itself as the dominant force in large corporate
30
restructurings. In bankruptcy, lawyers are often paid first, the assumption
being that they would refuse to work for a failing company without a
guarantee that they would be compensated while doing so. But Kirkland’s
31
fee here was enormous: it made $56 million for its work or nearly $1,000
32
an hour. By comparison, according to the tracking service Payscale, the
average retail department supervisor at Toys “R” Us made just $12 per
33
hour.
The losers in this process were Toys “R” Us’s employees, who got just
34
$2 million in severance. The employees, according to one of their
lawyers, had been promised $80 to $100 million in severance pay to work
35
through the busy holiday season, but in bankruptcy, employees were
“unsecured creditors” and had little leverage to demand what they were
owed. Ultimately, while the CEO received a $2.8 million exit package,
employees received severance packages amounting to about $60 per
36
person. The money was little more than “schmuck certificates,” according
to one of their lawyers, Jack Raisner: about enough for a family meal at
37 38
Arby’s. “For these people, it was devastating,” he said. “That’ll pay my
phone bill,” Michelle Perez, a mother with two young children, complained
39
to CBS. “This has really shown how the bankruptcy system is broken,”
40
she said.
The final loser in the bankruptcy was Toys “R” Us itself. Toys filed for
Chapter 11 bankruptcy, where companies are meant to rehabilitate
themselves by discharging some of their debts, rather than Chapter 7
bankruptcy, where companies are shut down and their remaining assets sold
to creditors. Toys initially planned to keep operating and was in
negotiations to do so, according to one of the company’s financial
41
advisers. But a hedge fund called Solus Capital Management owned a key
part of Toys “R” Us’s debt. It, along with four other debt holders, decided
that they were better off if Toys liquidated—that is, if it stopped working
entirely and sold itself for parts—than if Toys continued to operate as a
business. The debt holders were able to force the issue and shut the
company down. Solus reportedly made money on the transaction—and
thirty-three thousand people lost their jobs.
How about the private equity firms themselves? KKR claimed to have
42
lost millions of dollars on the deal. But while KKR’s various investors
may have lost money, the firm itself likely profited. An independent
analysis by Dan Primack at Axios estimated that KKR, as well as the other
private equity investors in the deal, all profited through the millions in
management and advisory fees that they bled out from Toys “R” Us over
43
more than a decade of ownership. Subsequent litigation by Toys’ creditors
revealed that the firms allegedly received $70 million more than even
44
Primack estimated. In other words, KKR and its private equity peers
likely did well for themselves, despite protests to the contrary.
At the end of the bankruptcy process, Mary Osman, a former Toys “R”
Us employee in Boardman, Ohio, told activists that “I can’t find another job
at my age—no one will hire me. I dedicated my life to Toys ‘R’ Us and
45
today I’m left with nothing.” Debbie Mizen, a former employee in
Youngstown, Ohio, said that “[a]fter devoting 31 years to a company, I have
lost not just my job but my financial stability. My only option is to work
very physically demanding jobs earning far less than what I worked so hard
46
to achieve.” She added, “I deserve better, and so do my coworkers.”

TOYS “R” US is just one part of a larger story of enormous advances by

private equity firms into the retail industry. Retailers are attractive targets.
They own their own property, which can be sold and leased back, and have
lots of cash flow, which can be used to pay debts. Collectively, private
equity firms have become some of the biggest employers in the country and
47
now own retailers that employ over 5.8 million people.
The problem is that private equity firms have, by and large, done a poor
job managing these companies or at least keeping their workers employed
and paid. On average, retail companies acquired by private equity
experienced a 12 percent drop in employment, and workers’ wages tended
48
to fall even as productivity rose. This has both hurt companies and
exacerbated inequality.
This decline is at odds with the overall trend in retailing. While over a
ten-year period, private equity firms and hedge funds were responsible for
an estimated 1.3 million direct and indirect retail job losses, over the same
49
time, the industry as a whole added 1 million jobs. In 2016 and 2017, over
60 percent of the jobs lost in retail were at companies owned by private
50
equity firms. Fully 70 percent of the retail stores that closed in the first
51
quarter of 2019 were owned by such firms.
The businesses they have controlled—and often bankrupted—are ones
you likely recognize: Aeropostale, American Apparel, Charlotte Russe,
Fairway, Gymboree, Hot Topic, J.Crew, Mervyn’s, Neiman Marcus, Nine
West, Payless ShoeSource, PetCo, PetSmart, RadioShack, Sports Authority,
52
Sears, Staples, Talbots—plus dozens more. And these closures affect
those people in America with the least power. A quarter of retail workers
53
live at or near the poverty line. In some sectors, like retail clothing, the
vast majority of employees are women, and a near majority are people of
color. As stores close, these people lose their jobs. Localities lose their tax
base, and businesses continue to concentrate.
Private equity firms will be quick to say that this is, in a sense,
inevitable. With the rise of online shopping and Amazon, the argument
goes, traditional retailers are doomed. Not so. Though Amazon is enormous,
54
it occupies only 10 percent of overall retail in America, and hundreds of
traditional retailers, like Macy’s, Target, and Walmart, have successfully
55
pivoted to e-commerce. Moreover, these companies have something that
Amazon, with the exception of its Whole Foods subsidiary and various
smaller experiments, does not: physical stores. The combination of on- and
offline retailing is something that can help traditional sellers meaningfully
compete with Amazon.
But to make this move to e-commerce, retailers need money, and lots of
it, to build the infrastructure necessary to sell online. Private equity’s
business model makes it difficult to meet this challenge. Acquired
companies are often saddled with debt, which they must service, on top of
management and transaction fees that they may owe to the private equity
firms. These costs give retailers little money to invest in themselves. “You
need so much money to keep the stores open, so much money to keep the
inventory flowing,” Marigay McKee, the former president of Saks Fifth
Avenue, told the New York Times. “Most P.E. firms don’t want to make
56
investment before they start seeing the return.” “To keep up with
everybody’s switch to online purchasing, there really needed to be some big
capital investments and changes made,” Elisabeth de Fontenay, a professor
at the Duke University School of Law who specializes in corporate finance,
added to the Times, “and because these companies were so debt strapped
when acquired by private equity firms, they didn’t have capital to make
57
these big shifts.”
Sometimes the problem was simply that private equity firms
understaffed their stores. For instance, after BC Partners bought PetSmart in
2015, it bragged on its website that it increased the company’s profitability
58
by “improving corporate efficiency.” But in practice, according to
employees, this meant dramatic layoffs, which left stores dangerously
59
understaffed. As detailed by Vice News, this had a particularly gruesome
effect. With too few employees to transport animals that died at the store,
carcasses of dead animals literally piled up in PetSmart freezers across the
country. One employee shared a photo she said was filled with two months’
worth of dead animals; another employee said their store had a freezer with
ten months’. A third employee said that, for lack of time, she would simply
throw bodies away. “Sometimes I was doing it weekly because we didn’t
have staff to take a vet trip to properly dispose of them so I was instructed
 60
to dispose of them myself,” she told Vice. (A spokesman for PetSmart
denied to Vice that the store’s standard of care had declined, while a law
firm representing the company wrote to the publication that “PetSmart
holds the health and well-being of its associates, customers, and pets as its
61
top priority.”)
It wasn’t just the dead bodies. Employees complained that PetSmart
62
regularly denied veterinary care for sick pets because of the cost.
According to PETA, the company even gave bonuses to managers who kept
animal care costs low. One employee told Vice that “I loved PetSmart, but
ever Since BC partners took over, they don’t care about animals or
63
employees or their safety.” Another former employee added, “I ended up
getting diagnosed with PTSD—PTSD tied to animals. I felt immense guilt.
I wouldn’t let myself sleep. I felt selfish going to bed. But at my job,
64
animals passed away so often, you couldn’t do anything.”
At other times, private equity firms simply hired the wrong people. In
2012, Golden Gate Capital and Blum Capital bought the discount shoe
65
seller Payless. As described in a detailed profile in the New York Times,
through a series of owners, Payless tumbled through bankruptcy three times
in four years. Part of the problem was that for every one dollar in profit
Payless made, more than a dollar went to its private equity owners and
another quarter went to its lenders. This made the company susceptible to
crisis when, for instance, a work slowdown by longshoremen left Payless’s
shoes waiting on boats for several weeks. But part of the problem was who
these owners put in charge. After Alden Global Capital (which describes
itself as a hedge fund but engages in private-equity-like buyouts) bought
Payless out of bankruptcy, it installed as CEO, not an executive from
footwear, fashion, or even retail, but an investment banker: Martin R. Wade
III. Payless middle management felt that Wade and his team treated them
with contempt: “They became convinced that, ‘You guys don’t know what
66
you’re talking about,’” one former midlevel employee told the Times. And
yet, despite their inexperience, the new management enthusiastically
pushed its own ideas, such as a plan to buy millions of World Cup–themed
flip-flops. The problem was that the sandals didn’t arrive until after the
World Cup had ended and even then often with flags of countries like
Mexico and Argentina, where Payless had no stores. Ultimately, the
company had to sell the flip-flops at a deep discount. Another idea was to
shift quality inspections from a dedicated facility to individual factories. As
a result, Payless received many shoes that were defective in various ways:
size six shoes labeled as size three, for example. A former employee said
67
that “missing one shoe can wipe out whatever you think you’re saving.”
Ultimately, Payless returned to bankruptcy and closed all its stores in the
United States. (In a statement to the New York Times, Golden Gate Capital
said that “[w]hen we exited Payless, we left it with a right-sized store
footprint and meaningful earnings opportunities for future owners.”)
At other times, private equity firms forced retail stores into partnerships
with some of its other portfolio companies. For instance, as described in an
earlier chapter, Sycamore Partners repeatedly forced the retailers it owned,
like Talbots and Aeropostale, to work with its chosen wholesale supplier.
Such “synergies” may have benefited Sycamore, which stood to make
money whether or not its retailers actually sold their goods. But deprived of
the opportunity to choose the suppliers that offered the best products at the
lowest costs, the retailers lost.
These are examples of private equity wrecking the companies they ran
by underinvesting in the retail stores they owned, by playing matchmaker
between portfolio companies, or through sheer mismanagement. But there
is a deeper truth: in many cases, private equity firms want these companies
to fail, or to at least go bankrupt, in order to get rid of unwanted debts. And
here, private equity’s true advantage—its ability to navigate the bankruptcy
code—comes into view. Bankruptcy is an opaque, enormously complex
process and one where great lawyering (though not necessarily great
business acumen) is rewarded. Private equity firms thrive in this part of the
law, and they have certainly been rewarded.
So it was with Friendly’s, the ice cream and diner chain in the American
Northeast. Friendly (the “s” was added in the 1980s), was started as an ice
creamery in Springfield, Massachusetts, by two brothers at the height of the
68
Great Depression. Curtis and Prestley Blake began their business with a
$547 loan from their parents and ran the operation as a family affair: their
mother made the syrup that was a key ingredient for their coffee-flavored
69
ice cream. When they closed their shop each evening, one brother would
stay through the night to make ice cream for the following day, while the
other would go home and sleep. The ice cream maker would retire in the
morning for a few hours’ rest, then return at noon to begin serving the
70
afternoon customers.
The Blake brothers’ competition across town sold two scoops of ice
71
cream for ten cents, and so the brothers charged a nickel. On their first
night in business, a line formed out the door that kept them operating until
midnight. They sold 552 cones and made $27.
72
Their work paid off: from their first store they expanded to a second
and then to a third. They began offering classic American food—
hamburgers and so forth—in addition to their ice cream offerings, which
73
eventually included their famous Fribble milkshake. When the United
States entered World War II, the brothers closed their shops, saying that
74
they would reopen “when we win the war” and returned in triumph,
adding stores in the years and decades that followed.
In 1979, the Blake brothers, by then in their sixties, sold Friendly to the
75
Hershey chocolate company. Hershey then sold the business to a wealthy
restaurateur, who in turn took the company public in 1997. But the chain
suffered without its original owners: restaurants became shabby, and menus
76
became stale. One writer observed that the restaurants had “deteriorated
to the point where the physical plant itself is downright depressing and as
such overshadows the food and service” and that there was an “apparent
disconnect between the colorful stream of marketing material pumped out
77
from corporate and the reality of each dated Friendly’s location.”
In 2007, Sun Capital, co-led by Marc Leder, bought Friendly’s for $337
78
million. Unsurprisingly for those familiar with Leder and Sun Capital,
they were unable to bring back the spark that once made Friendly’s so
successful. In fact, they made the situation considerably worse, by piling
 79
debt onto Friendly’s that the chain struggled to service and by executing a
80
sale-leaseback on the chain’s headquarters and 160 of its restaurants.
In 2011, Sun Capital finally pushed the company into bankruptcy. Here,
the private equity firm showed its real skill, for while Sun Capital was
unable to run an ice cream chain, it was able to perform an extraordinary
sleight of hand that allowed the firm to keep control of Friendly’s while
sloughing off the company’s pension obligations onto a quasi-government
agency.
To start, Friendly’s successfully petitioned to have its case administered
in the Delaware bankruptcy court, a district whose judges were generally
81
predisposed to rule for companies over their creditors in legal disputes.
Ordinarily, Friendly’s would have filed in Massachusetts—it was
headquartered there—but several of its subsidiaries were chartered in
Delaware, which gave the company a sufficient jurisdictional hook to have
the whole case managed in this preferred venue.
Then, Friendly’s lawyers (Kirkland & Ellis, the same firm that
represented Toys “R” Us) convinced the court to expedite the bankruptcy
process through a 363 sale, named for the relevant section of the bankruptcy
82
code. Usually, a restructuring bankruptcy builds toward a “plan of
reorganization”: a comprehensive agreement between the company and its
creditors about which debts will be paid and which will be discarded, as the
business returns to normalcy. A 363 sale abandons this plan of
reorganization in favor of a quick auction of some of the business’s assets
or, more aggressively, of the entire business itself. The winner of the
auction typically acquires the assets or business “free and clear” of their
outstanding debts.
The auction also largely removes discretion from the bankruptcy court.
One judge complained that in such auctions, “the judge is reduced to a
figurehead” and “might as well leave his or her signature stamp with the
83
debtor’s counsel and go on vacation.” In other words, by successfully
proposing a 363 sale, Friendly’s lawyers were able to take control of the
bankruptcy process and largely choose who would buy the company’s
assets.
 And here’s where private equity showed its genius. Sun Capital, through
Friendly’s, proposed to sell the business to… itself. One of Sun Capital’s
subsidiaries was Friendly’s owner. But another Sun Capital subsidiary was
84
its largest lender and had loaned Friendly’s $152 million, which had
85
blossomed to $268 million with interest. Another affiliate provided $71
million to keep Friendly’s in business through bankruptcy (what’s known as
86
debtor-in-possession financing). Sun Capital proposed to reacquire
Friendly’s by forgiving these debts, a tactic known as credit bidding.
The 363 sale allowed for other companies to bid on Friendly’s, but most
everyone else was at a huge disadvantage. Sun Capital was proposing to
buy Friendly’s by forgiving debt—debt that was unlikely to be paid in full
—while other potential buyers would need to pay actual money for the
company. Moreover, Sun Capital was allowed to bid both the principal and
interest for the company, meaning that it paid just $152 million for a
possible $268 million bid. Nobody else could hope to pay so little for so
much.
87
And nobody did. The auction for Sun Capital, which was to be held at
88 89
Kirkland & Ellis’s New York office, was canceled for lack of interest.
Sun Capital’s affiliate was able to acquire Friendly’s without so much as a
90
fight.
Reading the court documents, there is an absurd sense in which
Friendly’s—and Sun Capital—talk about themselves in the third person, as
if they were completely unrelated. To take one example of many, in an early
filing, Friendly’s lawyers said that a “bidder” already expressed interest in
buying Friendly’s, an encouraging sign and one that might incline the court
toward approving Friendly’s requested auction process. But the lawyers
added only in a footnote that the bidder was an affiliate of Friendly’s
91
existing owner, Sun Capital. This wasn’t necessarily dishonest, but the
effect was to make it seem like Friendly’s contemplated a genuine sale to a
third party, rather than a reshuffling of Sun Capital’s ledgers.
But why go through this whole process at all? Why would Friendly’s
declare bankruptcy, just to be sold from one Sun Capital fund to another?
The answer was simple: pensions. At the time of bankruptcy, Friendly’s had
92
$115 million in pension liabilities. By selling Friendly’s to one of its
affiliates, Sun Capital was able to reacquire its own company free and clear
of those liabilities. Instead, they were transferred to the Pension Benefit
Guaranty Corporation. The PBGC was chartered by Congress to rescue
underfunded pension plans and paid for itself in part through insurance
93
premiums that healthy pension plans paid to it. But it was always meant
as the destination of last resort, not as a convenient sucker for strategic
bankruptcy reorganizations.
And so the PBGC objected to Friendly’s plan, correctly observing that
“each and every party to this bankruptcy… is an affiliate of Sun Capital
94
Partners, Inc.” The PBGC argued that Sun Capital’s loans to Friendly’s
should probably be treated as equity—that is, further investments by the
owner of the company—rather than as debt. This mattered because in
bankruptcy a party can’t credit bid equity, and if the court granted the
motion, Sun Capital would have to wager cash for the company like most
everyone else. The PBGC also requested procedures that would encourage
the winning bidder to assume the obligations of the company’s pension
95
plan. But the court denied both these requests.
The PBGC didn’t bother to make the more aggressive argument that the
entire 363 sale process was invalid here. Such sales require good faith on
the part of the buyer and seller, which can be undermined by collusion
96
between the two. It seems unlikely that the court would have accepted this
aggressive position, given that it rejected the PBGC’s more modest
argument that Sun Capital’s debt should be treated as equity. But it could
have been worthwhile to ask for discovery on whether—and to what extent
—Sun Capital’s various affiliates communicated with each other and with
their parent company before, during, and after the bankruptcy process.
Regardless, Sun Capital was able to reacquire Friendly’s free and clear
of its pension obligations, without spending anything more than the money
it lent its own portfolio company. Pensioners were the obvious losers in this
process, who risked having their payments cut (the PBGC observed over
the previous decade that it had been forced to cut $70 million in benefits to
employees after 363 sales by debtors owned or controlled by private equity
97
firms). Pension plans for more responsible companies lost too: they would
have to pay the costs, through increased premiums to the PBGC, that Sun
Capital was unwilling to.
Many of Friendly’s existing employees lost as well. Sixty-three
98
restaurants closed as part of the bankruptcy process, and the Albany Times
Union reported that at the Friendly’s in Latham, New York, employees
hugged at the end of their final shift. While a company spokesperson said
that Friendly’s would hire as many workers as possible, one employee
questioned whether there would be enough open positions to hire the more
99
than twenty coworkers at the Latham shop alone.
Friendly’s itself was also a loser. In 2016, Sun Capital sold the
company’s ice cream manufacturing unit, along with its trademark, to Dean
100
Foods for $155 million. But the core restaurant business never improved.
Over the decade, the company lost nearly 70 percent of its locations, which
101
went from over 500 to just 130. Finally, in 2020, Friendly’s fell into
bankruptcy again. This time, an affiliate of a restaurant franchising
102
company agreed to purchase the business for just $2 million.
The final losers were the brothers who started Friendly’s, Curtis and
Prestley Blake. Curtis died at age 102 in 2019; Prestley at 106 in 2021.
Both men—the men who closed their business during World War II until
“we win the war”—lived long enough to see their creation collapse at the
hands of Sun Capital. But Sun Capital’s cofounder Marc Leder
demonstrated no comparable patriotism or seriousness of purpose. When
asked about Friendly’s collapse and his arguable manipulation of the
103
bankruptcy law, he said simply, “We don’t make the rules.”

WHAT SUN CAPITAL accomplished was far from unique. Over fifty companies
owned by private equity firms have pushed their pension plans onto the
 104
PBGC. But the result in Friendly’s seems almost farcical: why would a
court allow a private equity firm to do-si-do a company from one affiliate to
another, shaking off pension obligations in the process? Some of it may
simply be that private equity firms remain ahead of regulators and courts.
Josh Gotbaum, a former head of the PBGC, complained that “in many cases
financial institutions and financial markets have outstripped both the law’s
ability to comprehend them and bankruptcy courts’ ability to preserve fair
105
treatment of other constituencies in the face of them.”
But much of this may also have to do with private equity firms’ ability to
choose their venue. In 1979, Congress revised the bankruptcy code to give
106
companies wide latitude to choose where to declare bankruptcy. Several
jurisdictions became the courts of choice for distressed companies and the
lawyers who represented them: initially New York and Delaware (where the
Friendly’s case was filed) but increasingly White Plains, Houston, and the
Eastern District of Virginia (where the Toys “R” Us case was filed). Today,
more than 90 percent of the country’s big bankruptcy cases happen in these
107
five districts. In these jurisdictions, according to UCLA law professor
Lynn M. LoPucki, courts showed solicitude toward large corporations, their
108
financiers, and their lawyers over ordinary lenders. Preferred courts let
attorneys charge higher fees, relaxed conflict of interest standards, and
109
indemnified lawyers and financial advisers from wrongdoing. According
to LoPucki, the jobs of executives, “including those who led their
companies into financial disaster,” were secured, and executives were even
allowed bonuses in bankruptcy, on the theory that their skills were never
110
more necessary. This solicitude ultimately hurt creditors and the bankrupt
companies themselves. Firms reorganized in Delaware failed significantly
more often than firms organized elsewhere, suggesting that lax standards
led to reorganization plans that were unrealistic or impossible to achieve.
A body of academic literature has explored why courts competed like
this. Perhaps judges in these favored districts tried to bring in business to
the local bankruptcy bar by developing the law to favor the executives and
111
lawyers who chose where to file. Perhaps they desired the prestige and
challenge that came with handling the biggest cases with the most talented
litigators. Or perhaps more anodyne personal preferences in the law explain
their rulings. Regardless of the specific motivation, it’s clear that a handful
of courts are predisposed to the sorts of arguments that firms like Sun
Capital make. And it’s also clear that companies like Sun Capital have the
ability to choose their court in a way that, say, criminal defendants cannot.
The accommodation afforded companies filing for bankruptcy can reach
almost absurd proportions. The department store Belk, which was
purchased by the private equity firm Sycamore Partners, substantially
112
completed its bankruptcy—a process that could ordinarily take months —
in a single day. Belk was based in North Carolina and incorporated in
Delaware but filed in Houston by establishing a subsidiary corporation
there, forcing the subsidiary into insolvency and bringing the parent
113
business into bankruptcy with it. Belk’s attorneys—once again, the law
firm of Kirkland & Ellis—filed a reorganization plan the evening of
February 23, 2021. The court approved the plan at 10:08 a.m. the next day,
apparently accepting Belk’s argument that it had already negotiated a
settlement with its creditors.
With an almost literal rubber stamp over the agreement, the court had no
real way to confirm this assertion, or inquire whether, as may well have
been the case, Belk strong-armed its creditors into agreeing to a plan they
didn’t know they could contest. Nor was it able to interrogate the decision
by Belk’s board to allow Sycamore to remain in control of the company
114
(likely it was because the board itself was chosen by Sycamore). Nor did
the court control how much in fees Kirkland extracted through the process:
as Professor Lynn LoPucki explained, the court file approving the
bankruptcy had no information about how much work Kirkland did in
preparing the bankruptcy petition. In so doing, without violating any law,
Kirkland essentially bypassed the system for court approval of bankruptcy
attorney fees.
The Office of the US Trustee, the branch of the Department of Justice
charged with ensuring the fair application of the bankruptcy code, objected,
115
arguing that the speed of the whole endeavor violated due process. The
court entered the judgment anyway. It wasn’t corruption, but it wasn’t what
Congress intended with the bankruptcy code, either, and it gave the process
—and Belk’s creditors—short shrift.
This drift in the bankruptcy code helps to explain why so many of the
retail companies that private equity firms bought went bankrupt, namely,
that doing so was a good deal for private equity. It wasn’t exclusively, or
even primarily, that Amazon destroyed their businesses. It was that private
equity firms loaded these companies with debt, made the pivot to online
commerce impossible, then found ways to avoid their creditors through the
opaque and shifting bankruptcy process. And this drift helps to explain the
fundamental mystery: how private equity firms continue to expand and
profit in retail, even as the companies they buy wither and die.

COMPANIES’ PREFERENCE FOR certain courts, and those courts’ preference

for certain companies, means that employees must increasingly turn to tools
outside of the bankruptcy process to get fair compensation. And that’s what
happened with Ann Marie Reinhart and Toys “R” Us. As described in the
introduction, Reinhart began working as a part-time cashier in 1988 and
116
joined full-time as a supervisor after both her children entered school.
With it, she got health insurance. “Back then, Toys ‘R’ Us was very good to
all of us,” Reinhart told the Progressive. “It let me be the mom that I
117
wanted to be.”
118
Reinhart ultimately worked at the company for twenty-nine years.
She stayed with the company through the frantic holiday rushes. “Almost
119
the entire month of December, I didn’t see my husband,” she said. “He
got up early for work. I would come home and he would be sleeping. Then,
120
he would leave for work and I would be sleeping.” She stayed after an
angry customer threw a Green Power Ranger action figure at her head (she
still had a scar). She stayed when she moved her whole family from Long
Island to Durham, North Carolina, transferring to a new store. But when
Toys “R” Us went under, she did too.
 After she was laid off, Reinhart became active in the Dead Giraffe
Society, a Facebook group of former Toys “R” Us employees named for the
121
company’s mascot, Geoffrey the Giraffe. With the assistance of the
organizing group United for Respect, Reinhart and others began to advocate
for better treatment of the company’s former workers. They met with
members of Congress, who, at their urging, wrote to Bain, KKR, and
Vornado and demanded to know why their employees hadn’t been paid
122
severance. They convinced Senators Cory Booker and Robert Menendez,
123
along with Congressman Bill Pascrell, to protest with them. They held a
124
march through Manhattan, carrying a coffin for the mascot Geoffrey, and
125
rallied outside the penthouse home of the CEO, David Brandon.
But most importantly, they started meeting with the private equity firms’
126
investors. Across a dozen states, they met with fourteen pension funds,
and at their urging the Minnesota State Board of Investment suspended
investments in KKR until it investigated the Toys “R” Us employees’
127
claims. More than any statement from a member of Congress or bad
publicity from a protest, it was this threat of the loss of money that forced
private equity firms to change.
In November 2018, KKR and Bain announced a $20 million settlement
128
fund for former employees. This was nothing compared to the $250
million that the private equity firms that bought Toys received in advisory
129
fees alone. Payments to the employees ranged from a few hundred
130
dollars to $12,000 per worker. The settlement wasn’t enough: worker
advocates said that former employees were owed more than three times that
131
amount. But KKR and Bain weren’t legally required to give more, and
the settlement occurred outside the bankruptcy process. In fact, it was ten
times the size of what Reinhart and others were able to get through
litigation. In other words, though the settlement wasn’t enough in
employees’ eyes, it was so much more than what they could have expected
through bankruptcy. It showed that outside advocacy and agitation—quite
simply, embarrassing companies into action and threatening their access to
pension fund money—could serve as an interim substitute, however
insufficient and incomplete, for the bankruptcy system.
The announcement of the severance fund “rejuvenated me,” Reinhart
said. “It’s a win for us, and it’s a win for any other retail worker that this
132
happens to in the future.” Though Reinhart and her fellow activists didn’t
get what the Toys “R” Us employees deserved, they got the employees
more than they could have expected and more than they could through
litigation alone. In this way, Reinhart showed a path for how workers might
fight for themselves—through protest and pressure on investors—as private
equity firms continue their march across the retail industry.
Reinhart began to organize more broadly. She trained former employees
at Sears, Payless, and Gymboree to fight for their own severance
133
payments. She advocated in Congress for the Stop Wall Street Looting
Act, which would curtail some of private equity’s worst excesses. And she
134
campaigned for a fifteen-dollar minimum wage.
Reinhart lived barely long enough to see her own accomplishment. She
135
struggled to find work with health insurance after she was laid off and
for a time was forced to choose between her asthma medication and her
136
husband’s diabetes medication. Eventually, she went to work at the Belk
department store—ironically, the same store purchased by private equity
137
and put through bankruptcy in a single day.
138
Reinhart died in early 2021 from COVID-19. But before her death,
about her organizing, Reinhart said, “Nothing but good has come out of it
139
for me.” In an obituary in the New York Times, Alison Paolillo, who
worked with Reinhart, said that “[s]he was our voice.… She fought for
140 141
us.” United for Respect called her “a working class hero of our time.”
 CHAPTER FOUR

DEADLY CARE
Private Equity in Nursing Homes

Perhaps more than any other person, David Rubenstein illustrates private
equity’s entwining of money and power, and how the latter can legitimize
how the former is made. Rubenstein, the cofounder of the Carlyle Group, is
now a billionaire many times over. But he came from modest means. His
father worked for the postal service while his mother stayed at home, and
he grew up a studious, only child, a Jewish kid in Baltimore at a time when
1
the city was rigidly divided along religious and ethnic lines. Though he
was a shy boy, Rubenstein had a knack for making powerful connections. In
high school, he became friends with the star quarterback and found a
2
mentor in a Baltimore judge who ran a boys club. After law school he
3
worked to become a protégé of former Kennedy adviser Ted Sorensen and
later worked as legal counsel for Indiana senator Birch Bayh, who was
4
running in the Democratic primary for president at the time. When Bayh
lost, Rubenstein managed to jump over to the campaign of the man who
won the nomination, Jimmy Carter, and became close with one of Carter’s
5
chief advisers, Stuart Eizenstat. Thanks to his connections, when Carter
won, he was appointed deputy domestic policy adviser to the president. He
was twenty-seven.
At the White House, Rubenstein had an almost monk-like aura. Quiet,
6
serious, reluctant to take credit for himself, he worked harder than anyone.
He ate dinner from the vending machines and planned meetings with union
leaders, helped to oversee the Democratic party platform, and shaped the
 7
federal budget. A picture in the National Archives shows Rubenstein
outside the White House, wearing a dark suit with wide lapels. His thick
black hair swoops down over his forehead, and he looks past the camera
8
with an awkward smile mixed with concern.
Rubenstein looked forward to a promising future at the White House.
But, for him, tragedy struck: in 1980, Carter lost reelection in a landslide.
Rubenstein was out of a job, a Carter insider in Washington at a time when
no one had much use for such insiders. He struggled to find work—he
9
eventually found a job with a moderately prestigious law firm —and settled
into the lifestyle of that common figure in Washington: the former
government official, peddling his wares in private practice.
But Rubenstein’s quiet, studious persona hid a deeper, burning ambition.
He found himself unsuited to the practice of law and yearned for something
more rewarding, in every sense of the word. In 1987, he and four
10
acquaintances joined together to form an investment firm. They named
themselves the Carlyle Group, after the white-marbled New York City
11
hotel. At first, they didn’t know what their business would be: their initial
success was in selling the tax losses of Native Alaskans to corporations
seeking write-offs, the benefit of a government loophole that Congress
12
quickly closed. But in 1989, Rubenstein discovered his core idea when he
hired Frank Carlucci, the former secretary of defense to Ronald Reagan, to
13
serve as the firm’s vice chairman. The diminutive, angular Carlucci
exuded power—he had previously served as national security adviser,
deputy secretary of defense, and deputy director of the CIA—and he
brought to the firm a vast network of connections that Rubenstein and his
colleagues lacked.
One of their first victories with Carlucci was a deal to help Prince Al-
Waleed bin Talal of Saudi Arabia invest $500 million in Citicorp, a coup for
Carlyle that stunned the other, vastly larger and more established
14
institutions of high finance. In another deal, Carlyle bought the airline
food service company Caterair and, at the suggestion of a Republican
political operative, brought George W. Bush, the then flailing son of the
 15
current president, George H. W. Bush, on its board. Caterair would later
collapse, but the investment proved a successful one for Carlyle: the elder
16
Bush, apparently convinced by his former secretary of state Jim Baker,
17
later agreed to travel the world on Carlyle’s behalf as a paid speaker.
What Rubenstein discovered in Carlucci and those who followed was an
alchemy of money and power: by hiring well-connected former government
officials, he could find new deals and new money, as investors wanted to
spend time with these people and learn what they might not from the Wall
Street Journal or New York Times. Over the years, Carlyle built a stable of
extraordinarily powerful figures to work on its behalf: not only former
president George H. W. Bush but also former British prime minister John
Major, former secretary of state James Baker, former White House budget
chief Dick Darman, former SEC chairman Arthur Levitt, and former FCC
18
chairmen William Kennard and Julius Genachowski, among others.
With its connections, Carlyle prospered. Its assets under management—
19
the amount of investor money it controlled—rose from $5 million in 1987
20 21
to $14 billion in 2003 and then to an astounding $376 billion in 2022.
The company, alone or with others, bought and sold Hertz, Dunkin’ Brands,
Getty Images, and the consulting firm Booz Allen Hamilton, among many
22
others. And Rubenstein, the quiet scholar, became rich. He bought the
home next to his own in Bethesda and converted it into a guesthouse. He
built a ten-thousand-square-foot chalet in Colorado and a vacation home big
enough for thirty people in Nantucket (Presidents Biden, Carter, and George
23
H. W. Bush all, at various times, stayed overnight as his guests). By 2021,
24
he was worth over $4 billion.
As Rubenstein grew in wealth and stature, he modeled himself as
something of a “thinking man’s” titan of industry. While other billionaires
shed their power suits and, in California, donned jeans and T-shirts,
Rubenstein continued to wear pinstripe suits, Hermes ties, and what a
25
reporter described as a “substantial watch.” He possessed an exceedingly
dry, self-deprecating sense of humor and a level of self-awareness perhaps
unexpected from a billionaire (regarding private equity, he says, “I like to
26
say it’s the highest calling of mankind, but nobody agrees” ). He read
27
several books a week and began hosting an interview program on
28
Bloomberg TV and a podcast with the New York Historical Society.
As he grew older, Rubenstein became a philanthropist, devoting special
attention to patriotic causes. He bought original copies of the Declaration of
Independence and the Emancipation Proclamation and lent them to various
29
museums. He donated millions to repair the Washington Monument and
30
millions more to refurbish Monticello. He became chairman or trustee of
the Kennedy Center, the National Gallery of Art, and the Library of
Congress.
He also developed into a fixture in Washington. Photos document his
31
upward trajectory: there he is shaking hands with Paul Ryan. There he is,
32
in a tuxedo, conferring with Dr. Anthony Fauci. There he is standing for a
portrait with Sally Field, Mike Pompeo, and, strangely, Big Bird at a
33
Kennedy Center event. His hair is white now, but he still looks past the
camera with that awkward smile of concern, just as he did as a young Carter
staffer forty years before.
All this socializing had a purpose. As previously explained, private
equity firms need lots of money to buy companies. Only a small portion of
that money comes from the firms themselves; a much larger portion comes
from investors who are, figuratively, along for the ride. While others at the
firm actually ran the business, it was Rubenstein’s job to bring that
investment money in, which is what he did by meeting with the very rich,
charming them, gossiping with them, and going around the world to meet
34
them: Rubenstein estimated that he traveled three hundred days a year. By
2017, his last year as co-CEO—he now serves as cochairman of the board
—Carlyle had $195 billion in assets under management, raised from
35
investors like the ones Rubenstein feted. Rubenstein, with all his
networking, cultivated these investors and brought in the money Carlyle
needed to buy companies.
 In a deeper sense, all of Rubenstein’s ventures fed into a single, larger
project: creating an aura of respectability for himself and, even more
importantly, for Carlyle. With his now vast network, Rubenstein and the
former government officials he employed assured investors that the money
they spent with Carlyle was safe. And his public philanthropy sent a
message that the money they gave him, if far from charitable, was at least
estimable. If a single firm employed so many former leaders in government,
if the leader of the firm spent so much of his time giving his money away,
surely an investment with them was money well spent.
But how exactly were Carlyle—and Rubenstein—making their money?
The firm made hundreds of deals in a range of industries, but it is worth
considering just one: its acquisition of the nursing home chain HCR
ManorCare. The deal is worth considering because it shows many of the
tactics—sale leasebacks and transaction fees, leverage and layoffs—that
Carlyle often used to make money at the expense of its portfolio companies.
And it is worth considering because it shows how so many of those people
with whom Rubenstein met and who gave his firm money were, knowingly
or not, subsidizing what many viewed as the plunder of the nursing home
industry.

NURSING HOMES HAVE a fraught history. They are the descendants of English
almshouses: homes administered by local governments for the very sick, the
very poor, and the very old. Because almshouses took on those people
whom family members would not or could not care for, their operations
were, unsurprisingly, generally shabby. In time, “old age homes” developed
as an alternative in America. Often run by private charities, rather than
public governments, they tended to care for what were then called the
36
“worthy poor”: old people as opposed to, say, drunks. The Social Security
Act of 1935 hastened the growth of this private industry by withholding
direct payments to people living in public almshouses, so that these latter
facilities could not take residents’ money. The move decimated the sad
almshouse industry, but it had another, perhaps unintended effect: it created
a huge pool of government funds that could be spent on care for the elderly,
one that new, for-profit companies were eager to access. The Medicare and
Medicaid Acts of 1965 expanded this opportunity when they offered
payments directly to institutions willing to care for the sick and old.
This is how the nursing home industry developed: a jumble of nonprofit
and for-profit institutions vying for the elderly and the government money
that accompanied them. The business went through cycles of reform and
regression, as exposés revealed the squalid conditions of various facilities,
which were alternately shut down, reformed, or forgotten. In the 1990s,
cheap money led to industry consolidation, as individual institutions were
37
rolled up into larger chains. Today in America, there are about fifteen
38
thousand nursing homes who together house about 1.3 million residents.
This is where Rubenstein’s Carlyle Group stepped in. In 2007, Carlyle
bought HCR ManorCare, then the second-largest nursing home chain in
39
America. Carlyle entered the industry at an auspicious time. The country
was aging, and the need for nursing homes was growing. Research in one
state found that facilities tended to have between 19 and 22 percent profit
40
margins. Moreover, ManorCare itself was a sensible investment. The
41
company had operated since the late 1950s and for much of its history ran
better-than-average homes marketed to people who did not need to rely on
42
Medicare or Medicaid for payment. “They’re the cream of the crop in the
industry,” one analyst told the Washington Post midway through the
43
company’s history. The company was profitable the year before Carlyle
bought it, and when Carlyle made the acquisition, an analyst explained that
44
“the basic fundamentals… [of ManorCare] are very good.” Given this—
the strength of the industry and the strength of ManorCare—what happened
next was all the more tragic.
As described in the introduction of this book, most of the $6.1 billion
that Carlyle paid for ManorCare—$4.8 billion—was borrowed, while the
firm and its investors put up the remainder. Carlyle’s first major move, in
2010, was to sell ManorCare’s real estate to another investment firm for
45
over $6 billion. ManorCare then rented back the facilities that it once
owned. This was the sale-leaseback tactic, described in Chapter 1, that is a
hallmark of so many private equity deals. As Peter Whoriskey and Dan
Keating of the Washington Post later recounted, by selling ManorCare’s
real estate, Carlyle was able to recover the money that it had put into the
46
deal. In other words, with this sale alone, Carlyle had basically broken
even and still owned an enormous nursing home chain.
But selling ManorCare’s property put a terrible strain on the business.
ManorCare needed real estate to operate, and with the sale, ManorCare was
obligated to pay nearly half a billion dollars a year in rent to occupy the
47
buildings it was already using. On top of this, under the terms of the deal,
ManorCare was still responsible for paying the buildings’ insurance,
upkeep, and property taxes. This meant that ManorCare now had all the
obligations of owning its properties, with all the costs of renting them.
Carlyle extracted money from ManorCare in other ways too, including a
48
$61 million transaction fee for buying the business itself. It also took
about $27 million over nine years in advisory fees: fees that ManorCare
paid for the privilege of being owned by Carlyle. Like the sale-leaseback,
these too are common tactics of the private equity industry writ large.
Unsurprisingly, the business suffered. After the sale of its property,
ManorCare made hundreds of layoffs. It instituted cost-cutting programs,
and some of its nursing homes were unable to afford their rent. Health code
violations rose 26 percent between 2013 and 2017, three times faster than at
all other nursing homes.
Despite ManorCare’s cost cutting and the real estate sales that Carlyle
49
directed, by 2018, the company was over $7 billion in debt. Like most
private equity deals, this was debt that ManorCare, not Carlyle, owed, and
as mentioned, Carlyle itself had quickly recouped its own investment in the
firm. And so, without money, the company filed for bankruptcy in 2018 and
50
was ultimately sold to a nonprofit. The speed of this destruction was
almost impressive: ManorCare had operated since the 1950s, and Carlyle
drove it into bankruptcy in barely a decade. But despite the pace of this
gutting, Carlyle itself profited from the project. It made back the money it
invested through the sale-leaseback, plus millions more through transaction
and advisory fees. Which is to say that the firm made money despite the
fact that—or perhaps because—it devastated the business it owned. And it
suggests that Carlyle’s investors—the men and women whom David
Rubenstein charmed with his stable of former government officials—were
funding ventures far more destructive and distasteful than they perhaps
even realized.

MANORCARE IS NOT isolated. Rather, it is illustrative of private equity’s

larger role in the nursing home industry. Between 2004 and 2008, four of
the five largest nursing homes—Genesis HealthCare, Golden Living, Sava
51
Senior Care, and ManorCare—were acquired by private equity firms. All
of them executed sale-leaseback agreements like ManorCare. All of them
52
faced similar allegations of mismanagement and abuse. And amazingly,
53
all of them were charged by the Department of Justice for fraud. (Genesis,
Golden Living, and Sava paid settlements ranging from $613,000 to $53
million without admitting wrongdoing, while the Department of Justice
54
dropped its prosecution of ManorCare. )
The appeal of nursing homes to these firms was obvious. Nursing homes
had lots of cash flow, often coming from reliable government sources like
Medicare. Additionally, nursing homes often had physical assets—buildings
and so forth—that could be sold for profit. The problem was that, as
numerous studies demonstrated, private equity firms ignored the
fundamental tenets of work in nursing homes. In general, nursing homes
offer better care the more time caregivers spend with residents and the
55
better trained those caregivers are. Private equity firms disregarded both
these basic elements of care. One study found that private equity owners, on
56
average, cut the number of staffing hours at nursing homes. This made it
more likely that elderly people, left unattended, could injure themselves,
soil themselves, or develop bedsores: all issues that, unaddressed, could be
deadly. Another study found that private equity firms shifted to lower-
skilled workers, relying less on registered nurses, who must have
associate’s or bachelor’s degrees, and more on licensed practical nurses,
57
who need only a simpler, one-year certificate. Perhaps as a result of both
trends, private equity–owned facilities tended, more than others, to rely on
58
antipsychotic drugs to control their residents. Such drugs can make
patients more docile, acting as a crutch when homes are understaffed. But
they can also increase older users’ risk of death and are thus generally
disfavored.
The consequences of these actions in aggregate are almost difficult to
comprehend. In 2021, researchers at the Universities of Chicago and
Pennsylvania, as well as New York University, compared the short-term
mortality of residents in homes owned by private equity firms with that of
residents in other facilities. What they found was astounding: private equity
ownership was associated with over twenty thousand premature deaths in
59
nursing homes over twelve years. Such a figure may be hard to absorb,
but it is important to remember that each of those twenty thousand people
had, at one point, family, friends, people whom they loved and who loved
them in turn.
Moreover, residents in private equity–owned nursing homes particularly
suffered during the pandemic. A study of facilities in one state found that
residents and staff in such homes were more likely to get COVID-19 and
were more likely to die from it than were those in other for-profit,
60
nonprofit, and public facilities in the state. Around the country, private
equity–owned homes frequently experienced the largest outbreaks in their
cities or states, many of which were particularly acute: at one facility, for
61
instance, nearly three-quarters of patients were infected and eighteen died.
Outcomes were bad for residents but also for employees. Already,
nursing work is difficult, in part because so many patients need help being
62
lifted or moved, and dangerous, because some patients may be violent. In
fact, registered nurses and nursing assistants have among the most
musculoskeletal injuries of any profession, and nursing assistants in
particular are injured more often than are police, correctional officers, and
 63
even construction workers. But with cost cutting, private equity firms
exacerbated caregivers’ already difficult work. In addition to increased risks
for COVID, Milly Silva, a union representative, told Congress that nursing
home staff were forced to pay for shampoo and soap for residents when
64
their facilities would not do so. One caregiver reportedly complained that
her facility stopped training its staff as soon as a private equity firm bought
it; another “would break down crying” because there were just two nursing
65
staff to care for fifty residents during the height of the pandemic. No
wonder then that there were, according to Silva, “astronomical annual
turnover rates” in the industry overall: 128 percent nationally and over 300
66
percent in some institutions.
Finally, despite the harm to residents and workers, private equity–owned
homes actually cost more, not less, for patients and taxpayers. The same
academics who estimated twenty thousand premature deaths found that
fees, lease payments, and interest payments by nursing homes all increased
67
after being bought by private equity firms, while cash on hand declined.
Meanwhile, the amount billed to patients increased by 11 percent. The vast
68
majority—90 percent—of this was paid by taxpayers through Medicare.

GIVEN THESE OBVIOUS and deadly failings, one might expect that private
equity firms would taper their investment in nursing homes for fear of
regulation or litigation. But this wasn’t the case. In fact, in 2020, when
COVID-19 outbreaks and deaths in nursing homes were the stuff of
national headlines, firms spent over $1.5 billion buying facilities, an
69
increase of more than $1 billion from the year before.
Why would private equity firms rush into such a deadly business, a
business that firms had a demonstrated history of making worse? Likely in
part because they knew that the government was largely unwilling or unable
to police nursing homes’—and their private equity owners’—worst abuses.
The industry is regulated at both the federal and state level: the federal
government sets minimum standards of care, while states add their own
requirements and typically inspect nursing homes to ensure, in theory at
70
least, that their facilities meet those requirements. Through these
inspections, state surveyors issue “deficiencies”—notices of failures to
follow federal or state guidelines—which are categorized as “harm” or “no
harm” depending on whether a resident has been hurt by the violation. With
enough harm deficiencies, a nursing home can be fined and, if repeated,
71
shut down.
The problem is that state regulators often refuse to say that violations
72
harm residents, even when those harms are obvious. This is bad for
residents of all nursing homes but is particularly dangerous for those who
live in facilities owned by private equity firms, where such harm is much
more likely to occur. For instance, Illinois inspectors said that no one was
harmed when inadequate housekeeping led to a maggot infestation on a
73
resident’s scrotum. Inspectors in Wisconsin said that no harm resulted
74
when a resident broke a femur. And inspectors in California said that a
resident’s “avoidable” accident, which resulted in “screaming, pain, and [a]
75
broken shinbone,” caused no harm.
Why are regulators so scared to call these incidents of harm what they
are? At a narrow level, nursing homes tend to have many chances to
76
challenge harm deficiency designations, which may discourage inspectors
from bothering to issue designations that will be litigated in court. As one
inspector told the New York Times, “I feel sometimes the things I cite don’t
mean anything because it gets tossed out at the state level.… Sometimes it
77
makes you wonder why we spin our wheels on a problem.” More
importantly, when a nursing home does receive sufficient harm deficiencies
and is shut down, it may fall into the hands of the state government, which
may be charged with managing the facility. This is an expensive and
78
difficult responsibility, which the state may be ill equipped to handle, and
as such, there is a strong incentive for surveyors to treat nursing homes
lightly.
 At a more general level, inspectors may hold back their harshest
judgments because nursing homes are a force in government. The industry’s
primary advocacy organization has given over $18 million in federal
contributions and spent over $52 million lobbying, including $5 million in
79
the 2022 election cycle alone. Over the years, large, private equity–owned
chains like Genesis, ManorCare, and Golden Living spent millions more on
80
contributions and lobbying. “The nursing home lobby is so well funded,”
Charlene Harrington, a professor at the University of California San
Francisco School of Nursing and expert on nursing homes, told the
Intercept, “and it’s so hard to make changes because of these political
81
contributions.” This power is felt in the conciliatory approach that state
regulators have taken toward the industry. Inspectors in Pennsylvania, for
instance, were instructed to be “kinder and gentler” to nursing homes, while
those in Arkansas said that they were discouraged from issuing severe
82
citations. Inspectors in Oklahoma even referred to nursing homes, rather
83
than the patients they serve, as their “clients.” “They’re just not that
84
interested in regulating,” Harrington said in another interview. “And they
85
don’t want to pick a fight with these big companies.” This aversion to
action affects all nursing home residents, but it is particularly concerning
for residents of private equity–owned homes, where there are far greater
mortal dangers.
Given this general reluctance by regulators to regulate, the task of
protecting residents has often fallen to plaintiffs’ lawyers like Ernie Tosh.
Tosh is a big man, with a beard and straight, gray hair that goes down to his
shoulders. He listens to Swedish death metal in his leisure time, and in his
low, soft voice, he teases and praises his colleagues and brings detail and
profanity to his commentary on the industry. With some technical skills,
Tosh built a database of nursing home companies on which many other
lawyers relied. But more than his spreadsheets, people value his personality
and his easy, warm nature. “Ernie’s superpower is bringing together people
86
who need to know each other,” one lawyer, Nicole Snapp-Holloway, said.
87
“If you don’t like Ernie, something’s wrong with you.”
 Tosh had been suing nursing homes for years, representing residents
who’d been wronged, as well as their families, and who hoped to recover
some damages for the harm that they experienced. In theory, the money that
people like Tosh collected from homes would make it rational for facility
owners to provide decent care. But, unsurprisingly, nursing homes made it
exceedingly hard to get such money. “We can’t get jack shit in a civil case,”
88
Tosh said. “We’ve been actively litigating nursing home cases for 25
years, and the quality of care has gotten worse. Clearly we are not having
89
an impact.”
Why was this so? For one thing, nursing homes—including private
equity–owned homes—conceal their assets through shell and related
90
companies. Like matryoshka nesting dolls, nursing home chains have
built layers of companies on top of individual nursing homes, obscuring
their ultimate owners and making it harder for plaintiffs to collect money.
They also outsource their services to related companies that their parent
91
companies also control. Thus, a nursing home might have one company
for its real estate, another for its staffing, another for its equipment, and so
on. On paper, it would appear that the nursing home itself is cash strapped,
paying most of its money to these related companies. But ultimately, all of
the different companies would be controlled by the same parent company,
which reaps the combined profits as if running the nursing home directly.
Academics found that the use of these shell companies exploded in just a
92
few years. Nearly three-fourths of nursing homes in the United States now
93
use “related parties” to take money from their core nursing homes.
“[M]oney is siphoned out to these related parties,” Ernie Tosh told the New
York Times. “The cash flow gets really obscured through the related party
94
transactions.” Unsurprisingly, facilities that use related companies have,
on average, lower staffing, more complaints, and higher rates of patient
95
injuries than those that do not.
These tactics obscure the assets of nursing homes and make them look
poorer than they really are. By doing so, nursing homes make it harder for
plaintiffs to find those assets and harder for them to win those assets in
litigation. The industry has even said as much. At a 2012 conference for
nursing home executives, a presentation slide titled “Pros of Complex
Corporate Structure” stated that “many plaintiffs’ attorneys will never
conduct corporate structure discovery because it’s too expensive and time
96
consuming.” “There’s a game that’s played, that if you don’t sue the right
entities, your family is out of luck,” one plaintiffs’ lawyer told the Naples
97
Daily News. “You have to then start trying to chase the money.”
These tactics to hide assets have been extraordinarily successful. For
instance, after plaintiffs in one suit obtained a $110 million verdict against
two private equity–owned nursing homes in Florida, the nursing homes
simply shifted their liabilities to a related company that had no assets, while
creating a solvent nursing home chain that was nominally protected from
98
judgment. The result was that the plaintiffs had a judgment to collect
money from a company that, on paper at least, had none. Despite the
seemingly obvious game to avoid paying, more than a decade after the case
99
began, the litigation remains ongoing.
Nursing homes also get help from the government to stop plaintiffs from
getting damages. For instance, private equity–owned Genesis HealthCare
allegedly required its residents to sign arbitration agreements before coming
100
to their facilities. Under these agreements, residents and their families
consented not to go to court in the case of injury or wrongful death but
instead bring their disputes to arbitrators paid for by Genesis itself. (For its
part, Genesis claimed it merely offered the arbitration agreements, rather
than required them.) It should be no surprise that families recovered less, if
at all, when using arbitration. In fact, the American Association for Justice,
a professional organization for plaintiffs’ lawyers, found that over a five-
year period consumers brought just sixty-two cases against nursing homes
101
to the leading arbitration firms. Of these cases, consumers won monetary
awards in just four of them.
In 2016, the Obama administration issued a rule banning the use of
arbitration agreements at nursing homes. But the industry’s lobbying
organization, on whose board sat various representatives of private equity–
 102
owned nursing facilities, took swift action. It and a state affiliate in
Mississippi sued to enjoin the rule before it went into effect. Within a few
months, a federal judge ruled in favor of the nursing homes, concluding that
the executive branch lacked the authority to promulgate such a rule. Three
years later, the Trump administration finalized its own rule, largely allowing
103
nursing homes to use arbitration agreements with residents. In essence,
this just reaffirmed what the nursing homes were doing. The next year, a
104
district court upheld the validity of the rule. Given the Supreme Court’s
favorable attitude toward forced arbitration, the outcome was unsurprising,
but the decision made it harder for the Biden administration or any other to
contain the use of arbitration agreements in the future.
But arbitration agreements were just the beginning, as the nursing home
industry’s greatest accomplishment was, in the wake of the pandemic, to
create broad legal immunity for itself. COVID-19 laid bare the inadequacies
of so many nursing homes. According to Lori Smetanka, executive director
of the advocacy organization National Consumer Voice, many facilities had
relied on residents’ family members to provide unpaid care. With the arrival
of the pandemic, those family members were, by and large, unable to visit,
a fact that, according to Smetanka, exposed how so many homes were
inadequately staffed. Suing these homes for negligent COVID-19 infections
would have been a powerful incentive for nursing homes to improve their
staffing and quality of care. But that’s not what happened. Instead, with
extraordinary speed, thirty-eight states enacted liability shields that largely
prevented people from suing nursing homes for deaths and injuries resulting
105
from their handling of the pandemic. Several of these passed at the
public urging of the nursing home industry association’s state affiliates;
others presumably passed with their more subtle support.
Moreover, just three of the laws specifically restricted their scope to
harms resulting from exposure to the coronavirus, according to the National
Consumer Voice. So laws nominally passed to insulate nursing homes from
liability for COVID-related deaths—already a questionable goal—in fact
gave them broader and, in some cases, permanent, protection from lawsuits.
These liability shields have had entirely predictable results. For instance,
when Carol Ballard’s daughter tried to visit her at a facility operated by the
private equity–owned Genesis HealthCare, she found Ballard collapsed on
106
the floor in front of her wheelchair. Ballard had apparently been infected
with COVID-19 and passed away the next day. Ballard wasn’t alone: fully
one-third of residents in the facility died of the virus. Yet there was little
that Ballard’s daughter could do to hold Genesis responsible for the
outbreak, as the state’s governor had signed a broad immunity shield just
the day before. Ballard’s family had no way to hold Genesis accountable, or
even to investigate through litigation if Genesis had been negligent or
responsible for the widespread outbreak in its facility. “Even with a history
of these nursing homes having problems, why was immunity put in place?”
Ballard’s daughter asked the Washington Post. “I’m not looking for money.
107
I’m looking for somebody to be held accountable.” (A spokesman for
Genesis HealthCare told the Post that “we understand how difficult a time
this has been” but that “the experience we have had with our families… has
108
been overwhelmingly positive.”) With broad immunity, there was little
chance that there would ever be such accountability for the facility or its
private equity owner.
The nursing home industry has essentially shielded itself from serious
oversight or litigation, which in turn has made the industry even more
attractive to private equity firms. As Ernie Tosh, the plaintiff’s lawyer, said,
109
“We are just a cost of doing business.” This is evidenced by the fact, as
mentioned above, that private equity investment in nursing homes actually
increased during the pandemic, a time when the industry should have been
in greatest peril. But insulated from liability and the consequences of their
own actions, it was also a time of enormous opportunity for private equity
firms.

THE CASE OF Angela Ruckh and Consulate Health Care illustrates how
difficult it is to recover damages from nursing homes, especially those
owned by private equity firms. Consulate, owned by Formation Capital,
was a massive nursing home chain with over ten thousand employees in
 110
twenty states. It also had a terrible record of care. In Florida, where
Consulate ran one out of every nine nursing homes, more than half of its
facilities had just one or two stars on the federal government’s five-star
rating system. (This was quite an indictment, given that the government’s
111
rating system was notoriously easy to game.)
Ruckh was a nurse with over twenty years’ experience at the time her
case was filed, and for five months in 2011, she worked at two facilities
112
owned by Consulate. As alleged by Ruckh, the conditions in the homes
she worked at were abysmal. The facilities were understaffed, and at one
point, according to her complaint, Ruckh saw a resident with an untreated
wound. Beside the resident was a nurse’s note: “dressing not done—too
113
much to do—not enough time to do it.” At other times, according to
Ruckh, residents were denied critical care because they were on
114
Medicaid, which provided less money for services than did Medicare or
private insurance. At least twice, state regulators found deficiencies with
Consulate’s care so serious that they had the opportunity to shutter the
115
chain. For instance, separate from the incident Ruckh already described,
staff failed to treat a resident’s surgical wound for over two weeks and gave
116
the resident drugs instead when she cried in pain. Another time,
Consulate allegedly failed to report an instance when a patient with severe
dementia was found performing oral sex on another patient. Instead, the
facility’s director of nursing declared the dementia patient to be a
consenting adult. These were far from the only violations, yet the state
refused to close any of Consulate’s facilities.
The private equity–owned Consulate wasn’t just delivering poor-quality
care; it was also committing fraud. In particular, it was overcharging the
government for services that were unnecessary or that never happened. So
Ruckh sued under the False Claims Act, a federal law that empowered
whistleblowers to sue for the misuse of government money: in this case,
from Medicare and Medicaid. The case was complicated, as Consulate
disguised the wealth of its nursing homes using many of the tactics
117
described earlier. For instance, it organized its nursing homes into
individual companies making their finances appear shaky, while paying
rent, management, and rehabilitation fees to companies affiliated with
118
Consulate or Formation. Moreover, represented by various elite law
firms—Baker & Hostetler; Akin Gump Strauss Hauer & Feld; and Skadden
119
Arps —the nursing homes moved to dismiss the case and objected to
various discovery motions. This resulted in an enormous delay: the case did
not go to trial until 2017, six years after the litigation began. For over
twenty days, a jury heard about the nursing homes’ alleged fraudulent
practices and, after deliberation, found the homes guilty. The jurors returned
a stunning verdict: nearly $350 million in damages.
Then, something unusual happened. Nearly a year after the trial, the
district court judge vacated the jury’s decision—what’s called “judgment as
a matter of law”—concluding that Ruckh had failed to show that the alleged
losses were material or that the nursing home acted with sufficient
120
knowledge that what it was doing was wrong. The court also found that
Ruckh failed to demonstrate that the nursing homes’ management company
was liable for the actions of the individual homes.
In other words, Consulate and its private equity owners were insulated
from the actions of the individual homes. It was a stunning loss, and Ruckh
appealed. Another year and a half passed, and finally an appellate court
121
largely reversed the judge’s findings. In the main, it reinstated the jury’s
verdict against the companies, though reduced the damages claim, from
122
nearly $350 million to about $257 million. Ruckh had won, but the time
elapsed was extraordinary: it had now been nearly ten years since she had
123
first filed her complaint.
And this is where Ruckh’s story took a turn. Within weeks of the jury’s
verdict being largely reinstated, the private equity–controlled nursing
124
homes declared bankruptcy. And in bankruptcy, the nursing home was
able to discharge almost all the damages that Ruckh had won. In the end,
Ruckh and the Department of Justice settled for just $4.5 million in
damages, with three-quarters going back to the government and one-quarter
125
going to Ruckh. It took ten years, and Ruckh got $1 million for fraud that
 126
cost taxpayers $80 million. And the private equity company that owned
the nursing homes—Formation—continues to thrive, with $2 billion in
assets under management and investments in nearly two dozen
127
companies. Considering all that had been invested in the case, it was a
stunning loss. But it was also a guide. Smetanka of the National Consumer
Voice said, “We’re really worried that this is going to become the playbook
128
for other companies.” Smetanka added that Formation’s nursing homes
129
weren’t even banned from getting funds from Medicare or Medicaid. For
private equity firms, she said, “Their real focus is on going in, getting what
130
they can from the facility, and turning it over.” Formation’s victory
would make it easier for it, and all other private equity firms, to continue
doing just that.

WHAT CAN BE done? The short answer, explained more in Chapter 12, is that
regulators must be made accountable to residents themselves, not the
organization controlling nursing homes. Those who’ve been harmed at
facilities must be allowed to seek justice in court. To help accomplish this,
regulators can require nursing homes to meet minimum staffing
requirements and disclose their ultimate parent owners. State legislatures
can repeal their liability shields and narrow the scope of arbitration
agreements, even in the face of a hostile Supreme Court on the latter issue.
And state attorneys general can investigate the worst-performing homes.
But these institutions will act only if people force them to.
And it is worth doing so. As cases like ManorCare and Consulate
illustrate, nursing homes expose private equity’s worst tendencies. With a
captive market, firms can—and reportedly do—gut homes’ assets and
eviscerate their quality of care, resulting in quite literally tens of thousands
of deaths. And with a sclerotic regulatory bureaucracy, firms have little
reason to change. Disaster is not guaranteed, but without oversight, it
becomes more likely. These allegations of mismanagement and neglect put
a disquieting color on all the money that David Rubenstein raised for
investments like these and reveal the irony of his quip that private equity
was the “highest calling of mankind.”
 CHAPTER FIVE

MAKING IT ALL WORSE

Private Equity in Health Care

If you are an American, there is an exceedingly good chance that you are
worried about the cost of your health care. About four in ten of us have
medical debt, and about the same number have delayed their own health
1
care for fear of its price. Fully a quarter of Americans say that they or a
family member has skipped medications, cut back on necessary prescription
2
drugs, or delayed buying medicine simply because of their costs. These
costs keep rising: the growth in health care spending in America vastly
3
outpaces inflation and today takes up about a fifth of our entire economy.
There are many reasons for the rising cost of health care in this country.
But one of them is private equity, which spent over $150 billion in 2021—
the most recent year for which there is data—acquiring companies in every
4
part of the industry. By buying and combining competitors, firms have
been able to raise prices, lower pay for employees, and decrease the quality
5
of care for patients.
Consider the case of dermatology. The business caters to wealthier
clients who, one might think, would be somewhat insulated from private
equity’s whims. Not so. In less than a decade, private equity firms bought
6
184 dermatology practices and 381 clinics. The results were, at times,
disastrous.
For instance, as reported by Heather Perlberg of Bloomberg
Businessweek, after Audax Group bought the dermatology chain Advanced
Dermatology and Cosmetic Surgery, it limited the purchase of basic
supplies, which, one doctor alleged, left his office without gauze, antiseptic
7
solution, or even toilet paper. Audax also allegedly imposed a scorecard
system to give offices money when they met daily and monthly financial
quotas. At U.S. Dermatology Partners, another major private equity–owned
dermatology chain, a doctor complained that the corporate office switched,
8
without consulting medical staff, to a cheaper brand of needles. The
needles, the doctor claimed, were unreliable and often broke off inside
patients’ bodies. Elsewhere, firms gamed procedures and staffing: several
practices had to send patients home with open wounds, only to recall them
the next day for stitches, a tactic that allowed the practices to recoup more
from insurers. Other practices, according to doctors and staff, were forced
to rely increasingly on physician assistants over doctors for various tasks,
which resulted in assistants missing potentially deadly skin cancers.
Perhaps these tactics were profitable, but they were not good for patients.
As one doctor observed to Bloomberg, “You can’t serve two masters. You
9
can’t serve patients and investors.” (Audax and Advanced Dermatology
Partners declined to comment to Bloomberg about the article.)
Despite this cost cutting, money did not necessarily flow to doctors.
While older physicians could profit by selling their practices to private
10
equity firms, younger doctors who remained often found that they were
overburdened and underpaid relative to their more senior colleagues. One
dermatologist told MedPage Today that many of his fellow practitioners
“have expressed an outright refusal to work for private equity–backed
11
dermatology groups.” Consequently, job postings now frequently
12
advertise that their offices are “NOT Private Equity” in their titles.
But it’s not just dermatology: all kinds of physician practices are being
bought by private equity firms. Anesthesiology, cardiology, oncology,
radiology, pediatrics, urgent care, mental health, dentistry, obstetrics and
gynecology, and so many others. Private equity firms are buying clinics in
13
these fields and more, and all at an extraordinary pace. While
comprehensive statistics are hard to collect, researchers at the Brookings
Institution estimate that private equity firms have bought over 1,200 clinics
 14
across a range of specialties in little more than a decade. Yet even this
number considerably understates private equity firms’ role in health care
more broadly, as they have bought not just medical practices but also
companies providing pharmaceuticals, medical devices, information
15
technology, insurance, and others. Together, firms have spent more than
half a trillion dollars buying up health care companies around the world in
just a decade.
Why are private equity firms spending so much in health care? A few
reasons. Many companies in the industry offer steady cash flows through
reliable programs like Medicare and Medicaid. Firms can use these cash
flows to pay down the debts they use to buy businesses. Additionally, many
health care companies have, for better or worse, loyal customers (think
about the challenges of finding an in-network radiology clinic, for instance,
or a therapist you like). As a result, firms can often raise prices or cut
services without necessarily losing business. Finally, many health care
companies, which offer similar services across disparate geographies, are
ripe for consolidation through rollups. By buying competitors, private
equity firms make it easier to raise prices and cut costs without
consequence. Such rollups are not unique to private equity, but private
equity firms, with their need for short-term profits and their insulation from
legal consequences, are particularly disposed toward them. And the
consequences of these rollups are vividly on display in two areas: hospitals
and emergency rooms.
Private equity firms have long been attracted to hospitals. In 2004, for
instance, Blackstone acquired a majority interest in Vanguard Health
16 17
Systems, a chain of hospitals in Arizona, California, Illinois, and Texas.
In 2006, a consortium of firms, including KKR and Bain Capital, bought
18
the chain Hospital Corporation of America for $33 billion, in what at the
19
time was the largest leveraged buyout in history. And in 2010, Cerberus
created the Steward Health Care Network, which, with over thirty hospitals
20 21
in nine states and $6.6 billion in annual revenue, became one of the
22
largest hospital chains in the United States. All three companies
subsequently rolled up additional hospitals into the companies they
23
acquired. Once they did, the private equity firms executed many of the
tactics that are now familiar. Blackstone did a dividend recapitalization of
Vanguard and then sold it to another company, which subsequently
24
struggled to service the debt. Bain charged over $100 million in
25
management and transaction fees to the Hospital Corporation of America.
26
And Cerberus did a sale-leaseback of Steward’s real estate.
Steward in particular illustrates the consequences of using private equity
tactics on hospitals. As reported by Bloomberg, after Cerberus executed its
sale-leaseback on Steward, the hospital chain sat “on a financial knife’s-
27
edge.” So, using proprietary software to predict staffing needs, Cerberus
fired over five hundred employees. Predictably, this resulted in a shortage
of nurses and other aides. Staff were frequently forced to work overtime on
top of already draining twelve-hour shifts. And nurses had less time to care
for patients. Steward’s intensive care patients received, on average, four
fewer hours of nursing care every day than did patients at other, similarly
sized hospitals. “Frequently, I’m not performing the job up to standard,”
28 29
one nurse told Bloomberg. “I feel like I’m failing my patients.” But it
wasn’t the nurses’ fault: it was Cerberus’s policies that led to the short-
staffing.
Cerberus’s underinvestment led to predictably bad outcomes. Steward
had higher rates of patient falls than other, similarly sized hospitals, as well
as higher rates of infection. One nurse wrote that patients had to wait in
hallways when there were no available beds. Other nurses said that they
were forced to work overtime, even after their twelve-hour shifts ended.
When a mouse got trapped in an electrical transformer at one of Cerberus’s
hospitals, the facility was left without power for thirty-eight hours. To cope
with the crisis, hospital workers had to move COVID-19 patients from their
own wing to the main intensive care unit, where they were separated only
by a wheeled privacy screen, a solution so ineffectual as to be almost
insulting. “They’re pretty much all about the money,’’ one nurse told
30
Bloomberg about Cerberus. “They made that clear over and over again
 31
over the last 10 years. Their M.O. is take care of corporate first.” This was
true: although Steward’s situation was financially precarious, Cerberus
more than made back its investment.
If Cerberus’s—and private equity’s—rollup of hospitals led to dire
consequences, the situation was even worse with emergency medicine.
Emergency care is particularly attractive to private equity because of its
“inelastic” demand: people rarely choose where to get shot, for instance, or
when to have a heart attack. They therefore tend to go to one of several
nearby hospitals. Increasingly, these hospitals are staffed by one of two
companies, Envision and TeamHealth, which are owned by KKR and
32
Blackstone, respectively. Over many years, these companies executed a
dramatic rollup strategy to buy and combine companies that staffed
emergency rooms with doctors. By 2018, about two-thirds of emergency
33
rooms outsourced at least some of their staffing to a third party, many to
companies like Envision and TeamHealth. The problem was that the two
private equity–owned companies often failed in the basic task of ensuring
that the hospitals they serviced had the doctors and supplies they needed.
Consider the case of Dr. Raymond Brovont, who was employed by
Envision’s predecessor, EmCare, as the director of an emergency room in
Overland Park, Kansas. EmCare had a long history with private equity: the
firm Onex bought the company in 2004 and took it public the next year,
34
though continued to own a majority of shares. Clayton, Dubilier & Rice
35
bought the business in 2011 and took it public once again, though the
company kept a substantial stake in the company until 2015 and kept
36
affiliated directors on the board until 2017. Finally, KKR bought the
37
business’s parent, now named Envision, in 2018.
As medical director at Overland Park, Brovont worked under a number
of private equity owners and investors and quickly felt that EmCare had
dangerously understaffed his department. For most of the day, just one
doctor was on call to treat patients in both the pediatric and ordinary
emergency rooms. Yet at the same time, the hospital required an emergency
doctor to attend to any code blues, situations in which a patient’s heart or
 38
lungs stopped working. This could occur anywhere in the hospital, and
when it did, it often meant that the emergency room had quite literally no
doctor available.
Brovont feared that this short-staffing violated the law, as well as the
39
standards set out by the American College of Surgeons. And so he
complained and ultimately organized a meeting between his emergency
room doctors and an EmCare executive, Dr. Patrick McHugh. McHugh
listened to the doctor’s complaints but offered an astoundingly tone-deaf
reply. He wrote to all emergency room physicians, noting that for the
hospital chain, “many of their staffing decisions are financially motivated.
40
EmCare is no different.” “Profits are in everyone’s best interest,” he
added. “Thank you as well for respecting my request to refrain from
publicly voicing your concerns/objections until we are given a fair
41
opportunity to address them.” In his email, McHugh even included links
to EmCare’s stock and financial information. His comments were
refreshingly honest, but they laid bare the basic problem: EmCare was
apparently making decisions that affected patients and was doing so, it
appeared, out of a desire for profits alone, untempered by, for instance,
medical judgment.
42
After the meeting, no changes were made. Brovont raised the issue
several more times with the EmCare executive, to no effect. And so Brovont
wrote a formal letter, endorsed by all the physicians in the emergency
department, complaining about the understaffing crisis. He never received a
response, only a terse shot from the EmCare executive in the hallway:
43
“Why would you ever put that in writing?” Six weeks later, Brovont was
fired.
Brovont eventually sued the EmCare subsidiaries who employed him for
44
wrongful termination. In the course of litigation, it was revealed that
Brovont’s firing “petrified” the other doctors and created a “weird cult of
45
coercion” and silence on the code blue policy. Eventually, and
encouragingly, Brovont won nearly $26 million for his firing, including
46
substantial punitive damages. After the judgment, however, the hospital
declined to say whether it had actually changed the understaffing policies
47
that Brovont had complained about.
The debacle with Brovont was illustrative, but it wasn’t isolated. Like
EmCare, Blackstone’s TeamHealth fired an emergency room physician—
Dr. Ming Lin—after he complained about his hospital’s inadequate
COVID-19 protections. In particular, Lin sent a letter—and posted its
contents on Facebook—to the hospital’s chief medical officer,
recommending that staff have their temperatures taken at the beginning of
48
their shifts and that patients be triaged in the hospital parking lot. He also
criticized as “ludicrous” the hospital’s practice of testing patients for
49
COVID only after a prior influenza test proved negative. Doing so
needlessly exposed both patients and doctors to increased risk, he argued.
Shortly after Lin published his complaint, TeamHealth terminated Lin’s
shifts with the hospital, telling Lin that while the company believed that his
comments were “intended to be constructive… unfortunately it is not
50
possible for you to return” to work. Ultimately the ACLU chose to
represent Dr. Lin in a wrongful termination lawsuit, characterizing the
matter as one of free speech. TeamHealth denied that it had fired Lin and
told NBC that it offered to place him “anywhere in the country”; the
51
litigation remains ongoing.
Cases like Brovont’s and Lin’s occurred because they were fundamental
to Envision’s and TeamHealth’s business model under private equity
ownership, the whole point of which was to reduce the amount of money
spent on doctors and services in emergency rooms. This reached absurd
proportions when, for instance, both companies cut hours for emergency
52
room doctors during the early months of the COVID-19 pandemic.
Because doctors were paid by the hour, this also, in effect, cut their salaries,
a fact that TeamHealth initially denied. “[T]o see TeamHealth blatantly
53
lying is infuriating,” one doctor told ProPublica. Infuriating, perhaps, but
not surprising. Private equity firms bought these companies on the explicit
promise of cost cutting: when it bought Envision, KKR said that it would
focus on “operational improvement initiatives,” while when it bought
TeamHealth, Blackstone said that it was attracted to “near-term cost
54
reduction opportunities.” These were euphemisms for budget cuts, and it
should be no surprise that the firms followed through on their promises.
These companies’ practices, including their use of surprise billing,
which is discussed in later chapters, put a tremendous strain on doctors.
One clinician who worked for TeamHealth told ProPublica, “This is not
what I signed up for and this isn’t what most other ER docs signed up for. I
went into medicine to lessen suffering, but as I understand more clearly my
role as an employee of TeamHealth, I realize that I’m unintentionally
55
worsening some patients’ suffering.” Robert McNamara, a former
president of the American Academy of Emergency Medicine, said that
56
working for these companies “tears at your soul.” Yet, he added, “It’s
pretty hard to get a doctor to speak up against these corporations… because
57
they fear about being blacklisted.”

THE BASIC LOGIC of private equity drove these disastrous outcomes in

dermatology, hospitals, and emergency medicine. But sometimes, the
relentless pressure to increase profits and cut costs shoved these companies
into allegedly illegal conduct. In 2017, for instance, EmCare settled a case
with the Department of Justice over allegations that it improperly referred
58
patients to hospitals in exchange for kickbacks. Under the alleged scheme,
a chain of hospitals made bonus payments to EmCare’s physicians in
exchange for increasing the number of patient admissions, as Medicare
generally pays three times as much for inpatient care as it does for
59
outpatient care. If substantiated, this was risky conduct. People ought to
be admitted to hospitals only when truly necessary, given the danger of
60
infection and medical misadventure. EmCare agreed to pay nearly $30
61
million to resolve the allegations. But it was unclear how much these
fines mattered. One industry analyst, Sheryl R. Skolnick, wrote that
investors “seem to think that D.O.J. investigations, qui tam suits and
allegations of serious Medicare fraud are simply a cost of doing
62
business.”
EmCare wasn’t alone. In 2021, UnitedHealthcare sued Blackstone’s
TeamHealth for “upcoding,” that is, using billing codes unjustified by the
underlying medical distresses. In a battle between a health insurance
company and a private equity–owned physician staffing firm, it was hard to
say that there was a clear hero. And TeamHealth gave as good as it got,
63
successfully suing United for underpaying on thousands of claims. Yet
according to United, for example, TeamHealth charged $1,712—and billed
the case as one of “particularly high complexity”—to treat someone who
came to the hospital with indigestion from eating a chili dog (he was
64
prescribed Maalox and sent home). According to United, TeamHealth
upcoded tens if not hundreds of thousands of claims, which resulted in
65
overpayments in excess of $100 million. But for a case that began in
66
2021, over actions allegedly taken years before, trial was set for 2024. In
other words, it would take years to litigate the truth of the matter.
Finally, in 2020, another Blackstone-owned health care company, Apria
Healthcare Group, agreed to pay tens of millions of dollars for allegedly
billing the government for ventilators that were never used. Under
Medicare, the government provided higher reimbursement rates for so-
called noninvasive ventilators: those that could be worn like a mask, rather
67
than, say, inserted down patients’ throats with tubes. As alleged by the
Justice Department, Apria Healthcare moved aggressively to sell these
devices, so aggressively, in fact, that it billed the government for ventilators
it knew were not being used. Having been found out, Apria agreed to pay
68
$40.5 million without admitting wrongdoing. But such a settlement was
little more than a rounding error for Apria and its private equity owner. In
2020, Blackstone did a dividend recapitalization of the company, making
69
nearly five times what Apria paid to the government for its wrongdoing.
Recall that with a dividend recapitalization, a private equity firm makes its
portfolio company borrow money to pay the private equity firm. It’s like
using someone else’s credit card, and because private equity firms tend to
lose only a little money if the company fails but gain disproportionately if
the company succeeds, it almost always makes sense for the firm to do this.
70
Here, Blackstone forced Apria to borrow $410 million to pay Blackstone.
In 2021, Apria went public, netting its owners an additional $170 million, of
which Blackstone received a substantial percentage. Also that year, the
Trump administration removed Apria’s noninvasive ventilators from the
government’s competitive bidding process, a move that could have raised
71
device prices by more than a third. Finally, to save costs, Apria fired
respiratory specialists who were necessary to make sure that patients were
72
using the ventilator machines correctly. All of which is to say that the
fines levied on Apria were likely far too small to constrain its alleged
behavior. They were, to borrow a phrase, simply a cost of doing business.
Surveying all this alleged wrongdoing, it’s worth noting that the few
plaintiffs who litigate their cases to trial may take years—and spend
millions of dollars—to do so. As a result, most plaintiffs, including the
government, tend to settle and often without requiring defendants to admit
73
their own guilt. While this may save time and money, it prevents the
development of any useful case law that future plaintiffs can cite. And in
either case—resolution by trial or by settlement—the amounts that
defendants pay typically are simply too small to be anything other than a
distraction for most wrongdoers.
With these limitations in bringing fraud cases, some doctors are taking
the issue on themselves and challenging the legality of the very business
model of companies like Envision and TeamHealth. Both companies are
owned by private equity firms—KKR and Blackstone, respectively—
neither of which are run by physicians. But state “corporate practice of
medicine” laws nominally prohibit people other than doctors and
74
institutions other than hospitals from owning medical practices. These
laws capture the reasonable notion that medical practices should be owned
by those who actually understand medicine and who are driven by
professional obligations and duties of care over and above a simple desire
for profit.
 In general, private equity firms circumvented these laws by establishing
intermediate “physician management” companies that bought the assets of
the offices they acquired and by setting up separate service agreements to
75
employ the doctors at those practices. In states where corporate practice
of medicine laws are more strict, private equity firms established new
76
businesses run by “friendly” or “captive” physicians allied with the firms.
These arrangements potentially circumvented state laws, but left the private
equity firms—who now owned the assets of the clinics, and essentially
employed the physicians who work there—effectively in charge of the
practices they bought.
State medical licensing boards, who are, by and large, charged with
policing violations of the corporate practice of medicine laws, should have
stopped this. But Dr. Robert McNamara, the former president of the
American Academy of Emergency Medicine, complained that they were
slow to do so. Perhaps it was simply a failure to understand the issue or
their own authority; perhaps it was a fear of causing controversy. Whatever
the result, according to McNamara, it fell to others to enforce the law.
And so, in 2020, the American Academy of Emergency Medicine
(AAEM) sued Envision for violating the corporate practice statutes. As
alleged by the Academy, Envision created hundreds of subsidiary medical
groups, each run by a doctor, to manage its many practices. But according
77
to AAEM, these medical groups were “a mere front” for Envision itself.
In fact, just a single doctor served as the CEO of potentially hundreds of
78
these companies. And this doctor, Envision ensured, had no actual
authority over the businesses he ran: he was restricted, for instance, in his
79
ability to issue dividends, create new stock, or sell the medical group.
But as AAEM alleged, Envision controlled, not just business decisions,
but medical ones too; through a series of “best practices,” “red rules,” and
“evidence-based pathways” it promulgated protocols that described how to
80
treat patients. Envision also used “benchmarking” reports to compare
doctors’ performance to the company’s standards, as well as “practice
81
improvement feedback” to “educate” doctors on clinical decisions. In
effect, according to AAEM, Envision was “rendering physicians as mere
employees, and diminishing physician independence and freedom from
82
commercial interests.”
Envision’s management would be fine—perhaps even helpful—if
decisions were made by medical professionals. But the AAEM alleged that
this was not the case. In filing the case, the academy’s president said in a
statement that emergency room patients “deserve treatment by a board
certified emergency physician whose fiduciary duty is to place the patient’s
medical needs above all else, and not by a private equity or lay corporation
83
whose fiduciary duty is to place profit before the patient.” The litigation
84
remains ongoing.

THE CASE AGAINST Envision is not a panacea because it attacks just one part
of private equity’s entry into health care. But it gets to a fundamental issue,
namely, that health care decisions should be motivated by need and
knowledge, not by profit. Private equity firms’ desire for money is not
unique in our health care industry. Yet the crushing logic of their business
model, with its relentless focus on short-term profits, brings out many of the
industry’s worst tendencies. How might these broader harms be addressed?
One possibility is plain: the antitrust laws.
As mentioned, private equity firms often buy companies—dermatology
clinics, for instance, or emergency room staffing firms—through rollup
strategies, by which they purchase several similar businesses and combine
them into one. The purported reasons for these rollups are efficiencies of
scale. For example, a private equity firm can consolidate billing, records,
and marketing operations of several clinics, allowing doctors to focus on
the practice of medicine. This may be so, but there are other reasons too. By
building larger practices, private equity firms and their companies can
negotiate higher rates from patients’ insurance companies and from
uninsured customers. And by buying up many competitors, firms can lower
the quality of their care without consequence, knowing that patients will
struggle to find alternatives.
These are precisely the sorts of harms that the antitrust laws were meant
to protect against. In particular, Section 7 of the Clayton Act prohibits
acquisitions that may lessen competition by, for instance, raising prices for
consumers, reducing pay for workers, or gutting the quality of care. As far
back as a decade ago, as many as a fifth of physician markets were already
so consolidated that further acquisitions would presumptively violate the
85
law. Since then, private equity rollups have only grown more ambitious.
While the specific facts of each rollup matter, the trends suggest that those
empowered to enforce the antitrust laws—most prominently, the
Department of Justice and Federal Trade Commission (FTC)—could and
should focus their attention on ensuring compliance with those laws.
But for the most part, they have not done so. The federal government
does not appear to have challenged a single physician practice rollup, likely
because the agencies were unaware that they were even occurring (private
equity firms and other purchasers only report proposed acquisitions above a
86
certain size). But the government rarely challenged the acquisitions that it
did know about, too. When the hospital chain Community Health Systems
bought one of its largest rivals, the FTC required that it divest just two
87
hospitals. When Cerberus’s Steward Health Care Network bought its own
88
rival for nearly $2 billion, it required no divestitures at all. And when
Vanguard bought the Detroit Medical Center, the Commission allowed the
89
acquisition and, in fact, did so on an expedited basis.
In short, because of private equity, patients at hospitals with fewer
competitors faced worse health outcomes, while families paid thousands
more to medical monopolies than they would have in more competitive
90
markets. And people who went to physician practices and hospitals rolled
up by private equity firms experienced all the harms—understaffing,
increased costs, and insufficient care—described above.
Why did this happen? The simple answer is that the antitrust laws have
been under a sustained assault for two generations, the result of which is
that it has become increasingly difficult for the enforcement agencies to
stop the sorts of rollups that private equity firms are now engaged in.
This was not always the case. The nation’s primary antitrust law, the
Sherman Act, was passed as a “comprehensive charter of economic
91
liberty” and, in fits and starts, protected America from the domination of
great trusts, conglomerates, and monopolies. At the turn of the last century,
Theodore Roosevelt wielded the statute to splinter J. P. Morgan’s Northern
Securities railroad trust and break up John D. Rockefeller’s Standard Oil.
His successor, William Howard Taft, brought even more cases than
Roosevelt, dissolved the “sugar trust,” and moved to end the U.S. Steel
92
monopoly. President Wilson signed successor legislation, the Clayton Act,
which brought necessary scrutiny to mergers and acquisitions. And Franklin
Roosevelt, through the great assistant attorney general Thurman Arnold,
93
brought nearly as many cases as his predecessors combined. Arnold’s
94
strategy to “hit hard, hit everyone and hit them all at once” helped to
simultaneously lower prices for consumers and increase production and
employment, laying the foundation for an economic expansion after World
War II broadly shared with the growing middle class.
By the 1960s, antitrust law, or at least the subset of law concerned with
acquisitions, was strong and simple. The Department of Justice and FTC’s
merger guidelines—the agencies’ statement to the world about which
acquisitions they would and would not tolerate—laid out clear
concentration thresholds above which further acquisitions would almost
always be prohibited. This wasn’t to say that companies couldn’t get bigger,
but they would have to do so through organic growth and competition on
the merits, rather than by simply buying up competitors.
Unsurprisingly, the broader business community despised this approach
and set out to remake the laws to its benefit. In this effort, businesses found
an eager intellectual defender in Robert Bork, the pugnacious, oddly
bearded professor at the University of Chicago. In his academic articles and
enormously influential 1978 book The Antitrust Paradox, Bork set out to
deconstruct America’s antitrust laws. He argued that the statutes were
drafted narrowly to maximize “consumer welfare,” which in practice meant
lowering prices. (This ignored their other purposes, including protecting
small businesses, workers, and democracy itself from the too-strong
95
influence of big corporations.) Bork pushed to permit most predatory
pricing schemes, where companies underpriced their rivals to drive them
out of business. He claimed that tacit collusion—the process of a few firms
raising their prices in coordination without explicitly agreeing to do so—
probably never actually occurred. And most importantly, he argued that
mergers between competitors should generally be allowed and that so-
called conglomerate mergers—acquisitions in disparate industries, like
96
those that private equity firms make—should be permitted entirely.
Intellectually, Bork was not alone. He was joined, with varying levels of
nuance and agreement, by University of Chicago professors (and later
judges) Richard Posner and Frank Easterbrook, as well as Harvard
professors Donald Turner and Phillip Areeda. Harvard professor and later
Supreme Court justice Stephen Breyer was also an occasional fellow
traveler. These men cast a skeptical eye on antitrust enforcement generally
and believed that the harm of overenforcement vastly outweighed the risks
97
of underenforcement.
Financially, too, Bork was not alone. In 1976, the Law and Economics
98
Center, funded by corporate donors, began holding an annual economics
99
institute for federal judges, where it spread a conservative doctrine on
antitrust. By 1990, 40 percent of sitting federal judges had completed its
100
flagship program, despite apparent conflicts of interest: multiple judges
who attended the course heard antitrust cases involving companies who
101
sponsored the classes they took. Nevertheless, the program survived and
102
continues to operate today.
Meanwhile, big companies had the money to litigate Bork’s novel
103
claims in court. Eventually, Bork and his corporate allies got their way.
In 1979, one year after the release of The Antitrust Paradox, the Supreme
Court endorsed Bork’s dubious proposition that “Congress designed the
104
Sherman Act as a ‘consumer welfare prescription.’” In 1986, the Court
said that tacit collusion could not violate Section 1 of the Sherman Act, and
 105
raised the standards for proving explicit collusion cases. In 1993, it
neutered most predatory pricing claims by requiring plaintiffs to show that
defendants would likely recoup the costs of their predatory schemes, a
106
virtual impossibility to prove. And gallingly, in 2004, Justice Scalia
essentially endorsed the concept of monopoly, writing in Verizon v. Trinko
that “it is an important element of the free-market system. The opportunity
to charge monopoly prices—at least for a short period—is what attracts
‘business acumen’ in the first place; it induces risk taking that produces
107
innovation and economic growth.” No wonder then that the government
often struggled to bring successful cases against merging companies.
Antitrust enforcers suffered their own structural problems during this
108
time as well. Enforcement agencies remained persistently understaffed,
and they had little insight into smaller acquisitions—for instance, rollups of
physician practices—that fell below the reporting thresholds set by statute.
The result was that the Justice Department and FTC were simply unaware
that many of these acquisitions were even occurring.
But antitrust enforcers got in their own way, too. The Justice Department
and FTC’s merger guidelines in the late 1960s set clear standards for when
they would challenge proposed acquisitions, based on the number of
109
competitors remaining in the market. Importantly, the guidelines largely
rejected mitigating “efficiencies” that might justify these acquisitions. This
was so, the guidelines explained, because efficiencies could “normally be
realized through internal expansion” and because there were usually “severe
110
difficulties” in identifying and measuring those efficiencies. The idea
motivating the guidelines at the time was simple: big companies could get
bigger, but they would have to do so on their merits, not simply through
acquisitions.
In 1982, the Reagan administration revised the merger guidelines to add
a number of exceptions to this framework. Among other things, where it
was easy for new competitors to enter the market, or where competitors’
products were highly differentiated, the enforcement agencies announced
111
that they were less likely to challenge proposed mergers. Subsequent
revisions in the 1980s and 1990s to the merger guidelines across
administrations added further complications and exceptions and raised the
112
ceiling under which mergers would be presumptively permitted. By
2010, the guidelines made an about-face on their earlier incantation,
cheering that efficiencies were “a primary benefit of mergers” and that
mergers could “result in lower prices, improved quality, enhanced service,
113
or new products.” Far from rejecting speculative efficiency arguments,
the guidelines now begged for them.
Three things resulted from all these changes. First, by raising the
concentration thresholds, the merger guidelines treated a vast new swath of
mergers as presumptively procompetitive. Second, by encouraging
efficiency arguments and allowing a host of other exceptions, the
enforcement agencies put judges in the impossible position of balancing
harms and benefits that were both qualitative (for instance, hypothesized
price increases or decreases) and quantitative (for instance, increased or
decreased innovations). Third, by complicating the merger analysis, the
enforcers encouraged more reliance on expert economists, whose work
judges were ill-equipped to evaluate. Faced with complications, exceptions,
and complex economics, judges were prone to figuratively throw up their
hands and permit mergers that, under earlier versions of the guidelines,
ought not to have been allowed. And knowing all this, enforcement
agencies became less likely to bring actions in the first place: from 2015 to
2019, antitrust enforcers blocked just three of the seventy-five largest
114
acquisitions. With so many ways to lose a case, the Department of Justice
and FTC spent enormous resources preparing the cases they did bring,
meaning that they tended to file just a few health care cases—if that—each
115
year.
The result was that antitrust law became a shadow of what it once was.
The consequences surround us. Today in America, there are just four
116 117
leading airlines. There are three cell phone companies. There are two
118
leading drug stores. Plausibly no one benefited from this decline of
antitrust more than the private equity industry, particularly in health care.
Concentration didn’t cause all the problems in the health care system, but it
certainly contributed to them. And this concentration wasn’t an accident: we
let it happen.
Thankfully, this may be starting to change. The department and FTC are
working to revise the tangled merger guidelines. Both offices are now led
by officials who believe in aggressive antitrust enforcement, and both are
taking aggressive action to prevent rollups in the health care industry. The
FTC, for instance, has successfully challenged four large hospital mergers,
including the acquisition of Steward Health Care Network (once owned by
119
Cerberus) by HCA Healthcare (once owned in part by KKR). The
Department of Justice, meanwhile, sued to block UnitedHealth Group’s $13
billion acquisition of Change Healthcare, a company owned in part by
120
Blackstone. (The department lost that case at trial, but merely bringing
the case demonstrated a willingness to be aggressive.) Outside of
government, these enforcers are supported by a growing chorus of activists
and academics who are pushing to rethink the goals of the antitrust laws,
away from Bork’s cramped vision of “consumer welfare” and closer to the
broader reasons for which the laws have traditionally been enforced. It’s
encouraging; exciting even. But undoing the damage to the law, health care,
and elsewhere will take time.

HEALTH CARE ILLUSTRATES some of private equity firms’ worst tendencies:

their focus on short-term profits over long-term care, their disregard for
customers and patients, and their general ability to avoid meaningful
consequences for their actions. But, however fitfully and incompletely, that
may be starting to change. Though we have spent decades crippling
antitrust laws, a new generation of enforcers may revitalize the law in
health care and beyond. In the meantime, as the state corporate practice of
medicine suits show, doctors and patients may be able to challenge some of
these acquisitions themselves. These efforts are just beginning. But they
point to a way in which the government, patients, and medical
professionals, working alone and together, might slow or even stop the
private equity industry’s takeover of the American health care system.
 CHAPTER SIX

THIS TIME WILL BE DIFFERENT

Private Equity in Finance

The chapters thus far have explained how private equity firms have
reshaped the economy, by buying companies and raising prices, cutting
jobs, and shifting money from ordinary businesses to themselves. This is
the traditional work of private equity. Yet increasingly, firms like
Blackstone and Apollo are moving beyond the business of buying and
selling companies and into obscure markets like private credit once
dominated by the investment banks that started the Great Recession. Yet
they are doing so with far less oversight than those investment banks ever
faced. To fund their operations, firms are inhaling money from insurance
companies and soon from retirement funds, including potentially your own.
Some regulators appear to believe themselves powerless to stop this
expansion; others are eager to help. Either way, private equity is
metastasizing into new businesses and new pools of money. That they are
doing this largely without oversight is deeply disturbing for anyone who
remembers the Great Recession.

AT THE END of the last century and into the twenty-first, well-known
investment banks, like Goldman Sachs, JP Morgan, and Lehman Brothers,
became sprawling financial conglomerates. They still performed the
traditional work of advising companies on acquisitions and public offerings.
But they also got into the business of trading securities—stocks, bonds, and
futures—for their own accounts and bought, bundled, and sold (securitized,
in industry parlance) mortgages and other financial products. When the
housing market collapsed, the leading investment banks were
fundamentally shaken, and those that survived were either bought by or
1
transformed into bank holding companies. In this new form, these firms
were more tightly regulated, less free to make loans, and largely barred
from trading for their own benefit. They were also subject to potential
supervision by the newly created Financial Stability Oversight Council and
required to conduct “stress tests”—estimates of how they would handle
catastrophic losses—for regulators. A particular indignity to bankers, many
of these companies were required for the first time to report aspects of their
executives’ compensation.
Under this new scrutiny, the investment banks pulled back from many of
their riskiest investments. Something needed to fill the void, and that
something was private equity. This was possible because private equity
firms were far less regulated than were other kinds of firms and often
structured their investments as private funds, exempt from the ordinary
2
disclosure requirements that, say, mutual funds had to provide. They also
had lower capital requirements—that is, minimum amounts of money to be
kept on hand for downturns—than did bank holding companies. And they
escaped being designated “systemically important” by the Financial
Stability Oversight Council, a move that would have considerably increased
regulatory requirements on them.
With comparatively less oversight, the largest private equity firms, like
Blackstone, Apollo, KKR, and Carlyle, began to diversify, just as the
investment banks had. And just like the investment banks, private equity
firms threatened to become too big to fail: that is, to become so large that
the government would not tolerate their collapse. They bought real estate
and infrastructure. They launched their own hedge funds and recruited from
investment banks, which were forced by regulation to shut down their own
3
operations. And perhaps most importantly, they got into the business of
private credit, which, as the name might suggest, is an alternative to the
public stock markets. Historically, when a big company wanted to raise
money, it did so by issuing stock. In exchange for the obligations of being
public—such as filing quarterly and annual financial returns—the company
was allowed to broadly solicit money for investments, generally through an
initial public offering. But to avoid such burdens, some companies—usually
small or midsized businesses—borrowed money on the private credit
market from individual lenders, who typically would accept less
transparency from borrowers in exchange for higher interest rates.
Because of this looser oversight, over the course of forty years, private
credit grew and by some measures eclipsed the public markets. The
statistics here are necessarily incomplete, given that private credit is so
opaque, but the Wall Street Journal reports that assets held by private debt
funds—businesses that lent private credit—grew nearly fivefold from 2007
4
to 2020, to $850 billion. So-called Regulation D offerings—broad
solicitations for money, similar to initial public offerings in the public
markets—raised over $1.5 trillion in 2019, more than all the money raised
5
through the stock markets in the same year. Meanwhile, as private credit
grew, public markets shrank: In 1996, there were over 7,400 companies
6
listed on US stock exchanges. By 2018, there were fewer than half that.
In the wake of the Great Recession, private equity firms became leading
lenders of private credit as investment banks receded from the business.
Now, Blackstone and Apollo have the largest private credit funds in the
7
world, right after the behemoth Japanese firm SoftBank Group. In fact, for
many private equity firms, the actual business of private equity—leveraged
buyouts—now makes up only a minority of their business. Ares, a private
8
equity firm created by several Apollo alumni, makes a substantial majority
of its business ($262 billion in assets under management) in private credit,
9
while just $31 billion is invested in private equity. Blackstone has nearly as
much invested in credit and insurance ($259 billion) as it does in private
equity ($261 billion), while real estate, insurance, and hedge funds make up
10
the bulk of its remaining ventures.
The growth of private credit, and private equity’s role within it, raises
significant concerns. Private borrowers are likely to be smaller, and more
11
indebted, than their public counterparts and are thus more likely to default
on their loans. Private lenders, meanwhile, including private equity firms,
do not have the capital requirements that investment banks now must have
and so are in greater danger of collapsing when borrowers fail to pay their
loans. But beyond the individual risks for individual borrowers and lenders,
private credit creates broader systemic risks too. According to the Financial
Times, the ratings firm Moody’s, for instance, warned of the “opacity,
12
eroding standards and the difficulty in trading these slices” of debt. For
instance, private credit lenders typically sell off chunks of the loans they
make to other investors, a process known as securitization. Often, these
lenders do not bother to seek grades on the trustworthiness of their debts
13
from ratings agencies like Standard and Poor’s or Moody’s. When they
do, according to investor Dan Rasmussen, they typically rely on second-tier
ratings agencies, who are willing to give overly optimistic projections that
14
borrowers will repay. What this means is that other investors might be
buying securitized loans that are far less reliable than they think. And while
the private credit market is vastly smaller than the US mortgage market, it
is growing rapidly, from barely $100 billion in investable money in 2005 to
15
over $900 billion in 2021. In other words, the same dynamic that started
the Great Recession may be happening here, albeit at a smaller scale.
Republican and Democratic administrations both worked eagerly for
forty years to make possible the growth of private credit and private equity
firms’ role within it. In 1982, for instance, the Securities and Exchange
Commission (SEC) under President Reagan issued Regulation D, through
which companies could generally borrow from “accredited investors”—
shorthand for wealthy or sophisticated lenders—without registering with
16
the SEC. This created a new class of firms from which companies could
borrow money. Then, in 1990, the SEC allowed for the syndication of
private capital to certain institutional buyers. Investors could now make
loans on the private market and then bundle the promises of payment on
those loans and sell them to other investors. This Rule 144A, in essence,
created a new, secondary market for private credit.
These regulations were issued under SEC chairmen appointed by
Presidents Reagan and Bush, respectively. But Democratic administrations
got in on the game too. In 1996, Congress passed, and President Clinton
signed, legislation that lifted the requirement that private funds—funds that
made loans on the private credit market—be limited to one hundred or
17
fewer investors. This created the opportunity for investors to build vast
18
stores of capital with which to make private loans. The legislation passed
overwhelmingly in the House (just eight members voted against it) and by
19
unanimous consent in the Senate. Then, in 2012, Congress passed, and
President Obama signed, the JOBS (Jumpstart Our Business Startups) Act,
which further expanded the private credit market by permitting borrowers
20
to make general solicitations for money. This meant that private credit
sales could be advertised publicly and essentially obviated the purpose of
going public. The legislation passed with bipartisan majorities in both
21
chambers of Congress.
The result of all these changes was to make it vastly easier to lend and
22
borrow money outside of the stock market, with vastly less oversight.
This is risky for the individual lenders and borrowers, who have less
transparency in their transactions and thus likely face a greater risk of
default. But this is also risky for the economy overall, as the mistakes that
companies make in the opaque private credit market can affect those who
had no part in it, such as customers, suppliers, employees, and
communities. And with underregulated private equity firms eager to take on
this work, it is as if all the risks inherent in the financial system before the
Great Recession are simply moving from one set of institutions—the
investment banks—to a new set: private equity firms.

PRIVATE CREDIT IS just one area where firms like Blackstone and Apollo
have expanded. The simple fact is that these firms are so much more
complex and so much bigger than they were a generation ago. For
Blackstone, the diversity of its interests is astounding. It has expanded from
 23
private equity to private credit, as well as into real estate and hedge funds.
It operates a “life sciences” initiative that invests in nascent medical
24
technologies and manages a separate fund with some $30 billion to spend
on infrastructure projects. Almost incidentally, it has even become the
25
largest private sector property owner in America. Similar transformations
26
have occurred at the other leading private equity firms, who now invest in
27 28 29
infrastructure, health care, and energy, among so much else. They also
30
create hedge funds and buy and securitize distressed mortgages (exactly
31
the business that overturned companies like Lehman Brothers). The
biggest firms don’t even call themselves private equity anymore: they are
32
“alternative asset managers.”
The risk posed by this expansion is twofold. First, with less
transparency than other financial institutions, private equity firms may
make bigger, riskier bets, whose failures would affect not just them but
employees, customers, and communities. Second, once they reach a certain
size, some private equity firms might become too big to fail, that is, their
collapse would be so devastating to the economy that the government
would step in to prevent their failure. Knowing this, the biggest private
equity firms may be encouraged not to scale back but to take ever-greater
risks, assuming that they will be bailed out if those risks fail.
As private equity firms have expanded in every direction, they have
33
become the hot places to work on Wall Street. Before the Great
Recession, Goldman Sachs was perhaps the most coveted firm to work for
on Wall Street. Now, pay there has fallen in half, and private equity firms
like Blackstone have taken its place: one commentator said, “Blackstone
remind[s] me of Goldman Sachs in the 1990s—every time you see a new
34
business that is growing, that is where they are.”
The statistics bear this out. Nearly a fifth of Blackstone’s employees and
more than a quarter of KKR’s previously worked at Goldman Sachs or
Morgan Stanley, while just 1 percent of Goldman Sachs or Morgan Stanley
35
employees previously worked at Blackstone or KKR. In other words,
people are leaving banks to go to private equity firms but not the other way
around. There’s also the matter of pay, from the bottom to the top. New
hires at private equity firms may earn double what young employees at the
36
big investment banks might. Meanwhile, the CEO of Goldman Sachs
37
made just under $24 million in 2020; the president of Blackstone received
38
close to ten times that much. And since 2005, nearly two dozen private
39
equity executives have become multibillionaires. None of the CEOs of the
largest investment banks save one—Jamie Dimon of JP Morgan Chase—is
40
worth close to that much.
The migration from investment banks to private equity firms means that
the great mass of talent in finance is shifting to ever-less regulated and
transparent parts of the industry. It means that inequality, as expressed in the
extraordinary pay of private equity executives, continues to grow. And it
means that these private equity firms are simply getting bigger, with the
consequent risks to the economy and the creation of too-big-to-fail firms
just discussed. For perspective, KKR had $15 billion in 2005 in assets
41 42
under management; today, it has $459 billion. Blackstone had $79
43 44
billion in 2007; today it has $731 billion. Several firms anticipate
45
having $1 trillion in assets in a few years’ time. But to achieve these
goals, private equity firms need money—enormous sums of money—with
which to invest in their various plans. And with regulators’ help, they’re
getting it, from a perhaps unexpected source: you.

TO FINANCE THEIR expanding operations, private equity firms are buying

46
insurance companies. In 2019, for instance, Carlyle bought Fortitude, a
47
reinsurance company (an insurer for insurers). A few years later,
48
Blackstone bought Allstate Life Insurance. KKR bought Global
 49 50
Atlantic. And Apollo bought Athene. Together, private equity firms
spent almost $40 billion buying insurance companies in the United States
and today control over 7 percent of the industry’s assets, some $376 billion
51
—double what they had in 2015. This means that firms are getting ever
bigger, increasing risks to our economy in the ways just described. It also
means, as explained momentarily, that people’s insurance policies—
including potentially your own—may be less safe.
As described shortly, this expansion could threaten people’s life
insurance policies, including your own, as firms invest people’s premiums
in possibly riskier assets. Notably, this buying spree was enabled by state
insurance regulators, who approved acquisitions of companies domiciled in
52
their states. These regulators, the Washington Post reported, frequently
received “campaign contributions, lavish dinners and the prospect of future
53
employment” in the industry they regulated. In fact, of over one hundred
state insurance commissioners surveyed, more than half ultimately worked
54
for insurance companies after their careers in public service ended. Little
wonder, then, that the industry’s acquisitions were so often approved.
But why were firms buying these companies in the first place? Like so
many other businesses that attracted private equity, insurance offered a
steady cash flow. People make premium payments every month that
insurers invest, hoping to make the money they need to pay when the
policies came due. By buying insurers, private equity firms believed that
they invest the insurers’ money—in leveraged buyouts, for instance, or in
private credit—better than the insurers would themselves. On top of this,
firms could charge the insurance companies they owned and, ultimately,
55
their customers, various management fees for sourcing investments.
Regarding these increased fees, Larry Rybka, the CEO of private insurance
company Valmark Financial, told CNBC that “there’s nothing good in this
56
for the policyholder.”
Private equity’s appetite for risk attracted it to insurance for another
reason, namely, that it could engineer them to hold ever-fewer reserves and
give the money to the private equity firms. By law, insurers have to keep
money in reserve—capital requirements are set by state regulators—to pay
out their benefits. But private equity firms have set up complicated schemes
to avoid these restrictions. In particular, several created reinsurance
companies—insurers for insurers—in Bermuda, and sold US policies to
57
them. Bermuda has lower taxes and, crucially, lower capital requirements,
which allow the private equity firms to use more of their policyholders’
58
money as they choose. This means that private equity firms have more to
invest from policyholders than do traditional insurance companies. But it
also means that they have less cushion with which to absorb losses if those
investments fail. Unsurprisingly, this poses huge risks for policyholders and
governments. With lower capital reserves, private equity–owned insurance
companies are more likely to fail if their investments do, and with private
equity firms shoveling their money into riskier ventures, that failure is
becoming more likely. Private equity firms’ “focus is on maximizing their
immediate financial returns, rather than ensuring that promised retirement
benefits are there at the end of the day for policyholders,” said Ben Lawsky,
59
the former superintendent of New York State’s financial regulator. “This
type of business model isn’t necessarily a natural fit for the insurance
60
business, where a failure can put policyholders at very significant risk.”
Apollo Global Management and the insurance company it helped to
create, Athene Holding, illustrate many of the problems. Apollo was, in
many ways, culturally ill suited to run a staid insurance company. Profiles
of Apollo tended to describe it as “bare-knuckled,” “cutthroat,” and “rough-
edged,” adjectives describing a culture at odds with the quiet, conservative
61
business of taking premiums and paying out policies. It was the kind of
place where an employee who failed to respond to a boss’s Saturday
62
morning emails might get a follow-up “?” ten minutes later, where
63
employees worked twenty-hour days, and where, when one of the firm’s
original founders finally resigned, employees hummed “Ding-Dong! The
64
Witch Is Dead” from The Wizard of Oz. Moreover, it was a place riven
with controversy. In 2020, the New York Times revealed that Leon Black,
Apollo’s cofounder and CEO, had paid the financier and sex offender
Jeffrey Epstein $158 million for supposed tax and estate planning
65
services. As reported in Bloomberg, Black was not accused of being
involved in Epstein’s criminal activities, and an internal investigation by an
independent law firm found no connection between Black and Epstein’s
illegal activity. Observers were incredulous, however, at the purported
justification for the payments, given that Epstein, in fact, had no tax or
66
estate planning training. The next year, a former model accused Black of
67
sexual assault and sued him for defamation. Black countersued and
alleged that the woman’s case was, in fact, orchestrated by another
cofounder—Josh Harris—who sought to steal his job. The whole crisis
resulted in both Black and Harris leaving the firm they founded and
suggested that Apollo was, in culture and values, a poor fit for an industry
—insurance—that rested on caution, conservatism, and good judgment.
Nevertheless, Apollo became a private equity leader in the insurance
industry, beginning with its decision, in 2009, to provide funding to create
Athene. Athene’s business model was, in a sense, simple: it would buy the
policies that other insurers no longer wanted or the pension obligations that
companies could no longer afford. It would then invest the money that
policyholders and pensioners gave them every month or year into
investments that, it hoped, would earn more than it would have to pay when
68
those policies came due. Over a decade, Athene bought up plans and
whole insurers, and took on the pensions of companies like Lockheed
69 70
Martin and JC Penney. At the same time, Apollo became increasingly
entwined with the insurer: by 2021, Athene provided Apollo with 40
percent of its assets under management—that is, the money it could use to
71
invest in projects—and 30 percent of its revenue from fees. That year,
Apollo decided to buy a majority stake in Athene outright.
Athene and Apollo’s operations raised a number of concerns. For one,
Athene’s business model was predicated on earning more money than other
insurers in large part by buying “alternative assets” like Apollo’s own
72
private equity and debt funds. These were more profitable than other staid
investments. But they were also riskier. And the insurance industry, perhaps
more than virtually any other, feared risk.
For another, according to Tom Gober, an independent forensic account
73
who focused on fraud in the insurance industry, Athene dramatically
increased its liabilities—that is, its obligations to policyholders—without
increasing its surplus: the excess of its assets over its obligations. Between
2020 and 2021, the company’s liabilities increased by nearly $30 billion to
$105 billion. At the same time, its surplus declined from 1.7 percent of
74
liabilities to 1.2 percent. This was exceedingly small: according to Gober,
an insurance company’s average surplus was over 5 percent and could go as
75
high as 25 percent. This meant that only a small percentage of Athene’s
investments needed to sour before, legally, the state would be required to
take it over.
Finally, according to Gober, Athene “ceded,” or sold, over $50 billion in
liabilities to its own offshore affiliates. Generally, offshore affiliates existed
in jurisdictions where accounting standards were looser and capital
76
requirements were lower. This meant that a large portion of Athene’s
business was managed in places that likely allowed even riskier investing
strategies than those permitted in the United States.
Together, this meant that, under Apollo’s watch, Athene was allegedly
investing in riskier assets, while keeping ever less capital on hand if those
investments soured. At the same time, it was moving more of its business
offshore, where even riskier behavior was allowed. While this did not spell
disaster, it certainly increased the chances that disaster could occur. And it
was all overseen by a company—Apollo—whose culture was wildly at
odds with that of the insurance industry.
So what would happen if Athene, or any private equity–owned insurance
company, collapsed? State guaranty organizations would, as their names
suggest, guarantee insurance policies up to a certain point. But these
insurers do not cover the entirety of claim holders’ policies—generally they
77
pay only up to $300,000 —and variable annuity programs (those whose
payments fluctuate with the performance of their investments) are not
78
covered at all. Moreover, guaranty organizations are funded with
payments by other insurers. So, when an insurance company fails, it is the
more responsible, surviving insurers who must pay the costs. This means
that while private equity firms such as Apollo use insurance companies like
Athene to extract fees and fund various investments, if those investments
sour, it will be others—other, more responsible companies, and other,
unsuspecting policyholders—who will bear the cost.

BUT INSURANCE WAS only a small part of private equity’s quest for more
assets. The industry also lobbied—successfully—to access 401(k) funds,
including, possibly someday, your own. This change matters because the
money that private equity firms need to finance their acquisitions and other
endeavors has traditionally come from the very rich, from endowments and
sovereign wealth funds, and from pension funds. But in recent years, the
79
industry largely exhausted these resources. In search of new pools of
money, firms looked to 401(k) funds. Such funds historically had not
invested in private equity, as courts and regulators were generally skeptical
about the appropriateness of such investments for retirees. For unlike stocks
and bonds, investments in private equity funds were generally “illiquid”—
that is, they could not be withdrawn whenever people needed them. Private
equity firms also often charged high fees that were difficult to comprehend,
and potentially, their investments were riskier than those in the stock
market.
Nothing categorically prevented managers of retirement funds from
investing in companies like Blackstone and Carlyle, but few did, for fear of
being sued over investments gone bad. To get 401(k) money, private equity
firms needed help from the government to insulate these funds from
lawsuits. And that’s exactly what they did, with the help of two men—
Eugene Scalia and Jay Clayton—who served as secretary of labor and
chairman of the SEC, respectively, during the Trump administration.
Scalia is the son of the late Supreme Court justice and inherited his
father’s abiding support for big corporations. At the law firm of Gibson
Dunn, which primarily defended large companies, Scalia’s clients included
 80
Bank of America, Goldman Sachs, Facebook, and Walmart. He developed
a particular specialty defending businesses in suits brought by their
employees and the government. Among other accomplishments, he
81
defended UPS from a lawsuit brought by workers injured on the job and
represented SeaWorld in a lawsuit by the government after one of its whales
killed a trainer. He was well compensated for this work and earned over $6
million in the roughly year and a half before President Trump nominated
82
him to serve as secretary of labor. Once in government, Scalia continued
to be a fierce advocate for companies and against employees: among other
83
things, he reduced COVID-19 reporting requirements for companies
while at the same time opposing extended unemployment benefits for
84
workers.
Scalia’s partner in government, Jay Clayton, was a corporate lawyer
before President Trump appointed him chairman of the SEC. Like Scalia,
Clayton represented big businesses, though his practice skewed toward
85
dealmaking on behalf of finance and private equity firms. And like Scalia,
Clayton was rich: he enjoyed membership in the Philadelphia Cricket Club
86
(the nation’s oldest country club), invested with a half-dozen leading
87
private equity firms, and, with his wife, accumulated assets worth
88
between $12 and $47 million. Lastly, like Scalia, Clayton advocated for
business while in government. During his tenure as chairman, the SEC’s
enforcement actions dropped dramatically: in one year, it brought just
89
thirty-one insider trading cases, the lowest level since 1996. “That means
they’re not trying,” Bartlett Naylor of Public Citizen told NPR. “That
90
means they told the cops to go play canasta instead of doing their job.”
Clayton fought to expand private equity’s access to ordinary investors’
money. In an interview with, of all people, the cofounder of the private
equity firm the Carlyle Group, David Rubenstein, Clayton enthused about
the idea of giving private equity firms access to retirees’ funds.
“[R]etirement money in the defined-contribution [i.e., 401(k)] plan doesn’t
have the same investment opportunities that a defined-benefit [i.e., pension]
 91
plan has, even though they’re both retirement dollars,” he complained.
Rubenstein, in what looked a lot like lobbying out in public, agreed: 401(k)
managers should probably be allowed to invest some money in private
equity firms, he said, even if some of the money was “lost or didn’t do as
92
well.”
And so Clayton worked with Scalia to give firms like Rubenstein’s
93
Carlyle access to ordinary investors’ money. In 2020, with the support of
both Clayton and Scalia, the Department of Labor issued a letter that
generally permitted funds that managed 401(k)s to invest part of their
94
clients’ assets with private equity firms. The letter didn’t change any laws
or regulations, but it endorsed fund managers’ decisions to invest in private
equity. With the government’s imprimatur, this alone essentially insulated
funds from lawsuits by ordinary people if and when their investments ever
went bad.
The letter was a huge boon to private equity. At the time it was issued,
95
the industry had about $4 trillion in assets under management; 401(k)
96
funds had about $6 trillion. Even if the industry got only a small fraction
of that money, it would expand firms’ total assets under management
dramatically. Years earlier, Stephen Schwarzman of Blackstone had gushed
that “in life you have to have a dream,” and “one of the dreams” was to
97
access ordinary investors’ money. That dream was now a reality. The
industry’s lobbying organization said that the letter would “give more
98
hardworking Americans expanded access to private markets.” Scalia
99
observed that it “helps level the playing field for ordinary investors,” and
Clayton enthused that the letter would give “Main Street investors” a
“choice” to invest in the private markets. Consumer groups were far less
sanguine. “Secretary Scalia is still working for his former clients,” Barbara
100
Roper of the Consumer Federation of America complained. “This is a
101
multipronged attack on Americans’ retirement security.” With the danger
posed by private equity—its illiquidity, its fees, and its volatility—she was
likely right.
 Clayton and Scalia were well compensated after their government work.
Within months of leaving office, Clayton was appointed to the newly
created position of lead independent director at Apollo Global
102
Management. Shortly thereafter, as Apollo’s CEO and chairman Leon
Black was consumed by scandal, Clayton was named to replace Black as
103
nonexecutive chairman of the company. Scalia, meanwhile, returned to
his old law firm, Gibson Dunn, where he cochaired its regulatory
104
practice and continued to write about his passion: cutting unemployment
105
benefits for workers.

WHAT WILL HAPPEN now that private equity has all this money? First,
people’s retirement accounts may be less secure. Investments in private
equity firms are simply less transparent than those in, say, public
companies. Our history of financial crises teaches that opacity inevitably
leads to riskier investments, and risky investments, by definition,
sometimes fail. Second, with more cash but not necessarily more companies
to buy, private equity firms may compete more vigorously on the same
deals. The value of a business is often determined in part by a “multiple” of
its cash flow: a business might be worth three, four, or five times however
much it makes in a year. Competition among firms has increased these
multiples to such an extent that, by 2020, average deal valuations were
twelve times the common measure of cash flow, higher than the previous
106
peak in 2007. Private equity firms are also just buying worse companies.
In 2019, for the first time ever, a majority of private equity investments
went to unprofitable companies. With these companies forced to service the
debt that private equity firms load onto them, this will all increase the odds
that the companies themselves will fail.
More generally, private equity firms will continue to take on many of the
tasks that investment banks had before the Great Recession. With ever more
money under their management to finance their various adventures, this
poses systemic risks for the economy. But unlike the Great Recession,
private equity firms may have externalized many of the risks they create. If
one of their businesses fails, private equity firms may lose their
management fees and their investment in the company. But the majority—
likely the vast majority—of the losses will be absorbed by employees,
107
investors, and lenders, since private equity firms generally aren’t liable
for the debts of their funds. The result: in a future financial crisis, the
companies that private equity firms own may fail, but the private equity
firms themselves may survive and even thrive.
There are things that can be done to reverse this. To push companies out
of the private credit markets and toward the public markets, the SEC can
revise Regulation D, which permits broad solicitations of private money,
and Rule 144A, which permits the resale of private debt. To reduce risks to
retirees and investors, the Department of Labor can rescind its letter
granting private equity firms access to 401(k)s, and state regulators can
reject future private equity acquisitions of insurance companies. To its
credit, the Biden administration added a follow-up letter, generally limiting
private equity investments to those 401(k) managers that already had
108
experience working with private equity. But the new letter contained
loopholes so large that Bloomberg concluded that “the fundamentals of the
109
[original] letter remained untouched.”
More systematically, the Federal Reserve, alongside other regulators,
should prohibit the banks they regulate from making loans to private equity
firms that would result in excessive leverage to companies. The Financial
Stability Oversight Council, part of the Treasury Department, should
designate the largest private equity firms as systemically important,
subjecting them to greater oversight. And state insurance regulators should
cast a skeptical eye upon further acquisitions of insurance companies by
these firms. Together, these actions would contain the metastasization of
private equity to disparate industries and limit the damage that such
expansion might cause.
We have to move quickly. As private equity firms get used to the rules
promulgated by the Trump administration, it will become harder and harder
to undo them. It is possible to do so and prevent private equity firms from
repeating the mistakes of the investment banks a generation ago. But we
have to act now.
 CHAPTER SEVEN

CAPTIVE AUDIENCE
Private Equity in Prisons

America’s prisons are increasingly operated by private equity firms. If

you’re incarcerated today, the food you eat at the cafeteria or buy at the
commissary may be served by the Keefe Group or Trinity Services Group,
1
both of which are owned by the private equity firm H.I.G. Capital. If you
call your lawyer or a loved one, you will likely do so on a phone operated
2
by Securus Technologies (owned by Platinum Equity), ICSolutions
3 4
(H.I.G.), or Global Tel Link (American Securities). If you get sick, the
5
care you receive may be administered by Wellpath (H.I.G.) or Corizon
6
Health (Flacks Group). If you’re placed under house arrest, the ankle
7
monitor you wear may be operated by an Apax Partners company. And if
8
you are given a debit card with your prison wages upon release, it may be
9
managed by a business owned by Platinum Equity.
Along the way, you may pay thousands of dollars to these companies for
the cost of your own incarceration: money to the commissary, money to
place a phone call or send an email, money to post bail, and money to
access your own wages. You may even pay money for every minute you
10
read an e-book, a sort of protoprivatization of the prison library system.
The story of private equity’s privatization of prison services is
infuriating in its own right. But it is also illustrative of the industry’s
broader business model, for it shows how, when facing a captive audience,
firms are willing—eager, even—to eviscerate the services they offer, until
the companies they buy give the bare minimum required for subsistence and
survival, and sometimes less. While this is seen most clearly in the prison
industry, private equity’s perspective is not exclusive to it. As other chapters
explain, it is fundamental to these firms’ philosophies to raise prices and cut
care to a natural breaking point, and with short investment horizons, they do
so with little regard for the long-term consequences. Unfortunately—and
here again, prisons are illustrative but not exclusive—this is all happening
with the support of local governments, whose contracts with private equity
firms save, and often generate, money for police and sheriffs’ offices. In
fact, local law enforcement agencies have become private equity’s strongest
advocates, defending the industry and shielding it from scrutiny and
regulation. The entwining of private equity and government is not unique,
but in prisons, it finds its nadir.
As for the incarceration industry itself, this trend is without meaningful
precedent. In America, we have a long history of debtors’ prisons:
punishments for those who could not pay their debts and deterrents for
those who might be similarly situated. These were in time replaced with the
civil bankruptcy code, which allowed people to discharge their debts
11
without going to prison. We also have a dark history of convict leasing,
where prisoners—overwhelmingly African American men—were lent out
12
as labor to private companies. But only rarely have we actually charged
prisoners for their own incarceration, as most inmates lacked the ability to
13
pay for their imprisonment. Yet now, that is precisely what we are doing,
with prisoners’ and their families’ money going not primarily to the
government but to companies and, in particular, to companies owned by
private equity firms.
These firms are attracted to prison services for a number of reasons.
First, prison services tend to offer steady cash flows through government
contracts, which private equity firms are adept at landing. Second, these
businesses service a literally captive audience—prisoners—who will
tolerate, because they must, steep price increases and deep quality cuts. In
other words, prison services can be gutted, largely without consequence.
Third, prisons are run by government agencies that can be co-opted to
become firms’ allies and advocates. To emphasize, while these traits attract
private equity to prisons, they exist in so many other industries described in
this book: health care, housing, nursing homes, and so much else. In other
words, what private equity firms do to prisoners, they may someday hope to
do to you.

THE MOST PUBLIC part of this story has been private equity firms’ purchase
of prison phone companies. (Unless otherwise indicated, I use the terms jail
and prison interchangeably, though jails are typically where people are held
after being newly arrested, while awaiting trial, or to serve short sentences.
Prisons are generally where people convicted of crimes serve their
sentences.) For decades, inmates were generally allowed only a few collect
calls a year, until 1973, when the Federal Bureau of Prisons recommended
expanding inmates’ access to phones, citing evidence of increased
recidivism among people who were isolated from their families and
14
communities. Federal prisons loosened their restrictions on calls, followed
by state and local facilities, and for a decade, prisoners were able to reach
their loved ones at rates comparable to those on the outside, as billing was
handled by AT&T. But after the breakup of America’s telephone monopoly
and a favorable deregulatory ruling from the Federal Communications
15
Commission (FCC) in the early 1990s, companies like Sprint and MCI
entered the prison communications business, followed by smaller, niche
16
competitors, like Securus Technologies and Global Tel Link. Under their
contracts, governments didn’t pay these companies for their services.
Rather, it was the opposite: the companies paid the prisons for the privilege
to operate the phone systems and made their money by charging prisoners
for their calls. This created a perverse incentive system: prison phone
companies were encouraged not to lower their rates but to raise them so that
17
correctional facilities got as much money as possible.
At this point, private equity got in the game, attracted to an industry with
steady cash flows and a literally captive audience. In 2004, H.I.G. Capital
 18
bought the company that became Securus, which it sold to Castle Harlan
19 20
in 2011, who sold it to ABRY Partners in 2013, who sold it in turn to
21
Platinum Equity in 2017. Similar dances occurred with the other leading
phone companies: Global Tel Link (now ViaPath Technologies) is now
22
owned by the private equity firm American Securities, and ICSolutions
23
was most recently owned by H.I.G. Capital.
This was a great deal for prisons, which were allegedly offered as much
as 94 percent of the revenue that phone companies made from inmates’
24
calls. With prisons and companies aligned, costs for inmates spiraled.
25
Many states charged $12 or more for a fifteen-minute call, and in one
26
Arkansas jail, the cost reached nearly $25. Companies also charged
various fees for users to pay their bills by credit card, to pay by phone, to
27
process bills, and to variously create, maintain, or close accounts. One
former inmate told the Detroit Free Press that he spent $3,000 on calls over
just five months to keep in touch with his family and maintain a rental
28 29
property business. “Life didn’t stop because I was in jail,” he said.
Another limited his calls to only the most urgent situations, going months
without talking to his four- and five-year-old children so that his family
could afford childcare and other expenses. “The longer you’ve been in
prison, the more distant you become to the outside world,” yet another
30 31
former inmate told The Verge. “People can’t afford you anymore.”
Moreover, the costs of these calls were borne largely by those least able
to pay. Family members—women in particular—overwhelmingly
shouldered the burden of prison phone calls, and one-third of these family
32
members went into debt to pay for them. “It’s death by a thousand
pennies,” one woman, who founded a support group for incarcerated family
members, told the Nation. “Most people around here just don’t have a lot of
33
pennies to spare.”
This was all in contrast to the people who profited from these calls. It is
worth spending a moment to focus on just one: Tom Gores, whose private
equity firm, Platinum Equity, owns Securus. Gores is an American success
story, a child of immigrants who formed Platinum Equity by cold-calling
34
businesses to ask if they had divisions they wanted to sell off. He bought
35
his first business for $200,000 and flipped it to profitability in six months.
Over the years, Gores purchased dozens of companies, including the San
36 37
Diego Union-Tribune, the textbook publisher McGraw-Hill, and the
38
yearbook and class ring company Jostens. Along the way he became
fabulously rich, and his 90,000-square-foot office in Beverly Hills featured
marble and mahogany paneling, paintings by Joan Miró and Alexander
39
Calder, and a courtyard fountain. In 2016, he bought a home in Los
40
Angeles for $100 million, whose structures covered two acres and in
which a single bedroom spanned 5,300 square feet, about twice the size of
41
an average American home. The estate had two outdoor pools (and inside,
a water wall flowing into a third), a hair salon with manicure and pedicure
42
stations, and a theater with a dedicated valet entrance.
In 2017, shortly after buying his mansion, Gores, through his firm,
43
bought Securus for $1.5 billion. His purchase would have likely generated
little interest—another private equity billionaire buying another prison
services company—were it not for the fact that he’d also bought the Detroit
Pistons a few years before. Gores apparently was not an adept manager, as
he traded young players who would succeed elsewhere for established ones
44
who nevertheless failed to win the Pistons a title. But Gores did
demonstrate genuine empathy and support for the community. He donated
45
$10 million to address the Flint water crisis. He moved the team from
46
suburban Auburn Hills back to downtown Detroit. And after the killings
of Breonna Taylor, George Floyd, and Ahmaud Arbery, Gores issued a
statement in support of racial justice and committed to specific local
47
initiatives.
In light of these actions, his purchase of a prison phone company—one
that profited from a criminal justice system that disproportionately affected
people of color—seemed wildly hypocritical. And here, Bianca Tylek and
her organization, Worth Rises, were able to capitalize on this hypocrisy.
Tylek was a criminal justice reform advocate who founded Worth Rises
after graduating from law school in 2016. She had spent the first part of her
career working for Morgan Stanley and Citibank, and the way her
conversation was littered with profanity was evidence of her time in the
finance industry. Her experience also meant that she was perhaps uniquely
capable among activists of understanding private equity and its weaknesses.
“In banking, I learned a skill set to build companies that I now use to
48
dismantle them,” she said.
In 2018, Worth Rises successfully pushed the FCC to block Securus’s
proposed acquisition of one of its last remaining competitors, ICSolutions.
The group argued that the merger would result in just two companies
controlling 90 percent of the prison phone market and would “lead to fewer
options for facilities and higher rates for the end consumers, [namely,] those
49
with incarcerated loved ones.” The FCC apparently agreed, and forced
50
Securus to abandon the deal.
Worth Rises then turned to lobby Platinum Equity’s investors, exploiting
a quirk in the industry that made private equity more susceptible to
influence than, say, most public companies, whose investors tend to be
dispersed. If you have a 401(k), for instance, your money may be invested
in hundreds of different businesses. In contrast, private equity firms
typically draw from a smaller number of large institutional investors, often
public pension funds, and these pension funds allow public comments
before making investment decisions. Worth Rises seized on this fact and
lobbied three large pension funds that were considering investing with
Platinum Equity. In a major victory, one of them—Pennsylvania’s public
employee fund—chose not to invest a reported $150 million with the
51
private equity firm. Dave Fillman, the chairman of the fund’s board, said
that “I’ve been on this board for about 20 years, and I’ve never seen the
52
amount of negative press on a firm that I’ve seen here today.” He said he
feared Platinum would invest in some other “messed up” company “that
53
we’re not going to know about.”
 The public pressure campaign continued. In September 2020, Worth
Rises and another nonprofit wrote a letter to the Los Angeles County
54
Museum of Art, opposing Gores’s membership on the museum’s board.
After some hemming and hawing, Gores resigned. A few months later, the
organization took out a full-page ad in the New York Times, addressed to the
commissioner of the NBA and the league’s various owners, asking, “If
black lives matter, what are you doing about Detroit Pistons owner Tom
55 56
Gores?” Gores said of the ad, “it hurts,” and later conceded that the
57
prison telephone business should probably be run by nonprofits. It was an
understandable but hollow statement, given that Gores was perhaps the only
person in the world capable of making that happen.
And so, Worth Rises and other advocacy organizations continued to
58
push their agenda at the local level and in the courts. San Francisco, New
59 60
York, and Connecticut all passed bills to make phone calls free for
inmates, all at Worth Rises’s urging. At the same time, the nonprofit Justice
Catalyst and a coalition of other groups sued Securus and Global Tel Link
in federal district court, alleging that the companies conspired to raise
prices. (The defendants largely denied the allegations and the litigation
61
remains ongoing.) Separately, hundreds of lawyers sued Securus for
62
illegally recording privileged phone calls. Communications between
lawyers and their clients generally are constitutionally protected, but 750
attorneys in and around Kansas alleged that Securus had a widespread
policy of recording their conversations with inmates. Securus and a private
prison operator ultimately agreed to settle the case for $3.7 million, while
63
similar lawsuits began in Maine, Texas, Kansas, and California.
Faced with all this pressure, over the course of 2020, Gores and Securus
announced a number of new measures. They would give away $3 million to
64
reduce recidivism and improve prisoner reentry, they would continue to
65
reduce the cost of calls, and Gores himself would give away his personal
66
profits from the company. Gores told the Detroit Free Press, with
considerable self-importance, that “ultimately it’ll be a blessing that I’m in
 67
there and that somebody cares about what’s happening.” But Tylek
responded, “We’re not asking you to come save people; we’re asking you to
68
stop taking from them.” She added, “So before you can argue that you
want to do something good and all these things, you have to stop doing the
harm that you’re trying to unwind. Those two things can’t operate in the
69
same space.” Thus far, Gores hasn’t heeded Tylek’s direction: he has not
yet sold Securus—now rebranded Aventiv Technologies—nor has he shut it
70
down. It remains, as of this writing, a part of Platinum Equity’s portfolio.

THE GRASSROOTS EFFORTS to lower Securus’s outrageous prices were

heartening, but they were necessitated by a twenty-year, largely
unsuccessful movement to regulate these companies at the federal level. In
2001, a group of inmates and their family members sued the leading prison
71
phone companies, including the company that became Securus, alleging
72
that their high costs violated inmates’ constitutional rights. Later that year,
a court ruled that the lawsuit was premature and that the plaintiffs would
need to first seek redress through the Federal Communications
Commission. But under President Bush’s appointees, the FCC took no
action, and for years the matter lingered, until finally Barack Obama was
elected president and appointed Mignon Clyburn as a new commissioner.
Clyburn was one of the few African American members in the
commission’s history, and after meeting with activists, she took a particular
interest in the issue of prison phone call costs. It took barely half an hour,
she said, to convince her of the importance of the matter, which
disproportionately affected families of color and which later she described
73
as a “tax on pain.” Prison phone systems, she said, were “the smartest,
74
most evil way to make money.”
Clyburn pushed the FCC to regulate the cost of prison calls, a move that,
unsurprisingly, Securus and its peers opposed. They were joined in
opposition by the National Sheriffs’ Association, which represented a
powerful constituency. “Who is going to go against the sheriffs of these
75 76
counties?” asked Clyburn. “Who is going to go against the wardens?” In
comments to the FCC, the sheriffs threatened that taxes could rise if rates
77
were reduced, or that prison phone calls could be banned entirely. It did
not need to be said—though, inexplicably, the sheriffs said it—that they
78
received financial benefits from their arrangement with the companies.
(Even today, the Sheriffs’ Association lists Global Tel Link—now Viapath
Technologies—as one of its “Diamond Level” corporate partners, which
entitles it to a private dinner with the association’s executive committee and
79
a reception with its board of directors.) In other words, the Sheriffs’
Association took Securus’s money and became one of its most vocal and
powerful advocates.
Yet even in the face of all this lobbying by law enforcement and the
phone companies, in 2013 Clyburn convinced her fellow commissioners to
80
place strong limits on the rates for such calls. Under the new rules, collect
calls would cost twenty-five cents a minute. It was an enormous
accomplishment and one that the phone companies and their allies in state
government sued to stop. But before a court could even reach a decision,
Donald Trump was elected president and appointed a former Verizon
lawyer, Ajit Pai, as chairman of the FCC. One week later, in a highly
unusual move, Pai said that the commission would refuse to defend much of
81
its own regulation.
Pai’s decision was controversial: in private practice, Securus had been
82
one of his clients, and in 2017, as chairman, he voted to approve Platinum
83
Equity’s acquisition of the company. (Later, Pai left the commission to
84
work for another private equity firm. ) Clyburn called Pai’s decision not to
85
defend the rule “one of the most painful times of my life.” Without the
government to argue for its own proposal, an appeals court held that the
FCC lacked the authority to regulate intrastate prison phone calls, rendering
86
the rule largely toothless. Clyburn said the decision marked “a sad day for
the more than 2.7 million children in this country with at least one
87
incarcerated parent.”
In 2021, with a newly reconstituted commission under President Biden,
the FCC voted unanimously to lower the rates for interstate—as opposed to
88
intrastate—calls. But because the vast majority of prison calls are
89
reportedly made in state, the action affected only a portion of the business
of these companies. Meanwhile, members of Congress proposed legislation
90
to regulate intrastate calls, but the bills have languished in committee.
Looking back on the whole reform effort, Clyburn lamented the
entrenched forces, including local law enforcement, who defended the
current system. “There are just too many critical people that are being
91
enriched,” she said. “There is a dependence on this flow of income. Those
92
who have become dependent on it are not going to give it up.” The whole
saga showed how hard it was to regulate these companies at the federal
level and explained why activists focused so much on action by states and
cities. A sclerotic administrative process, a skeptical court, and occasionally
industry-friendly leadership all make it exceedingly difficult to enact
national reforms.
Finally, the story shows how prison phone companies and local law
enforcement allied with one another in a mutually beneficial financial
partnership, a story that continues today. In recent years, Securus and
Global Tel Link have expanded to sell video teleconferencing services to
prisoners. In theory, this could have been a boon to inmates, who now could
talk to loved ones who couldn’t visit in person. But unsurprisingly, these
companies demanded extraordinary sums for their services. Securus’s
subsidiary, JPay, for instance, charged $12.95 for a half-hour call in
93
Washington state. Prisoners there earned between 36 cents and $2.70 per
94
hour, meaning that a single thirty-minute call could cost nearly a week’s
wages.
Not that inmates had much of a choice. For a time, in its contracts with
law enforcement, Securus required that prisons using their teleconferencing
95
service actually stop in-person visits. In Keene, New Hampshire, for
instance, when the local jail signed a teleconferencing contract with
96
Securus, it agreed to ban all in-person visits with family members. One
mother described the process of going to the jail to “visit” her son, not
directly in person or even separated by plexiglass but through a small
screen. During the visit the sound often failed and the video frequently
froze. “I can’t stand it, because he’s on the screen in front of me, and I can’t
97
touch him,” she told NPR.
Under heavy criticism, in 2015, Securus struck this term from its
98
contracts, and delegated the decision to local authorities. But the local
authorities had the same incentives as Securus because they were getting a
slice of the money coming from the teleconferencing services. So even after
the company stopped demanding that prisons end in-person visits,
according to the nonprofit news organization The Appeal, prisons continued
99
to do so voluntarily. The companies and prisons, it seems, had fully allied
with one another to the harm of inmates and their families.
These stories were upsetting, but they were not isolated to prisons, as
firms like Platinum Equity and H.I.G. cut the quality of care and otherwise
mismanaged other companies in their portfolios. For instance, as detailed in
Chapter 8, Platinum’s portfolio company, Transworld Systems, was fined
millions of dollars for mishandling students’ loan accounts. H.I.G. Capital,
meanwhile, paid nearly $20 million to resolve claims that a mental health
company it owned provided services with unlicensed and unqualified
100
staff. Increasing prices and slashing the quality of the services their
companies provided was central to these firms’ business models. And if
their tactics in prison services seemed extreme, it was only because inmates
had even less ability to fight back than did, say, student borrowers and
mental health patients.

PHONES ARE JUST one star in the constellation of private equity’s rollup of
prison services. For example, H.I.G. Capital’s portfolio companies Keefe
Group and Trinity Services increasingly provide the food that inmates eat in
cafeterias and commissaries. While these companies offer their services
across the country, it is instructive to look at the experiment in just one
state: Michigan. There, the government moved to privatize its prison food
101
services in 2013, and in 2015, contracted H.I.G.-owned Trinity Services
to provide meals. It was quickly apparent that the quality of the food that
Trinity offered was appalling. On at least three occasions, Trinity served
food with maggots in it, and other times served food contaminated with
mold and “crunchy dirt.” One former Trinity employee, Steve Pine, said
that he was fired for refusing to serve about one hundred bags of rotten
102
potatoes. “It was the most disgusting thing I’ve seen in my life,” Pine
told the Detroit Free Press. “You could smell them… they had black and
103
green mold all over them.” Another former corrections officer told Salon,
“It was a human atrocity against the inmates, in my opinion.” He added,
“The rotten garbage that was being served, plus the way they were allowing
104
it to be prepared. It was an atrocity.”
105
However terrible the food was, at times, there wasn’t enough of it.
Under its cafeteria contract, Trinity was paid based on the number of
106
prisoners in the facilities rather than the number of meals it served. In
theory, this saved effort in tracking how many meals were served. But it
also subtly changed Trinity’s incentives, for it meant that even if the meals
were so bad that prisoners would not or could not eat them, the company
would still be paid. Through another portfolio company, Trinity’s private
equity owner also owned the contract for the commissaries, where prisoners
paid for food and supplies. Together, this created a perverse incentive
system to reduce the quantity and quality of cafeteria meals in order to push
inmates to pay for commissary food. As such, inmates complained to
Detroit’s Metro Times that Trinity wasn’t serving food with the minimum
107
calories required by law. “[W]hen a person goes hungry,” said one
108
inmate, “the only thing it does is make them angry.”
Prisoners’ complaints about the food actually helped to incite a prison
riot, in which inmates started a fire, smashed windows and sinks, and
 109
barricaded themselves into their housing areas. Officers with pepper
bomb–loaded guns were sent to quell the uprising, reportedly the first time
the state had to quash a riot since 1981. The riot cost the Michigan
110
government about $900,000. And these weren’t the only problems with
Trinity. The company had enormous staff turnover—one Trinity employee
was fired for having sex with an inmate—and over one hundred of its other
111
employees were placed on “stop orders” for violating prison rules.
Ultimately, Michigan’s governor announced that the state would no longer
112
rely on Trinity for food services. The experiment with private equity–
113
owned privatization of prison food in that state had failed.
Michigan wasn’t the only state that used Trinity. In Arizona, the
company allegedly served meat marked “not fit for human
114
consumption.” The meat, supposedly turkey, had already turned green,
and one inmate told the Phoenix New Times that “[w]e would constantly be
115
gagging from the smell that seeped out.” In Ohio, Trinity reportedly
116
served chicken labeled “for further processing only.” In Utah, it served
117
food with maggots, mold, and dirt. And in Atlanta, where Trinity
provided food services, prisoners complained about being severely
undernourished. One inmate said that he regularly ate toothpaste and toilet
118
paper to ease his hunger pangs. Another repeatedly filed a complaint with
119
a single word: “Hungry.” In a system that served only two meals a day,
several inmates said that they lost twenty pounds or more over just a few
months.
In all these cases, the basic logic of private equity applied: with a
captive audience and steady cash flows, firms’ portfolio companies could
serve, quite literally, inedible food without consequence. Of course, private
equity firms and their businesses might be more responsible if they faced
legal consequences for their actions, and lots of prisoners have sued to stop
various mistreatments. But the law has developed in ways unfavorable to
prisoners and favorable to governments and prison service companies. For
one thing, the Prison Litigation Reform Act required prisoners to exhaust
 120
their administrative remedies before bringing their challenges to court, a
long and potentially fruitless process. For another, a forgiving body of case
law has developed for prison food providers, which allows that “isolated
incidents” of rodents or insects appearing near food do not violate the
121
Eighth Amendment’s ban on cruel and unusual punishment. Moreover, to
successfully sue the companies (as opposed to individual employees),
prisoners must generally show that the companies were, in effect, acting as
122
arms of the state and that they had unconstitutional policies, as opposed
123
to merely the occasional impermissible incident. Finally, to recover
damages not just from the companies but their private equity owners,
plaintiffs must often show that a given company and private equity firm are
so intertwined that their “separate personalities do not exist,” a difficult
124
proposition to prove.
The cumulative effect of these decisions was to make it enormously
difficult for prisoners to successfully sue and recover damages for
atrocious, unsafe, or insufficient food. This difficulty became a near
impossibility when trying to hold private equity owners responsible as well.
Without the possibility of consequences, firms had no incentive other than
to provide the worst food at the cheapest prices to prisoners. It saved
money, and no matter the harm to people, the private equity firms
themselves would be fine.
More than food, private equity’s flaws were most concerning in their
acquisitions of prison health care companies. The industry owed its modern
genesis to the Supreme Court, which, in its 1976 decision Estelle v. Gamble,
established prisoners’ constitutional right to health care. That case
concerned J. W. Gamble, a Texas inmate who was injured while working on
125
loan at a local textile mill. Gamble’s doctors gave him painkillers for the
injury but failed to perform an X-ray, and when Gamble refused to work
further, was moved to solitary confinement. Gamble protested his treatment
in a case that wound its way to the Supreme Court and argued that his
inadequate care was an unconstitutional violation of the Eighth
Amendment’s prohibition on cruel and unusual punishment. The Supreme
Court agreed and announced that the “deliberate indifference to serious
medical needs of prisoners” violated the Constitution. Gamble’s case thus
created a legal minimum of care for prisoners in America (Gamble himself
did not benefit, as a lower court found that his care was not so poor as to
justify compensation. He was later murdered by a fellow prisoner). But
correctional facilities struggled to adapt to this constitutional guarantee of
basic health care, and after the widespread closure of mental health
hospitals in the 1990s and 2000s, many people who would have wound up
126
in such facilities went to jail. Increasingly, prisons turned to private
companies to offer health care services, and by 2018, 62 percent of
surveyed jails used some sort of private health care service.
Today, the two leading correctional health care companies—Wellpath
and Corizon Health—are owned by private equity firms (H.I.G. Capital and
BlueMountain Capital Management, respectively). Wellpath cares for about
127
250,000 prisoners, and Corizon has responsibility for 180,000. As with
phone and food services, these companies have disastrous contractual
incentives. They are often paid a flat rate based on the number of prisoners
in a facility and are thus incentivized to keep costs low. Unsurprisingly,
there are any number of examples of these companies badly mishandling or
ignoring prisoners’ health problems, with horrible results. In Arizona, for
instance, a fifty-nine-year-old inmate allegedly died after nurses ignored his
cries for help, even while “weeping lesions” on his body were covered with
128
flies. At the time, the state’s prison health care services were
129
administered by Corizon. Another inmate wrote a “notice of impending
130 131
death” when his cancer went untreated, also by Corizon. “Now
because of there [sic] delay, I may be luckey [sic] to be alive for 30 days,”
132
he wrote. He was dead in a month. Another lawsuit alleged that a
prisoner died in 2017 from a rare fungal infection (Corizon managed his
133
care). The inmate allegedly suffered a “staggeringly slow, physically and
134
mentally excruciating death.” (Before trial, Corizon successfully had the
case dismissed by disqualifying the expert witness for the inmate’s mother,
135
making her unable to prosecute her claim.) In New York’s Westchester
County, a thirty-six-year-old man died of a heart attack after a nurse for
Correct Care Solutions (the predecessor to Wellpath) said that he was faking
136
his symptoms. And in another case involving Correct Care Solutions, a
mentally ill woman alerted staff that she was having contractions. Staff
failed to come to her aid, and she was forced to give birth in her cell,
137
alone.
Overall, Corizon and Wellpath were sued about 1,500 times in just five
138
years, not just for individual harms like the ones above but for broader
systemic failings too. In Maine, for instance, a class action lawsuit alleged
that Wellpath treated just 3 of the more than 580 inmates who were
diagnosed with hepatitis C, a disease that can damage and eventually
139
destroy liver function. Instead, Wellpath and the department of
corrections had an apparent policy, not of preventing the disease’s
progression but of treating only those people who already showed signs of
extreme liver damage. The state ultimately settled the class action lawsuit
and agreed to treat all inmates who suffered from the disease. Elsewhere, in
Pierce County, outside Seattle, Washington, prison officials alleged that
medical professionals employed by the private equity–owned Correct Care
Solutions were not, in fact, licensed to practice in the state and “had to be
140
escorted out of the jail by corrections staff.” Insufficient management
and inadequate training “resulted in literally weekly turnover,” according to
141
the county. The company even lacked enough medications to treat
142
patients, with a nursing director announcing a “drug holiday” for a week.
A jury eventually awarded the county nearly $2 million for the company’s
143
negligence.
But if private equity–owned health care companies weren’t doing a good
job, why were they so dominant? In essence, these companies’ real product
may not be their health care services but the indemnification they provide
144
state and local governments. Corizon and Wellpath widely agree to
defend prisoners’ claims against them, relieving governments of some of
the burden of costly litigation. These companies often rely on the same law
145
firms for their defenses and so can bring to bear a national litigation
strategy against individual defendants. The likely result: more wins, fewer
losses, and less litigation for governments to worry about. As Todd Murphy,
the business development director for one of Wellpath’s predecessor
146
companies, put it, “the biggest thing we do is indemnify the county
against risk and reliability, [and] do everything we can to keep them out of
147
trouble.”
And if private equity firms insulate governments from legal liability,
they also insulate themselves too. In one case, for instance, an incarcerated
148
man died of sepsis while under the general care of Wellpath. When his
estate sued Wellpath’s owner, H.I.G. Capital, for wrongful death, H.I.G.
149
successfully had the case against it dismissed. The court determined that
even if H.I.G. “acquired, controlled, managed, and directed Wellpath,” that
alone would be insufficient to hold the private equity firm liable, as the one
150
was not the “alter ego” of the other. If such a conclusion seems
confusing, it was: the decision was the sort of legal sleight of hand that
made no sense except perhaps to the lawyers who performed it. But it also
showed how private equity firms were insulated from the consequences of
their own actions and had little, if any, incentive to improve the quality of
their care, even when lack of care proved deadly.

FINALLY, AS PART of their rollup, private equity firms are expanding their
carceral reach beyond prison itself and into prison release cards. These are
debit cards that facilities give inmates when leaving jail or prison, in theory
holding the money that the inmates brought with them, that they made
inside, or that the facilities gave them. But multiple lawsuits allege that the
business model of these companies was largely to extract fees from
prisoners. For instance, one plaintiff, Jeffrey Reichert, was arrested for
151
driving while intoxicated. When he was detained, the local jail
confiscated the $177.66 he had in cash. He spent just four hours in
detention but upon his release was not given his money back. Instead, he
 152
was given an ironically named Access Freedom debit card. Reichert
quickly found that the card, which he had not previously agreed to take, was
slowly draining him of his money: there was a weekly maintenance fee, an
153
inquiry fee to check the balance, and an issuer fee to withdraw funds.
This, it turned out, was company policy: the Keefe Group, which issued the
card and which was owned by H.I.G. Capital, charged fees for card activity,
for card inactivity, to request too much money, to ask about how much
money there was to request, to replace a card, and to close the account.
“Clearly, these cards are designed to make it impossible to avoid fees,”
154
wrote Lauren Sanders of the National Consumer Law Center. A portion
of the case was settled, and Keefe agreed to pay a percentage of the fees it
155
took from prisoners, but much of the litigation remains ongoing.
Additionally, the Consumer Financial Protection Bureau (CFPB) eventually
fined JPay, which issued many of these cards and which was owned by Tom
Gores’s Platinum Equity. The CFPB said that JPay’s tactic to attach fees to
156
credit cards after people were released from prison was abusive. In the
settlement, JPay agreed to give the former prisoners $4 million and pay a
penalty of $2 million, as well as limit the fees that it would charge in the
157
future.
While such litigation and regulation is welcome, it appears simply to be
the cost of doing business for the companies themselves, as private equity
firms continue to invest in prison services. The reason why goes back to the
kinds of businesses that Tom Gores and his peers buy. Platinum Equity’s
website advertises that it seeks companies with “[l]ong-term customers and
158
stable revenue.” So it is with prisons, where a loyal customer base is
guaranteed and where customers are certain to provide Platinum with a
stable source of revenue. Moreover, it’s an industry where prisoners have
little power to protest declining product quality or increasing prices. Finally,
it is an industry where private equity can form alliances with state and local
governments and turn them into effective advocates for the status quo.
In this sense, private equity’s excursion in prison services is less unique
than it is illustrative: in industries where consumers have limited options,
private equity firms will raise the prices and gut the quality of their services
until people very nearly reach the breaking point, and firms do this with the
government’s help. In this way, what firms do in prisons is no different than
what they do in civilian health care, housing, and nursing homes. The only
difference is that in these other industries, the actions of private equity
happen on a far grander scale.
But if there is reason for fear, there is also reason for hope. People like
Bianca Tylek and Mignon Clyburn have, in fits and starts, been able to
shame, litigate, regulate, and legislate against companies like Securus and
Platinum Equity and, however incompletely, slow their growth. Where
courts blocked substantial reform at the federal level, activists pushed
change locally. Where private equity firms were unwilling to divest from
the industry, they convinced institutional investors not to invest in the
private equity firms themselves. Their strategy is a multifront attack on
prison services, and it is one that can serve as a model for activists in other
industries as private equity firms spread ever outward.
 PART II
HOW THEY GET THEIR WAY
 CHAPTER EIGHT

SUING THEIR OWN CUSTOMERS

Private Equity in the Courts

When private equity firms buy companies, they sometimes get in the
business, not of making new products or services, but of suing their own
customers. This opportunity to target people—especially poor and working-
class people—often seems like the very reason that some firms buy
businesses. When they do, they benefit from a small mountain of favorable
case law, and where favorable laws do not exist, they spend enormous sums
to create them. Yet when customers try to seek some measure of justice for
themselves, they are often stymied, by arbitration agreements, by
limitations on suing investors, and by a host of other legal decisions that
make it hard for ordinary people to get redress. It is as if private equity
firms and their allies have built a justice system to their liking. Now the rest
of us must survive within it.
Consider when, in 2016, Mariner Finance allegedly sent Leticia
1
Castellanos, unprompted, a check for $2,539. Castellanos hadn’t asked for
the money; Mariner had just sent it. According to Castellano’s subsequent
complaint, the only thing she needed to do was endorse the check and in so
doing agree to pay Mariner a little under a hundred dollars a month for a
little over three years. The check was, in fact, a loan, with a 25 percent
interest rate. Though Castellanos lived in the gentrifying Fells Point
neighborhood of Baltimore, she herself made just $800 a month. A hundred
dollars was more than she could afford, but to cover emergency repairs to
her boiler, she endorsed the check anyway.
 As she subsequently alleged, after Castellanos made several payments,
2
Mariner reached out to her to discuss the terms of her loan. But rather than
finding a way to accommodate Castellanos’s fixed income, Mariner
convinced her to borrow more money, this time over $3,000. Most of that
went back to Mariner to cover her existing debt. But oddly, the loan also
included payments for multiple insurance policies—a life insurance policy,
a “Non-filing” policy to protect Mariner if Castellanos’s collateral was no
good, and an “Accidental Death–Dismemberment–Loss of Sight” policy—
3
that Mariner said it would buy for her. It was unclear whether Castellanos
ever asked for any of these things. Of the more than $3,000 that she
borrowed in this second loan, the vast majority went back to Mariner for the
unpaid balance of her account and for Mariner’s insurance. Less than one-
tenth went back to Castellanos.
Unsurprisingly, given the size of the loan and her modest income,
4
Castellanos reported that she fell behind on her monthly payments. So
Mariner sued to collect the debt in Maryland state court, seeking interest
5
and late fees. With the assistance of a law firm specializing in consumer
6
protection, Castellanos countersued, alleging fraud, usury, and violations
of Maryland’s debt collection and consumer protection acts, among other
harms.
And here, things took a turn for the worse for Castellanos. Knowingly or
not, when she signed the terms of her second loan, she agreed to a broad
arbitration provision, which committed her to resolving any disputes she
7
had with Mariner at an arbitration firm of the company’s choosing. But
fiendishly, Mariner was not similarly bound: the company could use the
machinery of the state court system to garnish her wages and seize her
8
assets.
So Mariner moved to have Castellanos’s case pushed into arbitration.
Castellanos opposed, arguing through her lawyer that Mariner couldn’t have
it both ways, litigating its own claims against Castellanos while defending
9
against hers in arbitration. But the case law simply was not on her side.
The local judge, citing the US Supreme Court, noted a “strong federal
 10
policy favoring arbitration.” It found no problem with the double standard
of this particular agreement: Castellanos, the court held, was bound to
pursue her claims in arbitration, while Mariner could continue to collect its
debt through the state court system. With Castellanos compelled to arbitrate
her claims, in a system where plaintiffs must often agree to silence about
the outcomes of their disputes, the ultimate outcome of her fight with
11
Mariner never became public.
Mariner Finance, which sent Leticia Castellanos that first check, is
12
owned by the private equity firm Warburg Pincus. Warburg’s president,
Timothy Geithner, was once President Barack Obama’s treasury secretary.
Mariner isn’t quite a payday lender: it’s an “installment” lender whose loans
are a little larger and whose repayment periods are a little longer than those
of its more notorious cousin. Nevertheless, Mariner is one part of a small
army of lending companies targeting working-class and poor people that
private equity firms have purchased in recent years. Among others,
13
Friedman Fleischer & Lowe bought Speedy Cash. Diamond Castle
14
Holdings bought a controlling interest in Community Choice Financial.
15
Blackstone bought Lendmark Financial Services LLC. And Lone Star
16
Funds bought DFC Global. The list goes on.
Payday and installment lending is an ideal industry for private equity. It
provides a stable cash flow and a captive customer base that has little
alternative but to keep using its product. The loans that so many people
receive from payday lenders aren’t used to buy real-world necessities but to
service prior loans. In fact, the Consumer Financial Protection Bureau
(CFPB) found that over 80 percent of payday loans were renewed or
17
refinanced within two weeks. For the vast majority of these “loan
sequences,” the principal on the most recent loan was the same or larger
than the principal on the first, meaning that for the duration, the borrower
was paying only interest and fees to the lender, rather than escaping the
debt.
While payday lending is an ideal industry for private equity, private
equity in turn exacerbates the industry’s worst tendencies. Consider two
payday lenders: Advance America, which is independently operated, and
18
ACE Cash, which is owned by a private equity firm, JLL Partners.
19
Advance is the larger of the two, but between 2012 and 2022, it had fewer
20
than 700 complaints filed against it to the CFPB. In contrast, ACE, the
smaller, private equity–owned company, had 1,800 complaints, more than
21
twice as many. Among other things, borrowers alleged that people
22
collecting debts for ACE called their family and work, threatened
23 24
prosecution, and attempted to collect on loans never made. ACE
ultimately entered into a $10 million settlement with the CFPB over
25
substantially similar allegations. But ACE wasn’t alone. After Blackstone
bought Lendmark in 2013, for instance, complaints against it rose every
26
year. It seemed that the logic of private equity, with its focus on quick
profits and limitations on private equity firms’ own liability, pushed these
companies into actions that were cruel and, in the case of ACE, allegedly
illegal.
But in addition to making payday lenders worse, private equity firms
also made them more litigious. In 2012, the year before Warburg Pincus
bought Mariner Finance, the company was a plaintiff in just 240 state cases.
27
By 2018, that number had risen to over 2,000, an eightfold increase. The
contrast was even more dramatic with OneMain Financial, which Fortress
28
Investment Group bought in 2015. The year before the acquisition,
OneMain brought 406 state cases. The year after the acquisition, it brought
29
1,200. Three years later the number increased over 10,000. These
dramatic increases suggested that private equity firms saw legal action as an
effective way to wring more money out of people who received the loans
and perhaps even built it into their business plans when buying these
companies. For upon winning a judgment, lenders could garnish their
customer’s wages and deplete their bank accounts, often simply by
completing a form provided by the court and serving it on the borrower’s
 30
bank or employer. Suing their customers wasn’t an aberration: it appeared
to be a business strategy.
In contrast, as Leticia Castellanos’s story illustrates, where consumers
tried to sue these lenders for violations of, say, state consumer protection
laws, they were often compelled into arbitration, where private companies,
not courts, resolved their disputes. This was bad for a number of reasons. To
start, plaintiffs often had to pay a filing fee—one that could go to several
31
thousand dollars —just to bring their claims. And when they did, their
cases were litigated before arbitration companies who were typically paid
32
for by the defendant business. A large body of research has shown that
these companies, knowing who paid their bills, typically sided with the
defendants that fronted for their services. In the rare arbitrations in which
consumers actually won, they were often bound by nondisclosure
agreements that prevented them from publicizing their victories and
notifying people like them of the opportunity to sue. At the same time,
victorious plaintiffs in arbitration did not develop any precedential case law
—as they might through ordinary litigation—that fellow consumers could
rely upon.
These basic injustices could have been resolved through regulation.
Toward the tail end of the Obama administration, the CFPB proposed a rule
that would require lenders to confirm that borrowers could plausibly pay
33
back the money they received, as opposed to simply servicing the debt in
perpetuity. This would have helped to end the cycles of debt that so many
consumers faced, reducing the chance for subsequent litigation. The rule
also placed some limits on lenders’ ability to take money from borrowers’
34
bank accounts to repay debts.
The CFPB finalized the rule in 2017, at the outset of the Trump
administration. But the payday lending industry—supported, in part, by
private equity firms—brought its enormous litigation and lobbying effort to
bear upon the regulation. To start, the Community Financial Services
Association of America, which included numerous private equity–backed
35
lenders, sued the CFPB, arguing that the bureau lacked the authority to
promulgate the rule. The groups succeeded in repeatedly delaying the rule’s
 36
implementation. Meanwhile, Community Choice Financial (owned by the
private equity firm Diamond Castle Holdings) retained the services of
President Trump’s former campaign manager Corey Lewandowski, who
went on television to advocate that Trump fire the CFPB’s director, Richard
37 38
Cordray. Under pressure, Cordray resigned and was ultimately replaced
by former congressman Mick Mulvaney, who had been publicly
contemptuous of the whole organization and who had called it a “sick, sad
39
joke.” Private equity–backed lenders also lobbied generously during this
time. ACE Cash Express, owned by JLL Partners, spent $390,000 in 2018
40
alone. Lendmark Financial Services, owned by Blackstone, spent
41
$400,000. Mariner Finance, owned by Warburg Pincus, spent nearly
42
$100,000. And OneMain Financial, owned by Fortress Investment Group,
43
spent $1 million. Their spending was successful. In 2020, the CFPB
rescinded the core provisions of the rule, including the provision that
payday lenders prove customers’ ability to repay their principals (rather
than merely servicing the debt). This left essentially just the limitations on
how often lenders could try to take money from delinquent borrowers’
44
accounts.
A similar assault—this one in Congress—occurred when the CFPB
issued a rule prohibiting financial institutions from forcing consumers into
45
arbitration agreements like the one that bound Leticia Castellanos. The
bureau’s rule did not sit well with Arkansas senator Tom Cotton, who said it
“ignores the consumer benefits of arbitration and treats Arkansans like
helpless children, incapable of making business decisions in their own best
46
interests.” Unstated was that consumers rarely, if ever, had a choice to opt
out of arbitration. Also unstated were the tens of thousands of dollars that
47
payday lenders had donated to Senator Cotton himself. Executives at
Blackstone, which owned the payday lender Lendmark, were particularly
generous: more than a half dozen of its executives, including its president,
48
Stephen Schwarzman, donated to Cotton and his campaign funds.
 Cotton was joined in opposition by the Trump administration’s Treasury
Department and Office of the Comptroller of the Currency, the latter of
which regulated national banks. The Treasury Department issued a fevered
report saying that the prohibition on forced arbitration would raise costs for
49
consumers. The comptroller, meanwhile, fretted that the rule could result
50
in “potentially ruinous liability” for lenders. (The comptroller apparently
failed to appreciate the argument that it would be “ruinous” to hold lenders
fully responsible for their actions in court.) Armed with these regulators’
support, in 2017, allies of the finance industry introduced resolutions under
the rarely used Congressional Review Act, which allowed Congress to
51
rescind recently implemented regulations. The resolution passed both
chambers and was signed by President Trump. Afterward, Senator Cotton
released a statement calling the repeal “good news for the American
52
consumer.” That election cycle, Cotton received $1.8 million from the
53
finance industry.
The effect of all of this was that the courts continued to operate just as
companies like Mariner Finance would prefer. Mariner could force people
like Leticia Castellanos to arbitrate their claims, while pursuing its own
claims against borrowers in court. When it did, Mariner added a cruel twist:
it would require borrowers to pay the cost of Mariner’s own attorneys.
“That really got me,” one borrower who was obligated to pay Mariner over
54
$500 for the company’s own lawyer told the Washington Post. The whole
court system, it seemed, was built for companies like Mariner and not for
people like Leticia Castellanos.

PRIVATE EQUITY’S FORAY into payday lending is just one instance of the
industry’s expansion into areas where firms have profited, not by improving
the businesses they buy but by suing their customers. This makes sense for
private equity firms, whose short-term investments preclude the sorts of
actions that would build long-term trust and engagement with customers.
Take, for instance, Southeastern Emergency Physicians. Southeastern is a
physician staffing company that makes money by assigning doctors to
hospitals and other medical facilities. In 2017, Blackstone bought
55
Southeastern and its parent company. Shortly thereafter, Southeastern’s
litigation docket exploded. Between 2017 and 2019, Southeastern filed
4,800 lawsuits against patients for unpaid bills in the Memphis metropolitan
area alone. In the first half of 2019, it sued more patients than three of the
largest regional hospitals combined.
Southeastern’s explosion in litigation is directly correlated with
Blackstone’s purchase of the company. The year before Blackstone bought
it, Southeastern filed a comparatively modest 798 lawsuits in Shelby
56
County. The year after, it filed more than double that. Meanwhile, former
call center agents were instructed not to raise with patients the possibility of
57
charity care, the common—and required —practice of forgiving debts for
those who cannot afford to pay. “A lot of times, a patient would call in and
say, ‘Hey, can you give us a discount?’” a former TeamHealth employee
told NPR. “But we had to say, ‘No, I can’t do that,’ because we weren’t
58
allowed to say, ‘Well, did you apply for charity care at the hospital?’”
(After its tactics were publicly reported, TeamHealth said that it would no
59
longer sue patients.)
It wasn’t just health care. The student loan collector Transworld
Systems, for instance, supported tens of thousands of lawsuits against
60
borrowers. After the private equity firm Platinum Equity bought the
61
company in 2014, the CFPB received over 4,600 complaints about it. As
alleged, Transworld sued people for debts that it couldn’t prove that they
actually owed and pressured its employees into signing affidavits saying
that they knew debts were legitimate, when in fact they had no such
knowledge. In 2017, the CFPB fined the company $2.5 million for these
62
illegal practices. But the bureau has yet to collect, as given the
complicated ownership structures of student debt, Transworld now contests
63
whether it actually agreed to a valid settlement. Years after the CFPB
issued its fine, the litigation remains ongoing. Meanwhile, Transworld has
continued to prosper and expand, buying numerous other debt collection
64
companies.
Private equity–owned businesses pursue similarly litigious strategies in
65 66
other industries, such as single-family home rentals, nursing facilities,
67
and mobile homes. These are not, as noted earlier, necessarily industries
with wealthy customers or clients. In fact, some of them cater to the poorest
people in America. Why, then, do private equity–owned companies focus
on suing these customers? Because they are the ones least able to fight
back. Defending against a collection action is a costly exercise,
affirmatively suing these companies for wrongdoing even more so.
Customers of these businesses do not have much money and are far less
able to defend themselves than are wealthier clientele in other industries,
who might be able to hire lawyers or at least devote the time to fighting
unjust tactics.

IN THE PURSUIT of their own customers, private equity firms have both
created and benefited from changes in the law and the legal profession. First
among these was the general reshaping of corporate law in favor of private
equity. Big law firms like Kirkland & Ellis and Paul Weiss used to make
their money primarily from litigation, while transactional work—the
business of helping companies organize, issue stock, and buy and sell one
another—formed a rump of the overall revenues of these forms. In time,
these roles shifted, with the largest law firms making most of their money
from transactional work: that is, helping businesses buy one another, go
public, form investment funds, and so forth. And for some firms, that
transactional work came ever more often from private equity.
Take Kirkland & Ellis. The firm had many of the leading lights of
conservative litigation, including partners Bill Barr, Ken Starr, and Paul
Clement. In 2010, however, a transactional lawyer—Jeff Hammes—took
68
over as chairman of the firm’s global management executive committee.
Within a decade, three-quarters of Kirkland’s business was transactional
work, a big part of which came from private equity, as the firm serviced
69
over 450 different firms. “[P]rivate equity has become a massive asset
class,” one partner told the Financial Times, “with a demand for legal
70
services that is diverse and deep.” Kirkland was smart “because we
71
realised how damn good that business was.”
Similar transformations occurred at other big law firms, many of which
72
developed dedicated practice areas for private equity. Quinn Emanuel, for
instance, claimed that it had over 250 lawyers working in its private equity
73
litigation practice group. Sidley Austin, meanwhile, bragged about its
“strong relationships with an extensive network of government lawyers and
enforcement officials” who could provide “credibility” to private equity
74
firms facing regulatory issues. Other firms similarly staffed up. The
consequence of this was that private equity firms generally had access to
some of the best-paid lawyers in the country for their highest-stakes
matters.
As law firms changed, so did the law itself, in particular, laws insulating
private equity firms from the legal consequences of their actions. Consider
the case of Annie Salley, discussed earlier in the introduction. Salley was in
her early seventies when she was admitted to the Heartland nursing home in
Hanahan, South Carolina. Heartland was owned, through a series of shell
companies, by HCR ManorCare and, in turn, by several funds controlled by
75
the private equity firm Carlyle Group. As previously discussed, Carlyle
bought ManorCare by loading the company up with debt and selling its
property. The move left the company cash strapped, the natural
consequence of which was to cut the quality of care.
This had disastrous consequences for Salley. With urinary tract
infections, arthritis, and foot pain, Salley struggled to get herself to the
76
bathroom. But as subsequently alleged by her estate, with inadequate
staffing at the facility, Salley was forced to do so herself, the result of which
was that one evening she fell and hit her head on a bathroom fixture. After
the accident, nursing home staff reportedly failed to perform a head scan
and did not refer her to a doctor, even though Salley exhibited confusion,
“thrash[ed] around,” and vomited.
As her estate alleged, Salley was eventually ejected from the nursing
home—her family was unable to afford the copay on her insurance—and
was shortly thereafter taken to a local hospital, where doctors discovered
77
severe bleeding in her brain. The blood was allegedly several weeks old
(presumably from the fall in the nursing home) and had pushed her brain to
one side of her head. Surgeons attempted to relieve the pressure by drilling
into her head but were unsuccessful, and Salley died of subdural hematoma:
that is, pooling of blood in the skull.
Salley’s estate eventually sued the nursing home, as well as its ultimate
parent company, Carlyle. But Carlyle moved to dismiss the case against it
and, in so doing, performed several legal sleights of hand. For one thing,
Carlyle argued that it didn’t actually own ManorCare or its facilities.
Rather, it claimed, it simply advised a series of funds that did. For another,
Carlyle refused to participate in any discovery about its control over the
facility in which Salley was injured. But it did produce affidavits from
Carlyle and ManorCare executives asserting that the firm had no
responsibility for the “policies or procedures” at Salley’s facility, nor did it
78
have “responsibility or involvement” with its “day-to-day operations.”
This allowed Carlyle to shape the facts of the case in its favor, without
giving the lawyers for Salley’s estate the opportunity to respond.
Although this was brought as a “motion to dismiss,” in which Salley’s
estate was entitled to all reasonable inferences in its favor, the court granted
Carlyle’s motion. It held that the estate had not “alleged specific facts that
79
support a claim that Carlyle actually did control the budget of Heartland.”
Moreover, the court held, “it would be a far stretch for the court [to] infer
80
this fact based solely on alleged ownership of a sixth-tier subsidiary.” Of
course, it was hard for plaintiffs to allege specific facts because Carlyle
moved to dismiss the case before discovery began. The nursing home was a
sixth-tier subsidiary—a common tactic in the industry that obscures
81
ultimate ownership and responsibility, of which the court was presumably
unaware. Ultimately, Salley’s family was unable to collect any money from
Carlyle for the death of their mother. The case was settled with ManorCare
and its affiliates for an undisclosed sum and without an admission of
wrongdoing.
Salley’s case showed how private equity firms managed to avoid legal
liability for their actions. It was also a relatively simple case to dispose of—
just a matter of crafting a motion to dismiss. In contrast, the case of Scott
Brass showed how far and how long a private equity firm would go to
insulate itself from the consequences of its actions. Scott Brass was not a
person but a company, an industrial metal manufacturer based in Rhode
82
Island. Sun Capital bought the business in 2007, and like so many of the
83
firm’s other acquisitions, the company quickly fell into bankruptcy. In the
wreckage, the employees’ pension fund tried to hold Sun Capital liable for
84
its underfunded benefits. But Sun Capital refused and in 2010 sought a
judgment in federal court that it was not responsible for these debts.
The subsequent litigation was tortuously long. After over two years of
argument, the district court held that Sun Capital was not a “trade or
business” as required under the relevant statute and therefore could not be
85
held liable for the pension. A year later, the First Circuit reversed the
86
decision. Four years after that, the district court found that Sun Capital’s
87
various funds could be held liable for the debt. But Sun Capital again
appealed, on the rather facile argument that investors were generally
responsible for pension debts only when they owned 80 percent or more of
a company and that, in fact, two separate Sun Capital funds owned Scott
Brass: one with a 70 percent stake, the other 30 percent.
In 2019, the appellate court sided with Sun Capital and against the
employees. On the merits, the decision was likely incorrect. Nevertheless,
Sun Capital won an important victory. The process had taken nine years
88
over what was, for Sun Capital, a pittance: $4.5 million. In fact, it’s
plausible that Sun Capital actually spent more than that litigating the issue,
but the case was a model for how private equity firms could avoid liability
for underfunded pensions. And it demonstrated how far a firm would go to
protect the principle that it should not be held responsible for the
consequences of its actions.

WHILE PRIVATE EQUITY firms worked hard to insulate themselves from legal
liability generally, two other, broader developments in the law helped the
industry: the fall of class action lawsuits and the concomitant rise of forced
arbitration.
With class actions, one or a handful of plaintiffs can bring suit on behalf
of all similarly situated people: say, all the residents in a nursing home
chain or all the purchasers of a defective product. These class actions are
necessary when it would be unaffordable for each person to bring suit
individually. By allowing plaintiffs’ lawyers to recover a contingency on the
total amount awarded, class actions make it possible—and rational—to
recover for these sorts of ordinary harms.
But class actions have been under sustained assault for over forty years.
From the Reagan administration onward, conservative administrations
89
appointed judges hostile to class action lawsuits. Meanwhile, with far
more money than their opponents, the corporate defense bar had the
resources to challenge nearly every facet of class action case law. This
pincer move had its intended effect, as increasingly conservative judges,
faced with the opportunity to do so, desiccated class actions. Among other
things, judges required plaintiffs to prove ever more of their case ever
90
earlier in litigation. They raised the standards for certifying classes. And
they rejected proposed settlements between purported classes and
defendants.
At the same time, courts increasingly blessed the use of forced
arbitration agreements. As noted earlier, since the 1980s, the Supreme Court
has repeatedly expressed a “federal policy favoring arbitration” and directed
91
that these agreements be enforced as corporations had written them. As
with class actions, an increasingly conservative judiciary blessed ever more
lopsided arbitration agreements that favored companies over consumers and
employees. In 2011, for instance, the Supreme Court held that federal law
preempted any state statutes that would require agreements to allow
92
plaintiffs to arbitrate in groups, like in ordinary class actions. In 2013, it
held that arbitration agreements could be enforced even when they would
93
make it economically impossible for plaintiffs to pursue their claims. And
in 2018, the Court held that employees could be compelled into arbitration
94
and waive their right to join class actions as a condition of employment.
The result was an explosion in the use of arbitration agreements. In the
1990s, about 2 percent of companies used arbitration with their nonunion
95
employees; by 2019, more than half did. In 2020, over two-thirds of
popular brands surveyed by Consumer Reports, from GE and Kenmore to
Sony, Bose, Microsoft, LG, Samsung, and Dell, used mandatory arbitration
96
clauses to manage disputes with their own customers. And, as intended,
almost no one used these agreements. Of the over 800 million consumer
arbitration agreements in effect in 2018, only 6,000—less than 1 percent of
97
1 percent—actually resulted in arbitration. Even among the
infinitesimally small number of cases brought, people rarely won. The
Consumer Financial Protection Bureau found that when customers brought
arbitration disputes over financial products, for instance, they succeeded
barely more than a quarter of the time, and recovered just thirteen cents for
every dollar in damages claimed.
Private equity firms benefited from both of these trends. As previously
98
discussed, portfolio companies in the payday loan, nursing home, and
99
single-family home rental industries all forced their customers to use
arbitration agreements, to the enormous detriment of people like Leticia
Castellanos. At the same time, they have successfully defeated class action
lawsuits against themselves and their portfolio companies. To take just one
example, in Kentucky, beneficiaries of the state’s pension fund filed a class
action lawsuit against KKR and Blackstone, alleging that the firms
breached their fiduciary duties by selling the pension fund financial
100
products with onerous, hidden fees. It was a dangerous case for the
private equity firms, as the plaintiffs alleged billions of dollars in damages.
And so KKR and Blackstone filed an unusual “writ of prohibition” with the
state appellate court, arguing that the plaintiffs had no standing to sue. The
appeals court and, subsequently, the Kentucky Supreme Court agreed.
Because the pension plan had not yet collapsed, the court held, the plaintiffs
101
could not sue; their allegations were “too speculative and hypothetical”
102
for the court to consider. This was a devastating loss for pensioners in
Kentucky. But as Blackstone’s lawyers noted, its impact was larger, given
the rise in lawsuits filed by beneficiaries of underfunded pensions across the
103
country. The case showed how private equity firms both benefited from
existing case law and worked to shape their own, neutering class actions as
a tool for justice along the way.

WHAT CAN BE done so that private equity firms do not enjoy such lopsided
advantages in our justice system? To start with, plaintiff-side lawyers need
to understand and explain how private equity firms are often intimately
involved in the management of their portfolio companies. Most judges
simply do not know what private equity firms are or how they work.
Showing that firms like Carlyle and Sun Capital don’t just invest in but also
shape the strategy of their portfolio companies may help plaintiffs to extend
liability to private equity firms.
At the same time, we’re seeing a variety of new tactics emerge to protect
consumers, even under increasingly hostile case law. One is mass
arbitration. To make arbitration agreements seem fair, defendant companies
104
often agreed to pay the costs of any case. Effectively foreclosed from
pursuing class actions, a few enterprising law firms took these companies at
their word and brought hundreds or thousands of individual arbitration
claims, the costs of which companies had to bear. This gave plaintiffs, for
the first time, some negotiating leverage with these businesses. Mass
arbitrations have been brought against companies as diverse as Uber,
Amazon, DoorDash, Intuit, Buffalo Wild Wings, and FanDuel, the latter
 105
two of which were owned or invested in by private equity firms. And
when companies have tried to wriggle out of their agreements, courts have
held them to their word. When DoorDash, for instance, tried to renege on
paying thousands of arbitration fees, the presiding judge wrote that its
employees were exercising “the remnant of procedural rights left to
106
them.” DoorDash’s “hypocrisy” in refusing to pay, the judge wrote, “will
107
not be blessed.”
Faced with the first serious challenge to the architecture of arbitration,
companies are regrouping to reduce what leverage consumers have gained.
DoorDash, for instance, reconfigured its employee contract to significantly
slow the pace at which cases are reviewed, to the detriment of plaintiffs.
The defense-side law firm Gibson Dunn, meanwhile, has recommended that
businesses no longer pay for the cost of arbitration and instead force
108
plaintiffs to pay when arbitrators deem claims frivolous. Demonstrating
enormous chutzpah, companies are trying to make these changes
retroactively. And they are also creating “batching” mechanisms to force
individual plaintiffs into class action–like procedures in arbitration.
Yet even if mass arbitrations lose their potency, plaintiffs are finding
other ways to challenge private equity’s conduct. One nascent possibility is
to pursue lawsuits for breach of fiduciary duty. The directors who sit on
corporate boards typically have various duties of loyalty and care to the
companies they oversee; in essence, they cannot be negligent or ransack a
company for their own gain. But when private equity firms buy companies,
they often install their own employees or allies on their boards. These
directors may act in the interest of their private equity employers over the
businesses they oversee, approving exorbitant management fees, for
example, or agreeing to sell businesses for less than their worth. When they
do so, board members may violate their fiduciary duties, and the people
harmed by their actions—creditors, employees, even customers—may sue
to stop them.
We’ve seen a handful of cases like this succeed. In 2013, for example,
the private equity firm Sycamore Partners bought the Jones Group, a
manufacturer of several then popular shoe lines, including Nine West, Anne
 109
Klein, and Gloria Vanderbilt. The Jones Group’s board approved its sale
to Sycamore, even though the deal resulted in debt levels for the company
higher than what its own investment bankers said it could sustain. After the
merger, Sycamore’s executives decided to sell some of the company’s most
promising businesses to their own affiliates. They did so at a price well
below the businesses’ market values and well below what the Jones Group
110
had paid for them just a few years before.
The move helped to destroy the company, which filed for bankruptcy in
2018.
Ultimately, a consortium of the old Jones Group’s creditors sued the
company’s former board of directors and others, alleging, among other
things, a breach of fiduciary duty. Judge Jed Rakoff, a sort of liberal lion of
the Southern District of New York, pointedly refused to dismiss their
claims. Judge Rakoff found that the directors had failed to conduct a
reasonable investigation into whether the sale to Sycamore would render
111
the company insolvent. It was a technical, narrow ruling, but it showed
how people might sue board members of other companies who approved
similarly disastrous sales to private equity firms. This was a lightning bolt
within the industry. Law firms sent out hurried client alerts. And the finance
commentator William Cohan wrote in his article for the New York Times,
“The Private Equity Party Might Be Ending,” that, given the chance that
officers and directors could now be held liable for private equity firms’
most brazen actions, “[t]he days of just selling a company to the highest
112
bidder regardless of the consequences—might just be over.” The
defendants, perhaps realizing what the case had revealed, quickly settled the
113
matter.
The suit showed what was possible: private equity–appointed board
members could finally perhaps be held legally liable for decimating
companies. Of course, there are challenges to bringing these sorts of suits.
Corporate directors are generally insulated from liability by the “business
judgment rule,” which typically protects executives’ decisions made in good
114
faith. And executives have learned, in advance of major sales, to get
materials from their financial advisers assuring them of the reasonableness
 115
of their actions. But private equity firms are getting increasingly bold,
and their acquisitions increasingly financially unreasonable: as far back as
2014, 40 percent of private equity deals used debt in excess of what the
Federal Reserve considered financially sustainable; that number has likely
116
increased considerably. These sorts of decisions can ruin companies and
careers, but potentially they can be challenged under the law.

THE AMERICAN JUSTICE system today is tremendously solicitous and

supportive of private equity. Firms have built whole businesses not on
raising the quality or reducing the costs of their products but on simply
suing their customers. They’ve spent enormous sums to insulate themselves
from the legal consequences of their actions, and they’ve both benefited
from and shaped the law on class actions and arbitrations to their own
benefit.
But we can do something about this. Plaintiffs’ lawyers can educate
judges on just how private equity firms work. Mass arbitrations can be a
tool for fighting inequity. So too may be suits for breaches of fiduciary duty.
There are creative ways in which private equity firms may be held
responsible for their actions. All we need are the lawyers to act.
 CHAPTER NINE

PRIVATIZING THE PUBLIC SECTOR

Private Equity in Local Government

In 2014, Middletown, Pennsylvania, was in trouble. The small borough was

tens of millions of dollars in debt to service its water and sewer system and
1
employee benefit program. In addition, its pension obligations to retired
2
police were rising. Middletown was unlikely to grow its way out of the
3
problem, as its population had been declining for decades. Moreover, the
4
per capita income ran thousands of dollars below the national average, and
in a borough of nine thousand people, less than one-fifth of residents had
5
bachelor’s degrees and nearly one in six people lived in poverty.
In 2014, the city’s leaders hit upon an idea, one that had been pursued
with apparent success by other cash-precarious towns: lease the water
system. For an upfront payment and some annual revenue, Middletown
would let a company manage its water utilities and collect fees from its
citizens. The company the town chose was Middletown Water Joint Venture
LLC, led by the private equity firm KKR. It was a “good decision” for the
6
“long term,” according to city council member Ben Kapenstein. “I think
7
the citizens got a good deal,” he said.
It did, indeed, seem like a good deal for Middletown. KKR was offering
to make essential investments in the city’s water system, federal funds for
which had dried up long ago. And even though KKR would be paying for
those investments, Middletown would continue to own the infrastructure:
the project was merely a lease to the joint venture. KKR promised, in
general, not to raise rates for four years, after which it would be allowed to
8
do so only at a certain percentage above inflation. And most importantly,
Middletown was getting money—tens of millions of dollars upfront and
9
hundreds of thousands of dollars every year —to deal with the city’s debt
10
and pension liabilities.
But if the deal seemed too good to be true, it was, of course. The joint
venture was not initially allowed to raise rates—in general. But in fact, it
could do so if demand fell below a threshold, one that was pegged to the
11
city’s water consumption in a year of particularly high demand. When,
unsurprisingly, residents’ water use fell below that peak, the operating
12
company assessed a 11.5 percent rate increase.
In a place like Middletown, where incomes were not high, these
increases were not affordable. On Facebook, Jackquline Foster wrote that
“Middletown is just becoming to[o] expensive,” and that she was “barely
13
surviving now being a single mom of 3.” Sheila Hinkson commented,
“guess I cut the cable off and forget the Internet[,] not to mention doctor co-
pays etc.… Maybe even have to take a bath every other day? When does it
14
stop?” Tom Buck complained—accurately, as it turned out—that “we can
post and bitch all we want on Facebook but that won’t change a damn
15
thing.”
It became increasingly clear that the operating company and KKR had
simply out-negotiated the small city of Middletown. One of the members of
the lease exploratory committee—a city council member—was just four
16
years out of college. In subsequent litigation, the city said that the
companies foisted the loophole that allowed the rate increases in the final
days of negotiation, a tactic that the city perhaps did not understand at the
17
time, and certainly did not address. Ultimately, recognizing its own error,
Middleton sued to get out of the contract but without success. The city’s
primary argument—that KKR and its operating partner could not have
actually intended these enormous rate increases—was weak, and the
defendants were represented by Allen and Overy, one of the largest law
 18 19
firms in the world. The judge dismissed the city’s case, and the lawsuit
proved to be another instance in which the city was simply no match,
strategically, for KKR.
KKR and its operating partner, eventually named Suez, were great at
negotiating the deal but bad at running the system. In 2018, Suez alerted
residents that one of its disinfection systems had failed and urged them to
20
“BOIL YOUR WATER BEFORE USING.” The company’s advisory
assured residents that they should not be concerned, even if “the water is
yellow,” though they directed residents to disinfect their water even for
tasks as small as brushing one’s teeth. Yet Suez declined to provide bottled
water to residents. Meanwhile, KKR sold its 90 percent stake in the project
21
to another private equity firm, tripling its money in under four years. The
town, it appeared, had been played.
The situation was even worse in Bayonne, New Jersey, which had taken
a similar deal with KKR and its operating partner a few years before. In
announcing the agreement, the parties made big promises. A law firm hired
by the water authority estimated that the city could save over $35 million
22
over forty years. The CEO of the operating company extolled “KKR’s
long-term vision,” which, he said, “brings credibility to address America’s
23
water challenges.” The Clinton Global Initiative even featured the
24
partnership as an innovative new business model in its annual meeting.
In announcing the deal, Bayonne officials promised a four-year rate
freeze, but unsurprisingly, that never happened. Because the city had
guaranteed revenue to KKR and its operating partner and because people
were using less water than expected, rates increased substantially almost
25
every year. Moreover, Bayonne agreed to pay for any major infrastructure
repairs itself and, if it needed any money to do so, to borrow specifically
26
from KKR. In other words, the deal was almost comically lopsided. Yet
despite the talk of KKR’s “long-term vision,” within a few years, the firm
sold its stake to another private equity firm, in the same deal in which it
 27
offloaded its investment in Middletown, for $110 million. It nearly tripled
28
its money on the Bayonne project.
In the aftermath of the deal, citizens of Bayonne tried to find ways to
escape their forty-year contract, or at least live under it. “I’ve become the
water nazi,” one resident told the Hudson Reporter, “telling my family:
‘You’ve got two minutes in the shower.’” “I buy flowers that require little
29
water because I don’t want to use my water,” she added. A third resident
complained that she had been charged $900 for a single three-month period.
“There is no water being used other than our faucets and our toilets and our
30
shower,” she told the Jersey Journal. “I don’t know how to handle this.”
31
Liens against properties for unpaid water bills rose dramatically.
But there was little that residents, or Bayonne, could do. After hiring a
law firm to review its contract, the city found that the only way it could
escape its forty-year agreement would be to buy the parties out, for
hundreds of millions of dollars. This was an unaffordable proposition. And
so, while KKR left the deal after just a few years, having made tens of
millions of dollars, Bayonne was saddled for decades with an agreement
that its residents simply could not afford. Bayonne, like Middletown, had
been played.

THE DISASTERS IN Middletown and Bayonne are part of a much larger story
about how the basic facets of government are increasingly being privatized,
with the aid of private equity firms. For a variety of reasons, since the
1970s, the government has invested ever less, as a percentage of our
32
economy, in infrastructure. At the same time, states and localities, which
bear primary responsibility for education and emergency services, faced a
pincer move of declining federal aid and laws that limit their ability to raise
33
taxes. As a result, many infrastructure projects were never funded, and
governments have struggled to find ever more creative ways to continue
their basic functioning.
Private equity firms stepped in to fill this gap. Often through dedicated
infrastructure funds, firms invested in the projects to keep America running:
34
Carlyle bought into electric vehicle charging stations. KKR bought oil and
35 36
gas distributors. Riverstone Holdings bought power plants. And
37
Blackstone invested in cell phone towers. With a “huge funding gap” in
infrastructure, one Carlyle executive observed, there was an opportunity for
private equity firms to fund essential assets for “providing drinking water,
38
power, roads, and airports.” An executive at KKR said, “We are slowly
starting to see more cities looking at these partnerships given all the fiscal
39
pressures they’re facing.”
Beyond traditional infrastructure, private equity firms bought businesses
that offered services once provided primarily by the government, including
ambulance companies and firefighting departments, 911 dispatch services,
and technical colleges. In all these industries, the basic business model of
private equity, which demanded short-term results while insulating firms
from the consequences of their actions, yielded all the predictable disasters.
But these disasters had particular poignancy because the people betrayed,
overcharged, and underserved were simply using the services they had the
right to expect from their government. In other words, they had no other
choice.

TO BEGIN, PRIVATE equity firms bought—and hobbled—one of the leading

providers of 911 dispatch services. In 2006, the private equity firms Thomas
H. Lee Partners and the Quadrangle Group bought the West Corporation, an
40
operator of customer call centers. Among other things, West nominally
provided routing services for 911 dispatch, ensuring that local calls went to
the right departments. The problem was that, under its new ownership, the
company repeatedly failed in this basic task, leading to widespread failures
and thousands of calls that never reached emergency dispatchers.
In 2014, for instance, West suffered a six-hour outage that affected
41
eleven million people, or 3 percent of the entire country. Over six
thousand calls never reached a dispatcher, and for a time, virtually the entire
state of Washington was without a working 911 system. The FCC fined
42
West $1.4 million, which agreed to implement a compliance program. In
August 2018, a “human error” made by a West employee resulted in nearly
43
700 calls in Minnesota not connecting. West agreed to pay the FCC a fine
44
and, again, implement a compliance plan. In December of the same year,
West failed once more, with a thirty-seven-hour outage that resulted in
45
nearly 900 calls not being routed. And then again in 2020, West, now
named Intrado, had an outage in fourteen states for over an hour, in which
46
135 calls failed to reach their dispatchers. It agreed to pay $1.75 million
47
and, yet again, implement a compliance program.
Were the company’s cascading failures the fault of its private equity
owners? Plausibly, yes. Under their ownership, the company experienced
dramatic layoffs. In 2006, when it was first bought, West had 29,000
48
employees. By 2016, its last year as a public company, it had fewer than
49
11,000. Additionally, according to Reuters, the company “grappled with a
50
debt pile of more than $3 billion,” which by necessity made it harder for
the business to invest in its own operations. Meanwhile, as reported by
Fitch Ratings, the company identified $125 million in “cost savings,” which
51
is to say, budget cuts. The consequence of these three things—large
layoffs, borrowing, and budget cuts, all hallmarks of private equity
ownership—was that the company had fewer people and less money to
invest in the actual operations of the business. Inevitably “human error” and
the failure of a basic social service became all the more likely.
THE 911 DISPATCH was just one small part of private equity’s expansion into
emergency services; the far larger part was its acquisition of ambulance
companies. It may be surprising to learn that ambulances were once free,
overwhelmingly provided by the government—especially for younger
people who have only known the prohibitive costs of calling an ambulance.
In fact, in 1988, a national survey of cities found that not one had privatized
52
its ambulance services. But in the 1990s, amid municipal budget cuts and
a growing distrust in government, that began to change. By 1997, 16
53
percent of cities had privatized their ambulance services. By 2012, nearly
54
40 percent had. If localities were looking to sell their ambulance
operations, private equity firms were looking to buy them, as people who
called emergency services were willing to pay perhaps enormous sums to
save their own lives. So, over the course of fifteen years, Patriarch Partners,
Warburg Pincus, Clayton, Dubilier & Rice, and KKR, among other firms,
55
all bought ground ambulance companies. KKR and American Securities
also bought the largest air ambulance companies—those that delivered
patients by helicopter and plane—which, together with one other firm,
56
controlled two-thirds of the industry.
The results were upsetting and unsurprising. As reported by the New
York Times, within three years, a quarter of the twelve ambulance
companies recently bought by private equity firms went bankrupt. By
comparison, none of more than one thousand other, nonprivate equity–
owned companies that the paper tracked failed over the same period of
time. When one private equity–owned ambulance company, TransCare,
went bankrupt, fully 30 percent of its ambulances were not operating. Some
vehicles had brakes that didn’t work, while others took upward of four
hours to get started. “You really had to become a MacGyver in the field,”
57
one former employee told the Times. Response times at another
ambulance company, Rural/Metro, slowed after it was bought by the private
equity firm Warburg Pincus, and during some crises, the company simply
had no ambulances to dispatch.
While quality suffered, private equity firms kept companies focused on
their priority: profits. Rural/Metro, for instance, pushed its employees to get
patients to sign documents, even in times of dire need, so that the company
could bill them. “Almost always, if the patient is alert, they will be able to
sign” release documents, a poster hung in Rural/Metro ambulances and fire
58
stations explained.
While private equity firms cannot bear the full blame for rising costs,
over the past five years—a time when the industry continued to invest in
59
ambulances —costs for consumers rose 23 percent, such that, before
60
insurance is paid, a single ride now costs, on average, nearly $1,300. At
the same time, nearly half of all rides now result in surprise medical bills
for privately insured patients, a tactic particularly favored by private equity
61
firms. Among air ambulances, a single ride in a private equity–owned
plane or helicopter now costs, on average, $48,000, nearly $20,000 more
62
than with a nonprivate equity–owned company. Private equity firms
cannot fully explain the rising costs for ambulances, but the costs they
impose have become so ingrained in our social consciousness that the
industry, in essence, helped to transform an essential service into a luxury,
and an unaffordable one at that.
Beyond ambulances, at least two private equity firms are bringing these
same innovations to fire departments, which similarly command a captive
—and potentially lucrative—consumer base. In 2011, Warburg Pincus
bought Rural/Metro, which KKR in turn bought in 2018. Rural/Metro
contracted with cities to provide fire services and solicited individuals for
subscriptions in smaller communities, often in the arid Southwest.
The company also put out fires for nonsubscribers but at an enormous
cost. To take just one example, in 2013, Justine and Kasia Purcell’s mobile
63
home in Maricopa County, Arizona, burned down. The couple was away
from home at the time, preparing for the birth of a child, and arrived only to
see firefighters put out the remnants of their house, which was totally
destroyed. Some of those firefighters were from Rural/Metro, and though
they were unable to save the Purcells’ home, the company billed them for
nearly $20,000. Later, a spokesperson for Rural/Metro told HuffPost that
the Purcells “knew they had an obligation/option to pay our annual
subscription” and had “elected to… roll the dice that they would not have a
64
fire—they lost.” Such stories are not isolated. Reporters for the New York
Times spoke with more than a dozen people who had been sued by
Rural/Metro for putting out fires. One couple, the Addies, who similarly
lost their mobile home to a fire, were sued for about $7,000. To save money
to pay off the debt, Mr. Addie said, “We just eat two meals a day instead of
65
three.” (In contrast, Henry Kravis, the cofounder of Rural/Metro’s private
66
equity owner, KKR, is worth just shy of $10 billion. )
The stories above—on water utilities, ambulances, and fire departments
—tell some simple truths about the effect of the private equity business
model. In each industry, firms found cities and states that, starved of
revenue, were willing to give up their responsibilities for fiscal reprieve.
And in each, firms found a captive audience—citizens and residents—that
had little choice but to pay the prices charged. The money these people paid
did not go to local governments to help in the basic project of caring for one
another. Instead, it went to firms that were motivated not by the public good
but by private desires. People can demand these services back and force
governments to reclaim the responsibilities they lost. But the cost, in
money, time, and political effort, will be enormous.

firms are turning to higher education, the result,

FINALLY, PRIVATE EQUITY
once again, of government underinvestment. Historically, the task of
67
funding public colleges fell primarily to the states. But over the last two
decades, and in particular after the Great Recession, local investment in
higher education fell dramatically, while federal investment failed to fully
68
make up the difference. State schools faced significant budget shortfalls
69
and, in response, most raised tuition. Community colleges were
particularly hard hit and, for the first time, turned to tuition as a major
70
source of revenue, which increased substantially. This meant that
community and public colleges were no longer seen as an obviously
affordable path to higher education. This also meant that they had fewer
resources to make the kinds of changes, such as night classes and flexible
start dates, to meet students’ changing needs. Enter for-profit colleges, who
were able to turn their enormous marketing teams to steer students to their
programs who, in another era, might have gone to public institutions of
higher education. Underfunded community colleges were slow to adapt to
the lives and needs of their students, while for-profit enrollment officers
(i.e., salespeople) were there to help people navigate the system in a way
that publicly funded schools didn’t.
Such for-profit colleges were ideal acquisition targets for private equity
firms: they had lots of cash flow, a consumer base that, once enrolled,
would struggle to leave, and enormous revenue from the government in the
form of student loans and grants. So when enrollment in for-profits rose
dramatically in the 2000s (particularly after the Great Recession), private
equity firms began an aggressive push into the industry. Warburg Pincus
helped to create Ashford University. KKR and its allies bought Laureate
Education. Landmark Partners, with others, bought the Education
Corporation of America. And Apollo Global Management bought the
University of Phoenix. In all, the Private Equity Stakeholder Project
71
identified over fifty acquisitions of for-profit colleges.
The industry that private equity entered had a miserable reputation and
deservedly so. For every dollar of tuition they received, for-profits spent
just 29 cents on instruction, compared to 84 cents at private colleges, and
72
$1.42 at public universities. Students who attended for-profit bachelor’s
programs left, on average, with $14,000 more debt than their peers in
73
nonprofit colleges. And while for-profits enrolled just 8 percent of
74
students, they accounted for 30 percent of student loan defaults. Most
importantly, students who attended could expect to earn well below what
their peers at public schools made, and at least one study found that
graduates of for-profit colleges were no more likely to be hired than
75
candidates who attended no college at all.
But if it were possible, the outcomes at private equity–owned schools
were even worse than at ordinary for-profits. Research found that students
76
at these schools paid higher tuition and left with more debt. They were
less likely to graduate, less likely to pay off their loans, and less likely to
earn as much as their peers at ordinary for-profits. Private equity firms
invested less in faculty and more—much more—in sales even than did
other for-profits. As a result, they siphoned students away from nearby
community colleges. And all the while, they were more likely to be
investigated by the government, mostly for recruiting violations, such as
misrepresenting student loan terms, graduation rates, and employment
outcomes.
The case of Ashford University is instructive. Ashford began as the
77 78
Franciscan University of the Prairies, a small college run by nuns whose
campus in Clinton, Iowa, sat just off the Mississippi River. In 2005, the
private equity firm Warburg Pincus—now run by President Obama’s former
treasury secretary, Tim Geithner—funded a handful of executives from the
79
University of Phoenix to buy the school, sever its affiliation with the
Catholic Church, and repurpose it as a for-profit college, which they
80
renamed Ashford University. By doing so, the executives inherited the
college’s accreditation, which gave it access to federal financial aid.
With accreditation, Ashford’s new leaders were able to explode
enrollment. When they bought the college in 2005, it had just 332
81
students. Six years later, it had over 83,000, almost all of them enrolled in
the school’s online program. In just a few years, Ashford became the
second-largest degree-granting college in the country, and its revenue grew
from $7.9 million in 2005 to $968 million in 2012.
But Ashford, it turned out, was allegedly little more than a scheme to
extract money from its students. At a time when the school had over
seventy thousand enrollees, its online degree program allegedly had just
82
seven full-time faculty. A study led by Senator Tom Harkin found that in
2011, the school had over 1,700 recruiters, but one—just one—employee
devoted to helping its graduates find jobs.
Unsurprisingly, students had terrible outcomes. One former student
complained, “I’ve gotten my resume updated numerous times, I’ve applied
83
to well over 100 jobs, and years later I still don’t have a job in my field.”
Another said, after failing to find a job, “I have given up hope and I feel
like I wasted 4 years and all that money for a useless paper that hangs on
84
my wall.” According to the California attorney general, an alumni survey
conducted by Ashford itself found that over half of its respondents were
85
either unemployed or working in a field unrelated to their degree.
Separate studies reportedly found that barely a quarter of students enrolled
in bachelor’s degree programs graduated within six years, while just 10
percent of students enrolled in associate’s degree programs graduated
86
within three. As alleged in the same lawsuit, three years after leaving, less
than a quarter of students had paid any money toward the principal balance
87
of their loans.
An education at Ashford was almost worthless; it was also overpriced.
The four-year cost of an online bachelor’s degree, including tuition, fees,
88
books, and supplies, was over $60,000. By comparison, the average cost
of attending a local public four-year college in person, including room and
89
board, was less than half that amount.
And yet, Ashford enrolled tens of thousands of students through an
extraordinarily aggressive, highly successful, and potentially illegal sales
campaign. As the California attorney general subsequently alleged,
Ashford’s salespeople, misleadingly called enrollment advisers, university
90
advisers, or admissions counselors, told prospective students that federal
financial aid would cover the entire cost of their attendance and, in fact, that
surplus aid could be spent on cars and vacations. They said that the credits
earned from other schools would transfer to Ashford. And they promised
that entirely unrelated programs would help students achieve their
ambitions: one recruiter, for instance, allegedly told a student that a
program in acupuncture, reiki, and traditional Chinese medicine would help
him to become a biochemist. “They lied about the costs.… The tuition and
91
fees were outrageous.… So many lies,” said one student. Another student
added, “I didn’t realize how disregarded this degree [from Ashford] would
92
be until I couldn’t find a job.”
Recruiters also trapped students into enrolling. One of their alleged
tactics was to promise that federal financial aid would cover the cost of
attendance but that any award letters could be sent only after students
93
enrolled. Students would receive their letters months after classes started,
discovering then that they might in fact owe thousands of dollars
themselves. At that point, the students could withdraw or continue, but they
would be obligated to pay Ashford either way. This left students trapped. By
the time of the California lawsuit in 2017, students owed billions of dollars
94
to the government in loans and hundreds of millions to Ashford itself.
The salespeople were themselves under tremendous pressure. Managers
allegedly forced people to stand at their desks when they missed sales
95
targets and prodded them to make bets on one another’s performances.
One manager had a “Guess Who” game where she showed her team’s
metrics and asked people to guess who had gotten each. Another saved the
key cards of fired admissions staff on a key ring, which she would rattle in
front of salespeople to remind them of what would happen if they failed to
meet their targets. Because of these tactics, one director of admissions—that
is, one of the salespeople—at Ashford said, “you stop thinking of these
students as people, you start putting numbers on people.… Your entire day
96
was consumed with a number so that you wouldn’t get in trouble.”
Ultimately, California succeeded in its lawsuit against Ashford, which the
97
court ordered must pay $22 million for defrauding students.
In short, Ashford preyed upon students’ dreams: the dreams of an
affordable, accessible education that, due to declining government
investment, was ever harder to obtain. Ashford was in part able to
accomplish this—to create the patina of legitimacy—because of its real
estate. Recruiters were able to say that the school had a beautiful campus
and a tradition dating back to 1918, and that students were simply enrolling
in an online program from a reputable university, one in which the
instruction would be just as good as that delivered to the school’s in-person
98
students. But there were vanishingly few such students. In fact, the school
99
shut the physical location entirely in 2015.
Various government agencies investigated Ashford, but none succeeded
in closing it. First, Senator Harkin’s investigation into the for-profit college
industry generally and Ashford specifically found that spending on
instruction there fell from $5,000 to $700 per student after Warburg
100
Pincus’s allies bought the college. Meanwhile, more than twice as much
money went to profits and nearly four times as much went to recruiting as
went to actual teaching. Senator Harkin also revealed that Andrew Clark,
the chief executive of Ashford’s parent company, made $20.5 million in a
101
single year, more than twenty times that of his counterpart at Harvard. “I
102
think this is a scam,” Senator Harkin said, “an absolute scam.” Second,
in 2016, the Consumer Financial Protection Bureau fined Ashford’s parent
company tens of millions of dollars for offering private loans to its students,
which the company’s salespeople said students could pay off for as little as
103
$25 per month. This was false, and the bureau required Ashford to give
millions back to the students it misled. Third, in 2018, the Iowa attorney
general settled with the college for, among other things, charging students
in the middle of courses a surprise “technology fee” of $900 to $1,200.
104
Ashford agreed to return over $7 million back to students. Finally, there
were other investigations by the Massachusetts, North Carolina, and New
York attorneys general, as well as the US Department of Justice, the
105
Department of Education, and the Securities and Exchange Commission.
But none of these investigations succeeded in closing Ashford, which was
106
ultimately sold to the University of Arizona.
The private equity firm Warburg Pincus was central to the school’s
whole project. In its prospectus to launch as a public company, Ashford’s
parent gloated that the private equity firm had started the business,
107
alongside the college’s management team. After the company went
public in 2009, Warburg retained two-thirds of the company’s common
108
stock and held two seats on the company’s seven-person board, while a
109
third was held by a former employee of Warburg’s. As the attention on
Ashford turned sour, Warburg appeared to—but did not in fact—cut ties
with the school. In particular, after Senator Harkin’s deeply embarrassing
hearing on the company, Warburg filed papers to sell its stake in the
110 111
business (at the time it owned 65 percent of the company ). But it
didn’t actually divest, at least not meaningfully, because six years later, it
remained the company’s largest shareholder. Finally, in 2017, thirteen years
112
after its initial investment, Warburg sold its stake in the company —and
only then after another scandal over whether the school could accept money
113
from the Department of Veterans Affairs. Now, while Warburg Pincus
prominently discusses many of its investments on its website, there is
literally no reference to Ashford University on it.
But this makes sense. Ashford made hundreds of millions of dollars in
114
profits. Though the terms of Warburg’s investment are not public, a
portion of this money likely went to the private equity firm as the
company’s earliest investor and biggest shareholder. Why would it need to
advertise this fact? Warburg got everything it needed.

THE STORY OF Ashford University illustrates what could happen when

private equity got in the business of higher education. But there were so
many other schools owned by private equity firms and so many other
problems. For instance, graduates at the Austin campus of Southern
Careers, owned by Endeavour Capital, earned nearly $5,000 less than the
115
average Austin resident with only a high school diploma. Three years
after leaving school, less than a fifth of students there had paid back any of
their federal student loans. More generally, students at private equity–
owned for-profits were less likely to graduate and held more debt than
116
students even at other for-profits.
Moreover, not just Ashford, but other private equity–owned schools
engaged in deception. For example, Education Management Corporation,
owned at various times by Goldman Sachs’s private equity arm, Providence
Equity Partners, and Leeds Equity Partners, agreed to pay nearly $100
million to settle claims that it engaged in an illegal student recruiting
117
scheme. Education Affiliates, meanwhile, owned by JLL partners, agreed
to pay $13 million to settle claims that it violated the False Claims Act and
118
submitted false student loan applications to the Department of Education.
Some private equity–owned schools even exceeded Ashford in certain
ways, by, for instance, abandoning their students midway through the
school year. Vatterott College, for example, owned by TA Associates, shut
119
down on a day’s notice. Education Corporation of America, supported by
Willis Stein & Partners, shut down with similarly little advance warning.
This dizzying abandonment, perhaps more than anything, showed that these
schools were interested in taking from, rather than educating, the students
who enrolled with them.
These disastrous outcomes were so common because the problems of
for-profit colleges and the problems of private equity compounded upon
one another. If for-profit colleges were, by definition, concerned primarily
with making money, private equity firms exacerbated that perspective by
loading companies up with debt, extracting fees, and demanding returns in
just a few short years. If for-profits insufficiently considered the needs of
students, private equity firms made the problem worse, knowing that they
were unlikely to be held legally liable for the consequences of their own
actions.
But private equity wasn’t alone. Allies in the federal government didn’t
just allow for-profit colleges to flourish: they overwhelmingly subsidized
them. For example, between 2006 and 2016, Ashford got between 80 and
87 percent of its money from the federal government, primarily through
120
federal student loans and grants. This was not unusual: on average, over
80 percent of revenue from private equity–owned for-profits came from the
 121
government. In fact, the industry’s reliance on these loans and grants was
so intense that the Department of Education had a rule that no more than 90
percent of colleges’ revenue could come from it. (For-profits circumvented
the rule nevertheless: Southern Careers Institute, owned by Endeavour
Capital, actually got 98 percent of its revenue from the government.)
The government tried to constrain some of the industry’s worst instincts
but with limited success. In 2014, the Obama administration issued the
“gainful employment” rule. Under it, colleges whose students generally had
debt payments more than 12 percent of their incomes could lose their access
122
to federal financial aid. Though the rule took years to implement, it had
an effect: colleges shut down some of their worst-performing programs and
123
instituted tuition freezes. Several private equity–owned for-profits failed
under the rule, including programs at the University of Phoenix (owned by
124
Apollo Global Management), the Fortis Institute (owned by JLL
Partners), and Brightwood College (owned by Landmark Partners and
125
Vision Capital). Apollo said that it would close programs likely to fail
126 127
under the rule, Fortis eventually shut down some campuses, and
128
Brightwood College eventually closed entirely.
Implementing the rule was a tortuous process, however. The drafters
took eight years to research the issue and considered 190,000 public
129
comments. Along the way, they faced $16 million worth of industry
130
lobbying, spent particularly to hire Democrats close to the White House.
And after the rule was implemented, Congress and the courts were
aggressively pushed to stall or stop it. For instance, House Education
Committee chairman John Kline, who subsequently received over $100,000
from the for-profit industry, held a hearing called “The Gainful
Employment Regulation: Limiting Job Growth and Student Choice” and
claimed that the regulation would hamper the creation of career training
131
programs and stifle job growth. Meanwhile, after winning an injunction
132
against an earlier version of the rule in 2012, for-profit trade associations
brought lawsuits in New York and Washington, DC. Both suits ultimately
133
failed, but it took years for the courts to resolve the matter.
Although the rule survived these legal changes, once Donald Trump was
elected president, his administration acted quickly to undo it. In particular,
President Trump’s secretary of education, Betsy DeVos, was an advocate for
for-profits and delayed the rule, suspended it, and proposed rewriting it,
134
before ultimately rescinding it in 2019. Along the way, her department
acknowledged that doing so would cost the government $6.2 billion over
135
ten years. The Biden administration ultimately vowed to revive some
version of the rule but chafed at simply returning to the old one, which it
said was now technically outdated, and actually went to court to prevent it
136
from being implemented. All of which is to say that, nearly a decade
after the rule was first promulgated, for-profit colleges and their private
equity owners are not bound by any gainful employment regulation.
Under Secretary DeVos—a longtime advocate for the for-profit industry
137
who herself invested in private equity —the government found other
ways to support the for-profit industry. DeVos disbanded the team that was
138
investigating fraud at for-profit colleges. She restored recognition for the
accrediting body that oversaw several collapsed for-profits, and she hired
several for-profit allies to work in her administration, including a former
executive at Warburg Pincus’s Ashford University, Robert Eitel, who
worked at the Department of Education for a time without even leaving his
139
old job. With Eitel at the department, DeVos worked to dismantle another
Obama-era regulation on for-profits, the “borrower defense” rule, which
allowed students to discharge their debts when colleges lied about their job
140
placement rates or otherwise broke state consumer protection laws.
141
Under the Obama rule, students received, on average, $11,154 in relief.
142
Under DeVos’s replacement rule, they received $523. The Biden
administration announced plans to review DeVos’s rule, but like so many
other federal regulations, doing so could take months or years.
 In short, the government subsidized the for-profit college industry but
did little to constrain its predation. It was an industry that preyed upon
people’s dreams. But it was an industry that existed in large part because the
government at the local and state level was unable to help people realize
those dreams themselves. States’ relative decline in higher education
funding and the inability to compete with for-profit marketing meant that
students moved from public universities and community colleges to for-
profits. And throughout, private equity firms were ready to fund the entire
endeavor, making an already predatory industry worse.

IN THE STORIES above—in infrastructure, emergency services, and higher

education—private equity is both a symptom and a cause of the problem.
Though the basic logic of private equity made life worse for people who
depended on running water, reliable ambulances, and affordable education,
private equity only entered these businesses because governments chose to
reduce their commitment to residents. For those who have pushed the
philosophy that private industry in general—and private equity in particular
—can always provide better and cheaper services than the government,
these stories are a painful rebuttal. And for those of us who have lived with
the consequences of that ideology, they show that we can demand that our
governments do better. As explained later in Chapter 12, we can sue to stop
private equity’s predation in these industries. We can return the basic
responsibilities of infrastructure and emergency services to our local
governments. And we can demand that these services be affordable. That
our governments once took on these responsibilities as a matter of course
shows that, in fact, they can do so again.
 CHAPTER TEN

THE INDUSTRY’S STRONGEST ADVOCATES

Private Equity in Congress

Private equity is a force in Congress. Since 1990, the industry has given
1
over $896 million to congressional candidates and members. This
distribution of money has been bipartisan, with Republicans getting more—
2
but just slightly more—than Democrats. But this money tells only part of
the story of the industry’s influence. As noted earlier, private equity firms
are populated with people who once held the most powerful positions in
government. In addition to cabinet secretaries, generals, and two Speakers
of the House (Paul Ryan and Newt Gingrich), any number of former
3
congresspeople and senators now lobby on behalf of the industry and
4
several serve as their advisers or board members. Perhaps even more
importantly, the industry offers a home not just for former leaders in
government but for their staff too. The lobbying disclosure forms for the
largest firms are filled with the names of former government employees:
former chiefs of staff and counsels, former legislative directors, and former
5
special assistants. This means that when someone in government is lobbied
by a private equity firm, the person doing the lobbying may be a friend or a
former boss. It also means that those currently in government know that,
quite likely, they have a home to go to when their time in public service
comes to an end.
As a result, private equity has become one of Congress’s most important
constituents. Through its money and connections, the industry has worked
its unpopular will on Congress to enact surprise medical billing. It protected
its preferred tax benefit, the carried interest loophole, despite its astounding
unfairness and a fifteen-year campaign to end it. It extracted money from
Congress during the pandemic. And it evaded oversight when firms,
however inadvertently, damaged our national security. Quite simply,
Congress works for few constituencies harder than it works for private
equity.
All of the issues just mentioned are concerning, but it is the first—
surprise medical billing—that tends to touch Americans most directly. For
instance, Drew Calver was forty-four years old when he had his heart
6
attack. Perhaps even more than most cardiac episodes, it was unexpected:
Calver was a healthy high school teacher and swim coach and had
competed in an Ironman Triathlon just a few months before. As he
collapsed onto his bedroom floor, Calver called out to his young daughter
and used the voice recognition feature on his phone to send a text message
to his wife, who was at the grocery store at the time. Ultimately, a neighbor
got to Calver and took him to a nearby hospital. Doctors implanted stents in
his clogged artery the next day.
As reported by Kaiser Health News and NPR, Calver recovered, but at a
terrible financial cost. The hospital charged him $164,941, of which he was
7
personally responsible for over $100,000, despite the fact that Calver had
insurance and that he even had the wherewithal to ask from his hospital bed
whether it could cover the cost of his care (he was assured it would). But
while his insurance company nominally agreed to pay for his operation, it
and the hospital failed to settle on a price. The hospital, managed in part by
the private equity–funded HCA Healthcare, billed Calver for the
extraordinary remainder. “I can’t pay this bill on my teacher salary,” Calver
8
said, “and I don’t want this to go to a debt collector.”
After Calver’s story was reported, the hospital that treated him
9
dramatically lowered the amount it demanded. But he was lucky; few
people in America can expect national coverage for their own billing crises.
Unfortunately, Calver’s crisis is achingly typical. In a country where two-
10
thirds of bankruptcies are the result, in part, of medical emergencies,
almost two in five Americans are “very worried” about receiving surprise
 11
medical bills. These typically occur when a patient seeks treatment at a
hospital or clinic that is nominally within their insurance network but is
12
cared for by a doctor who is not and so is billed at an out-of-network rate.
Nearly one in five emergency room visits and one in six hospital stays
13
result in such a surprise bill. The problem is particularly acute for
ambulances. Fully half of emergency ground trips result in out-of-network
charges, and about two-thirds of trips on air ambulances—helicopters and
planes—are out-of-network for the patients they carry, at an average cost of
14
over $36,000 for each helicopter ride.
Private equity firms are responsible for much of this. Doctors once
15
worked directly for hospitals or on individual contracts. But in time, and
as discussed previously, these hospitals shifted to rely on physician staffing
companies to populate their facilities. Physician staffing companies often
depend on creating surprise, out-of-network bills for the patients in their
care. And in the last decade, private equity firms bought them up. As
16
described in Chapter 5, in 2016, Blackstone bought TeamHealth, with
17 18
over twenty thousand employees, and in 2018, KKR acquired Envision,
19
with over seventy thousand. The private equity owners loaded up both
these businesses with debt, which together provided staffing for about a
20
third of all emergency rooms. At the same time, some of the same private
equity firms bought up ground and air ambulance companies. KKR bought
21 22
Air Medical Resource Group and American Medical Response;
23
American Securities bought Air Methods; and Patriarch Partners bought
24
TransCare, among other acquisitions.
Little good came from private equity firms entering the market.
Researchers at Yale found that after Blackstone-owned Envision took over
staffing at nearly two hundred emergency rooms, most—and in some
25
extraordinary cases, all—of their bills became out-of-network surprises.
“I discovered a pattern of inflated bills and out-of-network bills,” one
 26
doctor at such a hospital told the New York Times. “What they are doing is
27
egregious billing.” On average, emergency room patient costs increased
28
83 percent after the company took over. “It almost looked like a light
29
switch was being flipped on,” said one of the researchers. (In a statement
to the Times, Envision’s subsidiary EmCare called the study “fundamentally
30
flawed and dated.”)
This seemed like precisely the kind of issue that Congress should solve,
and at the end of the last decade, there was broad, bipartisan support for
action: 90 percent of Democrats, 75 percent of independents, and 60 percent
31
of Republicans wanted the government to prohibit surprise medical bills.
The key issue for Congress, however—beyond whether to act at all—was
whether to set bill prices through benchmarking or through arbitration.
Under benchmarking, out-of-network bills would be set at, say, the median
price that insured patients paid. So, for example, if the average in-network
patient paid $2,500 to treat a broken arm, an out-of-network patient would
be billed the same. Under arbitration, the provider—often the staffing
company like Envision or TeamHealth—and the insurer would go before a
third party to determine a “fair” price. This way an arbitrator would decide,
considering various factors, how much a patient should pay to mend a
broken arm. Benchmarking was simpler and cheaper and would more likely
have lowered health care costs. Arbitration was more complicated and less
likely to do so. To the extent that they were willing to accept any
legislation, staffing companies and their private equity owners preferred the
latter proposal.
In 2019, despite all the ordinary dysfunction in Congress, committees in
32
both the House and Senate neared agreement on a compromise solution.
Under it, small bills would be benchmarked to the in-network rate, while
33
large bills would go to arbitration. Even the White House had apparently
agreed to the plan. It actually looked like something might happen. But for
the private equity–owned staffing companies, this was an existential fight.
State-level legislation had reduced out-of-network billing by more than a
34
third in New York. Similar federal legislation could be mortally damaging
to TeamHealth and Envision, both of whom, thanks to their private equity
35
ownership, were billions of dollars in debt.
And so staffing companies and their private equity owners spent money
—lots of money—to kill the bill. A mysterious group called Doctor Patient
Unity, later revealed to be funded by Blackstone’s Envision and KKR’s
36
TeamHealth, spent $54 million to oppose surprising billing legislation.
Their ads said that the bill was the “first step toward socialists’ Medicare-
for-all dream” and was an effort by big insurance companies to “profit from
37
patients’ pain.” The group was also unusually aggressive in whom it
targeted. For instance, it deluged Senator Tina Smith with $2 million in
attack ads, even though she supported the softer arbitration, as opposed to
benchmarking, proposal (Senator Smith said that she thought the ads were
38
“designed to intimidate us” into dropping the legislation entirely).
And Doctor Patient Unity wasn’t the only private equity–affiliated group
agitating against change. Physicians for Fair Coverage, a half dozen of
39
whose corporate board members were funded by private equity firms,
40
spent $4 million in just three months. Their ads claimed that surprise
billing legislation “would cut money that vulnerable patients rely on the
most” and that “seniors, children and Americans who rely on Medicaid
41
would be hurt.” (The ad, in addition to being wrong, was a non sequitur:
surprise billing legislation was completely unrelated to Medicaid.) A third
group, American Physician Partners, hired three lobbying firms and a
42
former congressman to make their case in Congress. The organization was
affiliated with several staffing companies funded by the private equity firm
43
Welsh, Carson, Anderson & Stowe.
Ultimately, a more direct touch solved private equity’s problem:
Blackstone, which owned TeamHealth, gave Representative Richard Neal,
44
the chairman of the powerful Ways and Means Committee, over $31,000.
And so, in December 2019, just as Congress was finalizing compromise
legislation, Neal and a colleague introduced a competing proposal that
appeared to rely on arbitration alone. Neal’s proposal wasn’t even an actual
bill—it was a one-page description of a potential bill—but it was enough to
45
shatter the fragile coalition that supported compromise legislation. One
Republican aide told BuzzFeed News that “there is extreme frustration. This
was the deal. It was vetted. It was signed off on. It was approved. The
46
White House endorsed it.” And yet, the deal was dead.
The next year, Congress tried again, and again, Representative Neal
47
almost killed the bill. Only after repeated intervention by Speaker Nancy
48
Pelosi did Congress, remarkably, manage to pass any legislation. But the
bill that passed was weaker than the benchmarking proposal, weaker even
than the compromise legislation that had been proposed the year before.
Instead, all types of medical bills would be pushed into a complicated
dispute resolution process that could result in arbitration: essentially,
Representative Neal’s proposal. And once there, arbitrators were
circumscribed in what they could consider in determining a fair price and
could not, for instance, consider the cost that Medicare or Medicaid paid for
49
similar procedures, something that would likely have saved people
money. Additionally, surprise bills from ground ambulances—bills that
50
averaged $1,200 per ride, often from private equity–owned companies—
51
were excluded from the legislation entirely.
The bill, undoubtedly, was progress: most Americans would not
experience surprise medical bills in the way that they had before. But by
resorting to arbitration, Congress failed to actually address the exorbitant
prices that companies like Envision and TeamHealth threatened. Those
prices would likely be absorbed into higher insurance premiums, which, in
turn, would be passed on to consumers. That TeamHealth praised the
52
legislation upon passage was a sure sign that the problem remained.
Even after Congress passed the bill, private equity’s lobbying didn’t
stop. In 2021, the Biden administration issued a rule to implement the
legislation. Private equity–owned providers, however, apparently felt that
the regulation would sway arbitrators toward awarding too-low fees. And
so, in November of that year, 150 members of Congress sent a letter to the
53
relevant agencies, urging them to weaken the rule. The letter’s lead
authors all received large donations from Blackstone, KKR, and private
54
equity–backed physician staffing companies. And they weren’t alone.
Senators Bill Cassidy (who, in the 2020 election cycle, received over
55
$57,000 from KKR and over $13,000 from Blackstone) and Maggie
Hassan (who received $12,000 from a private equity–funded staffing
56 57
company) wrote their own letter. So too did Representatives Kevin
58
Brady ($14,000 from Blackstone) and Richard Neal ($31,800 from
59
Blackstone).
The letters weren’t just nudges to the regulators; they were a way to
shape the history of what Congress intended with the legislation. This
proved quite useful when several providers sued to enjoin the rule. In their
opening brief, the companies actually cited Brady and Neal’s letter to argue
that the Biden administration had misinterpreted Congress’s intent in
60
writing the regulation. The letters were, in effect, tools to rewrite
congressional history. And private equity, having largely won in Congress,
was now using that history to win further advances. The industry was
relentless, and it was enormously successful.

IF PRIVATE EQUITY exercised power in Congress to protect its ability to issue

large medical bills, it demonstrated overwhelming—and overwhelmingly
successful—force to protect its prized tax benefit: the carried interest
loophole. As explained in Chapter 1, private equity firms were historically
compensated on a 2-and-20 model: every year, they would take 2 percent of
the assets they managed and 20 percent of the profits they earned past a
certain threshold. The 2 percent of assets was taxed as ordinary income,
while the 20 percent was taxed at the lower capital gains rate. Intuitively,
this seemed unfair. Though private equity executives were earning income
just as most people did, much of the money they made was taxed at a far
lower rate than for the rest of us. This trick was what became known as the
“carried interest loophole.”
 In 2006, Victor Fleischer, then a professor at the University of Illinois,
brought this loophole to national attention in an unexpectedly popular law
61
review article. Fleischer’s point was that by taxing a large part of private
equity executives’ compensation as capital gains, rather than as ordinary
income, many executives in the industry could have lower effective tax
rates than did ordinary Americans. A decade and a half later, the news that
the very rich may pay relatively little in taxes is no surprise, but at the time,
it was a revelation. Multiple members of Congress introduced bills to close
the loophole, and then Senator Obama campaigned against the tax
62
preference.
63
But then Blackstone staffed up. In 2007, the firm and its companies
spent over $5 million on lobbying—more than five times what it spent the
year before—to employ dozens of former staffers and a couple
congressmen. By 2011, Blackstone’s spending rose to over $8 million
annually. (Carlyle, KKR, and Apollo also spent millions on lobbying during
64
this time.) And with that spending came results: none of the reforms
introduced in Congress, or proposed by the president, went anywhere. After
65 66
becoming president, Obama tried repeatedly, in 2011 and again in 2015,
to create momentum on the issue but failed each time. Toward the end of
the Obama administration, Steve Rosenthal of the Tax Policy Center
reflected that the private equity industry had “tied up the Congress for six or
seven years.” Remarking as one might about a bank heist, “[i]t’s really
67
phenomenal,” he said.
The industry would tie up Congress for many more years. President
Obama’s successor was generally regressive on most tax issues, but he had
a curious distaste for carried interest. As a candidate, Trump claimed that
the loophole had “been so good for Wall Street investors and for people like
68
me but unfair to American workers” and promised to eliminate it.
Multiple times, the president reportedly tried to close the loophole as part of
his 2017 tax cut package, and multiple times he was rebuffed. The about-
faces in Congress during this time were almost comical. In late November
2017, for instance, Susan Collins proposed to pay for an expanded child
 69
care tax credit by closing the carried interest loophole. But just one day
after she made the proposal, two Republican officials (one of whom—Drew
Maloney—later left to run the private equity industry’s main lobbying arm)
said that she had retreated on carried interest. As if in reward for her
reversal, Collins subsequently became a major recipient of private equity
donations: KKR and Blackstone numbered among her largest
70
contributors, and Blackstone’s Stephen Schwarzman personally gave $2
71
million to a super PAC that supported her.
Faced with a strong constituency in Congress for protecting the tax
benefit, Treasury Secretary Steve Mnuchin—an investor who subsequently
72
formed his own private equity fund —fashioned a compromise of sorts.
Under it, carried interest treatment would apply to the profits of assets held
longer than three years; less than three years, and profits would be treated
73
as ordinary income. The problem was that private equity firms typically
held their investments for far longer than that, meaning that vanishingly few
private equity firms would actually be affected by the change. The deal
“was structured by industry to appear to do something while affecting as
few as possible,” said Victor Fleischer, the law professor who first brought
74
attention to the issue. As if to cement the tight bond between Mnuchin and
private equity, the next year, his key legislative adviser left to run the
75
industry’s lobbying association.
With Trump having failed to meaningfully address the loophole, the task
fell finally to his successor. President Biden initially proposed, as part of his
first budget, to raise the capital gains rate and eliminate the carried interest
76
loophole for people with very high incomes. But as his proposal wended
77
its way through Congress, it grew weaker. By the fall of his first year as
president, the carried interest solution was reportedly no longer a part of his
78
budget negotiations. “This is a loophole that absolutely should be closed,”
Jared Bernstein, one of the president’s senior economic advisers, told
79
CNBC. But “when you go up to Capitol Hill and you start negotiating on
taxes, there are more lobbyists in this town on taxes than there are members
 80
of Congress.” This was true: there were over 4,100 lobbyists registered to
work on tax issues, or about 7 for every 1 member of Congress. Moreover,
while the administration was pushing to close the carried interest loophole,
lobbying by private equity firms surged: Carlyle spent over $3 million in
81
2021, KKR over $4 million, Blackstone over $5 million, and Apollo over
82
$7 million. Apollo alone employed the former general counsel to the
83
House Republican caucus, a former senior adviser to a past Speaker of the
84 85
House, a former chief of staff to another Speaker, and a former US
86
senator, among more than a dozen other former officials.
Eventually, even the modest increase in the capital gains rate that Biden
proposed failed. Senator Kyrsten Sinema conditioned her support for
President Biden’s revived Build Back Better legislation, by then renamed
the Inflation Reduction Act, on making no modifications to the carried
interest loophole. Looking at her contributors, this was unsurprising. By
year-end 2021, two of Senator Sinema’s top five donors were private equity
87
firms; a third was Goldman Sachs. Meaningful tax reform and a final fix
for the carried interest loophole never stood a chance, it seemed.
Incredibly, in the debate over the legislation, private equity managed not
just to protect its tax advantage but gain a new one. The Inflation Reduction
Act established a corporate minimum tax for companies making over $1
billion in revenue a year. A key question was whether private equity firms
and their portfolio companies would be considered together or apart for the
purposes of calculating such revenue. This mattered, as it would mean that
most private equity firms’ portfolio companies would be subject to the
minimum tax. But if they were exempted, it would give firms an advantage
over other acquiring firms, as it would mean that the acquired companies
might avoid paying a minimum rate.
As the legislation was considered on the floor, members of Congress
rejected dozens of amendments, including amendments to extend the child
tax credit, to cover dental, hearing, and vision benefits under Medicare, and
88
to expand access to free preschool. One of the few amendments they did
approve was one to clarify that companies owned by the same investor—for
instance, a private equity firm—would not be considered together for
89
purposes of the minimum tax. In short, private equity firms not only
protected their preferred tax advantage, the carried interest loophole; they
actually gained a new one. Yet again, the industry’s allies in Congress
delivered for private equity as they did for few others.

PRIVATE EQUITY’S FIGHTS to protect surprise medical billing and the carried
interest loophole illustrate the industry’s effectiveness in Congress in
scuttling legislation and avoiding taxation. But private equity firms have
also been effective in convincing Congress to, quite simply, give them
money. For instance, at the outset of the pandemic, the industry received
over $5 billion in federal assistance, in part through programs meant to help
90
small businesses. This might not have been so objectionable—COVID
didn’t distinguish between corporate ownership structures—except that the
private equity firms whose companies received this money held over $908
billion in reserves. This meant that private equity firms, which might
otherwise have had to spend their own money rescuing their portfolio
companies, could simply do more deals instead. And that’s exactly what
happened: the ten firms that received the most bailout money did 230
91
leveraged buyouts in just nine months. More importantly, this also meant
that private equity firms could appropriate bailout money from their
portfolio companies. For instance, businesses that Apollo, Blackstone,
Carlyle, and KKR owned together got $1.8 billion in aid in 2020. But that
year, those same firms extracted $5.4 billion in management fees from their
businesses. In other words, with hundreds of millions of dollars flowing
from Congress to their companies, private equity firms were able to take
that money—and more—for themselves.
At the same time, private equity firms convinced the Department of
Health and Human Services to give them more than $1.5 billion in no-
interest loans through programs that Congress greatly expanded during the
92
pandemic. KKR and its subsidiaries, for example, got nearly three
hundred loans that totaled more than $60 million, even though the firm
itself had over $58 billion in reserves. Apollo Global Management and its
subsidiaries, meanwhile, received at least $500 million, despite the fact that
93
Apollo had $46 billion in cash on hand. These loans were initially due
within seven to twelve months, when, in October 2020, Congress further
94
delayed repayments. This free money was unnecessary for the private
equity firms but allowed them to finance their various adventures free of
charge. Not without reason, two Apollo executives said that the pandemic
95
was a “time to shine.”
How did the industry accomplish this? The path is not perfectly clear,
though it is worth noting that eighteen private equity firms and the
industry’s trade association together spent $32 million on lobbying in
96
2020. These firms further disclosed that they lobbied on the CARES Act,
97
Congress’s primary emergency legislation during the pandemic. While it
is difficult to know what happened in the meetings their lobbyists had with
legislators, it seems clear that private equity spent large sums of money to
get even more money from the government.

CONGRESS HAS THE responsibility not just to legislate but also to investigate
and oversee. Its various committees have the power to compel testimony
and the production of documents, to issue reports, and to ensure that issues
of national importance are receiving their due. But just as private equity got
its way in legislation and appropriation, it managed to avoid Congress’s
tools of oversight. Here, the case of SolarWinds is instructive. That
company sold software to help companies manage their computer networks,
and its products were enormously popular: the company reportedly had
98
over 320,000 customers and contracts with the government worth $230
million. “We manage everyone’s network gear,” SolarWinds CEO once
99
boasted.
 In 2016, the private equity firms Silver Lake and Thoma Bravo bought
100
SolarWinds for several billion dollars. Thoma Bravo’s basic strategy was
simple: buy and combine companies, increase their prices, and cut costs by
101
hiring employees in other countries. These moves were typically
accompanied by layoffs, often of 10 percent or more of a company’s
102
employees. And that’s largely what happened with SolarWinds. The
103
company bought up several competitors and moved some of its software
104
development to Belarus. According to the New York Times, “every part of
the business was examined for cost savings and common security practices
105
were eschewed because of their expense.”
With an obsession over savings, SolarWinds allegedly neglected its own
security. One former employee claimed that the company internally relied
on older operating systems and web browsers that were more vulnerable to
106
attack. Plaintiffs in a class action lawsuit said that the company failed to
107
create a password policy or cybersecurity training for its employees. And
a cybersecurity researcher discovered that the company accidentally
published—and failed to take down for over a year—the password to its
108
update server, from which customers downloaded its software. (Almost
109
comically, that password was “solarwinds123.”) Allegedly, the company
even advised customers to disable their own antivirus tools before installing
110
SolarWinds software, a recommendation that put its own users in danger.
Allegedly, this neglect was no accident. In 2017, a cybersecurity adviser
for the company met with SolarWinds executives and implored them to
improve their internal security. Failure to do so, he warned, would be
111
“catastrophic.” But under Silver Lake and Thoma Bravo’s management,
SolarWinds apparently declined to follow his advice. As alleged in a
subsequent lawsuit, one participant said that the CEO “won’t like spending
112
that kind of money” to make internal reforms. The adviser resigned in
protest and subsequently said that a major breach of the company was
113
inevitable.
114
That’s precisely what happened. Sometime in 2019, hackers affiliated
with Russia’s intelligence service managed to embed malicious code into
115
the software update for one of SolarWinds’s most popular products. Over
the course of several months, thousands of customers downloaded the
116
infected software, through which the hackers were able to steal users’
credentials and access ever more sensitive parts of their victims’
117
networks. Hundreds of businesses and at least a half-dozen federal
118
agencies were infected. Many of the details of the hack remain secret, but
the government revealed that, at the very least, the intruders were able to
119
access the emails of senior officials at the Treasury Department and
120
prosecutors at the Justice Department. One government official called it
121
“the worst hacking case in the history of America.”
It’s hard to say that Thoma Bravo and Silver Lake’s cost cutting
inevitably led to the attack, just as it’s hard to say that the budget cuts at
Carlyle’s nursing homes inevitably led to more accidents and deaths. But
the drive to cut costs, to increase profits over long-run sustainability,
permeated the company’s culture. And the particular decision to shift
software development to Eastern Europe, where Russia had deep
122
connections, potentially exposed SolarWinds to just this sort of attack.
Congress could have done something, and to its credit, it tried. At least
five committees—the Senate Committee on Intelligence, the House
Committees on Oversight and Reform and on Science, Space and
Technology, and both chambers’ committees on homeland security—held
123
hearings, jointly or individually, on the attack. They heard testimony
from current and former employees, from government officials, and from
various experts. But missing from these hearings was testimony from
124
executives at SolarWinds’s actual owners, Silver Lake and Thoma Bravo.
In fact, while the Congressional Record during this time had nearly fifty
references to SolarWinds, there was not a single reference to either private
125
equity firm. Silver Lake and Thoma Bravo, as owners of the company,
were a crucial part of the story, but Congress never got their testimony and
perhaps never even tried. This was made more galling by the fact that the
two firms sold $280 million in stock just six days before the company
126
revealed that it had been hacked. The move saved the private equity
127
firms $100 million in losses. It was also, potentially, illegal, as selling
stock based on “confidential corporate”—that is, insider—information is
generally prohibited, and the Securities and Exchange Commission opened
an investigation. That Silver Lake and Thoma Bravo potentially broke the
law to avoid paying a financial price for their behavior was another reason
to demand the companies’ testimony. But Congress never did.

PUBLIC RECORDS FROM this time do not show that Thoma Bravo or Silver
Lake lobbied to avoid congressional testimony. Rather, the truth may be
simpler and sadder: it simply did not occur to members of Congress to
investigate these firms’ roles in the crises just described. The lack of
understanding of private equity, as well as Congress’s innate chumminess
with the industry, meant that these firms just don’t receive the scrutiny that
other risks to national security pose. But this failure to oversee suggests that
if ignorance, not influence, is to blame, then there may be a chance for
Congress, properly informed, to investigate some of the problems posed by
private equity. In particular, the legislative branch may be uniquely
positioned to examine one sprawling problem, alluded to in the previous
example: private equity’s ties to foreign governments.
Private equity firms make no secret of the fact that they take money
from foreign countries and investors. But the extent of the industry’s
entanglement may be greater than is commonly understood. To take just one
example, Blackstone has established numerous connections with America’s
fickle allies, like Saudi Arabia, and outright adversaries, like China and
Russia. When Blackstone went public in 2007, for instance, China’s
 128
sovereign wealth fund bought an enormous stake in the company, just
below that which triggered a review by the US government for national
129
security concerns. The purchase was apparently the first time that China
130
invested its foreign reserves in something other than US treasuries and,
according to Stephen Schwarzman, required the personal approval of
131
Premier Wen Jiabao. In turn, Blackstone invested in various businesses
132
in China and, among other assets, sold the famous Waldorf Astoria hotel
133
to a Chinese investment firm. Perhaps as a result, the Washington Post
said that Schwarzman had “one of the closest relationships to Beijing of any
134
American executive.”
At the same time, Blackstone developed ties with the Russian
government, at least for a while. In 2011, Schwarzman, along with several
other private equity executives, joined the international advisory board of
the Russian Direct Investment Fund, which married private and government
135
money for development projects inside the country. The partnership was
short-lived, however: after Russia invaded Crimea in 2014, Schwarzman
136
and others’ names were removed from the fund’s list of advisers, and the
following year, the Obama administration sanctioned the fund as
137
punishment for Russia’s actions.
Finally, Blackstone cultivated ties to Saudi Arabia. Schwarzman spent
years courting the country’s de facto leader, Crown Prince Mohammed bin
138
Salman, meeting with him repeatedly and at one point hosting him for
139
lunch in Schwarzman’s Manhattan apartment. In 2017, as part of
President Trump’s first state visit to the Saudi kingdom, Blackstone
announced that the country would give the firm up to $20 billion to invest
in infrastructure projects, primarily in the United States. Afterward,
Schwarzman showered praise on the work of the young prince, telling
CNBC, “It’s sort of extraordinary what’s going on in Saudi Arabia… you
see economic growth and other good things happen when you have
140
intelligent, informed, reform-oriented governments.” He added, “As an
outsider, this is like a case study. And it’s happening so fast and is so
141
bold.” Perhaps this was true, though as Schwarzman was potentially
142
aware, at the same time the crown prince was also arresting his critics
143
and holding some of the country’s elite hostage.
After Saudi operatives killed dissident journalist Jamal Khashoggi,
Blackstone distanced itself visually, but not financially, from the country. In
2018, Schwarzman declined to attend Saudi’s Future Investment Initiative,
144
the “Davos in the Desert” of figurative and literal potentates. But his
145
company did not back out of its financial partnership with the country,
and ultimately, Blackstone abandoned even the optical illusion of distance:
in 2021, Schwarzman returned to the Davos in the Desert event, where he
146
spoke about women’s empowerment at his firm.
Perhaps these connections would not be so concerning were it not for
the fact that Schwarzman played such a substantial role in shaping policy
during the Trump administration. Schwarzman spoke with the president and
147
his advisers frequently, and Treasury Secretary Steven Mnuchin said that
148
he talked to Schwarzman more than nearly any other business leader. On
matters of foreign policy, the Trump administration treated Schwarzman as
a private diplomat. He served as an interlocutor between China’s President
Xi Jinping and Trump and advised Trump on a summit between the two at
149
Mar-a-Lago. He publicly nudged Trump not to declare China a currency
manipulator and—after making eight trips to China in a single year on
behalf of the administration—helped to negotiate a trade agreement
150
between the two countries.
This may or may not have been a good deal for America, but it almost
certainly was a good deal for Blackstone. Reduced tariffs could potentially
help the firm’s industrial investments, as could a repeal prohibiting foreign
151
ownership of Chinese financial services firms in China could create new
investment possibilities. And the mere fact of consultation mattered. Going
back to Blackstone’s deal with Saudi Arabia, that country reportedly
considered working with several investment firms but chose Blackstone
 152
only after Schwarzman started advising Trump. Schwarzman’s proximity
to power was an asset.
Blackstone’s disquieting relationships with foreign policy adversaries
and its leader’s role in shaping American policy should be concerning for us
all. And Blackstone’s combination of foreign investment and domestic
influence, while illustrative, is hardly exhaustive. The industry’s
connections to foreign governments are worthy of investigation,
understanding, and perhaps, someday, legislation.
In this sense, Congress is uniquely positioned to act. Private equity’s
entanglement with foreign governments does not appear illegal. As such,
the government’s law enforcement agencies are largely irrelevant.
Meanwhile, the arms of our foreign policy—the State Department and
Defense Department, for instance—do not generally perform these sorts of
reflective, searching inquiries that touch as much on life in America as they
do abroad. The White House itself is so thinly staffed and lacks the
subpoena power to compel testimony that would be necessary to investigate
the issue. That leaves Congress, which has the broad purview to investigate
people and companies. It has the power to compel testimony. And crucially,
it does not need to pass a sixty-vote threshold in the Senate to begin an
investigation. All that’s required is the majority support of just one relevant
committee or subcommittee; the filibuster plays no role here. An
enterprising senator or congressperson need only convince a handful of
colleagues that this is an issue worthy of their attention. In other words,
even in a dysfunctional institution like Congress, action to investigate and
constrain private equity’s entwining with foreign adversaries might really
be possible here.

SURPRISE MEDICAL BILLING, carried interest, COVID funding, and so much

else: these issues illustrate Congress’s failure to legislate or oversee—and at
times, its outright capture by—private equity. But if there is failure in the
institution of Congress, there is also opportunity. The disturbing
relationship between the industry and foreign adversaries is an issue worthy
of Congress’s attention and uniquely suited to its scope and powers.
Progress is possible, even in the face of dysfunction. All that’s needed is a
single enterprising congressperson to begin this work.
 PART III
HOW TO STOP THEM
 CHAPTER ELEVEN

WHAT WE MUST DO

So what is to be done? I hope that the chapters thus far have convinced you
that private equity firms are transforming America—not for the better—and
creating systemic risks for our economy as a whole. I hope too that I have
convinced you that these firms have done so not because of great business
acumen—most of the people who run the largest private equity firms do not
know how to write software, run a factory, or market a product—but in
large part because of their ability to find, or create, gaps in our legal system.
Finally, I hope that I have convinced you that our various arms of
government, from the courts to Congress to our federal and state regulators,
not only allowed this to happen but, often, actively encouraged it.
This story feeds into a deeper pessimism in our country. The twenty-first
century has been enormously disheartening for most Americans. With the
failure of the government to equitably address the Great Recession, its
inconsistent and often inept response to the global pandemic, and its
inability to address the urgent problems of health care, climate change,
economic inequality, systemic racism, and the opioid crisis, there is a
reason why public faith in our institutions is abysmal.
With our economy specifically, there is a widespread sense that things
have simply stopped working. For most Americans, real wages have barely
grown in two generations, while for the very rich they have doubled, and
1
for the exceedingly rich, tripled. Despite the commitment of over $4
trillion in emergency stimulus funds over the past fifteen years, household
wealth for most Americans has yet to return to its pre–Great Recession high
2
(this, of course, has not been true for the wealthy). Meanwhile, businesses
in increasingly concentrated industries have used the pandemic to raise
prices for consumers and increase profits for themselves. But it isn’t just
that the economy feels unfair; it feels like it’s breaking down.
Manufacturing—the part of our economy that actually builds things—
3
continues to shrink, while finance continues to grow. We need banks and
investors to provide capital and build businesses, but we do not need to give
them as much power as they have today: research shows that American
finance has long since exceeded the size at which it begins to hurt, rather
4
than help, our growth. Anecdotally, it feels like everything’s getting a little
worse: our products are lower quality, our stores are understaffed. Private
equity is not the whole of this story, but by draining productive companies
of their assets, it is a part. The question becomes ever more urgent: Can we
still make things as a country? Can we still care for ourselves?
Commentators have looked abroad and backward to see where America
might be going. Perhaps, some argue, America in 2023 is Japan in 1993.
There, banks, often enmeshed in conglomerate keiretsu not unlike our own
private equity firms, drove a speculative real estate bubble to absurd
5
proportions. When the bubble burst, the banks and keiretsu needlessly
prolonged the survival of various zombie companies in order to hide their
6
own financial risk. Businesses moved production overseas and replaced
their workforces with temporary employees who had less job security and
7 8
fewer benefits. Productivity collapsed, and unemployment exploded. The
government, which had been slow to recognize the crisis, ultimately spent
enormous but insufficient sums on stimulus, creating a huge public debt. In
the ensuing “lost decades,” Japanese citizens disengaged from politics, and
voter participation plummeted to levels more like those in America. Less
than a fifth of Japanese people now believe that their children will be better
9 10
off than themselves, almost identical to public polling here. Perhaps
America is bound for similar years of twilight.
Or perhaps, more darkly, America in 2023 is Germany in 1933. There,
giant corporations—in particular, the chemical manufacturer IG Farben—
supported the Nazis at crucial moments and helped bring Hitler to power.
Farben, for instance, made a massive contribution to the Nazis on the day of
the Reichstag fire and spread the party’s propaganda through its company-
 11
owned newspapers. Once installed, Hitler made the corporations a part of
his engine of war. Farben in particular ran a concentration camp at
Auschwitz, and two dozen of its executives were ultimately tried at
Nuremberg. Perhaps, some might argue, America is headed toward similar
democratic collapse, enabled by its corporate elite.
Or perhaps—and this is my hope—America in 2023 is America in 1903.
The turn of the last century was a time of renewal after two generations of
darkness. After America abandoned the commitment of Reconstruction in
1877, most citizens lived in fear and misery. In the South, a dual campaign
of white terrorism and voter suppression destroyed biracial state
governments and reestablished rule by white elites. “Black Codes,” blessed
by President Andrew Johnson, criminalized the existence of “idle,”
“vagrant,” or “undomiciled” African Americans and forced them into prison
12
or labor much like the slave conditions they had escaped. In the North, the
fortunes of men like J. P. Morgan and James J. Hill were built on railroads,
while over two hundred thousand mechanics and laborers died in their
repair shops and on the tracks themselves. At a time when New York
millionaires hosted literal treasure hunts on their country estates, burying
diamonds in the lawn for friends to find with golden trowels, the New York
Times and Harper’s Weekly lobbied for a constitutional amendment to take
away the right to vote from middle-income and working-class residents.
Government in the Gilded Age did not simply stand idly by: it was an
advocate and defender for racial and economic elites. The Justice
Department largely abandoned any attempt to stop white terrorism in the
13
South, while the Supreme Court interpreted the Fourteenth Amendment to
make it largely powerless to stop racial segregation. As monopolies formed
in the steel, tobacco, and oil businesses, the Court also ruled that the new
antitrust laws were powerless to stop manufacturing monopolies but could
be used to break up labor unions. State courts, meanwhile, invalidated
employee protections and anticompany store laws. And the US Supreme
Court, in its famous Lochner decision, nullified a law limiting some
14
workers to sixty-hour workweeks for violating their “liberty of contract.”
The governor of New York at the time said it most truly when he declared,
unironically, that “in America the people support the government; it is not
15
the province of the government to support the people.”
And then, slowly, fitfully, with terrible defeats and disappointments,
something changed. The rural Grangers and populists and, later, urban
progressives led multiple movements to remake America. In the twenty
years from 1901 to 1920, they started the first antitrust movement and broke
up the steel, tobacco, sugar, and oil monopolies. In Congress, they
16
established eight-hour workdays for interstate rail workers and
17
empowered the government to set fair railway rates. They created regional
18 19
banks to lend to farmers and postal banks for others to save. In the
20 21
states, they passed factory safety laws and worker compensation laws.
22
Localities established clean air ordinances, and Congress created the
national parks system.
For farmers, the rural Grange movement bought cooperatively owned
23
machinery and grain elevators. For workers, Congress prohibited
discrimination against rail workers who joined unions and in 1912 created
24
the Department of Labor. To reduce inequality, the country passed a
constitutional amendment to authorize a graduated income tax. To expand
democracy, progressives successfully forced the direct election of senators
and the president and passed the Nineteenth Amendment, which granted
suffrage to women.
These were flawed movements. The vision of progress that these groups
held largely excluded African Americans and immigrants. Yet, on balance,
they remade America for the better and laid the social and organizational
foundation for the New Deal a generation later. Arguably, the post–Second
World War boom, which brought about the greatest middle-class prosperity
in American history, happened because of the work that began at the turn of
the century.
History here has a funny rhyming quality. When Stephen Schwarzman
held an opulent sixtieth birthday party with hundreds of guests and video
25
tributes to himself, he did so at the Park Avenue Armory, which—perhaps
unknown to Schwarzman or his guests—was built a century earlier by
 26
Gilded Age barons in part to defend against mobs of laborers. Meanwhile,
Schwarzman’s Park Avenue apartment was once owned by John D.
27
Rockefeller Jr., son of the creator of the Standard Oil Monopoly.
Schwarzman quite literally inhabits the role of a Gilded Age tycoon. And
just as those tycoons were eventually tamed—the Standard Oil monopoly
was splintered, the masses that the volunteers of the Park Avenue Armory
feared eventually organized into unions—so too it can happen here.
All of which is to say that our country is not necessarily doomed to
follow the path of others. America has experienced a first Gilded Age, yet
with successes and setbacks and through shifting coalitions and years of
effort, ordinary people remade the country. We can do so again. We are
aided, ironically, by the fact that the victory of private equity over our
economy was not an accident; it was the result of deliberate choices we
made. If we once chose to let private equity win, we can reverse that choice,
constrain the industry, and make room in our economy and our lives for
more productive businesses, ones that actually build things and solve
problems for consumers.
To do that, we need to make dozens of changes to our laws and
regulations, changes that fall into three groups. First, we need to constrain
private equity firms’ abuses in specific industries by, for instance, setting
minimum standards of care in nursing homes and ending contracts with
private prison health care and cafeteria providers. Second, we need to
change the incentives that drive private equity’s worst excesses. In
particular, we need to change our laws to make private equity firms
consider the long-term effects of their actions, to stop firms from loading up
the companies they buy with debt and extracting fees, and to stop them
from dodging the legal consequences of their actions. Finally, we need to
reduce the systemic risks that private equity poses to our economy overall,
in particular through its expansion into insurance, retirement funds, and
private credit. The chapter that follows describes these reforms in detail.
These are changes we can accomplish through regulation, litigation, and,
if possible, legislation. But to do so, we must confront the reality that one
branch of the federal government—Congress—has proven largely incapable
of solving the greatest challenges of the past quarter century. As the
previous chapters have, I hope, demonstrated, the courts, federal regulators,
and state and local governments are not absolved here. But only Congress
can write national legislation for the good of ordinary Americans, and for
the most part, it has not done so. Consider some of the biggest crises facing
America: the opioid epidemic, climate change, a broken immigration
system, and economic inequality, to name just a few. These problems have
been with us for generations, and yet, despite a handful of bills passed—
most recently, the Inflation Reduction Act, which would offer incentives to
reduce greenhouse gas emissions—Congress has proven largely unable to
solve any of them. This is not necessarily because of a deeper division in
our country. Large majorities of Americans, for instance, support gun
control, climate change legislation, and a public health care option. In fact,
28
majorities of Republicans support these measures too. The problem isn’t a
deep division in our country on these issues; the problem is that Congress is
largely unable to reflect the popular will, in particular when doing so would
constrain the power of big businesses. It will be particularly hard to take
action on private equity, whose firms have donated enormous sums to
members of Congress and on a bipartisan basis. Blackstone, for instance,
and its affiliated donors (employees and so forth) gave $38 million in just
one election cycle and to both Democrats and Republicans. Overall, the
29
industry gave over $200 million in the 2020 election cycle alone.
Someday this may change. Congress may reform itself by, for instance,
eliminating the filibuster, resuscitating its professional staff, and
empowering its committees over its party leadership. Politicians responsive
to widespread popular support for action on inequality may come into
office. The institution may live up to its best ideals and rein in the excesses
of corporate power while it addresses our climate crisis, passes
comprehensive immigration reform, and finally confronts the raging opioid
epidemic.
Perhaps. But we cannot wait for that to happen. Instead, we must use the
other levers of power over private equity: federal agencies, courts,
investors, and state and local governments.
Through federal agencies, we can address many of private equity’s
abuses in specific industries and contain some of the more dangerous tactics
—dividend recapitalizations, for example—that drive the industry’s worst
behaviors. The Department of Health and Human Services, for instance, can
impose minimum staffing criteria at nursing homes. The Department of
Labor can effectively block private equity firms from accessing individuals’
401(k) savings. And the Federal Reserve can designate firms as
systematically important and subject them to greater regulatory oversight.
Through the courts, we can stop some of the gaming that allows private
equity to take all the benefits of its risk taking while experiencing none of
the harms. The government or private litigants, for instance, can pierce the
corporate veil that, in specific cases, insulates firms from the liability of
their portfolio companies. Antitrust enforcers like the Department of
Justice, Federal Trade Commission, and state attorneys general, as well as
individuals, can investigate and sue to stop private equity rollups of various
industries.
Through investors, we can shape private equity firms’ behaviors. Worth
Rises’s successful effort to stop or slow public pension investments in
private equity firms buying prison phone companies is a useful model.
Where firms are acquiring particularly odious businesses, public pension
funds can be pressured not to invest.
Finally, through the states, we can stop abuses in some of the most
predatory industries in which private equity invests. States can, for instance,
end contracts with for-profit prison health care and phone services
companies. They can enforce corporate practice of medicine laws to stop
the rollup of physician practices. They can end the most abusive arbitration
agreements and outlaw the most predatory debt collection practices. And
they can ensure basic protections for tenants in single-family home rentals
and limit corporate ownership of these properties.
Perhaps most importantly, through states we can regulate the
fundamental shortcomings of the industry. Private equity firms are often
short-sighted, extractive, and insulated from the consequences of their
actions. States can change that. Within certain constitutional limits on how
much they can regulate actions beyond their borders, states can likely limit
how much debt locally headquartered companies can take on in the process
of being acquired. They can ban the use of dividend recapitalizations and
sale-leasebacks for the same. And they can update their own liability laws
and hold firms responsible for what they do. In the absence of congressional
action, states can be some of the most powerful forces for reform.
 To accomplish this, we do not need, as some might suggest, to rethink
the entirety of the finance industry or overthrow capitalism itself (if such a
thing were possible). No, the changes we need are not small, but they are
not utopian either. We just need to make private equity firms, simply put,
boring. The essential work of providing capital, both public and private, for
businesses to grow and prosper should and will continue. But if we’re
successful, private equity firms will not be so readily able to extract money
from captive companies. Instead, that money will go to productive
businesses, which will be able to reinvest in infrastructure and employees,
research and marketing. Rather than money flowing to the very richest
among us, it will—at least potentially—go to useful endeavors. In the
process, we will relearn how to make things. We will build a better
economy for all.
To do all of this, we’ll need to organize ourselves.
We’ll need better reporting on private equity. Some of this will come
from traditional news outlets, but nonprofit and volunteer organizations can
play an important role here too. The Prison Policy Initiative, for instance,
has done excellent reporting on private equity’s purchase of prison phone
services. Other industry-specific efforts would help enormously. We’ll also
need databases of private equity portfolio companies, their owners, and the
institutional investors that support the private equity firms themselves. This
will give activists areas on which to focus. And we’ll need to better
understand—and publicize—which firms are giving money to which
politicians and when the latter are acting on the former’s behalf.
We’ll also need a way to channel popular energy. Groups like the Private
Equity Stakeholder Project, Americans for Financial Reform, the American
Economic Liberties Project, and the Open Markets Initiative are already
doing important advocacy work. These organizations should consider
campaigns to encourage people to get involved in federal rulemaking.
Agencies like the Securities and Exchange Commission and the Consumer
Financial Protection Bureau are doing important work, but it is often
difficult for people to understand those efforts, much less comment on
them. Advocacy organizations can help to clear the fog. These groups
should also find a way to include people in the litigation process. Too often,
public interest litigation is filled with dry briefs, devoid of human context.
Organizations should find ways to include people in cases, through
affidavits and testimony, which will help judges and clerks understand the
human component of the decisions they make.
Finally, we’ll need allies. Private equity firms will spend enormous sums
to protect their interests. But we have the advantage of having more people.
We’ll need to build partnerships with other groups—social justice
organizations, unions, small businesses, plaintiff-side law firms, and
religious groups—who have experienced the effects of private equity firms’
injustice firsthand. We’ll need to educate one another on how private equity
firms affect our specific areas of concern and share tactics (for instance, on
how to hold firms legally accountable for the actions of their portfolio
companies) that will be of interest to us all. We’ll also need to run for
office. Yes, advocates for economic justice need to win the Congress and
presidency, but we also need to populate legislatures and city councils: as
mentioned, much of the engine for action here will, for years to come, be at
the state and local level. We also need public-spirited public servants. As
someone who has worked in government several times, I can attest both to
the importance of line-level government employees and to the need for
people in government who care about, and can fight on behalf of, ordinary
people.
So what can you do? Here, let me speak personally for a moment. My
first job in the Department of Justice was in the National Security Division
and specifically in the office that advised the White House on the legality
and advisability of various national security policies. I held that job at the
tail end of the Obama administration and into the Trump administration. As
relevant here, for several months, my office was intimately involved in
debates over the Trump administration’s travel ban, which barred transit
from several majority Muslim nations. It was a horrifying experience, and
for several months, in meetings and memos, I and others tried to stop the
various iterations of the ban from being issued or to have countries taken
off the list. I was obviously unsuccessful in that effort and left the office
shortly after the ban was issued, which the Supreme Court subsequently
upheld. Nevertheless, throughout that process, I remember feeling
strengthened knowing that my objections were supported by people—
millions of people—outside the Department of Justice. The literal protests
in the street gave me, a junior lawyer in a quiet office, the strength to make
my complaints to more senior and powerful people.
 All of which is to say that protest has an effect. In big departments and
agencies, it can give career staff the courage to argue their points. In courts,
it can alter and expand what judges and clerks consider possible options.
The effects of protests might not always be visible, the strand connecting
outburst and action not always clear, but I can say that they have an effect
because they had an effect on me.
So, I encourage you to make your voice heard, at whatever level of
volume you can. Tweet your outrage if you have a moment. Volunteer your
time or money to any of the organizations mentioned in this book, or find
one that works on your specific area of interest if you can (there are so
many great local groups working on, for instance, housing justice,
eldercare, and retail workers’ rights). If no organization does what you think
needs doing, start your own. And, quite seriously, run for local office. In a
time when national legislation is infrequent, we need smart people to push
state and local lawmaking in the right direction. Your voice matters.
Most importantly, do not give in to despair or nihilism. Yes, private
equity is part of a larger story of the financialization of our American
economy, a story about how our country has grown more unequal and
unjust. But to believe that our condition is, for better or worse, inevitable is
exactly what the most privileged among us want you to believe. They want
you to think that a better world isn’t possible. They want things to stay as
they are.
This isn’t to say that change is certain, but it is possible. Let’s get
started.
 CHAPTER TWELVE

AN AGENDA FOR REFORM

The specific reforms in this chapter would rein in private equity’s worst
excesses. They fall into three groups and are organized by the different
institutions that can make them a reality. First are reforms that address
wrongdoing in specific industries where private equity firms have been
active: nursing homes, for instance, and prison services. Second are those
that would limit private equity firms’ ability to engage in specific abusive
tactics, like dividend recapitalizations and excessive management fees.
Finally are those recommendations that would reduce the systemic risks
that the industry poses to the broader economy through, for instance, its
investment in private credit.

THE DEPARTMENT OF JUSTICE AND FEDERAL TRADE COMMISSION

Investigate rollups. Private equity firms are acquiring individual
companies in a host of industries and rolling them up into larger businesses.
This is happening to a diverse array of fields: dentist and dermatology
practices, portable toilet and puzzle companies, church software providers
and veterinary clinics, to name just a few. As these businesses are rolled up,
prices are liable to rise, while quality—and pay for employees—is likely to
fall. While not every rollup is illegal, in their extreme forms, they may
violate antitrust laws, which prohibit acquisitions that may reduce
competition.
In addition to investigating rollups themselves, the FTC and Justice
Department should engage the states in this process too by more regularly
referring matters of local interest to state attorneys general. The agencies
should require more information from companies that propose to merge
with or acquire one another. In particular, forms that companies submit to
the government when proposing major acquisitions should be revised to
require private equity firms to better show the investments they have in
competing companies. This will make it easier for agencies to identify and
stop incipient rollups.
Revise the merger guidelines. The antitrust merger guidelines describe
when the Justice Department or FTC will typically intervene to stop
proposed acquisitions. These have become baroque documents with too
many exceptions that permit what once would have been impermissible
acquisitions. Fortunately, under new and assertive leadership, the Justice
Department and FTC are revising these guidelines. The agencies should
return to the framework of the earlier 1968 guidelines, which offered clear
direction for when mergers would be permitted and offered few exceptions
that would cloud the agencies’—and courts’—analyses.
Investigate interlocking directorates. Private equity firms often place
their allies on the boards of the companies they buy. Ordinarily this is fine,
but private equity firms may violate antitrust laws if they install their
representatives on the boards of competing companies. Such “interlocking
directorates” are generally illegal because they could facilitate collusion
between companies. The FTC and Justice Department should investigate
these interlocks to ensure that private equity firms do not have so easy a
mechanism to coordinate collusion among the companies they invest in.
Prohibit and prosecute tacit collusion. As private equity firms engage
in rollups, it becomes easier for the remaining companies to engage in “tacit
collusion,” the practice by which companies can raise prices in coordination
without an explicit agreement. Though rarely used, the FTC has broad
1
authority to stop this. The commission should prosecute the worst tacit
colluders directly or promulgate a rule to stop the practice in general. Either
strategy would make it harder for private equity firms to profit off of rolling
up and concentrating industries.
Investigate prison health services. Prisoners are guaranteed a
minimum quality of health care under the Eighth Amendment’s prohibition
against cruel and unusual punishment. But private equity firms’ acquisition
of leading prison health care companies led to a marked deterioration in the
quality of care for inmates: as described in an earlier chapter, one female
inmate was forced to give birth alone in her cell, for instance, while another
 2
prisoner died after his weeping lesions went untreated. The Justice
Department’s Civil Rights Division, specifically its Special Litigation
Section, should investigate these companies to determine whether they are
violating prisoners’ constitutional rights.
At the same time, the Justice Department should investigate private
equity firms’ acquisitions of prison food services, which have had similarly
disastrous results. Inmates, as noted earlier, allegedly have been forced to
3
eat meat labeled “not fit for human consumption,” for instance, while
others ate toothpaste to stave off hunger pangs or shivered at night with
4
hunger, given that portions were so small. The department should
investigate these practices for similar constitutional violations.
Fairly enforce the bankruptcy code. Private equity firms have
successfully used the bankruptcy code to discharge employees’ pension
obligations while retaining control of the companies they buy. (Josh
Gotbaum, the former head of the Pension Benefit Guaranty Corporation,
5
called this “pension laundering.”) They have done so in part by relying on
“363 sales,” which expedite the bankruptcy process at the expense of other
lenders, and “credit bids,” which, in essence, allow private equity firms to
buy companies at a discount.
The United States Trustee Program, a part of the Department of Justice,
is tasked with ensuring the equitable enforcement of the bankruptcy code.
The trustees should file amicus briefs in high-profile bankruptcies arguing
for limitations on 363 sales and credit bids. The trustees should also push to
ensure that private equity firms do not slough off their pension obligations
through the bankruptcy process. The trustees are well respected in the
bankruptcy courts; their voice could make a difference.
Help to pierce the corporate veil. Private equity firms are often
insulated from the wrongdoing of their portfolio companies, even when the
firms themselves were responsible for or even directed that wrongdoing.
The challenge for plaintiffs is to pierce the corporate veil, a legal argument
that courts are often reluctant to accept. Plaintiffs would be aided if the
Department of Justice—likely through the Consumer Protection Branch or
the Fraud Section of the Commercial Litigation Branch of the Civil
Division—joined a handful of plaintiffs in amicus briefs to help clarify that
a private equity firm should not be insulated from liability where a
company’s misdeeds were directly caused by the firm’s actions.

DEPARTMENT OF LABOR
Reverse private equity access to 401(k)s. The Trump administration
issued a directive allowing 401(k) asset managers to invest in private equity
funds. This will increase risks for ordinary retirement savers, while giving
private equity firms access to trillions of dollars they do not need. This will
also likely encourage private equity firms to pay yet more money for the
companies they buy. These companies, loaded with debt, will then increase
the systemic risk to the economy as a whole. The loophole enabled by this
directive is unnecessary and should be eliminated. The Biden
administration, thankfully, has started this effort, though it continues to
permit a potentially large subset of 401(k) managers—those that also
6
manage pension plans—to continue to invest in private equity. The
administration should complete the job and fully prohibit private equity
firms from accessing 401(k) funds.
Clarify that the WARN Act applies to private equity firms. The
Worker Adjustment and Retraining Notification (WARN) Act requires that
companies provide advance notice to their employees when contemplating
major layoffs and provides damages to employees when their employers fail
to do so. This statute is often violated, but the case law is muddled as to
whether liability under the act extends to private equity owners of
companies. The Department of Labor should help clarify through amicus
briefs that, in fact, the act applies to private equity.

CONSUMER FINANCIAL PROTECTION BUREAU

Revive the payday lending rule. Private equity firms have bought up
payday lenders. Toward the end of the Obama administration, the Consumer
Financial Protection Bureau proposed a rule that would require these
lenders to estimate that borrowers could actually repay the loans they were
7
offered. This mattered because the overwhelming majority of payday
borrowers are trapped in lending cycles they cannot escape, in which they
pay exorbitant fees and interest. The Trump administration largely gutted
this rule, leaving only limitations on how often payday lenders could take
money from borrowers’ bank accounts. The CFPB should revive and
expand the earlier, 2016 rule, which, fortunately, it is already considering
8
doing.
Revive the financial institution arbitration rule. Payday lenders have
achieved a frustrating double standard: borrowers agree to pursue their own
claims in arbitration but grant lenders the ability to prosecute their debts
through the state court system. This standard, unsurprisingly, has been
disastrous for borrowers, who, in pursuing arbitration, must often front
unaffordable filing fees. In 2016, the Obama administration issued a rule to
limit financial institutions’ use of forced arbitration agreements. The Trump
administration and Congress rescinded the rule using the Congressional
Review Act. That act prohibits the CFPB from simply reintroducing the
9
rule, so the bureau should consider a more tailored regulation—one that
prohibits the litigation-arbitration double standard just described—which
might survive both congressional and judicial scrutiny.
Investigate usurious rates of prison release cards. Private equity firms
have bought up companies that offer “prison release cards.” These cards—
essentially debit cards—are given when prisoners are released from jail or
prison and contain the money they brought with them or earned while
incarcerated. But usurious fees—for withdrawals, balance inquiries, and
card activity and inactivity—make this little more than a way to steal
former inmates’ money. The CFPB has done important work investigating
whether the fees charged by one company (JPay) violated the Electronic
10
Funds Transfer Act. The bureau should conduct an additional, larger
investigation of the industry as a whole.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Impose staffing minimums and ban arbitration agreements at nursing
homes. Private equity firms have been buying up thousands of nursing
homes and generally gutting the quality of their care. Under the supervisory
authority of the Center for Medicare and Medicaid Services, or the
Occupational Health and Safety Administration’s authority to regulate
workplace safety, the Department of Health and Human Services should
require a baseline level of nursing home staffing—likely 4.1 hours per
 11
resident per day —that is generally recognized as necessary for residents’
safety. Fortunately, the Biden administration has begun a process to set
12
minimum staffing levels; it should complete that effort. Similarly, the
Obama administration in 2016 issued rules to largely ban arbitration
agreements for nursing home residents. The Trump administration largely
gutted this rule, allowing forced arbitration agreements in almost all
circumstances. The 2016 rule should be revived.
Require reporting on the ultimate parent entity of nursing homes.
Private equity firms often obscure their ultimate ownership of nursing
homes to avoid legal liability. The Center for Medicare or Medicaid
Services has regulations that require homes to disclose any investors with a
13
5 percent or greater ownership stake. These regulations should be updated
to require nursing homes to identify the ultimate parent entities of the
investors, as well as the ultimate parent entities of the contractors that they
use (nursing homes often obscure their wealth by paying money to
contractors that they themselves own). This information should be made
public so that the families of those who die in nursing homes know whom
to sue.

FEDERAL COMMUNICATIONS COMMISSION

Make interstate prison calls free or at-cost. Private equity firms have
bought up the leading prison phone companies and charged exorbitant rates.
With new legislation signed in early 2023, the FCC finally has renewed
authority to regulate interstate, as well as intrastate, prison phone services.
Given the positive demonstrated effects of allowing prisoners to
communicate with their families, the commission should use this authority
and follow the path of several cities to make these calls free or at-cost.
Prohibit replacement of free in-person meetings with for-pay
teleconferencing meetings. Prisons are increasingly replacing spaces for
in-person visits with private equity–owned videoconferencing systems. This
would not necessarily be a bad thing except that the private equity firms
that own these prison teleconferencing systems are charging exorbitant fees.
The result is that, increasingly, prisoners must pay to see their own family
members. The FCC should use its regulatory authority over phone systems,
if possible, to mandate that prisons that adopt these videoconferencing
systems not replace in-person visits and make videoconferences free or at-
cost.

DEPARTMENT OF EDUCATION
End abuses of for-profit colleges. Private equity firms are buying up the
booming industry of for-profit colleges. From 2000 to 2010, undergraduate
14
enrollment in for-profit colleges quadrupled. The results have been
disastrous. Private for-profit colleges enroll just 10 percent of students but
account for half of student loan defaults. Average tuition at a for-profit is
$10,000 higher than at a public community college. And graduates of for-
profits typically earn less than graduates of public or non-profit colleges.
The Obama administration imposed a “gainful employment” rule, which
cut federal spending when schools’ graduates were unable to meet certain
debt-to-earnings ratios. The Trump administration rescinded this rule. The
Department of Education should reinstate it and expand the regulation to
15
consider the outcomes for nongraduates as well. The Trump
administration also weakened the “borrower defense” rule, which created a
process for canceling student debt when students were defrauded by
schools. This too should be reinstated.
The Department of Education should also fix the so-called 90/10 rule,
which generally requires that no more than 90 percent of students’ tuition
come from government sources but which historically excepted military
funds, such as those from the GI Bill. The result has been that for-profit
16
colleges particularly target veterans for enrollment, who complain that
college salespeople contact them dozens of times a week, often falsely
describing themselves as “Pentagon Advisors” whose school is “Pentagon-
17
approved.” In fact, almost one-third of GI Bill funds go to for-profit
18
colleges. Legislation in 2021 aimed to close that loophole by extending
the 90-10 rule to all federal benefit programs, including military ones. The
Department of Education, in drafting regulations to implement the new law,
should confirm that it does.
 The department also needs to hold executives accountable when for-
profit schools shut down. The Center for American Progress proposed the
innovative idea of conditioning the receipt of federal aid on for-profit
19
school executives agreeing to hold themselves liable for school failures.
Money paid in salaries and bonuses should be clawed back to reimburse
students who were cheated out of proper educations and who had nothing to
do with the schools’ mismanagement.
Finally, the government should make public data on graduate earnings
and loan repayment rates for each for-profit college so that students can
20
make informed decisions about the risks of attending for-profit schools.
Publicity is not a panacea, but if students are aware of schools’ actual costs
and likely outcomes, they may be more likely to enroll in nonprofit
universities and community colleges.

SECURITIES AND EXCHANGE COMMISSION

Reduce the size, and increase the transparency, of private credit. Private
equity firms are lending money to companies through the “private credit”
markets, which function as something of an alternative to the stock markets,
albeit with far less transparency. With less visibility, companies are more
likely to take on too much debt, creating a bubble that may, like all bubbles,
eventually burst, to the detriment of companies’ consumers and workers. To
push borrowers back to the public markets, the SEC should narrow
Regulation D by limiting the size of private offerings, which function as an
alternative to IPOs. The SEC should also reform Regulation 144A to limit
the ability of private equity and other firms to pass off the debt they lend to
other investors, a process known as syndication that gives firms an
incentive to make loans, with little care to their quality. If possible, the SEC
should require firms that seek private credit above a threshold size to
publicly disclose certain facts about themselves, such as their level of
indebtedness. To the extent that private credit is replacing the public
market, the SEC should bring similar transparency to it.
Bring necessary transparency to the industry. The Dodd-Frank Act
requires private equity firms to file a document—Form PF—with the SEC,
21
which provides general statements about the firms’ leverage and liquidity.
As currently designed, however, this form is not particularly informative
and should be revised to collect much more information. For instance,
rather than general statements, each firm should provide specific data on
executive compensation, the companies the firm has invested in, and the
level of indebtedness of those companies. Additionally, each firm should
report generally accepted measures of revenue and income (the industry’s
preferred metric, “internal rate of return,” has been shown to be liable to
gaming). Finally, each firm should report on how much it has lent and
borrowed through the “private credit” market, an emerging source of funds
that poses systemic risks to the economy.
Establish fiduciary duties and fee disclosure requirements for
private equity firms. Various professions have fiduciary duties, such as
candor and loyalty, which generally require those professionals to be honest
with their clients and to put the interests of their clients ahead of their own.
Private equity firms, however, can often contract with their investors to
slough off these duties, in essence preventing institutions that invest in them
22
from suing when they act against those investors’ interests. Thankfully,
the SEC has proposed a rule clarifying that private equity firms can no
23
longer abandon their fiduciary duties and must also disclose the fees they
24
charge to investors. The commission should complete this important
process.
Prohibit incentive-based pay when companies engage in immediate
dividend recapitalizations, lay off masses of workers, or abandon
pensions. Section 956(b) of the Dodd-Frank Act directs federal agencies to
“prohibit any types of incentive-based payment arrangement, or any feature
of any such arrangement, that the regulators determine encourages
25
inappropriate risks by covered financial institutions.” To the extent
possible, the SEC should issue a rule barring incentive-based pay at private
equity firms when their portfolio companies engage in dividend
recapitalizations, mass layoffs, or abandoned pensions within the first
several years of ownership. The rule should also ban pay when firms
demand excessive management or transaction fees from their portfolio
companies. Doing so would contain the excessive risks that private equity
firms often place onto the economy.
 INTERNAL REVENUE SERVICE
End the carried interest loophole. Many private equity executives pay
lower tax rates than ordinary Americans, thanks to the 2-and-20 model,
explained in Chapter 10. For close to fifteen years, however, Congress has
struggled to close the loophole through legislation. Professor Victor
Fleischer, who first popularized this issue, proposes that the IRS use its
26
existing statutory authorities to issue a rule to eliminate this loophole.
Doing so would be far simpler than waiting another generation for
legislative action and would dramatically reduce the incentives for private
equity to engage in risky dealmaking.
Investigate management fee waivers. As just mentioned, private equity
firms tend to be compensated on a 2-and-20 model, with variable tax rates.
Private equity firms are increasingly creating complicated ways to have the
2 in the 2-and-20 model treated as capital gains too, using what are called
management fee waivers. These waivers may often violate the tax code, but
the IRS rarely investigates them, in part, perhaps, because the IRS never
finished rulemaking to clarify which kinds of waivers are illegal. The
agency should finish this rulemaking process and investigate the most
27
egregious waiver schemes.
Shift enforcement to the largest tax abusers. Many if not most private
equity firms organize themselves as partnerships. The United States loses
an estimated $75 billion per year from investors in partnerships who fail to
28
report their income accurately. Yet despite such widespread violations,
these legal structures are exceedingly unlikely to be audited. In fact, people
earning less than $25,000 are three times as likely to be audited as are
partnerships. This is a terribly inefficient allocation of resources.
Understanding that audits of partnerships are more complicated, the IRS
should find ways to shift its enforcement resources to these vastly more
important and, for taxpayers, costly, tax avoidance schemes.

FEDERAL RESERVE
Limit bank lending to overleveraged private equity portfolio
companies. The Federal Reserve can play an important, perhaps crucial,
role in regulating the banks that lend to private equity firms and the
companies they buy. Back in 2013, the Fed and other bank regulators issued
informal guidance, generally recommending that companies not borrow
29
more than six times their annual cash flow. This guidance was widely
ignored, and by 2021, a third of all US loans sold to investors exceeded this
30
threshold. This creates huge risks for the companies that private equity
firms buy: debt sucks money away from companies’ operations and makes
them vulnerable to collapse in slight downturns. To the extent possible, the
Fed, alongside other bank regulators, should prohibit banks from making
loans to private equity firms that would result in excessive leverage for
companies. In the meantime, the Fed should revise its nonbinding guidance
and more aggressively investigate those banks who flout it.

FANNIE MAE AND FREDDIE MAC

Protect tenants in private equity–owned rental properties. Government-
sponsored entities like Fannie Mae and Freddie Mac helped to drive single-
family properties to private equity firms. These same organizations can now
help to protect consumers, by selling distressed properties they own to
institutional investors only when those investors agree to basic tenant
31
protections, such as caps on fees, limits on rent increases, and rights of
first refusal for tenants to buy these properties. Fannie and Freddie should
also set internal preferences to sell to nonprofits and other mission-driven
32
developers, who are less likely to take advantage of tenants. To their
credit, both Fannie and Freddie have started to prioritize some of these
33
issues, but they must dramatically increase their ambitions.

TREASURY DEPARTMENT
Designate the largest private equity firms as systemically important. In
the wake of the Great Recession, Congress created the Financial Stability
Oversight Council to monitor incipient risks to the economy and designate
systemically important businesses to heightened oversight. The Obama
administration identified a handful of such businesses, while the Trump
34
administration attempted to undo much of that work. The council should
designate the largest private equity firms as systemically important to the
financial system. Doing so will subject them to greater reporting
requirements and potentially help curtail their most dangerous practices,
such as loading up the companies they own with excessive debt.

STATE AND LOCAL GOVERNMENTS

Prohibit dividend recapitalizations and other abuses. In the absence of
action by Congress, states can play perhaps the most important role in
limiting private equity firms’ abuses. As described throughout this book,
private equity firms suffer from three core problems in their business
model: they invest for the short term, load companies up with debt and
extract fees, and insulate themselves from legal liability. States can address
all three of these issues. They can require that private equity firms buying
businesses headquartered within their borders hold those businesses for a
meaningful period of time. They can require that firms not load up local
companies with debt, not extract unreasonable fees, and not engage in
tactics like dividend recapitalizations and sale-leasebacks, which often
eviscerate companies’ assets. And they can reform their “corporate veil”
statutes to make it possible to hold firms responsible for the consequences
of their actions.
Such actions will no doubt be subject to legal challenge. But states shape
their own liability laws, regulate in-state companies, and even in certain
circumstances impose laws that have effects beyond their borders. In a
world where congressional legislation is unlikely, states may be the most
powerful institutions to constrain the actions of private equity.
Investigate rollups. As described above, private equity firms are rolling
up a huge range of industries. States, through their attorneys general, have
the authority to enforce the antitrust laws and stop these abuses. To do so,
they will need better information about acquisitions that are occurring.
States should require companies to submit to them the same information
they submit to the federal government about large proposed transactions
and require independent reporting on smaller transactions that are
nevertheless important, such as rollups in the medical profession.
Washington and Connecticut already require reporting like this on
35
significant health care mergers. Other states should do the same.
 Strengthen corporate practice of medicine laws. Private equity firms
are rolling up medical practices in part because they have been able to
circumvent state corporate practice of medicine laws. To make this possible,
firms are appointing figurehead physicians to “run” these companies, when,
in fact, it is the firms themselves that allegedly do so. States should update
their laws that prohibit this “corporate practice of medicine” to more clearly
ban this behavior and prevent medical decisions from being made by
nonmedical professionals.
End contracts with abusive prison service companies. Private equity
firms have bought numerous prison services, from cafeteria and
commissary providers to health care companies and prison release card
servicers. Previous chapters document the overwhelmingly negative result
—far worse than what would likely happen if the states were in charge of
these services. States and localities should end their contracts with private
equity providers of these services and do this work themselves. By
removing the profit motive for these services, governments will eliminate
the incentive that drives down the quality of care in each industry and may
ultimately save themselves money.
End surprise billing for ambulances. Congress passed legislation to
deal, in part, with the scourge of surprise medical billing. But the legislation
36
did not address surprise billing by ground ambulatory services. States,
many of whom independently adopted their own legislation on the issue,
should ban surprise billing by these ambulance companies.
Ban abusive arbitration agreements. Private equity firms have
imposed arbitration agreements in a range of industries in which they have
been active: nursing homes, payday lending, for-profit colleges, and others.
The Supreme Court has circumscribed states’ ability to regulate these
agreements, but there is still some room to maneuver. California, for
instance, prohibited employers from forcing employees to sign arbitration
agreements as a condition of their employment. The Supreme Court may
37
yet invalidate the legislation, but in late 2021, the Ninth Circuit upheld it.
Vermont, meanwhile, proposed legislation banning “unconscionable”
arbitration agreements, such as those that would require fees greater than
38 39
those for a court proceeding. The bill was ultimately vetoed, but it,
along with model legislation proposed by the National Consumer Law
40
Center, could serve as a template for other states.
Stop abusive debt collection practices. Private equity firms are buying
up payday and installment lenders. States can update their sometimes
comically out-of-date lists of personal property exempt from collection:
until 2011, for instance, Massachusetts protected two cows, twelve sheep,
and two swine from being taken by debt collectors, but only a car worth up
41
to $750. Updates will ensure that borrowers can keep essential assets—
cars, phones, and so forth—that are necessary to work and survive. States
can also prohibit the abuse of arrest warrants in civil cases and cap the
statute of limitations on collecting consumer debts. Importantly, states can
limit how aggressively debtors can garnish low-income people’s wages,
leaving a minimum for how much must be kept in people’s bank
42
accounts. Finally, states can require creditors to have actual
documentation that the debts they seek to collect are valid and properly
43
transferred to the companies trying to collect the debts, something,
incredibly, that often does not happen.
Protect tenants in private equity–owned rental properties. Private
equity firms are buying up single-family homes and flipping them into
rental properties. States and cities should make sure that these residents are
adequately protected. For instance, governments should extend rent control
and tenant protection laws to single-family rental homes (California and
44
Oregon have already done this ). They should limit how many properties a
single owner can have and impose a residential vacancy tax for corporate
property owners, to discourage owners from strategically keeping properties
45
empty. Governments should also stop selling foreclosed homes in
bundles, a practice that ensures that only institutional investors can buy
46
these properties. And they should ban hidden fees that drive so much of
private equity firms’ income from rental properties. Disclosure laws here
are not enough: governments should cap how much a corporate landowner
can make from fees as a percentage of rental income.
 Corporate control of the rental properties is also distorting the market: in
47
2021 alone, asking rents for houses rose 13 percent over the year before.
Building more properties is important, but in a market increasingly
controlled by large investors, it is also necessary to impose limits on rent
increases for some properties: Oregon, for instance, limits rent increases to
48
7 percent above the local rate of inflation; California, 5 percent. Tenants
should also be given a right of first refusal to buy properties they rent.
49
Washington, DC, Portland, and Baltimore have already adopted this;
others should follow their lead.
End abuses of for-profit colleges. As discussed above, private equity
firms are investing in for-profit colleges, which often have abysmal
graduation and job placement rates while leaving students mired in debt.
The Century Foundation has made a number of recommendations for how
states can contain the abuses of for-profit colleges.
First, where data shows that for-profit schools are being particularly
predatory—for instance, saddling students with unreasonable debt or
demonstrating poor graduation or job placement rates—they should be shut
50
down. For-profit colleges already report much of this information to the
Department of Education. States should require that the same information
be sent to them, so that they can decide whether these schools should
continue to operate. Additionally, states should create a private right of
action for students to sue schools that have poor student outcomes.
Second, states should ensure that for-profit colleges actually spend
money on instruction. For instance, public and nonprofit colleges generally
spend over half the money they receive on teaching; for-profit colleges
51
spend less than 10 percent. Each college reports to the US Department of
Education how much money it spends on instruction. States should demand
this information themselves and require that a minimum percentage be
52
spent on teaching. This may ultimately discourage private equity
investment in the industry.
Third, schools that go bankrupt must do so in an orderly way. For-profit
colleges often close down unexpectedly, leaving students in the lurch.
States should require colleges to close in an orderly fashion, and students
shouldn’t have to pay money (and in fact, should be refunded) when a
53
school abruptly closes before they get their degrees. Maryland’s
54
Disorderly School Closures Act already does this and can serve as a
model for other states.
Fourth, for-profit colleges must stop disguising themselves as
nonprofits. All nonprofits must file a Form 990 with the IRS to prove that
55
they are not abusing their tax-exempt status. While the IRS should pursue
investigations into the issue, the agency’s staffing has been gutted. States
should require the same information to be sent to them, to conduct their
own independent reviews.
Finally, for-profit colleges must stop requiring students to sign binding
arbitration clauses. The Obama administration issued a rule to end forced
arbitration for students at for-profit colleges, a rule that the Trump
56
administration reversed. While the Department of Education should
reinstate the rule, states can accomplish the same by conditioning the grant
of any money they send to for-profit colleges on their dropping the use of
57
arbitration agreements.

STATE ATTORNEYS GENERAL AND PRIVATE PLAINTIFFS

State attorneys general and, in many cases, ordinary people can sue to stop
some of private equity firms’ worst excesses and generally can follow the
litigation strategy for the Justice Department and FTC described above. For
instance, attorneys general and private plaintiffs can sue to stop
anticompetitive rollups, as well as the interlocking directorates of corporate
boards. When harmed, people can also sue for violations of state corporate
practice of medicine laws. And both consumers and state attorneys general
can sue private equity–owned businesses—for-profit colleges, nursing
homes, prison services, and so forth—that violate local consumer protection
laws.
Most creatively, people may be able to sue the board members of private
equity–owned companies for breaches of fiduciary duty. Board members
typically owe duties of care and loyalty to the companies they oversee, and
yet many board members are personally divided between the companies
they lead and the private equity firms they often work for. When board
members authorize dividend recapitalizations, sale-leasebacks, or excessive
fees, they may violate their obligations to these companies. Employees at,
or customers of, companies gutted by private equity firms should seek to
58
recover damages under this theory.

CONGRESS
More than anything, to address the fundamental problems with the private
equity business model, Congress should pass the Stop Wall Street Looting
Act. This legislation, introduced by Senators Elizabeth Warren, Tammy
Baldwin, and Sherrod Brown, as well as Representatives Mark Pocan and
59
Pramila Jayapal, would give workers higher priority in the bankruptcy
process, end the carried interest loophole, and prevent companies from
doing dividend recapitalizations within the first two years of ownership.
Congress can also address through legislation virtually all of the
regulatory solutions discussed above. It can also fill important gaps that can
only be fixed through new laws. For instance, it can condition the receipt of
additional stimulus money on not firing workers or engaging in extractive
practices like dividend recapitalizations and excessive management fees or
60
executive compensation.
Even if it is not feasible to pass legislation with a sixty-vote majority in
the Senate, Congress should launch an investigation into private equity,
similar to its high-profile investigation into Big Tech, which produced
important revelations about the industry. With subpoena power, Congress
will be able to uncover, in ways that ordinary reporting cannot, so much
about how private equity firms are making their money. It can also uniquely
focus on the concerning ties that many private equity firms have with
foreign governments and the extent to which those ties may hurt our
economy and our national security.

INVESTORS
Private equity firms get their money through a variety of sources: sovereign
wealth funds, high-net-worth individuals, and, most importantly, public
61
pension funds, which provide nearly half of firms’ investable money.
Most public pension funds have open meetings and invite comments from
the public. Following the example of Worth Rises’s successful efforts to
slow investments in prison phone services, discussed in Chapter 7, activists
should use these meetings to stop public pensions from investing in the
most predatory private equity firms.

ACTIVISTS
Activists—individuals, nonprofit organizations, academics, and others—
play an essential role in building the infrastructure and public pressure for
action on the predatory practices of private equity.
First, new or existing groups can connect people agitating for change in
disparate industries affected by private equity, such as nursing homes,
payday lending, prison services, and medical practices. The specifics of
each industry are different, but there is much that these people can learn
from one another, including how private equity firms are organized, where
they might be vulnerable to lawsuits, when public advocacy campaigns
have been particularly effective, and who might join adjacent causes in
solidarity. There is much that we can learn from each other, and strength
that we can draw on.
Second, these organizations can publish explanations of how the private
equity business model affects their area of concern. Plaintiffs can then make
better arguments to pierce the corporate veil and hold firms accountable for
the actions of their portfolio companies. Publishing a database of the largest
investors in private equity firm funds—public pension funds chief among
them—will help activists identify which funds they should pressure to
divest investments. Highlighting which politicians are getting the most
money from private equity firms—information that is publicly available
through the nonprofit Open Secrets but that is seldom reported—will be
illuminating and informative. Many of private equity’s influence campaigns
are conducted in the open; all that is necessary is for someone to look.
Third, these organizations can make it easier for people to participate in
rulemaking and litigation. Protests matter. So too do comments submitted to
regulators and affidavits submitted to courts. The processes for participating
in rulemaking and litigation can be obscure, but it is important for people to
be a part of them. Citizens can make concrete the harms of decisions that
private equity firms, more often than not, would like to be kept obscure and
technical. Organizations can help people understand how to participate in
these processes and convince them to do so.
Fourth, organizations focused on doing something about private equity
plunder can power creative lawsuits, something that government agencies
cannot. For instance, activists should work with investors in or former
employees of private equity–owned companies to sue for breach of
fiduciary duty and work with consumers to bring mass arbitration claims.
These kinds of cases require finding private plaintiffs, a task that only
activists outside of government can do.
Finally, organizations can pressure public pension funds to divest from
private equity firms that engage in particularly odious tactics and pressure
nonprofits (for instance, art museums), on whose board many private equity
leaders sit, to agitate for change. Public pressure campaigns worked in the
prison services industry, and they can work elsewhere too. All that’s
necessary are the organizations and people to offer focus and momentum.

THE ACTIONS DESCRIBED above would rein in private equity’s worst excesses
and help to protect consumers, workers, and the economy as a whole. While
many are ambitious and time consuming, the risk of inaction is enormous.
As described at the outset of this book, left unconstrained, private equity
will transform the economy in this decade the way that Big Tech did in the
last decade and subprime lenders did in the decade before that.
But if inaction carries enormous risks, action carries enormous
opportunity. Americans are a diverse and dynamic people. Limiting private
equity—freeing people from these companies’ predation and enabling their
own entrepreneurialism—could immeasurably improve people’s lives and
the spirit of our country. The recommendations above are ambitious, but
they are all achievable.
A better world is possible. We just need to demand it.
 ACKNOWLEDGMENTS

This book relies on the reporting and research of hundreds of journalists,

academics, and activists without whose work this project would have been
impossible. I am enormously grateful for their research, as evidenced by the
hundreds of citations in this book. Where appropriate, I have mentioned
specific writers in the text to draw attention to their important work.
The opportunity to write this book has been an enormous gift, and I am
grateful to my agent Gail Ross and editor John Mahaney for their faith in an
unknown author. Thank you to Ben Wittes and Ganesh Sitaraman for
crucial advice and introductions at the outset of the project, and to “Team
Plunder”—Amita Chauhan, Zoe Li, Lindsay Maher, and Claire Yang—for
exceptional research and revisions. Thank you to Johanna Dickson, Maggie
Goodlander, Danielle Hauck, Aaron Hoag, Jonathan Kanter, Dara Kaye,
Dave Lawrence, Kelly Lenkevich, Carolyn Levin, Karina Lubell, Kate
Mueller, Adam Severt, and Paul Sliker, as well as to my many friends who
read chapters and listened to long monologues during this project, including
Max Friedman, Ben Heller, Nick Kelly, Leora Kelman, Henry
Klementowicz, Paul Kubicki, Nikki Leon, Amy Marshak, Eric Rosenblum,
Alan Rozenshtein, Laura Sloan, Alex Statman, and Glover Wright.
Two final notes of gratitude. First, to Louis Brandeis, whose book Other
People’s Money, and How the Bankers Use It was the inspiration and
lodestar for this project. Brandeis’s ideas permeated every part of this effort,
and I returned repeatedly to his writings throughout and thought often about
how his work a century ago is newly urgent today. Second, to my mother,
Martha Ballou. She was and is a fierce champion for working people and
someone whose moral compass I try to emulate. This book, of course, is
dedicated to her.
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 NOTES

INTRODUCTION: A NEW GILDED AGE

1. Peter Whoriskey & Dan Keating, Overdoses, Bedsores, Broken
Bones: What Happened When a Private-Equity Firm Sought to Care for
Society’s Most Vulnerable, WASH. POST (Nov. 25, 2018),
https://wapo.st/2TMbMzj.
2. William Conway, Jr., FORBES,
https://www.forbes.com/profile/william-conway-jr/?sh=7d8e699f7ae6;
David Rubenstein, FORBES, https://www.forbes.com/profile/david-
rubenstein/?sh=13fecb91792f; Daniel D’Aniello, FORBES,
https://www.forbes.com/profile/daniel-daniello/?sh=64cf09de6ea9.
3. Whoriskey & Keating, supra note 1.
4. Id.
5. Id.
6. Matthew Goldstein et al., Push for Profits Left Nursing Homes
Struggling to Provide Care, N.Y. TIMES (May 7, 2020),
https://www.nytimes.com/2020/05/07/business/coronavirus-nursing-
homes.html.
7. Whoriskey & Keating, supra note 1.
8. Complaint, Salley et al. v. Heartland-Charleston of Hanahan SC LLC
et al., No. 2:10-cv-791 (D.S.C. Mar. 29, 2010), EB No. 1.
9. Motion to Dismiss at 3, Salley et al. v. Heartland-Charleston of
Hanahan SC LLC et al., No. 2:10-cv-791 (D.S.C. June 25, 2010), ECF No.
15-1.
10. Order Granting Motion to Dismiss at 9, Salley et al. v. Heartland-
Charleston of Hanahan SC LLC et al., No. 2:10-cv-791 (D.S.C. June 25,
2010), ECF No. 45.
11. Ben Unglesbee, In Pandemic Era, Private Equity–Owned Retail Is
as Vulnerable as Ever, RETAIL DIVE (July 14, 2020),
https://www.retaildive.com/news/in-pandemic-era-private-equity-owned-
retail-is-as-vulnerable-as-ever/581252/ (BC Partners acquired PetSmart,
Leonard Green acquired J.Crew, and Sycamore acquired Talbots); KKR to
Acquire DTC Pioneer 1-800 Contacts from AEA Investors, PR NEWSWIRE
(Sept. 23, 2020), https://www .prnewswire.com/news-releases/kkr-to-
acquire-dtc-pioneer-1-800-contacts-from-aea-investors-301136355.html
(KKR acquired 1-800 Contacts).
12. Ingrid Lunden, Iconic Font Company Monotype Is Getting Acquired
by PE Firm HGGC for $825M, TECHCRUNCH (July 26, 2019),
https://techcrunch.com/2019/07/26/iconic-font-company-monotype-is-
getting-acquired-by-pe-firm-hggc-for-825m/; Monotype, HGGC,
https://www.hggc.com/portfolio/monotype; Bembo Family, MONOTYPE,
https://catalog.monotype.com/family/monotype/bembo (the private equity
firm HGGC bought Monotype, which licenses Bembo, among other fonts).
13. Get the Private Equity Data You Need to Fundraise Faster, Invest
Smarter and Exit Stronger, PITCHBOOK, https://pitchbook.com/private-
equity-database (identifying over 47,000 businesses in which private equity
invests); Vartika Gupta et al., Reports of Corporates’ Demise Have Been
Greatly Exaggerated, MCKINSEY (Oct. 21, 2021) (identifying about four
thousand publicly traded companies in the United States).
14. Mark Vandevelde, How Private Equity Came to Resemble the
Sprawling Empires It Once Broke Up, FIN. TIMES (Oct. 15, 2021),
https://www.ft.com/content/2c56a7da-6435-469c-90d8-28e966f20379.
15. Paul J. Davies, Why Private Equity Risks Tripping on Its Own
Success, WALL ST. J. (Feb. 13, 2018), https://www.wsj.com/articles/why-
private-equity-risks-tripping-on-its-own-success-1518518193.
16. Blackstone Growth (BXG), BLACKSTONE,
https://www.blackstone.com/our-businesses/blackstone-growth-bxg/.
17. Frank Holmes, Top 10 Largest Fortune 500 Employers in the U.S.,
FORBES (Oct. 26, 2022),
https://www.forbes.com/sites/greatspeculations/2022/10/26/top-10-largest-
fortune-500-employers-in-the-us/?sh=57eebb977e36.
18. Eileen Appelbaum & Rosemary Batt, PRIVATE EQUITY AT WORK:
WHEN WALL STREET MANAGES MAIN STREET 41, 43–44, 52–53 (2014)
(discussing use of debt, short-term investments, limited liability, and fees).
 19. Alicia McElhaney, LBOs Make (More) Companies Go Bankrupt,
Research Shows, INSTITUTIONAL INVESTOR (July 26, 2019),
https://www.institutionalinvestor.com/article/b1gfygl4r8661f/LBOs-Make-
More-Companies-Go-Bankrupt-Research-Shows.
20. Jim Baker et al., Pirate Equity: How Wall Street Firms Are
Pillaging American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 9
(2019), https://united4respect.org/wp-content/uploads/2019/07/Pirate-
Equity-How-Wall-Street-Firms-are-Pillaging-American-Retail-July-
2019.pdf; Emily Stewart, What Is Private Equity, and Why Is It Killing
Everything You Love?, VOX (Jan. 6, 2020), https://www.vox.com/the-
goods/2020/ ⅙ /21024740/private-equity-taylor-swift-toys-r-us-elizabeth-
warren; Rosemary Batt et al., How Private Equity Firms Will Profit from
COVID-19, A M. PROSPECT (May 7, 2020),
https://prospect.org/coronavirus/private-equity-firms-profit-covid-19-j-
crew/; Sapna Maheshwari & Vanessa Friedman, The Pandemic Helped
Topple Two Retailers. So Did Private Equity, N.Y. TIMES (June 18, 2020),
https://www.nytimes.com/2020/05/14/business/coronavirus-retail-
bankruptcies-private-equity.html; Ben Unglesbee & Nicole Ault, Is the
Road to Bankruptcy Paved by Private Equity?, RETAIL DIVE (Nov. 9, 2018),
https://www.retaildive.com/news/the-road-to-bankruptcy/540617/; Adam
Lewis, Private Equity–Backed Bankruptcies Surged in May, but Future
Might Not Be So Bleak, PITCHBOOK (June 5, 2020),
https://pitchbook.com/news/articles/private-equity-backed-bankruptcies-
surged-in-may-but-future-might-not-be-so-bleak; Jordan Weissmann, Why
Private Equity Keeps Wrecking Retail Chains Like Fairway, SLATE (Jan.
26, 2020), https://slate.com/business/2020/01/private-equity-retail-fairway-
why.html.
21. The Forbes 400, FORBES (2020), https://www.forbes.com/forbes-
400/.
22. GDP (current US$), WORLD BANK,
https://data.worldbank.org/indicator/NY .GDP.MKTP.CD.
23. Dawn Lim, Blackstone’s Schwarzman Collects $1.1 Billion in
Dividends, Pay, BLOOMBERG (Feb. 25, 2022),
https://www.bloomberg.com/news/articles/2022-02-26/blackstone-s-
schwarzman-collects-1-1-billion-in-dividends-pay; Nicole Goodkind,
JPMorgan Shareholders Vote Down Pay Bump for CEO Jamie Dimon,
CNN (May 18, 2022),
https://www.cnn.com/2022/05/18/investing/jpmorgan-ceo-pay-
shareholders/index.html; Everything Is Private Equity Now, BLOOMBERG
(Oct. 3, 2019), https://www.bloomberg.com/news/features/2019-10-
03/how-private-equity-works-and-took-over-everything.
24. Jordan Weissmann, How Wall Street Devoured Corporate America,
ATLANTIC (Mar. 5, 2013),
https://www.theatlantic.com/business/archive/2013/03/how-wall-street-
devoured-corporate-america/273732/.
25. Elizabeth Warren, End Wall Street’s Stranglehold on Our Economy,
MEDIUM (July 18, 2019), https://medium.com/@teamwarren/end-wall-
streets-stranglehold-on-our-economy-70cf038bac76.
26. Private Equity & Investment Firms: Summary, OPEN SECRETS,
https://www.opensecrets .org/industries/indus.php?ind=F2600&cycle=All.
27. Timothy F. Geithner, WARBURG PINCUS,
https://warburgpincus.com/team/timothy-f-geithner.
28. Team, LINDSAY GOLDBERG,
https://www.lindsaygoldbergllc.com/team.
29. Investment Team, JAM CAPITAL,
http://www.jamcapitalpartners.net/#team-header-1.
30. Team, SOLAMERE CAPITAL, https://www.solamerecapital.com/team/.
31. David H. Petraeus, KKR, https://www.kkr.com/our-
firm/leadership/david-h-petraeus.
32. Zachary Mider & Jennifer Jacobs, At Cerberus, Feinberg Built a
Web of National Security Ties, BLOOMBERG (Feb. 16, 2017),
https://www.bloomberg.com/news/articles/2017-02-16/at-cerberus-
feinberg-built-a-web-of-national-security-contacts.
33. Senator Kelly A. Ayotte, BLACKSTONE,
https://www.blackstone.com/people/senator-kelly-a-ayotte/; Tony Cook,
Evan Bayh’s Board Seats Made Him Millions After Senate, INDYSTAR (Aug.
13, 2016), https://www.indystar.com/story/news/politics/2016/08/13/evan-
bayhs-private-sector-work-raises-questions/88582174/.
34. Dan Quayle, CERBERUS, https://www.cerberus.com/our-
firm/leadership/dan-quayle/.
 35. Tim Shorrock, Kushner and Bannon Team Up to Privatize the War
in Afghanistan, NATION (July 14, 2017),
https://www.thenation.com/article/archive/kushner-and-bannon-team-up-
to-privatize-the-war-in-afghanistan/.
36. Cutting James Baker’s Ties, N.Y. TIMES (Dec. 12, 2003),
https://www.nytimes.com/2003/12/12/opinion/cutting-james-baker-s-
ties.html (identifying Baker’s employment with the Carlyle Group); Lee
Fang, Homeland Security Pick Gen. John Kelly Fails to Disclose Ties to
Defense Contractors, INTERCEPT (Jan. 17, 2017),
https://theintercept.com/2017/01/17/homeland-security-pick-gen-john-
kelly-fails-to-disclose-ties-to-defense-contractors/ (identifying John Kelly’s
employment with DC Capital Partners); Zachary Mider & Jennifer Jacobs,
At Cerberus, Feinberg Built a Web of National Security Ties, BLOOMBERG
(Feb. 16, 2017), https://www.bloomberg.com/news/articles/2017-02-16/at-
cerberus-feinberg-built-a-web-of-national-security-contacts (identifying
Dan Coats’s employment with Cerberus); John W. Snow, CERBERUS,
https://www.cerberus.com/our-firm/leadership/john-w-snow/; Former FCC
Chairman Kennard to Join the Carlyle Group, CARLYLE GROUP (May 1,
2001), https://www.carlyle.com/media-room/news-release-archive/former-
fcc-chairman-kennard-join-carlyle-group; Julius Genachowski, CARLYLE
GROUP, https://www .carlyle.com/about-carlyle/team/julius-genachowski;
Ajit Pai, SEARCHLIGHT CAPITAL, https://www.searchlightcap.com/team/ajit-
pai/; Former SEC Chairman Arthur Levitt to Join the Carlyle Group,
CARLYLE GROUP (May 1, 2001), https://www.carlyle.com/media-
room/news-release-archive/former-sec-chairman-arthur-levitt-join-carlyle-
group; Apollo Appoints Jay Clayton as Lead Independent Director, APOLLO
GLOBAL MANAGEMENT (Feb. 18, 2021),
https://www.apollo.com/media/press-releases/2021/02-18-2021-
113016273.
37. US PE Breakdown, PITCHBOOK (Jan. 11, 2022),
https://pitchbook.com/news/reports/2021-annual-us-pe-breakdown.
38. Louis Brandeis, OTHER PEOPLE’S MONEY AND HOW THE BANKERS
USE IT 13 (1914).
 39. Id. at 16 (discussing excessive fees); id. at 49 (discussing forced
partnerships); id. at 75 (discussing decline in product quality).

CHAPTER 1: OTHER PEOPLE’S MONEY, AND HOW THEY USE

IT
1. Dan Primack, How Workers Suffered from Shopko’s Bankruptcy
While Sun Capital Made Money, AXIOS (June 11, 2019),
https://www.axios.com/shopko-bankruptcy-sun-capital-547b97ba-901c-
4201-92cc-6d3168357fa3.html.
2. ShopKo Through the Years, POUGHKEEPSIE J. (Jan. 16, 2019),
https://www .poughkeepsiejournal.com/picture-
gallery/money/2019/01/09/shopko-through-years-bankruptcy-green-bay-
stores-headquarters/2526099002/.
3. Jeff Bollier, “There Were Memories Here”: Shopko Store Where
Business Was Born Ends 57-year Run, GREEN BAY PRESS-GAZETTE (Apr.
22, 2019), https://www.greenbaypressgazette
.com/story/news/2019/04/22/there-were-memories-here-green-bays-
original-shopko-store-closes-bankrupcy-liquidation/3537413002/.
4. Shopko, WIKIPEDIA, https://en.wikipedia.org/wiki/Shopko; List of
Former Shopko Stores, MALLS AND RETAIL WIKI,
https://malls.fandom.com/wiki/List_of_former_Shopko_Stores.
5. Erik Gunn, One Year After Shopko Went Bankrupt, URBAN
MILWAUKEE (Mar. 22, 2020), https://urbanmilwaukee.com/2020/03/22/one-
year-after-shopko-went-bankrupt/.
6. Id.
7. Jeff Bollier, Shopko Files for Bankruptcy, Will Close 105 Stores,
Including 16 in Wisconsin, GREEN BAY PRESS-GAZETTE (Jan. 16, 2019),
https://www.greenbaypressgazette.com/story/money/2019/01/16/shopko-
files-bankruptcy-close-38-more-stores/2551819002/; Sari Lesk, Shopko to
Close All Stores, Liquidate After Unsuccessful Attempt to Find a Buyer,
MILWAUKEE BUS. J. (Mar. 18, 2019),
https://www.bizjournals.com/milwaukee/news/2019/03/18/shopko-to-
close-all-stores-liquidate-after.html.
 8. Sun Cap Affiliate to Buy ShopKo, PROGRESSIVE GROCER (Oct. 19,
2005), https://progressivegrocer.com/sun-cap-affiliate-buy-shopko.
9. Ryan Chittum & Dennis K. Berman, Spirit Finance to Buy Most of
ShopKo’s Property, WALL S T. J. (May 10, 2006),
https://www.wsj.com/articles/SB114723045415348642.
10. Id.
11. Jeff Bollier, Shopko Used Borrowed Money to Pay Dividends; Owes
Wisconsin $13 Million in Taxes, Fees, GREEN BAY PRESS-GAZETTE (Mar. 1,
2019), https://www.greenbaypressgazette
.com/story/money/2019/03/01/shopko-dividends-under-investigation-also-
owes-wisconsin-13-5-million/2906336002/.
12. Primack, supra note 1.
13. Bollier, supra note 11.
14. Creditor Data Details—Claim # 345, KROLL (July 29, 2019),
https://cases.ra.kroll .com/shopko/Home-ClaimInfo.
15. Shopko Timeline of Notable Events, from 1961–2019, GREEN BAY
PRESS-GAZETTE (Jan. 16, 2019),
https://www.greenbaypressgazette.com/story/money/2019/01/16/shopko-
timeline-notable-events-1961-2019/2540803002/.
16. Primack, supra note 1.
17. Jeff Bollier, Bankruptcy Judge Approves $3 Million for 4,000
Former Shopko Workers Promised Severance, GREEN BAY PRESS-GAZETTE
(Oct. 15, 2020), https://www.greenbaypress
gazette.com/story/money/2020/10/15/shopko-severance-bankruptcy-judge-
approves-3-million-severance-pay-4-000-workers/3651776001/; WBAY
news staff, Court Approves Severance Pay Settlement for Former Shopko
Employees, WBAY (Oct. 16, 2020), https://www
.wbay.com/2020/10/16/court-approves-severance-pay-settlement-for-
former-shopko-employees/.
18. Id.
19. Gunn, supra note 5.
20. Id.
21. Id.
22. Dana Schuster, This Party-Boy Investor Throws the Grossest Ragers
in the Hamptons, N.Y. POST (July 2, 2015),
https://nypost.com/2015/07/02/the-hugh-hefner-of-the-hamptons-is-back-
with-naked-ladies-lasers-and-booze-galore/.
23. PageSix.com staff, Nude Frolic in Tycoon’s Pool, PAGE SIX (Aug. 7,
2011), https://pagesix.com/2011/08/07/nude-frolic-in-tycoons-pool/.
24. Id.
25. Mark Memmott, Romney’s Wrong and Right About the “47
Percent,” NPR (Sept. 18, 2012), https://www.npr.org/sections/thetwo-
way/2012/09/18/161333783/romneys-wrong-and-right-about-the-47-
percent.
26. David Corn, Secret Video: Romney Tells Millionaire Donors What
He Really Thinks of Obama Voters, MOTHER JONES (Sept. 17, 2012),
https://www.motherjones.com/politics/2012/09/secret-video-romney-
private-fundraiser/.
27. Alexander Bolton, Restive GOP Freshmen Eye Entitlement Reform,
THE HILL (Oct. 1, 2016), https://thehill.com/homenews/senate/298792-
restive-gop-freshmen-eye-entitlement-reform.
28. Jeff Stein, Ryan Says Republicans to Target Welfare, Medicare,
Medicaid Spending in 2018, WASH. POST (Dec. 6, 2017),
https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-
post-tax-cut-changes-to-welfare-medicare-and-social-security/.
29. Steve Kadel, Congressman: Reform Entitlement Programs to
Reduce Federal Debt, TIMES-INDEPENDENT (Apr. 4, 2013),
https://www.moabtimes.com/articles/congressman-reform-entitlement-
programs-to-reduce-federal-debt-2/.
30. Hannah Hess, Welfare Reform Act Champion Clay Shaw Dies, ROLL
CALL (Sept. 11, 2013) https://rollcall.com/2013/09/11/welfare-reform-act-
champion-clay-shaw-dies/.
31. Nicole Goodkind, Mitch McConnell Calls for Social Security,
Medicare, Medicaid Cuts After Passing Tax Cuts, Massive Defense
Spending, NEWSWEEK (Oct. 16, 2018), https://www .newsweek.com/deficit-
budget-tax-plan-social-security-medicaid-medicare-entitlement-1172941.
32. Individual Contributions, FEDERAL ELECTIONS COMMISSION,
https://www.fec.gov/data/receipts/individual-contributions/?
contributor_name=leder&contributor_employer=sun+capital.
 33. Wolf Richter, Another Retail Chain Bought & Stripped Bare by Sun
Capital Goes Bankrupt, WOLF STREET (Jan. 17, 2019),
https://wolfstreet.com/2019/01/17/another-retail-chain-owned-stripped-
bare-by-sun-capital-goes-bankrupt/.
34. 2021 Highlights, SUN CAPITAL PARTNERS (2021),
https://suncappart.com/wp-content/uploads/2022/03/Sun-Capital-2021-
Highlights.pdf.
35. George Fisher Baker, WIKIPEDIA,
https://en.wikipedia.org/wiki/George_Fisher_Baker; George F. Baker, 91,
Dies Suddenly of Pneumonia, N.Y. TIMES (May 3, 1931),
https://www.nytimes.com/1931/05/03/archives/george-f-baker-91-dies-
suddenly-of-pneumonia-dean-of-nations.html.
36. Louis Brandeis, OTHER PEOPLE’S MONEY AND HOW THE BANKERS
USE IT 116 (1914).
37. Id.
38. Vetrerie Riunite, SUN CAPITAL,
https://suncappart.com/portfolio/vetrerie-riunite/.
39. West Dermatology, SUN CAPITAL,
https://suncappart.com/portfolio/west-derma tology/.
40. Smokey Bones, SUN CAPITAL,
https://suncappart.com/portfolio/smokey-bones/.
41. Windsor Fashions, SUN CAPITAL,
https://suncappart.com/portfolio/windsor-fashions/.
42. Brandeis, supra note 36, at 5, 13.
43. Baker, George Fisher, SCOTT J. WINSLOW AMERICANA,
https://www.scottwinslow
.com/manufacturer/BAKER_GEORGE_FISHER/2446 (estimating Baker’s
fortune at $73.5 million in 1931, or about $1.4 billion in 2022 dollars).
44. #79 Stephen Schwarzman, FORBES,
https://www.forbes.com/profile/stephen-schwarzman/?sh=6ee1ffa6234a.
45. Mark Luscombe, Historical Capital Gains Rates, WOLTERS KLUWER
(Mar. 9, 2022), https://www.wolterskluwer.com/en/expert-insights/whole-
ball-of-tax-historical-capital-gains-rates.
 46. Philip Shabecoff, U.S. Eases Pension Investing, N.Y. TIMES (June
21, 1979), https://www.nytimes.com/1979/06/21/archives/us-eases-
pension-investing-pension-investments .html.
47. Ann Crittenden, Reaping the Big Profits from a Fat Cat, N.Y. TIMES
(Aug. 7, 1983), https://www.nytimes.com/1983/08/07/business/reaping-the-
big-profits-from-a-fat-cat.html.
48. David Gelles, Billionaire Confessional: David Rubenstein on Wealth
and Privilege, N.Y. TIMES (Mar. 12, 2020),
https://www.nytimes.com/2020/03/12/business/david-rubenstein-carlyle-
corner-office.html.
49. Stephen Gandel, 3 Reasons the Go-Go ’80s Aren’t Back on Wall
Street, FORTUNE (Oct. 20, 2015), https://fortune.com/2015/10/20/wall-
street-1980s/.
50. History of the RJR Nabisco Takeover, N.Y. TIMES (Dec. 2, 1988),
https://www .nytimes.com/1988/12/02/business/history-of-the-rjr-nabisco-
takeover.html.
51. John M. Doyle, Judge Dismisses Prison Term for Former Milken
Associate, ASSOCIATED PRESS (Sept. 8, 1992),
https://apnews.com/article/2efffe6a8df8a34c9e4200ec0473 25ed.
52. Savings and Loan Crisis, FEDERAL RESERVE HISTORY,
https://www.federalreservehistory .org/essays/savings-and-loan-crisis.
53. Tom Pratt, Snapple Insiders to Cash In Part of Huge LBO Windfall,
INVESTMENT DEALERS’ DIGEST (Sept. 20, 1993)
https://www.proquest.com/docview/198348759.
54. Antoine Gara, How Burger King’s Brilliant Brazilian Billionaire
Turned $1.2B into $22B, THESTREET (Aug. 25, 2014),
https://www.thestreet.com/markets/mergers-and-acquisitions/how-burger-
kings-brilliant-brazilian-billionaire-turned-12b-into-22b-12856055.
55. James Politi & John Murray Brown, Houghton Mifflin Agrees $5BN
Sale, FIN. TIMES (Nov. 29, 2006), https://www.ft.com/content/07a232e4-
7f60-11db-b193-00007 79e2340.
56. John Kreiser, Harrah’s Accepts $17.1B Buyout Bid, CBS (Dec. 19,
2006), https://www.cbsnews.com/news/harrahs-accepts-171b-buyout-bid/.
57. Sue Zeidler, MGM Seeks Lenders’ OK for Pre-packaged
Bankruptcy, REUTERS (Oct. 7, 2010), https://www.reuters.com/article/us-
mgm-restructuring/mgm-seeks-lenders-ok-for-pre-packaged-bankruptcy-
idUSTRE69706320101008.
58. Jeff Spross, How Vulture Capitalists Ate Toys ‘R’ Us, THE WEEK
(Mar. 16, 2018), https://theweek.com/articles/761124/how-vulture-
capitalists-ate-toys-r.
59. Daniel Rasmussen, Private Equity: Overvalued or Overrated?, AM.
AFFAIRS (Spring 2018), https://americanaffairsjournal.org/2018/02/private-
equity-overvalued-overrated/.
60. BLACKSTONE, https://www.blackstone.com/.
61. About, APOLLO, https://www.apollo.com/about-apollo; see also
Google Books Ngram Viewer, GOOGLE,
https://books.google.com/ngrams/graph?content=%22private+equity
%22%2C+%22leveraged+buyout%22&year_start=1800&year_end=2019
&corpus =26&smoothing=3 (The term leveraged buyout rose to
prominence in 1987 and immediately declined in use. Private equity
replaced leveraged buyout as the term of art, peaked in 2009, then similarly
collapsed).
62. US PE Breakdown, PITCHBOOK 4 (Jan. 11, 2022),
https://files.pitchbook.com/website/files/pdf/2021_Annual_US_PE_Breakd
own.pdf.
63. Gross Domestic Product, FEDERAL RESERVE BANK ST. LOUIS,
https://fred.stlouisfed .org/series/GDP (Q4 2022 GDP was about $24
trillion).
64. Dylan Thomas, KKR Scales AUM in 2021, Targets Private Wealth,
S& P GLOBAL (Feb. 8, 2022),
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-
headlines/kkr-scales-aum-in-2021-targets-private-wealth-68795650.
65. Blackstone Reports Fourth Quarter and Full Year 2021 Results,
BLACKSTONE (Jan. 27, 2022),
https://s23.q4cdn.com/714267708/files/doc_financials/2021/q4/Blackstone
4Q21Earnings PressRelease.pdf.
66. For simplicity’s sake, unless otherwise indicated, references to
private equity firms in this book include the funds they manage.
67. Eileen Appelbaum & Rosemary Batt, PRIVATE EQUITY AT WORK:
WHEN WALL STREET MANAGES MAIN STREET 2–3 (2014).
 68. Id. at 3, 7.
69. Id. at 72.
70. Victoria Knight, Private Equity Ownership of Nursing Homes
Triggers Capitol Hill Questions—and a GAO Probe, KAISER HEALTH NEWS
(Apr. 13, 2022), https://khn.org/news/article/private-equity-ownership-of-
nursing-homes-triggers-federal-probe/; Amy Abdnor & Alexandra Spratt,
Part 2: Hotspots for COVID Deaths, Nursing Homes Have Long Been
Targeted—and Gutted—by Private Equity, ARNOLD VENTURES (Sept. 8,
2020), https://www.arnoldventures.org/stories/hotspots-for-covid-deaths-
nursing-homes-have-long-been-targeted-and-gutted-by-private-equity.
71. Id.; Atul Gupta et al., Does Private Equity Investment in Healthcare
Benefit Patients? Evidence from Nursing Homes (National Bureau of
Economic Research, Working Paper No. 28474, Feb. 2021),
https://www.nber.org/papers/w28474.
72. Abdnor & Spratt, supra note 70.
73. Gupta et al., supra note 71.
74. Appelbaum & Batt, supra note 67.
75. Adam Lewis, PE Firms Keep Deploying Dividend Recaps Despite
the Risks, PITCHBOOK (Aug. 15, 2019),
https://pitchbook.com/news/articles/pe-firms-keep-deploying-dividend-
recaps-despite-the-risks.
76. Dan Primack, Why Hertz Crashed, AXIOS (May 26, 2020),
https://www.axios.com/hertz-bankruptcy-6f16b3a4-141f-43cd-8f7b-
e6a60a01d5dd.html.
77. Appelbaum & Batt, supra note 67, at 7.
78. Primack, supra note 76.
79. Tom Krisher, Debt and Coronavirus Push Hertz into Bankruptcy
Protection, ASSOCIATED PRESS (May 23, 2020),
https://apnews.com/article/3d73d765cb60bef45afc83fa0dd24775.
80. Lewis, supra note 75.
81. Eliza Ronalds-Hannon & Davide Scigliuzzo, Sycamore Gets $1
Billion in Deal That Amazed Street, BLOOMBERG (Apr. 11, 2019),
https://www.bloomberg.com/news/articles/2019-04-11/sycamore-pockets-
1-billion-from-deal-that-amazed-wall-street (Sycamore invested $1.6
billion in equity into the company, received $1 billion through a dividend
recapitalization, and received another $300 million back through a separate
deal).
82. Matthew Goldstein, Private Equity Firms Are Piling on Debt to Pay
Dividends, N.Y. TIMES (Feb. 19, 2021),
https://www.nytimes.com/2021/02/19/business/private-equity-dividend-
loans.html; Dividend Recapitalizations in Healthcare: How Private Equity
Raids Critical Health Care Infrastructure for Short Term Profit, PRIVATE
EQUITY STAKEHOLDER PROJECT (Oct. 2020), https://pestakeholder.org/wp-
content/uploads/2020/10/PESP-HC-dividends-10-2020.pdf.
83. Morgan Greene, Hundreds More Lawsuits Filed over Ethylene
Oxide Emissions at Sterigenics Plant in Willowbrook, CHICAGO TRIB. (Aug.
21, 2020), https://www.chicagotribune .com/news/breaking/ct-sterigenics-
lawsuits-20200821-mugtioojxvf2rfqoxnbfante2y-story.html. Sterigenics
fought the lawsuits and argued that the quantities of chemicals it released
were too small to be harmful. Nevertheless, in late 2022, a jury awarded
$363 million to a plaintiff who lived near the facility and developed cancer.
Sterigenics said that it would appeal the decision. Michelle Gallardo,
Sterigenics Trial Jury Reaches $363M Verdict in Favor of Woman Who
Sued Willowbrook Company, ABC7 CHICAGO (Sept. 19, 2022),
https://abc7chicago.com/sterigenics-lawsuit-willowbrook-verdict-
locations/12240473/.
84. Sterigenics Funnels $1.3 Billion in Cash While Facing Increased
Legal Pressure for Causing Cancers, ROMANUCCI & BLANDIN (Feb. 3,
2020), https://jnswire.s3.amazonaws.com/jns-
media/5f/59/11380855/Sterigenics_Amended_Complaint_2-3-20.pdf. The
Atlanta-Journal Constitution exposed Sterigenics’s use of dividend
recapitalizations. In a statement to the paper, Sterigenics denied that the
company “took actions with respect to capital structure at the expense of
safety” but did not deny the recapitalizations themselves. Brian Eason,
Investor Payouts Put Sterigenics in Tenuous Financial Position as Pressure
Mounts, ATLANTA JOURNAL-CONSTITUTION (Feb. 3, 2022),
https://www.ajc.com/news/atlanta-news/investor-payouts-put-sterigenics-
in-tenuous-financial-position-as-pressure-
mounts/EJC5VJYEH5CINFSN24TGN5C4RI/.
85. Goldstein, supra note 82.
 86. Davide Scigliuzzo, Private Equity’s Dividend Spree Looks Like It’s
Just Starting, BLOOMBERG (Sept. 15, 2021),
https://www.bloomberg.com/news/articles/2021-09-15/private-equity-s-
dividend-spree-looks-like-it-s-just-starting.
87. Id.
88. Margalit Fox, Alan Haberman, Who Ushered in the Bar Code, Dies
at 81, N.Y. TIMES (June 15, 2011),
https://www.nytimes.com/2011/06/16/business/16haberman.html.
89. Peter Whoriskey, As a Grocery Chain Is Dismantled, Investors
Recover Their Money. Worker Pensions Are Short Millions, WASH. POST
(Dec. 28, 2018), https://wapo .st/32fIQFh.
90. Id.; Eileen Appelbaum & Rosemary Batt, Private Equity Pillage:
Grocery Stores and Workers at Risk, CENTER FOR ECONOMIC AND POLICY
RESEARCH (2018), https://cepr .shorthandstories.com/private-equity-
pillage/index.html (estimating that Marsh’s property was undervalued by
$100 to $150 million).
91. Whoriskey, supra note 89.
92. Id.
93. Id.
94. Id.
95. Id.
96. Id.
97. Sun Capital allegedly received dividends on several of these
investments. See, e.g., Jonathan Shieber, Sun Capital Sees Healthy Return
on Fluid Routing Solutions, WALL ST. J. (Mar. 9, 2012),
https://www.wsj.com/articles/DJFLBO0020120308e838sjksd; Stephanie
Gleason, Indalex Sues Kirkland & Ellis, Alleges Investment Conflicts,
WALL S T. J. (May 15, 2021),
https://www.wsj.com/articles/DJFDBS0020120515e85fjr2ah (Indalex
alleged that Sun Capital received a substantial dividend from Indelex; the
matter settled before the allegation could be resolved publicly).
98. Sycamore Partners Completes Acquisition of Talbots, CISION (Aug.
7, 2012), https://www.prnewswire.com/news-releases/sycamore-partners-
completes-acquisition-of-talbots-165259216.html.
 99. William Grimes, Nancy Talbot, Who Helped Build a Retail Empire,
Dies at 89, N.Y. TIMES (Sept. 3, 2009),
https://www.nytimes.com/2009/09/04/business/04talbot.html.
100. Id.
101. Khadeeja Safdar & Miriam Gottfried, How One Investor Made a
Fortune Picking Over the Retail Apocalypse, WALL ST. J. (Mar. 21, 2018),
https://www.wsj.com/articles/how-one-investor-made-a-fortune-picking-
over-the-retail-apocalypse-1521643491.
102. Steve Gelsi, Sycamore Pays Dividend Recap with $205 mln in
Fresh Talbots Debt, BUYOUTS (Apr. 27, 2015),
https://www.buyoutsinsider.com/sycamore-pays-dividend-recap-with-205-
mln-in-fresh-talbots-debt/.
103. Safdar & Gottfried, supra note 101.
104. Ben Unglesbee, Talbots Downgraded by S&P as Pandemic Weighs
on Sales, Cash Flow, RETAIL DIVE (Jan. 22, 2021),
https://www.retaildive.com/news/talbots-downgraded-by-sp-as-pandemic-
weighs-on-sales-cash-flow/593821.
105. Debtors’ Motion for an Order, In re: Aeropostale Inc., et al., No.
16-bk-11275 (S.D.N.Y. July 22, 2016), ECF No. 496 at ¶ 5; Declaration of
Julian R. Geiger, In re: Aeropostale Inc., et al., No. 16-bk-11275 (S.D.N.Y.
May 4, 2016), ECF No. 26.
106. Peg Brickley, Aéropostale Loses Bid to Rein in Sycamore, WALL
ST. J. (Aug. 26, 2016), https://www.wsj.com/articles/aeropostale-loses-bid-
to-rein-in-sycamore-1472243765; Memorandum of Decision, In re:
Aeropostale Inc., et al., No. 16-bk-11275 (S.D.N.Y. July 22, 2016), ECF
No. 724 at 60-64; Jessica DiNapoli, Aeropostale to Challenge Sycamore’s
Status as Creditor, REUTERS (July 21, 2016),
https://www.reuters.com/article/us-aeropostale-claims-
bankruptcy/aeropostale-to-challenge-sycamores-status-as-creditor-
idUSKCN10130P.
107. Jana Kasperkevic, All the Stores You Shopped at as a Teen Are
Going Bankrupt, MARKETPLACE (Mar. 20, 2018),
https://www.marketplace.org/2018/03/20/all-stores-you-shopped-teen-are-
going-bankrupt/.
 108. Nathan Bomey, Will Your Aeropostale Close? Here’s the List, USA
TODAY (May 4, 2016),
https://www.usatoday.com/story/money/2016/05/04/aeropostale-chapter-
11-bankruptcy-store-closure-list/83916028/.
109. Eileen Appelbaum & Rosemary Batt, Private Equity Partners Get
Rich at Taxpayer Expense, CENTER FOR ECONOMIC AND POLICY RESEARCH
(July 2017), https://cepr.net/images/stories/reports/private-equity-partners-
2017-07.pdf.
110. Gregg D. Polsky, Private Equity Management Fee Conversions 12
(FSU College of Law, Public Law Research Paper No. 337, 2012),
https://papers.ssrn.com/sol3/papers .cfm?abstract_id=1295443.
111. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
112. Appelbaum & Batt, supra note 67, at 79.
113. Robert F. Smith, FORBES, https://www.forbes.com/profile/robert-f-
smith/?sh =45b9d7bb2236.
114. Ted Andersen, Billionaire Private Equity Firm Founder, CEO
Caught Up in Federal Tax Fraud, SAN FRANCISCO BUS. TIMES (Oct. 15,
2020), https://www.bizjournals.com/sanfrancisco/news/2020/10/16/sf-
private-equity-firm-founder-federal-cuts-deal.html.
115. Laura Saunders, The IRS Reels In a Whale of an Offshore Tax
Cheat—and Goes for Another, WALL ST. J. (Oct. 23, 2020),
https://www.wsj.com/articles/the-irs-reels-in-a-whale-of-an-offshore-tax-
cheatand-goes-for-another-11603445399.
116. Id.
117. David Voreacos & Neil Weinberg, Lawyer to Billionaire Who Died
on Eve of Tax-Fraud Trial Took His Own Life, BLOOMBERG (Nov. 29,
2022), bloomberg.com/news/articles/2022-11-29/lawyer-to-billionaire-
died-by-suicide-on-eve-of-tax-fraud-trial.
118. Suhas Gondi & Zirui Song, Potential Implications of Private
Equity Investments in Health Care Delivery, JAMA (Feb. 28, 2019),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6682417/.
119. Complaint, Jones et al. v. Varsity Brands, LLC et al., 2:20-cv-
02892 (W.D. Tenn. Dec. 10, 2020).
 120. Complaint to the FTC,
https://www.dropbox.com/s/f4o6w112dnzqv0x/Complaint
%20to%20the%20FTC.pdf; Matt Stoller, The Coming Collapse of a
Cheerleading Monopolist, BIG (May 27, 2020),
https://mattstoller.substack.com/p/the-coming-collapse-of-a-cheerleading.
121. Varsity Defendants’ Answer to the Class Action Complaint, Jones
et al. v. Varsity Brands, LLC et al., 2:20-cv-02892 (W.D. Tenn. Aug. 15,
2022), ECF No. 340; Bain Capital Private Equity’s Answer to the Class
Action Complaint, Jones et al. v. Varsity Brands, LLC et al., 2:20-cv-02892
(W.D. Tenn. Aug. 15, 2022), ECF No. 338.
122. Leslie Helm, Wellhaven’s Pet Project, SEATTLE BUS. (Apr. 2019),
https://wellhaven .com/wp-content/uploads/2019/03/SBM-
WellHavenArticle-3.29.19.pdf.
123. Private Equity—What Veterinarians Should Know, VETERINARY
IDEALIST (Feb. 12, 2020), https://vetidealist.com/private-equity-
veterinarians/.
124. Wall Street’s Secret Pet Profiteering, AMERICANS FOR FINANCIAL
REFORM (Apr. 2020), https://ourfinancialsecurity.org/2020/04/blog-posts-
wall-streets-secret-pet-profiteering/.
125. Id.
126. Toys ‘R’ Us to Close 75 Stores and Cut 11% of Work Force, N.Y.
TIMES (Jan. 10, 2006), https://www.nytimes.com/2006/01/10/business/toys-
r-us-to-close-75-stores-and-cut-11-of-work-force.html.
127. Ben Unglesbee, Ex-Toys R Us Employees Win $2M Severance
Agreement, RETAIL DIVE (June 28, 2019),
https://www.retaildive.com/news/ex-toys-r-us-employees-win-2m-
severance-agreement/557888/.
128. Id.
129. Mayra Rodriguez Valladares, Private Equity Firms Have Caused
Painful Job Losses and More Are Coming, FORBES (Oct. 30, 2019),
https://www.forbes.com/sites/mayrarodriguezvalladares/2019/10/30/private
-equity-firms-have-caused-painful-job-losses-and-more-are-coming/?
sh=35bbe1b37bff.
130. Jim Baker et al., Pirate Equity: How Wall Street Firms Are
Pillaging American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 40–
44 (2019), https://united4respect.org/wp-content/uploads/2019/07/Pirate-
Equity-How-Wall-Street-Firms-are-Pillaging-American-Retail-July-
2019.pdf.
131. Valladares, supra note 129.
132. Appelbaum & Batt, supra note 67, at 217; Julie Creswell, Oh, No!
What Happened to Archway?, N.Y. TIMES (May 30, 2009),
https://www.nytimes.com/2009/05/31/business/31archway.html.
133. Id.
134. Id. Catterton denied allegations of financial mismanagement made
in a subsequent complaint by unsecured creditors. A spokeswoman for
Catterton told the Times that “Archway notwithstanding, Catterton has
helped to capitalize and grow nearly 75 successful consumer companies in
its 20-year history.”
135. Warren, Pocan, and Ocasio-Cortez Investigate Private Equity
Firms Profiteering Off Incarcerated People and Their Families, OFFICE OF
SENATOR ELIZABETH WARREN (Oct. 1, 2019),
https://www.warren.senate.gov/oversight/letters/warren-pocan-and-ocasio-
cortez-investigate-private-equity-firms-profiteering-off-incarcerated-
people-and-their-families.
136. Letter from Senator Elizabeth Warren et al. to Andrew Feldstein et
al. at 8 (Sept. 30, 2019),
https://www.warren.senate.gov/imo/media/doc/2019-09-
30%20Letters%20to %20PE%20Firms%20re%20Prison%20Services.pdf.
137. Steve Coll, The Jail Health-Care Crisis, NEW YORKER (Feb., 25,
2019), https://www.newyorker.com/magazine/2019/03/04/the-jail-health-
care-crisis.
138. Id.
139. Neil Irwin, How Private Equity Buried Payless, N.Y. TIMES (Feb.
1, 2020), https://www.nytimes.com/2020/01/31/upshot/payless-private-
equity-capitalism.html.
140. Id.
141. Alicia McElhaney, LBOs Make (More) Companies Go Bankrupt,
Research Shows, INSTITUTIONAL INVESTOR (July 26, 2019),
https://www.institutionalinvestor.com/article/b1gfygl4r8661f/LBOs-Make-
More-Companies-Go-Bankrupt-Research-Shows.
 142. Capabilities, BLUE WOLF CAPITAL,
http://bluewolfcapita.wpengine.com/about/capabilities/.
143. Stephen Steed, Arkansas Town Sees More Jobs with Sawmill
Revival, ARK. DEMOCRAT-GAZETTE (June 8, 2017),
https://www.capitalpress.com/nation_world/profit/arkansas-town-sees-
more-jobs-with-sawmill-revival/article_8332864c-0459-55a6-9bf4-a6fafe
409f03.html.
144. Capabilities, supra note 142.
145. Steed, supra note 143.
146. Stephen Steed, Sawmill’s Revival Gives Arkansas Town a Lift, ARK.
DEMOCRAT-GAZETTE (June 1, 2017),
https://www.arkansasonline.com/news/2017/jun/01/sawmill-s-revival-
gives-town-a-lift-201/.
147. Id.
148. Steed, supra note 143.
149. Investment Strategy, BLUE WOLF CAPITAL,
https://www.bluewolfcapital.com/strategy/investment-strategy.
150. Interview with Charlie Miller, partner and chief compliance officer,
Blue Wolf Capital (Mar. 14, 2022).
151. Conifex Buying U.S. Sawmills for $258 Million to Add 50 per Cent
More Capacity, FIN. POST (May 15, 2018),
https://financialpost.com/pmn/business-pmn/conifex-buying-u-s-sawmills-
for-258-million-to-add-50-per-cent-more-capacity.
152. Robert Dalheim, Conifex Shuts Down Arkansas Lumber Mill
Indefinitely, Lays Off 92, WOODWORKING NETWORK (Aug. 15, 2019),
https://www.woodworkingnetwork.com/news/woodworking-industry-
news/conifex-shuts-down-arkansas-lumber-mill-indefinitely-lays-92.
153. Resolute Forest Products Buying El Dorado, Glenwood Mills from
Conifex, Will Reopen Union County Site in 2021, MAGNOLIA REP. (Jan. 4,
2020), http://www.magnoliareporter
.com/news_and_business/union_county/article_b1febdaa-2927-11ea-a8eb-
27ef7d9357e1 .html.
154. Glenwood, RESOLUTE FOREST PRODUCTS,
https://www.resolutefp.com/installation_site.aspx?
siteid=173&langtype=4105.
 CHAPTER 2: ENDING HOMEOWNERSHIP AS WE KNOW IT
1. Amanda L. Gordon, Schwarzman Parties at 70 with Camels, Cake
and Trump’s Entourage, BLOOMBERG (Feb. 13, 2017),
https://bloom.bg/3mS8hWK.
2. Bess Levin, Populist Hero Stephen Schwarzman’s Birthday Blowout
Included Fireworks, Acrobats, and Live Camels, VANITY FAIR (Feb. 13,
2017), https://www.vanityfair.com/news/2017/02/stephen-schwarzmans-
birthday-blowout-included-fireworks-acrobats-and-live-camels; Sam
Dangremond, Steve Schwarzman Hosted an Epic 70th Birthday Party in
Palm Beach, TOWN & COUNTRY (Feb. 13, 2017),
https://www.townandcountrymag.com/the-scene/parties/news/a9556/steve-
schwarzman-birthday-party/; Emily Smith, Blackstone CEO Throws
Himself “the Party of the Century,” N.Y. POST (Feb. 13, 2017),
https://pagesix.com/2017/02/13/blackstone-ceo-throws-himself-the-party-
of-the-century/.
3. Sam Dangremond, Steve Schwarzman Hosted an Epic 70th Birthday
Party in Palm Beach, TOWN & COUNTRY (Feb. 13, 2017),
https://www.townandcountrymag.com/the-scene/parties/news/a9556/steve-
schwarzman-birthday-party/.
4. Levin, supra note 2.
5. Smith, supra note 2.
6. Gordon, supra note 1.
7. Smith, supra note 2.
8. Julia Gordon, The Dark Side of Single-Family Rental, SHELTERFORCE
(July 30, 2018), https://shelterforce.org/2018/07/30/the-dark-side-of-single-
family-rental/.
9. Brett Christophers, How and Why U.S. Single-Family Housing
Became an Investor Asset Class, J. URBAN HIST. 1, 6–7 (2021),
https://journals.sagepub.com/doi/pdf/10.1177/00961442211029601.
10. Francesca Mari, A $60 Billion Housing Grab by Wall Street, N.Y.
TIMES (Mar. 4, 2020),
https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html.
 11. Elora Raymond et al., Corporate Landlords, Institutional Investors,
and Displacement: Eviction Rates in Single-Family Rentals, 04-16
COMMUNITY & ECONOMIC DEVELOPMENT DISCUSSION PAPER 1, 2 (Dec.
2016), https://www.atlantafed.org/-/media/documents/community-
development/publications/discussion-papers/2016/04-corporate-landlords-
institutional-investors-and-displacement-2016-12-21.pdf.
12. Gordon, supra note 8.
13. Rachel Bogardus Drew, Single-Family Rentals Have Risen to
Nearly a Third of Rental Housing, JOINT CENTER FOR HOUSING STUDIES OF
HARVARD UNIVERSITY (Oct. 5, 2015),
https://www.jchs.harvard.edu/blog/single-family-rentals-have-risen-to-
nearly-a-third-of-rental-housing.
14. Julianne Pepitone, Foreclosures: Worst-hit Cities, CNN (Oct. 28,
2009),
https://money.cnn.com/2009/10/28/real_estate/foreclosures_worst_cities/.
15. George Packer, THE UNWINDING 260 (2013).
16. Andrew Clark, Mortgage Crisis: Welcome to Sub-prime Capital,
USA, GUARDIAN (July 27, 2008),
https://www.theguardian.com/business/2008/jul/28/subprimecrisis
.useconomy.
17. Id.
18. Christopher J. Goodman & Steven M. Mance, Employment Loss and
the 2007–09 Recession: An Overview, MONTHLY LAB. REV. 1, 3 (April
2011), https://www.bls.gov/opub/mlr/2011/04/art1full.pdf.
19. Maya Abood et al., Wall Street Landlords Turn American Dream
into a Nightmare, ACCE INSTITUTE ET AL. 4,
https://www.publicadvocates.org/wp-content/uploads/wallstreetland
lordsfinalreport.pdf.
20. Charles Duhigg, Loan-Agency Woes Swell from a Trickle to a
Torrent, N.Y. TIMES (July 11, 2008),
https://www.nytimes.com/2008/07/11/business/11ripple.html?
ex=1373515200.
21. Reduce, Refinance, and Rent? The Economic Incentives, Risks, and
Ramifications of Housing Market Policy Options, CONGRESSIONAL
RESEARCH SERVICE 13 (Aug. 28, 2012),
https://crsreports.congress.gov/product/pdf/R/R42480/12.
22. Id.
23. Ben Hallman, Edward DeMarco’s Lonely Stand Against Mortgage
Debt Relief, HUFFPOST (Aug. 2, 2012),
https://www.huffpost.com/entry/edward-demarco-principal-
reduction_n_1730806.
24. Letter from Edward J. DeMarco, acting director, Federal Housing
Finance Authority to Tim Johnson, chairman of the House Committee on
Banking, Housing and Urban Affairs et al. (July 31, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Documents/PF_LetterToCong_7
3112_N508.pdf.
25. Ben Hallman, Ed DeMarco, Top Housing Official, Defies White
House; Geithner Fires Back, HUFFPOST (Sept. 30, 2012),
https://www.huffpost.com/entry/ed-demarco-principal-
reduction_n_1724880.
26. President Obama, Fire Edward J. DeMarco, CHANGE.ORG,
https://www.change.org/p/president-obama-fire-edward-j-demarco?
redirect=false.
27. FHFA’s DeMarco Opposes Mortgage Help, UPI (July 31, 2012),
https://www .upi.com/Business_News/2012/07/31/FHFAs-Demarco-
opposes-mortgage-help/88651343773559/.
28. Ben Hallman, Edward DeMarco Threatens Action Against
Communities Weighing Principal Reduction Proposal, HUFFPOST (Aug. 9,
2012), https://www.huffpost.com/entry/edward-demarco-principal-
reduction_n_1759767?utm_hp_ref=business.
29. Id.; Use of Eminent Domain to Restructure Performing Loans,
FEDERAL HOUSING FINANCE AGENCY (Aug. 9, 2012),
https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Use-of-Eminent-
Domain-to-Restructure-Performing-Loans.aspx.
30. Welcome to HPC, HOUSING POLICY COUNCIL,
https://www.housingpolicycouncil .org/mission.
31. FHFA Announces Pilot REO Property Sales in Hardest-Hit Areas,
FEDERAL HOUSING FINANCE AGENCY (Feb. 27, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Pilot-
REO-Property-Sales-in-HardestHit-Areas.aspx.
32. Housing Markets in Transition, FEDERAL RESERVE (Feb. 10, 2012),
https://www.federal
reserve.gov/newsevents/speech/bernanke20110210a.htm (Bernanke said
that “[w]ith home prices falling and rents rising, it could make sense in
some markets to turn some of the foreclosed homes into rental
properties.”).
33. Id. (“[A]ppropriately structured programs could help some
involuntary renters become owners again by giving them options to
purchase the homes they are renting.”).
34. Lorraine Woellert, FHFA Will Sell Foreclosed Homes to Investors
for Rentals, BLOOMBERG (Feb. 27, 2012),
https://www.bloomberg.com/news/articles/2012-02-27/fhfa-to-begin-
selling-foreclosed-homes-to-investors-for-rentals.
35. Meredith Abood, Securitizing Suburbia: The Financialization of
Single-Family Rental Housing and the Need to Redefine “Risk,” MIT 13
(2017), https://dspace.mit.edu/handle/1721.1/111349.
36. Id.
37. FHFA Statement on REO Pilot Transactions, FEDERAL HOUSING
FINANCE AGENCY (Nov. 1, 2012),
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Statement-on-
REO-Pilot-Transactions.aspx.
38. Lisa Bartley, Billion-Dollar Landlords: Rental-Home Giant Under
Fire for Unsavory Conditions, ABC7 (Nov. 18, 2017),
https://abc7.com/starwood-waypoint-homes-tom-barrack-donald-trump-
invitation/2663400/.
39. Christophers, supra note 9, at 1, 5.
40. Robbie Whelan, Firms Flock to Foreclosure Auctions, WALL ST. J.
(Sept. 12, 2012),
https://www.wsj.com/articles/SB1000087239639044369660457764470044
8760254.
41. Id.
42. Starwood Waypoint Homes, Quarterly Report (Form 10-Q) (Nov.
2017),
https://www.sec.gov/Archives/edgar/data/1579471/000156459017023253/s
fr-10q_20170930 .htm.
43. Robbie Whelan, Colony Capital to Acquire 10% Stake in Fannie
Housing Pool, WALL S T. J. (Oct. 25, 2012),
https://www.wsj.com/articles/SB1000142405297020407620457807918338
2983270.
44. Allison Bisbey, Invitation Homes Obtains Financing from Fannie
Mae, NAT’L MORTGAGE NEWS (Jan. 26, 2017),
https://www.nationalmortgagenews.com/news/invitation-homes-obtains-
financing-from-fannie-mae; Abood et al., supra note 19, at 37.
45. Stephanie Zimmerman, Through Fannie Mae, US Taxpayers
Provide Backing for Some Rental Home Giants, ABC NEWS (Nov. 16,
2017), https://abcnews.go.com/US/fannie-mae-us-taxpayers-provide-
backing-rental-home/story?id=51194097.
46. Elora Lee Raymond et al., From Foreclosure to Eviction: Housing
Insecurity in Corporate-Owned Single-Family Rentals, 20 CITYSCAPE: J.
POL’Y DEV. RES. 159, 160 (2018), https://bit.ly/3C7lEZu.
47. Abood, supra 35, at 12.
48. In 2015, Starwood Waypoint Residential Trust announced plans to
buy Colony American. Barry Sternlicht and Tom Barrack were set to
become nonexecutive cochairmen of the combined board of trustees. Chad
Bray, Starwood Waypoint Residential Trust to Acquire a Rival, N.Y. TIMES
(Sept. 21, 2015), https://www.nytimes
.com/2015/09/22/business/dealbook/starwood-waypoint-residential-trust-
to-acquire-a-rival.html. The deal was completed along these terms in 2016.
Colony Starwood Homes Announces Closing of $7.7 Billion Merger of
Starwood Waypoint Residential Trust with Colony American Homes,
Creating the Premier Single-Family REIT, BUSINESS WIRE (Jan. 5, 2016),
https://www.businesswire.com/news/home/20160105006880/en/Colony-
Starwood-Homes-Announces-Closing-of-7.7-Billion-Merger-of-Starwood-
Waypoint-Residential-Trust-with-Colony-American-Homes-Creating-the-
Premier-Single-Family-REIT. The new venture was initially called Colony
Starwood Homes but in 2017 rebranded as Starwood Waypoint Homes.
Ben Lane, Colony Starwood Homes Rebranding as Starwood Waypoint
Homes, HOUSING WIRE (July 9, 2017), https://www
.housingwire.com/articles/40722-colony-starwood-homes-rebranding-as-
starwood-waypoint-homes/. Then in July 2017, Blackstone’s Invitation
Homes bought Starwood Waypoint. Ben Lane, Invitation Homes, Starwood
Waypoint Homes Merge to Create Largest Single-Family Landlord,
HOUSING WIRE (Nov. 16, 2017),
https://www.housingwire.com/articles/41839-invitation-homes-starwood-
waypoint-homes-merge-to-create-largest-single-family-landlord/. When
they changed names, Barrack sold his stake in the firm. Ryan Dezember,
Blackstone, Starwood to Merge Rental-Home Businesses in Bet to Be
America’s Biggest Home Landlord, WALL ST. J. (Aug. 10, 2017),
https://www.wsj.com/articles/with-merger-deal-blackstone-starwood-bet-
on-being-americas-biggest-home-landlord-1502361000. In the discussion
that follows, “Colony” refers to any of the iterations of the company.
49. Abood, supra 35, at 73.
50. Affordability Issues Aid Spike in Single-Family Rent Growth, DS
NEWS (July 20, 2021), https://dsnews.com/daily-dose/07-20-
2021/affordability-aids-spike-in-single-family-rent-growth.
51. Abood et al., supra note 19, at 17.
52. Mari, supra note 10.
53. Rivera v. Invitation Homes, Inc., No. 4:18-cv-3158 (N.D. Cal.
2018); McCumber et al. v. Invitation Homes Inc., 3:21-cv-2194 (N.D. Tex.
2021). As of November 2022, the parties in the Texas case have neared a
settlement. Joint Status Report, McCumber et al. v. Invitation Homes Inc.,
3:21-cv-2194 (N.D. Tex. Nov. 22, 2022), ECF No. 86.
54. Order Denying Motion for Class Certification and Dismissing
Action at 8, Rivera v. Invitation Homes, Inc., No. 4:18-cv-3158 (N.D. Cal.
Feb. 18, 2022), ECF No. 70.
55. Alexandra Stevenson & Matthew Goldstein, Rent-to-Own Homes: A
Win-Win for Landlords, a Risk for Struggling Tenants, N.Y. TIMES (Aug.
21, 2016), https://www .nytimes.com/2016/08/22/business/dealbook/rent-
to-own-homes-a-win-win-for-landlords-a-risk-for-struggling-tenants.html;
Invitation Homes Makes Dreams of Home Ownership a Reality for
Residents, INVITATION HOMES (Nov. 8, 2018), https://www
.prnewswire.com/news-releases/invitation-homes-makes-dreams-of-home-
ownership-a-reality-for-residents-300746216.html; Matthew Goldstein &
Alexandra Stevenson, Market for Fixer-Uppers Traps Low-Income Buyers,
N.Y. TIMES (Feb. 20, 2016),
https://www.nytimes.com/2016/02/21/business/dealbook/market-for-fixer-
uppers-traps-low-income-buyers.html?_r=0 (Blackstone and its Invitation
Homes offered such “opportunities,” and KKR invested in a company that
did the same).
56. Stevenson & Goldstein, supra note 55.
57. Abood, supra 35, at 77.
58. Capitol Forum, Single Family Rental Industry: Companies Lean on
Tenant Chargebacks to Effectively Cut Operating Expenses (Feb. 21,
2018).
59. Id.
60. Id.
61. Mari, supra note 10; Abood et al., supra note 19, at 21.
62. Raymond et al., supra note 46, at 159–160.
63. Joshua Akers et al., Toxic Structures: Speculation and Lead
Exposure in Detroit’s Single-Family Rental Market 3 (2019), https://npr-
brightspot.s3.amazonaws.com/legacy/sites/michigan/files/toxic_structures_
2019-final.pdf.
64. A Brief Guide to Mold, Moisture and Your Home, ENVIRONMENTAL
PROTECTION AGENCY (Mar. 25, 2022), https://www.epa.gov/mold/brief-
guide-mold-moisture-and-your-home.
65. Abood, supra 35, at 74.
66. Complaint, Lisboa v. Colfin AI-FL 4, LLC et al., No. 5:16-cv-312
(M.D. Fla. May 3, 2016).
67. Id.
68. Id.
69. Id.
70. Abood et al., supra note 19, at 12.
71. Mari, supra note 10.
72. Maya Abood, Wall Street Landlords Turn American Dream into a
Nightmare, ACCE INSTITUTE ET AL., 33,
https://www.publicadvocates.org/wp-content/uploads/wallstreetland
lordsfinalreport.pdf (“Members of the Council include Invitation Homes,
American Homes 4 Rent, Tricon American Homes, Altisource Rental
Homes, FirstKey Homes, Roofstock, National Rental Homes, and over a
dozen others.”); Renter’s Rights, NATIONAL RENTAL HOME COUNCIL,
https://www.rentalhomecouncil.org/advocacy/ (promising to prevent
“harmful rent control policies from being established that undermine rental
choices for consumers”).
73. Homeowners vs Renters Statistics, PROPERTY MANAGEMENT (July
12, 2022), https://ipropertymanagement.com/research/renters-vs-
homeowners-statistics.
74. Mari, supra note 10 (“Blackstone contributed $5.6 million to the No
campaign, and Invitation Homes contributed nearly $1.3 million.”).
75. Eli Vitulli, Hedge Papers No. 69: Billionaire Corporate Landlords,
20 (2019), https://hedgeclippers.org/wp-
content/uploads/2019/08/HP69_CorpLandlords-CA-Housing_V14.pdf.
76. Prop 10 Flaws, Bad Future, YOUTUBE,
https://www.youtube.com/watch?v=Bde X1UTy5wo.
77. Eli Vitulli, HEDGE PAPERS NO. 69: BILLIONAIRE CORPORATE
LANDLORDS 20 (2019), https://hedgeclippers.org/wp-
content/uploads/2019/08/HP69_CorpLandlords-CA-Housing_V14.pdf.
78. Raymond et al., supra note 46, at 159, 162 n.2.
79. Ben Lane, Blackstone Cashes Out on Invitation Homes, HOUSING
WIRE (Nov. 22, 2019), https://www.housingwire.com/articles/blackstone-
cashes-out-on-invitation-homes/; Peter Grant, Blackstone Bets $6 Billion
on Buying and Renting Homes, WALL ST. J. (June 22, 2021),
https://www.wsj.com/articles/blackstone-bets-6-billion-on-buying-and-
renting-homes-11624359600.
80. Ryan Dezember, KKR Doubles Down on House Flippers, WALL ST.
J. (June 12, 2019), https://www.wsj.com/articles/kkr-doubles-down-on-
house-flippers-11560331806.
81. Blackstone Establishes Single-Family Buy-to-Rent Lending
Platform, BLACKSTONE (Nov. 15, 2013),
https://www.blackstone.com/news/press/blackstone-establishes-single-
family-buy-to-rent-lending-platform/.
82. Julia Gordon, The Dark Side of Single-Family Rental,
SHELTERFORCE (July 30, 2018), https://shelterforce.org/2018/07/30/the-
dark-side-of-single-family-rental/.
 83. Diana Click, Government’s Fannie Mae Will Back PE Giant
Blackstone’s Rental Homes Debt, CNBC (Jan. 25, 2017),
https://www.cnbc.com/2017/01/25/governments-fannie-mae-will-back-pe-
giant-blackstones-rental-business-debt.html.
84. Kevin Schaul & Jonathan O’Connell, Investors Bought a Record
Share of Homes in 2021. See Where, WASH. POST (Feb. 16, 2022),
https://www.washingtonpost.com/business/interactive/2022/housing-
market-investors/.
85. Investor Relations, INVITATION HOMES,
https://www.invh.com/home/default.aspx.
86. Daniel Immergluck, Renting the Dream: The Rise of Single-Family
Rentership in the Sunbelt Metropolis, 2 (2018),
https://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1010
&context=urban_studies_institute.
87. Mari, supra note 10.
88. Alana Semuels, When Wall Street Is Your Landlord, ATLANTIC (Feb.
13, 2019), https://www.theatlantic.com/technology/archive/2019/02/single-
family-landlords-wall-street/582394/.
89. Mari, supra note 10.
90. Hanna Ziady, Wall Street Is Buying Up Family Homes. The Rent
Checks Are Too Juicy to Ignore, MERCURY NEWS (Aug. 2, 2021),
https://www.mercurynews.com/2021/08/02/wall-street-is-buying-up-
family-homes-the-rent-checks-are-too-juicy-to-ignore/.
91. Id.
92. Jacob Passy, Black Homeownership Rate Hits Lowest Level Since
the 1960s—That’s Unlikely to Change in Pandemic Year 2, MARKETWATCH
(Mar. 23, 2021), https://www .marketwatch.com/story/most-black-
americans-arent-homeowners-how-can-we-change-that-11615431459.
93. Amanda Lee et al., U.S. Homeownership Rates Fall Among Young
Adults, African Americans, POPULATION REFERENCE BUREAU (Feb. 13,202),
https://www.prb.org/resources/u-s-homeownership-rates-fall-among-
young-adults-african-americans/.
94. Id.
95. Rani Molla, The Home Sales Boom Means You Might End Up
Renting, VOX (May 4, 2021),
https://www.vox.com/recode/22407667/home-sales-boom-rent-housing-
single-family-rental.
96. Matthew Goldstein, As Banks Retreat, Private Equity Rushes to Buy
Troubled Home Mortgages, N.Y. TIMES (Sept. 28, 2015),
https://www.nytimes.com/2015/09/29/business/dealbook/as-banks-retreat-
private-equity-rushes-to-buy-troubled-home-mortgages .html.
97. Nationstar Mortgage LLC, FORTRESS,
https://www.fortress.com/businesses/private-equity/select-
investments/nationstar.
98. Nationstar Mortgage Announces Completion of Greenlight
Financial Services Acquisition, MR. COOPER GROUP (June 3, 2013),
https://investors.mrcoopergroup.com/events-and-presentations/press-
releases/press-release-details/2013/Nationstar-Mortgage-Announces-
Completion-of-Greenlight-Financial-Services-Acquisition/default.aspx.
99. TEXT-S&P Monitoring Nationstar on ResCap Acquisition Plans,
REUTERS (May 21, 2012),
https://www.reuters.com/article/idUSWNA774420120521.
100. Nationstar Mortgage Announces Agreement to Acquire
Approximately $215 Billion in Mortgage Servicing Assets from Bank of
America, NATIONSTAR (Jan. 7, 2013), https://www
.sec.gov/Archives/edgar/data/1520566/000119312513009512/d461579dex
991.htm.
101. Complaint for a Permanent Injunction and Other Relief, CFPB v.
Nationstar Mortgage LLC, No. 1:20-cv-3550 (D.D.C. Dec. 7, 2020), ECF
No. 1.
102. Matthew Goldstein et al., How Housing’s New Players Spiraled
into Banks’ Old Mistakes, N.Y. TIMES (June 26, 2016),
https://www.nytimes.com/2016/06/27/business/dealbook/private-equity-
housing-missteps.html.
103. Id.
104. Quarterly Report to Congress, OFFICE OF THE INSPECTOR GENERAL
FOR THE TROUBLED ASSET RELIEF PROGRAM 72 (Apr. 26, 2017),
https://www.sigtarp.gov/sites/sigtarp/files/Quarterly_Reports/April_26_201
7_Report_to_Congress.pdf.
105. Id.
 106. Consumer Financial Protection Bureau and Multiple States Enter
into Settlement with Nationstar Mortgage, LLC for Unlawful Servicing
Practices, CONSUMER FINANCIAL PROTECTION BUREAU (Dec. 7, 2020),
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-multiple-states-enter-settlement-nationstar-mortgage-llc-
unlawful-servicing-practices/; Complaint for a Permanent Injunction and
Other Relief, supra note 101.
107. Consumer Financial Protection Bureau and Multiple States Enter
into Settlement with Nationstar Mortgage, LLC for Unlawful Servicing
Practices, supra note 106.
108. National Creditor Settlements, DEPARTMENT OF JUSTICE (Sept. 27,
2022), https://www.justice.gov/ust/national-creditor-settlements.
109. Goldstein et al., supra note 102.
110. Id. Nationstar declined to comment on the Browns’ case to the New
York Times.
111. Nationstar Mortgage LLC, FORTRESS,
https://www.fortress.com/businesses/private-equity/select-
investments/nationstar; Nationstar’s Merger with WMIH, CRAVATH, SWAINE
& MOORE LLP, https://www.cravath.com/news/nationstar-s-merger-with-
wmih.html; Ben Lane, Invitation Homes, Starwood Waypoint Homes
Merge to Create Largest Single-Family Landlord, HOUSING WIRE (Nov. 16,
2017) (In 2012, Fortress organized an initial public offering for Nationstar,
but continued to own a majority stake in the company into 2018).
112. Alexander Hermann, New Paper Details the Dramatic Decline of
Low-Cost Rentals, JOINT CENTER FOR HOUSING STUDIES (Sept. 17, 2019),
https://www.jchs.harvard.edu/blog/new-paper-details-the-dramatic-decline-
of-low-cost-rentals.
113. Rana Foroohar, Why Big Investors Are Buying Up American
Trailer Parks, FIN. TIMES (Feb. 7, 2020),
https://www.ft.com/content/3c87eb24-47a8-11ea-aee2-9ddbdc86190d.
114. Id.; Dori Zinn, How Much Does It Cost to Buy a Mobile Home?,
FORBES (Sept. 7, 2022), https://www.forbes.com/advisor/mortgages/mobile-
home-cost/; Geoff Williams & Devon Thorsby, How Much Does It Cost to
Buy a Mobile Home?, U.S. NEWS & WORLD REPORT (May 4, 2022),
https://realestate.usnews.com/real-estate/articles/how-much-does-it-cost-to-
buy-a-mobile-home.
115. Foroohar, supra note 113.
116. Andrew Keel, Mobile Home Park Trends: Big Money and
Improvements, FORBES (Sept. 14, 2021),
https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/14/mobile-
home-park-trends-big-money-and-improvements/?sh=4b9c851c5a89.
117. Private Equity Giants Converge on Manufactured Homes, PRIVATE
EQUITY STAKEHOLDER PROJECT, 1 (Feb. 2019),
https://pestakeholder.org/wp-content/uploads/2019/02/Private-Equity-
GIants-Converge-on-Manufactured-Homes-PESP-MHAction-AFR-
021419.pdf.
118. Sheelah Kolhatkar, What Happens When Investment Firms Acquire
Trailer Parks, NEW YORKER (Mar. 8, 2021),
https://www.newyorker.com/magazine/2021/03/15/what-happens-when-
investment-firms-acquire-trailer-parks.
119. Peter Whoriskey, A Billion-Dollar Empire Made of Mobile Homes,
WASH. POST (Feb. 14, 2019),
https://www.washingtonpost.com/business/economy/a-billion-dollar-
empire-made-of-mobile-homes/2019/02/14/ac687342-2b0b-11e9-b2fc-
721718903bfc_story .html.
120. Peter Grant, Singapore Fund GIC Is in Talks to Buy Owner of
Manufactured-Home Communities, WALL ST. J. (June 28, 2016),
https://www.wsj.com/articles/singapores-sovereign-wealth-fund-is-in-talks-
to-buy-manufactured-home-owner-1467106203.
121. Sam Tabachnik, Raise Rent Repeatedly, Remove Amenities: The
Core Tenets of Colorado’s Mobile Home University and the People Who
Suffer, DENVER POST (Sept. 14, 2021), https://www
.denverpost.com/2021/09/05/mobile-home-university-rv-horizons-impact-
communities-frank-rolfe-dave-reynolds/.
122. Gillian Tan, Blackstone to Boost Mobile-Home Bet with $550
Million Deal, BLOOMBERG (Sept. 14, 2020),
https://www.bloomberg.com/news/articles/2020-09-14/blackstone-said-to-
boost-mobile-home-bet-with-550-million-deal.
123. Kolhatkar, supra note 118.
 124. Jacob Channel, Mobile Home Values Are Rising Faster Than
Single-Family Home Values—Here’s Where They’re the Most, Least
Expensive, LENDINGTREE (Nov. 30, 2021),
https://www.lendingtree.com/home/mortgage/mobile-home-values-study/.
125. Private Equity Giants Converge on Manufactured Homes, supra
note 117, at 1–4.
126. Id. at 2 (Sunrise Capital Investors describes itself as a “real estate
private equity investment firm.”); Sunrise Capital Investors, Sunrise
Capital Investors Distributes Over $4.5 Million to Fund 2 Investors, CISION
(Oct. 21, 2021), https://www.prnewswire.com/news-releases/sunrise-
capital-investors-distributes-over-4-5-million-to-fund-2-investors-
301405867.html.
127. Private Equity Giants Converge on Manufactured Homes, supra
note 117, at 2.
128. Id. at 6.
129. Whoriskey, supra note 119.
130. Id. Stockbridge said in a statement to the Post that “Stockbridge is
proud of its association with YES Communities, which has met the
affordable housing needs of its residents nationwide for the past 11 years.”
131. Tracy Lien, In Silicon Valley, Even Mobile Homes Are Getting Too
Pricey for Longtime Residents, L.A. TIMES (May 4, 2017),
https://www.latimes.com/business/technology/la-fi-tn-silicon-valley-
mobile-homes-20170504-htmlstory.html.
132. Whoriskey, supra note 119.
133. Foroohar, supra note 113.
134. Chris Arnold, Why Are Investors Buying Up Mobile Home Parks
and Evicting Residents?, NPR (Sept. 3, 2021),
https://www.npr.org/2021/09/03/1033910731/why-are-investors-buying-
up-mobile-home-parks-and-evicting-residents.
135. Duty to Serve Underserved Markets Plan: 2022–2024, FANNIE
MAE, 8 (2021),
https://www.novoco.com/sites/default/files/atoms/files/fannie-mae-duty-to-
serve-2022-24-proposed-052021.pdf.
136. Id.
 137. San Jose-Sunnyvale-Santa Clara Home Values, ZILLOW,
https://www.zillow.com/home-values/54626/sunnyvale-ca/. The Zillow
Home Value Index is “[a] smoothed, seasonally adjusted measure of the
typical home value and market changes across a given region and housing
type. It reflects the typical value for homes in the 35th to 65th percentile
range.” Housing Data, ZILLOW, https://www.zillow.com/research/data/.
138. Lien, supra note 131.
139. Id. Carlyle declined to comment to the Los Angeles Times about its
rent increases or plans after its lease ended.
140. Id.
141. Victoria Keira, Sunnyvale: Council Will Select Top Issues to Study
This Year, MERCURY NEWS (Jan. 21, 2017),
https://www.mercurynews.com/2017/01/21/sunnyvale-council-will-select-
top-issues-to-study-this-year/.
142. Interview with Fred Kameda (Feb. 9, 2022).
143. Id.
144. Id.
145. Ben Silverfarb, “Last Man Standing”: Woman Will Not Accept
Relocation Package After Being Evicted from Mobile Home Park, DAILY J.
(Jan. 11, 2016), https://www .smdailyjournal.com/news/local/last-man-
standing-woman-will-not-accept-relocation-package-after-being-evicted-
from-mobile-home/article_b6c227bc-f94b-5406-9508-cdfccaaa6a9c.html.
146. Lien, supra note 131.
147. George Avalos, Big Sunnyvale Mobile Home Park Is Bought by
Chicago Investors, MERCURY NEWS (Aug. 30, 2019).
https://www.mercurynews.com/2019/08/30/big-sunnyvale-mobile-home-
park-is-bought-by-chicago-investors/.
148. Leonardo Castañeda, “It’s Absolute Desperation”: Mobile Park
Residents Say Rent Increases Threaten One of Silicon Valley’s Last
Affordable Housing Options, MERCURY NEWS (May 10, 2021),
https://www.mercurynews.com/2021/05/08/were-like-hostages-mobile-
park-residents-say-rent-increases-threaten-silicon-valleys-last-affordable-
housing-option/.
149. Omar Pérez, Sunnyvale Mobile Home Park Residents Express
Frustrations over Rent Increases, KRON4 (May 26, 2021),
https://www.kron4.com/news/sunnyvale-mobile-home-park-residents-
express-frustrations-over-rent-increases/.
150. Id.
151. Sunnyvale Mobile Home Park Owners Agree on Deal to Keep Lots
Affordable, KRON4 (Oct. 22, 2021), https://www.kron4.com/news/bay-
area/sunnyvale-mobile-home-park-owners-agree-on-deal-to-keep-lots-
affordable/.
152. Kavish Harjai, Sunnyvale’s Mobile Homeowners Are Eligible for
Key Financial Perks—if They Sign Up in Time, PENINSULA PRESS (Nov. 4,
2021), https://peninsulapress .com/2021/11/04/sunnyvales-mobile-
homeowners-are-eligible-for-key-financial-perks-if-they-sign-up-in-time/.
153. Resident interview (Feb. 10, 2022).
154. GOP Candidate’s Private Equity Resume Draws Scrutiny in Va.,
WTOP (July 1, 2021), https://wtop.com/virginia/2021/07/gop-candidates-
private-equity-resume-draws-scrutiny-in-va/.

CHAPTER 3: PROFITING OFF BANKRUPTCY

1. Charles Lazarus, WIKIPEDIA,
https://en.wikipedia.org/wiki/Charles_Lazarus.
2. Toys “R” Us, WIKIPEDIA,
https://en.wikipedia.org/wiki/Toys_%22R%22_Us.
3. Geoffrey Through the Years, TOYS R U S,
https://www.toysrus.com/geoffrey.html.
4. Julia Horowitz, How Toys ‘R’ Us Went from Big Kid on the Block to
Bust, CNN (Mar. 17, 2018),
https://money.cnn.com/2018/03/17/news/companies/toys-r-us-
history/index.html.
5. Jake Pearson, Toys R Us Closes Flagship Store: Ferris Wheel, T-Rex
and All, SEATTLE TIMES (Dec. 30, 2015),
https://www.seattletimes.com/business/toys-r-us-closes-flagship-store-
ferris-wheel-t-rex-and-all/.
6. Mylene Mangalindan, How Amazon’s Dream Alliance with Toys ‘R’
Us Went So Sour, WALL ST . J. (Jan. 23, 2006),
https://www.wsj.com/articles/SB113798030922653260.
 7. Toys “R” Us, Form 10-K (May 15, 2007),
https://www.sec.gov/Archives/edgar/data/1005414/000119312507115768/d
10k.htm.
8. Jeff Spross, How Vulture Capitalists Ate Toys ‘R’ Us, WEEK (Mar. 16,
2018), https://theweek.com/articles/761124/how-vulture-capitalists-ate-
toys-r.
9. Id. (Toys “R” Us’s debt servicing ranged from $425 million to $527
million per year.)
10. Id.
11. Bryce Covert, The Demise of Toys ‘R’ Us Is a Warning, ATLANTIC
(July 2018), https://www.theatlantic.com/magazine/archive/2018/07/toys-r-
us-bankruptcy-private-equity/561758/ (“After its buyout, Toys “R” Us
acquired a number of companies, including FAO Schwarz, eToys.com, and
assets from KB Toys (itself a failed reclamation project of Bain’s).
Consolidating brick-and-mortar and online toy businesses may have been a
good-faith strategy. What’s certain is that the deals helped generate $128
million in transaction fees for the owners.”).
12. KKR, Bain Capital, Vornado Repeatedly Rewarded Themselves for
Adding Debt to Toys “R” Us, PRIV. EQUITY STAKEHOLDER PROJECT (May
29, 2018), https://pestakeholder.org/news/kkr-bain-capital-vornado-
repeatedly-rewarded-themselves-for-adding-debt-to-toys-r-us/.
13. Spross, supra note 8.
14. Covert, supra note 11.
15. Ben Unglesbee, Inside the 20-Year Decline of Toys R Us, RETAIL
DIVE (June 26, 2018), https://www.retaildive.com/news/inside-the-20-year-
decline-of-toys-r-us/526364/.
16. Toys “R” Us, supra note 2.
17. Covert, supra note 11.
18. Alina Selyukh, Game Over for Toys R Us: Chain Going out of
Business, NPR (Mar. 14, 2018), https://www.npr.org/sections/thetwo-
way/2018/03/14/592882488/game-over-for-toys-r-us-chain-going-out-of-
business.
19. Tara Lachapelle, Lessons Learned from the Downfall of Toys ‘R’ Us,
BLOOMBERG (Mar. 29, 2018),
https://www.bloomberg.com/news/articles/2018-03-09/toys-r-us-downfall-
is-ominous-reminder-about-debt-laden-deals#xj4y7vzkg (Interest expenses
tended to near or even exceed operating income. In 2017, had $460 million
in operating income, $457 million in interest expenses.).
20. David A. Brandon, Experience, LINKEDIN,
https://www.linkedin.com/in/david-a-brandon-
5b826654/details/experience/ (“In March 1999, Brandon was named
Chairman and CEO of Domino’s Pizza by Bain Capital Partners, LLC after
they acquired the world’s largest pizza delivery company in December
1998.”).
21. Complaint at ¶ 71, TRU Creditor Litigation Trust v. David A.
Brandon et al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020). The case
was eventually transferred to the Eastern District of Virginia and settled
without a final adjudication on the creditors’ allegations, while broader
bankruptcy litigation remains ongoing. Order Granting Joint Stipulation of
Dismissal, TRU Creditor Litigation Trust v. David A. Brandon et al., No.
3:20-cv-311 (E.D. Va. Nov. 15, 2022) ECF No. 92; TRU Creditor
Litigation Trust v. Raether et al., No. 3:20-ap-3038 (E.D. Va.).
22. Central Park + The Plaza District, ONE57,
https://one57.com/location#location-hero.
23. JC Reindl, Ex-U-M Athletic Director Dave Brandon Couldn’t Save
Toys R Us, DETROIT FREE PRESS (Mar. 15, 2018),
https://www.freep.com/story/money/2018/03/15/dave-brandon-toysrus-
liquidates/423756002/.
24. Complaint, TRU Creditor Litigation Trust v. David A. Brandon et
al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020).
25. Id. at ¶ 7.
26. Id. at ¶ 87, 170; Jeremy Hill & Eliza Ronalds-Hannon, Former Toys
‘R’ Us Executives Face Trial over Botched Bankruptcy, BLOOMBERG (June
28, 2022), https://www .bloomberg.com/news/articles/2022-06-28/former-
toys-r-us-execs-to-stand-trial-over-botched-bankruptcy.
27. Complaint ¶ 88, TRU Creditor Litigation Trust v. David A. Brandon
et al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020).
28. Id. at ¶ 89.
29. Id. Brandon and the legal entity managing Toy’s “R” Us’s
bankruptcy subsequently denied the allegation that Brandon misled the
store employee. Answer at 44, TRU Creditor Litigation Trust v. Raether et
al., No. 3:20-ap-3038 (E.D. Va. Oct. 1, 2020), ECF No. 66. The case
remains ongoing.
30. See Kirkland & Ellis: Bankruptcy/Restructuring, CHAMBERS AND
PARTNERS, https://chambers.com/department/kirkland-ellis-llp-bankruptcy-
restructuring-usa-5:513:127 88:1:3636 (an interviewee comments, “I think
they are the very best; they are aggressive and extremely commercially
minded.”); Roy Strom, Kirkland’s Bankruptcy Business Out-Billing Peers
in Pandemic, BLOOMBERG L. (June 9, 2020), https://news
.bloomberglaw.com/business-and-practice/kirklands-bankruptcy-business-
out-billing-peers-during-pandemic.
31. Kate Gibson, Toys R Us’ Bankruptcy Lawyers Get $56 Million While
Laid-Off Workers Get $2 Million, CBS NEWS (June 28, 2019),
https://www.cbsnews.com/news/bankruptcy-court-gives-toys-r-us-workers-
2-million-and-retailers-lawyers-56-million/.
32. Samantha Stokes, Kirkland Secures $56M in Fees for Toys R Us
Bankruptcy, AM. LAWYER (June 10, 2019),
https://www.law.com/americanlawyer/2019/06/10/kirkland-ellis-secures-
56m-in-fees-for-toys-r-us-bankruptcy/.
33. Average Hourly Rate for Toys ‘R’ Us Inc Employees, PAYSCALE,
https://www.payscale
.com/research/US/Employer=Toys_%27R%27_Us_Inc/Hourly_Rate (Jan.
15, 2021).
34. Melanie Anzidei, Toys R Us Workers Win $2 Million Severance
Settlement, N. JERSEY (June 27, 2019),
https://www.northjersey.com/story/money/2019/06/27/toys-r-us-workers-
win-2-million-severance-settlement/1587364001/.
35. Interview with Jack Raisner (Nov. 10, 2021).
36. Jeremy Hill & Eliza Ronalds-Hannon, Former Toys ‘R’ Us
Executives Face Trial over Botched Bankruptcy, BLOOMBERG (June 28,
2022), https://www.bloomberg.com/news/articles/2022-06-28/former-toys-
r-us-execs-to-stand-trial-over-botched-bankruptcy; Kate Gibson, Toys R
Us’ Bankruptcy Lawyers Get $56 Million While Laid-Off Workers Get $2
Million, CBS NEWS (June 28, 2019, 2:36 PM), https://www.cbsnews
.com/news/bankruptcy-court-gives-toys-r-us-workers-2-million-and-
retailers-lawyers-56-million/.
37. Gibson, supra note 36.
38. Id.
39. Gibson, supra note 31.
40. Id.
41. Gretchen Morgenson & Lillian Rizzo, Who Killed Toys ‘R’ Us?
Hint: It Wasn’t Only Amazon, WALL ST. J. (Aug. 23, 2018),
https://www.wsj.com/articles/who-killed-toys-r-us-hint-it-wasnt-only-
amazon-1535034401.
42. Chris Cumming, Lawmakers Question KKR, Bain Capital over Toys
‘R’ Us Failure, WALL ST. J. (July 6, 2018),
https://www.wsj.com/articles/lawmakers-question-kkr-bain-capital-over-
toys-r-us-failure-1530896043 (“Even accounting for fees received from
Toys ‘R’ Us, we have lost many millions of dollars. To find anyone who
profited, one would need to look at the institutions that pushed for Toys to
liquidate its U.S. business,’ the firm wrote.”).
43. Dan Primack, Toys “R” Us Not a Total Loss for Private Equity
Fund Managers, AXIOS (Oct. 5, 2017),
https://www.axios.com/2017/12/15/toys-r-us-not-a-total-loss-for-private-
equity-fund-managers-1513305992.
44. Complaint at ¶ 48, TRU Creditor Litigation Trust v. David A.
Brandon et al., No. 651637/2020 (N.Y. Sup. Ct. Mar. 12, 2020) (the private
equity firms allegedly extracted over $250 million in advisory fees).
45. Jim Baker et al., Pirate Equity: How Wall Street Firms Are
Pillaging American Retail, CENTER FOR POPULAR DEMOCRACY ET AL. 9
(2019), https://united4respect.org/wp-content/uploads/2019/07/Pirate-
Equity-How-Wall-Street-Firms-are-Pillaging-American-Retail-July-
2019.pdf.
46. Id.
47. Id. at 3.
48. Id. at 15, 21.
49. Id. at 3.
50. Steve LeVine, Vulture Capitalists Are Killing Off Retail Jobs, AXIOS
(Jan. 10, 2018), https://www.axios.com/private-equity-1515603080-
efd39541-a9fb-474b-8c24-04623ee518fd.html.
51. Baker et al., supra note 45, at 13.
52. Id. at 40–44.
53. Id. at 5.
54. Amazon and Walmart Are Nearly Tied in Full-Year Share of Retail
Sales, PYMNTS (Mar. 11, 2021),
https://www.pymnts.com/news/retail/2021/amazon-walmart-nearly-tied-in-
full-year-share-of-retail-sales/.
55. McKinsey & Company, FUTURE OF RETAIL OPERATIONS: WINNING IN
A DIGITAL ERA 25 (2020),
https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our
%20Insights/Future%20of%20retail%20operations%20Winning%20in%20
a%20digital %20era/McK_Retail-Ops-2020_FullIssue-RGB-hyperlinks-
011620.pdf (discussing Macy’s, Nordstrom, and Walmart).
56. Sapna Maheshwari & Vanessa Friedman, The Pandemic Helped
Topple Two Retailers. So Did Private Equity., N.Y. TIMES (June 18, 2020),
https://www.nytimes.com/2020/05/14/business/coronavirus-retail-
bankruptcies-private-equity.html.
57. Id.
58. PetSmart-Chewy, BC PARTNERS,
https://www.bcpartners.com/private-equity-strategy/portfolio/petsmart-
chewy.
59. Lauren Kaori Gurley, Some Understaffed PetSmarts Are Dealing
with Freezers Overflowing with Dead Pets, VICE (Mar. 9, 2022),
https://www.vice.com/en/article/3ab4ek/some-understaffed-petsmarts-are-
dealing-with-freezers-overfilled-with-dead-pets.
60. Id.
61. Id.
62. Id.
63. Id.
64. Id.
65. Neil Irwin, How Private Equity Buried Payless, N.Y. TIMES (Feb. 1,
2020), https://www.nytimes.com/2020/01/31/upshot/payless-private-
equity-capitalism.html.
66. Id.
 67. Id.
68. Friendly’s, WIKIPEDIA, https://en.wikipedia.org/wiki/Friendly%27s.
69. Emily Langer, S. Prestley Blake, a Founder of Friendly’s Ice Cream
Chain, Dies at 106, WASH. POST (Feb. 12, 2021),
https://www.washingtonpost.com/local/obituaries/s-prestley-blake-
dead/2021/02/12/acbb76d0-6d4b-11eb-9f80-3d7646ce1bc0_story.html.
70. Emily Langer, Curtis Blake, Co-founder of the Friendly’s Ice Cream
Chain, Dies at 102, WASH. POST (May 31, 2019),
https://www.washingtonpost.com/local/obituaries/curtis-blake-co-founder-
of-the-friendlys-ice-cream-chain-dies-at-102/2019/05/31/bc0a502c-83b2-
11e9-95a9-e2c830afe24f_story.html.
71. Langer, supra note 69.
72. Id.
73. Rhode Island’s Awful Awful Love Affair: A History, NEW ENG. HIST.
SOC’Y, https://www .newenglandhistoricalsociety.com/rhode-islands-awful-
awful-love-affair-history (Aug. 15, 2022).
74. Langer, supra note 69.
75. Friendly’s, supra note 68.
76. Edwin Durgy, Friendly’s Files for Bankruptcy, FORBES (Oct. 5,
2011), https://www.forbes.com/sites/edwindurgy/2011/10/05/friendlys-
files-for-bankruptcy/?sh=108c15144da3.
77. Id.
78. Sun to Buy Friendly Ice Cream in $337 Million Deal, REUTERS
(June 17, 2007), https://www .reuters.com/article/friendlyicecream-
suncapital/sun-to-buy-friendly-ice-cream-in-337-million-deal-
idUSWEN881220070618; Mia Lamar & Jacqueline Palank, Friendly’s
Files for Chapter 11 Bankruptcy, WALL ST. J. (Oct. 6, 2011),
https://www.wsj.com/articles/SB1000142405297020338880457661253134
0661442.
79. See Tom Hals, UPDATE 3-Friendly’s Chain Files for Bankruptcy,
REUTERS (Oct. 5, 2011), https://www.reuters.com/article/friendlys/update-
3-friendlys-chain-files-for-bank ruptcy-idUSL3E7L51GD20111005 (“The
company’s debt load also prevented it from sprucing up its restaurants,
which got their start in Springfield, Massachusetts, in 1935.”). See also
Motion for Joint Administration Filed by Friendly Ice Cream Corporation
at 4, In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct.
5, 2011), ECF No. 2 (“As the Debtors’ liquidity position deteriorated, the
Debtors struggled to meet their debt service obligations and failed to satisfy
financial covenants under their prepetition revolving credit agreement,
resulting in a default.”).
80. Friendly Sells 160 Units in Sales-Leaseback Deal, NATION’S REST.
NEWS (Oct. 22, 2007), https://www.nrn.com/corporate/friendly-sells-160-
units-sales-leaseback-deal.
81. Ch. 11 Voluntary Petition at 1925–26, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Oct. 5, 2011), ECF No. 1 (Friendly
Ice Cream Corporation had its headquarters or principal place of business
in Massachusetts. Its various subsidiaries were headquartered or had their
principal places of business in Delaware); Motion for Joint Administration
Filed by Friendly Ice Cream Corporation at 5, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Oct. 5, 2011), ECF No. 2.
82. Motion for Joint Administration Filed by Friendly Ice Cream
Corporation at 9, In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr.
D. Del., Oct. 5, 2011), ECF No. 2.
83. In re: Humboldt Creamery, LLC, No. 09-11078 (Bankr. N.D. Cal.
2009).
84. Mike Spector, Two Hats a Fit for Friendly’s Owner, WALL ST. J.
(July 26, 2012),
https://www.wsj.com/articles/SB1000087239639044347710457755100055
5121714.
85. Omnibus Objection of the Official Committee of Unsecured
Creditors ¶ 19, In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr. D.
Del., Oct. 28, 2011), ECF No. 242. Technically, Friendly’s owner—the Sun
Capital affiliate Freeze LLC—had lent the money, then transferred
ownership of the debt to the second affiliate, Sundae Group Holdings II;
Omnibus Objection of Pension Benefit Guaranty Corporation at 7, In re:
Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 28, 2011),
ECF No. 241.
86. Lamar & Palank, supra note 78.
87. Spector, supra note 84.
 88. Order Approving Bidding Procedures at 5, In re: Friendly Ice
Cream Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011), ECF No. 289.
89. Notice of Service/Notice of Cancellation of Auction and Successful
Bidder Filed by Friendly Ice Cream Corporation, In re: Friendly Ice Cream
Corp., No. 11-13167 (Bankr. D. Del., Dec. 30, 2011), ECF No. 526.
90. Spector, supra note 84; Lamar & Palank, supra note 78.
91. Motion to Approve Debtor in Possession Financing at 2, In re:
Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 5, 2011),
ECF No. 16.
92. Israel Goldowitz et al., The PBGC Wins a Case Whenever the
Debtor Keeps Its Pension Plan, 16 MARQ. BEN. & SOC. WELFARE L. REV.
257, 297 (2015),
https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?
referer=&httpsredir=1&article =1005&context=benefits.
93. Douglas J. Elliott, A Guide to the Pension Benefit Guaranty
Corporation, BROOKINGS INSTITUTION, 7 (May 20, 2009),
https://www.brookings.edu/wp-
content/uploads/2016/06/0520_pensions_elliott.pdf.
94. Omnibus Objection of Pension Benefit Guaranty Corporation at 1,
In re: Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Oct. 28,
2011), ECF No. 241.
95. Order Approving Bidding Procedures at 5, In re: Friendly Ice
Cream Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011), ECF No. 289.
96. Motion to Authorize Debtors’ Motion for Entry of an Order
Approving Bidding Procedures and Notice Procedures at 28, In re:
Friendly Ice Cream Corp., No. 11-13167 (Bankr. D. Del., Nov. 3, 2011),
ECF No. 15.
97. Statement of Hon. Joshua Gotbaum, ABI COMMISSION TO STUDY
REFORM OF CHAPTER 11 (Mar. 14, 2013),
https://www.pbgc.gov/documents/Gotbaum-ABI-Statement.pdf.
98. Friendly’s Bankruptcy: Full List of Closed Friendly’s Restaurants,
MASSLIVE (Oct. 5, 2011), https://www.masslive.com/business-
news/2011/10/full_list_of_closed_friendlys_restaurants.html.
99. Eric Anderson, Friendly Emerges from Bankruptcy, TIMES UNION
(Jan. 9, 2012), https://www.timesunion.com/business/article/Friendly-
emerges-from-bankruptcy-2452103.php.
100. Aisha Al-Muslim, Friendly’s Restaurant Owner Files for
Bankruptcy amid Pandemic, WALL ST. J. (Nov. 2, 2020),
https://www.wsj.com/articles/friendlys-restaurant-owner-files-for-
bankruptcy-amid-pandemic-11604318761.
101. Jonathan Maze, Friendly’s Declares Bankruptcy and Will Be Sold
to the Owner of Red Mango, REST. BUS. (Nov. 2, 2020),
https://www.restaurantbusinessonline.com/financing/friendlys-declares-
bankruptcy-will-be-sold-owner-red-mango.
102. Al-Muslim, supra note 100.
103. Julie Creswell, In a Romney Believer, Private Equity’s Risks and
Rewards, N.Y. TIMES (Jan. 21, 2012),
https://www.nytimes.com/2012/01/22/business/in-a-romney-believer-
private-equitys-risks-and-rewards.html.
104. Baker et al., supra note 45, at 38 (“A National Bureau of
Economic Research analysis of over 3,000 private equity acquisitions
found that retail companies acquired by private equity experienced a 12
percent drop in employment over the subsequent five years.”).
105. Elizabeth Lewis, A Bad Man’s Guide to Private Equity and
Pensions 7 (Edmond J. Safra Working Papers No. 68, 2015),
https://papers.ssrn.com/sol3/papers.cfm ?abstract_id=2620320.
106. Lynn M. LoPucki, COURTING FAILURE: HOW COMPETITION FOR BIG
CASES IS CORRUPTING THE BANKRUPTCY COURTS 16 (2006) (Forum shopping
provisions became part of bankruptcy code in 1978, went into effect 1979).
107. Lynn M. LoPucki, Chapter 11’s Descent into Lawlessness 4
(UCLA Sch. of L. L.-Econ., Working Paper No. 21–12, 2022),
https://ssrn.com/abstract=3946577.
108. Id.
109. LoPucki, supra note 106, at 18.
110. Id.
111. Id. at 20.
112. Tom Hals, Ever-Shorter U.S. Bankruptcies Have Creditors
Scrambling, REUTERS (Feb. 1, 2017), https://www.reuters.com/article/us-
usa-bankruptcy/ever-shorter-u-s-bank ruptcies-have-creditors-scrambling-
idUSKBN15G5FO.
 113. LoPucki, supra note 106, at 2, 8.
114. Id. at 16.
115. Id. at 3.
116. Stephen Kurczy, Annmarie Reinhart Smith, Who Battled for Retail
Workers, Dies at 61, N.Y. TIMES (Mar. 15, 2021),
https://www.nytimes.com/2021/03/06/obituaries/annmarie-reinhart-smith-
dead-coronavirus.html; Sarah Jaffe, Service with a Smile: A Retail Worker
Learns to Fight for Her Rights, PROGRESSIVE MAG. (Jan. 26, 2021),
https://progressive.org/magazine/service-with-a-smile-jaffe/.
117. Jaffe, supra note 116.
118. Rachel Siegel, $20 Million Fund Set Aside for Laid-Off Toys R Us
Workers, WASH. POST (Nov. 20, 2018),
https://www.washingtonpost.com/business/2018/11/20/million-fund-set-
aside-laid-off-toys-r-us-workers/.
119. Jaffe, supra note 116.
120. Id.
121. Kurczy, supra note 116.
122. Letter from Rep. Mark Pocan et al., to Joshua Bekenstein,
cofounder of Bain Capital, L.P., et al. (July 5, 2018),
http://online.wsj.com/public/resources/document s/toysrusletter_0706.pdf.
123. Menendez, Booker, Pascrell Demand Fairness for Toys ‘R’ Us
Workers Following Bankruptcy, OFFICE OF SENATOR BOB MENENDEZ (June
1, 2018), https://www.menendez .senate.gov/newsroom/press/menendez-
booker-pascrell-demand-fairness-for-toys-r-us-workers-following-
bankruptcy.
124. Kurczy, supra note 116.
125. Chris Isidore, Toys ‘R’ Us Employees Protest Lack of Severance
Pay, CNN (June 4, 2018),
https://money.cnn.com/2018/06/04/news/companies/toys-r-us-employees-
severance-protests/index.html.
126. Michael Corkery, Laid-off Toys R Us Workers Find Powerful Ally
in Public Pensions, ALBUQUERQUE BUS. J. (Oct. 8, 2018),
https://www.bizjournals.com/albuquerque/news/2018/10/08/laid-off-toys-r-
us-workers-find-powerful-ally-in.html.
 127. Mark Vandevelde, KKR Faces Pension Fund Ire over Toys R Us
Collapse, FIN. TIMES (June 24, 2018),
https://www.ft.com/content/7370b1fc-763a-11e8-a8c4-408cfba4327c.
128. Siegel, supra note 118.
129. Memorandum Opinion, TRU Creditor Litig. Tr. v. Brandon (In re:
Toys “R” U.S., Inc.), No. 17-34665-KLP (Bankr. E.D. Va. June 27, 2022).
130. Corinne Ruff, Former Toys R Us Employees Receive Hardship
Fund Checks, RETAIL DIVE (Jan. 4, 2019),
https://www.retaildive.com/news/former-toys-r-us-employees-receive-
hardship-fund-checks/545295/.
131. Siegel, supra note 118 (The employees would get payments from
$20 million fund. Rise Up Retail said that they were owed $75 million,
however.)
132. Id.
133. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
Leader in Toys ‘R’ Us, Private Equity Campaigns, UNITED FOR RESPECT
(Feb. 18, 2021), https://united4respect.org/statement/ann-marie-reinhart-
smith/ (Employees will get between $200 and $12,000).
134. Kurczy, supra note 116.
135. Anne D’Innocenzio, Former Toys R Us Workers to Get $20 Million
in Hardship Fund, TELEGRAPH (Nov. 25, 2018),
https://www.telegraphherald.com/news/business/article_9bcaa561-2f95-
5e3e-9308-81d36e5e4d87.html/.
136. Jaffe, supra note 116.
137. Kurczy, supra note 116.
138. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
supra note 133.
139. Jaffe, supra note 116.
140. Kurczy, supra note 116.
141. United for Respect Mourns the Loss of Ann Marie Reinhart Smith,
supra note 133.

CHAPTER 4: DEADLY CARE

 1. David Gelles, Billionaire Confessional: David Rubenstein on Wealth
and Privilege, N.Y. TIMES (Mar. 12, 2020),
https://www.nytimes.com/2020/03/12/business/david-rubenstein-carlyle-
corner-office.html.
2. Greg Schneider, Connections and Then Some, WASH. POST (Mar. 16,
2003),
https://www.washingtonpost.com/archive/lifestyle/2003/03/16/connections-
and-then-some/faaece9e-0225-4310-a8f9-8137d2329d52/.
3. David Montgomery, David Rubenstein, Co-founder of Carlyle Group
and Washington Philanthropist, WASH. POST (May 14, 2012),
https://www.washingtonpost.com/lifestyle/style/david-rubenstein-co-
founder-of-carlyle-group-and-washington-
philanthropist/2012/05/14/gIQA7XcvPU_story.html.
4. Id.; Interview with David Rubenstein, Deputy Director Domestic
Policy Staff, JIMMY CARTER PRESIDENTIAL LIBRARY (Dec. 3, 1980),
https://www.jimmycarterlibrary.gov/assets/documents/oral_histories/exit_i
nterviews/Rubenstein.pdf.
5. Schneider, supra note 2.
6. Id. (President Carter said, “He devoted probably more hours to his
work in the White House than anyone on my staff, so far as I ever knew.…
He was a reticent person as far as putting himself forward. He was very
modest, and never claimed credit for successes when they did
materialize.”).
7. Thomas DeFrank & Eleanor Clift, Inside the Carter White House,
Wash. Post (Jan. 18, 1981),
https://www.washingtonpost.com/archive/opinions/1981/01/18/inside-the-
carter-white-house/31f3eb8e-038e-48c0-ae29-a805adb92a7a/; Collection:
Office of Staff Secretary; Series: Presidential Files; Folder: 8/27/80;
Container 173, JIMMY CARTER PRESIDENTIAL LIBRARY (Aug. 27, 1980),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/173/SSO_1
48878_173_05.pdf; Folder Citation: Collection: Office of Staff Secretary;
Series: Presidential Files; Folder: 9/13/77; Container 40, JIMMY CARTER
PRESIDENTIAL LIBRARY (Sept. 13, 1977),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/40/SSO_14
8878_040_08.pdf; Folder Citation: Collection: Office of Staff Secretary;
Series: Presidential Files; Folder: 7/2/80; Container 168, JIMMY CARTER
PRESIDENTIAL LIBRARY (July 2, 1980),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/168/SSO_1
48878_168_03.pdf; Folder Citation: Collection: Office of Staff Secretary;
Series: Presidential Files; Folder: 12/13/77; Container 54, JIMMY CARTER
PRESIDENTIAL LIBRARY (Dec. 13, 1977),
https://www.jimmycarterlibrary.gov/digital_library/sso/148878/54/SSO_14
8878_054_12.pdf.
8. Jimmy Carter entering presidential helicopter, fr 1-5; David
Rubenstein, fr 8-28, NATIONAL ARCHIVES CATALOG (Apr. 13, 1979),
https://catalog.archives.gov/id/184343.
9. Schneider, supra note 2.
10. David A. Vise, Area Merchant Banking Firm Formed, WASH. POST
(Oct. 5, 1987),
https://www.washingtonpost.com/archive/business/1987/10/05/area-
merchant-banking-firm-formed/c567202c-e8ed-409a-8c08-d552e1857844/.
11. Hotel Fact Sheet, CARLYLE, A ROSEWOOD HOTEL,
https://www.rosewoodhotels .com/en/the-carlyle-new-york/media/press-
kit/hotel-fact-sheet.
12. Schneider, supra note 2.
13. Carlucci Takes Job at Carlyle Group, N.Y. TIMES (Jan. 30, 1989),
https://www.nytimes .com/1989/01/30/business/carlucci-takes-job-at-
carlyle-group.html.
14. Kenneth N. Gilpin, Little-Known Carlyle Scores Big, N.Y. TIMES
(Mar. 26, 1991), https://www.nytimes.com/1991/03/26/business/little-
known-carlyle-scores-big.html.
15. Id.
16. Schneider, supra note 2.
17. David Ignatius, The President as Businessman: The Fancy
Financial Footwork of George W. Bush, N.Y. TIMES (Aug. 7, 2002),
https://www.nytimes.com/2002/08/07/opinion/IHT-the-president-as-
businessman-the-fancy-financial-footwork-of.html.
18. Schneider, supra note 2; Biography: William E. Kennard,
DEPARTMENT OF STATE, https://2009-2017.state.gov/s/p/fapb/185588.htm;
Julius Genachowski, CARLYLE, https://www.carlyle.com/about-
carlyle/team/julius-genachowski.
19. Schneider, supra note 2.
20. Id.
21. Bain Capital Partners, the Carlyle Group and Thomas H. Lee
Partners Agree to Acquire Dunkin’ Brands, Inc. from Pernod Ricard S.A.
for $2.425 Billion, CARLYLE GROUP (Dec. 11, 2005),
https://www.carlyle.com/media-room/news-release-archive/bain-capital-
partners-carlyle-group-and-thomas-h-lee-partners-agree; The Carlyle
Group and Getty Images Management to Acquire Getty Images from
Hellman and Friedman for $3.3 Billion, CARLYLE GROUP (Aug. 14, 2012),
https://www.carlyle.com/media-room/news-release-archive/carlyle-group-
and-getty-images-management-acquire-getty-images; Austen Hufford,
Carlyle to Sell Remaining Stake in Booz Allen Hamilton, PRIVATE EQUITY
NEWS (Dec. 2, 2016), https://www.penews.com/articles/carlyle-remaining-
stake-in-booz-allen-hamilton-20161202; Dan Primack, Why Hertz
Crashed, AXIOS (May 26, 2020), https://www .axios.com/2020/05/26/hertz-
bankruptcy.
22. The Carlyle Group, WIKIPEDIA,
https://en.wikipedia.org/wiki/The_Carlyle_Group.
23. Schneider, supra note 2; Tina Sfondeles & Alex Thompson, Why
“Scranton Joe” Loves Nantucket, POLITICO (Nov. 24),
https://www.politico.com/newsletters/west-wing-
playbook/2021/11/24/why-scranton-joe-loves-nantucket-495223.
24. David Rubenstein, FORBES, https://www.forbes.com/profile/david-
rubenstein/?sh =2c0fcd8792fd (Oct. 2, 2022).
25. Mikaela Lefrak, Why This Billionaire Is Spending a Fortune on
Washington’s Monuments, WAMU 88.5 (Feb. 12, 2020),
https://wamu.org/story/20/02/12/why-this-billionaire-is-spending-a-
fortune-on-washingtons-monuments/.
26. Gelles, supra note 1.
27. Schneider, supra note 2.
28. The David Rubenstein Show, BLOOMBERG,
https://www.bloomberg.com/peer-to-peer (Sept. 29, 2022).
 29. David Rubenstein, WIKIPEDIA,
https://en.wikipedia.org/wiki/David_Rubenstein; Daniel Trotta, Carlyle
CEO Buys 1776 Printing of Declaration of Independence, REUTERS (June
25, 2013), https://www.reuters.com/article/us-usa-declaration-
carlyle/carlyle-ceo-buys-1776-printing-of-declaration-of-independence-
idUSBRE95O1HK20130626; Newseum, First Newspaper Printing of the
Declaration of Independence Goes on Display at the Newseum, CISION
(June 29, 2016), https://www.prnewswire.com/news-releases/first-
newspaper-printing-of-the-declaration-of-independence-goes-on-display-
at-the-newseum-300292229.html; Smithsonian Announces $10 Million Gift
from David Rubenstein to the National Museum of African American
History and Culture, NATIONAL MUSEUM OF AFRICAN AMERICAN HISTORY
AND CULTURE (Jan. 20, 2016),
https://www.si.edu/newsdesk/releases/smithsonian-announces-10-million-
gift-david-rubenstein-national-museum-african-american-his.
30. David Rubenstein, supra note 29.
31. Benjamin Wofford, How Did David Rubenstein—Yes, That David
Rubenstein—Become a TV Star?, WASHINGTONIAN (Oct. 26, 2017),
https://www.washingtonian.com/2017/10/26/david-rubenstein-become-tv-
star/.
32. Martin Pengelly, “America Is Not a Perfect Country”: David
Rubenstein on Trump, Biden and a Nation’s Troubled History, GUARDIAN
(Sept. 6, 2021), https://www.theguardian .com/books/2021/sep/06/david-
rubenstein-interview-trump-biden-america.
33. David Matthews, “Sesame Street” Stars Feted at the Kennedy
Center Honors, on Day Big Bird Puppeteer Caroll Spinney Died, N.Y.
DAILY NEWS (Dec. 8, 2019), https://www
.nydailynews.com/news/national/ny-sesame-street-kennedy-center-honors-
big-bird-elmo-20191209-ezraqh3o6rhgfpll74rltyrexm-story.html.
34. Schneider, supra note 2.
35. Overview, CARLYLE GROUP (Dec. 2017),
https://www.carlyle.com/sites/default/files/inline-
files/CarlyleFactSheet_Dec2017.pdf; Dan Primack, David Rubenstein
Steps Down as Carlyle Group Co-CEO, AXIOS (Oct. 25, 2017),
https://www.axios.com/2017/12/15/david-rubenstein-steps-down-as-
carlyle-group-co-ceo-1513306434.
36. Grace Birnstengel, How’d We Get Here? The History of Nursing
Homes, NEXT AVE. (Mar. 5, 2021), https://www.nextavenue.org/history-of-
nursing-homes/.
37. Charlene Harrington et al., Marketization in Long-Term Care: A
Cross-Country Comparison of Large For-Profit Nursing Home Chains, 10
HEALTH SERVS. INSIGHTS (2017) (“Major growth occurred in the 1990s with
many acquisitions and mergers by chains.”).
38. Nursing Home Care, CENTERS FOR DISEASE CONTROL AND
PREVENTION (Sept. 6, 2022), https://www.cdc.gov/nchs/fastats/nursing-
home-care.htm.
39. Peter Whoriskey & Dan Keating, Overdoses, Bedsores, Broken
Bones: What Happened When a Private-Equity Firm Sought to Care for
Society’s Most Vulnerable, WASH. POST (Nov. 25, 2018),
https://www.washingtonpost.com/business/economy/opioid-overdoses-
bedsores-and-broken-bones-what-happened-when-a-private-equity-firm-
sought-profits-in-caring-for-societys-most-
vulnerable/2018/11/25/09089a4a-ed14-11e8-baac-2a674
e91502b_story.html.
40. Charlene Harrington et al., Improving the Financial Accountability
of Nursing Facilities, KAISER COMMISSION ON MEDICAID AND THE
UNINSURED, 6 (June 2013), https://www .kff.org/wp-
content/uploads/2013/06/8455-improving-the-financial-accountability-of-
nursing-facilities.pdf.
41. Mike Shepard, Carlyle to Buy Nursing Home Operator Manor Care,
WASH. POST (July 2, 2007),
http://voices.washingtonpost.com/washbizblog/2007/07/carlyle_to_buy_nu
rsing_home_op_1.html.
42. David A. Vise, Manor Care Keeps Growing, WASH. POST (Aug. 8,
1982),
https://www.washingtonpost.com/archive/business/1982/08/08/manor-care-
keeps-growing/3a77db32-e28f-40a9-b567-b1358d088ddc/. See also
Despite Recent Troubles, HCR ManorCare Has a Rich History, INS.
NEWSNET (Apr. 29, 2018), https://insurancenewsnet .com/oarticle/despite-
recent-troubles-hcr-manorcare-has-a-rich-history (The former head of
HCR, prior to its merger with ManorCare, said that today “the elderly are
more wealthy… [and] increasingly able to pay for their own care.”).
43. Vise, supra note 42.
44. Carlyle to Buy Manor Care for $4.9 Billion, REUTERS (July 2, 2007),
https://www .reuters.com/article/us-manorcare-carlyle/carlyle-to-buy-
manor-care-for-4-9-billion-idUSWNAS513520070702.
45. HCP to Acquire the Real Estate Assets of HCR ManorCare, Inc. for
$6.1 Billion, CARLYLE (Dec. 12, 2010), https://www.carlyle.com/media-
room/news-release-archive/hcp-acquire-real-estate-assets-hcr-manorcare-
inc-61-billion.
46. Whoriskey & Keating, supra note 39.
47. Id.
48. Id.
49. Matthew Goldstein et al., Push for Profits Left Nursing Homes
Struggling to Provide Care, N.Y. TIMES (May 7, 2020),
https://www.nytimes.com/2020/05/07/business/coronavirus-nursing-
homes.html.
50. Whoriskey & Keating, supra note 39.
51. Harrington et al., supra note 40.
52. Eileen O’Grady, Pulling Back the Veil on Today’s Private Equity
Ownership of Nursing Homes, PRIVATE EQUITY STAKEHOLDER PROJECT
(2021), https://pestakeholder.org/wp-
content/uploads/2021/07/PESP_Report_NursingHomes_July2021.pdf
(discussing issues with Genesis (owned by Formation) and Golden Living
(owned by Fillmore)); Sava Senior Care, NURSING HOME ABUSE GUIDE,
https://www.nursinghomeabuseguide.org/resources/sava-senior-care
(discussing Sava).
53. Harrington et al., supra note 40.
54. Genesis Healthcare Inc. Agrees to Pay Federal Government $53.6
Million to Resolve False Claims Act Allegations Relating to the Provision
of Medically Unnecessary Rehabilitation Therapy and Hospice Services,
DEPARTMENT OF JUSTICE (June 16, 2017), https://www.justice
.gov/opa/pr/genesis-healthcare-inc-agrees-pay-federal-government-536-
million-resolve-false-claims-act (Genesis settled for $53.6 million); Alex
Spanko, DOJ Drops False Claims Act Case Against HCR ManorCare,
SKILLED NURSING NEWS (Nov. 9, 2017),
https://skillednursingnews.com/2017/11/doj-drops-false-claims-act-case-
hcr-manorcare/; Golden Living Nursing Homes Settle Allegations of
Substandard Wound Care, DEPARTMENT OF JUSTICE (Jan. 2, 2013),
https://www.justice.gov/usao-ndga/pr/golden-living-nursing-homes-settle-
allegations-substandard-wound-care; SavaSeniorCare LLC Agrees to Pay
$11.2 Million to Resolve False Claims Act Allegations, DEPARTMENT OF
JUSTICE (May 21, 2021), https://www.justice.gov/opa/pr/savaseniorcare-llc-
agrees-pay-112-million-resolve-false-claims-act-allegations.
55. R. Tamara Konetzka et al., The Staffing—Outcomes Relationship in
Nursing Homes, 42 HEALTH SERVICES RESEARCH (2008),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2442239/.
56. Atul Gupta et al., Does Private Equity Investment in Healthcare
Benefit Patients? Evidence from Nursing Homes 4 (Nat’l Bureau of Econ.
Rsch., Working Paper No. 28474, 2021).
57. Nalea Ko, Licensed Practical Nurses (LPN) vs. Registered Nurses
(RN), NURSE J. (Aug. 29, 2022), https://nursejournal.org/resources/lpn-vs-
rn-roles/; Rohit Pradhan et al., Private Equity Ownership of Nursing
Homes: Implications for Quality, 42 J. HEALTHCARE FIN. 1, 9 (2014),
https://healthfinancejournal.com/index.php/johcf/article/view/12 (“In terms
of structural (staffing) variables, results suggest that private equity nursing
homes have 29% lower RN hours PPD compared to the control group
(p<.001). On the other hand, private equity owned facilities have 7% higher
LPN hours PPD (p<.05).”).
58. Gupta et al., supra note 56, at 2–4.
59. Id. at 2–3.
60. The Deadly Combination of Private Equity and Nursing Homes
During a Pandemic, AMERICANS FOR FINANCIAL REFORM 1 (Aug. 2020),
https://ourfinancialsecurity.org/wp-content/uploads/2020/08/AFREF-NJ-
Private-Equity-Nursing-Homes-Covid.pdf.
61. O’Grady, supra note 52, at 7 (“Regency’s West Oaks Nursing and
Rehabilitation Center experienced the deadliest coronavirus outbreak at a
nursing home in Austin, TX, where at least 18 patients died and 72 of its 98
current patients were infected.”); Anita Chabria & Melissa Gomez, How
Nursing Homes Became California Coronavirus Hot Zones, L.A. TIMES
(May 2, 2020), https://www.latimes.com/california/story/2020-05-02/how-
nursing-homes-became-coronavirus-hot-zones-in-california (Plum
Healthcare Group had the nursing home with the biggest outbreak in
California).
62. 6 Most Common Nursing Injuries, UNITEKCOLLEGE (Dec. 15, 2020),
https://www .unitekcollege.edu/blog/most-common-nursing-injuries/.
63. Occupational Injuries and Illnesses Resulting in Musculoskeletal
Disorders (MSDs), BUREAU OF LABOR STATISTICS (May 2020),
https://www.bls.gov/iif/oshwc/case/msds.htm; Daniel Zwerdling, Hospitals
Fail to Protect Nursing Staff from Becoming Patients, NPR (Feb. 4, 2015),
https://www.npr.org/2015/02/04/382639199/hospitals-fail-to-protect-
nursing-staff-from-becoming-patients.
64. Testimony of Milly Silva, executive vice president, 1199SEIU
United Healthcare Workers East before the House Ways and Means
Oversight Subcommittee (Mar. 25, 2021),
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov
/files/documents/M.%20Silva%20Testimony.pdf.
65. Id.
66. Id.
67. Gupta et al., supra note 56, at 34.
68. Id. at 20 (“In our data, more than 90% of the billed amount is paid
by taxpayers through Medicare and patients pay the balance.”).
69. Investor-Owned Nursing Homes Draw Scrutiny as Deals Flourish,
BLOOMBERG LAW (April 6, 2021), https://news.bloomberglaw.com/health-
law-and-business/investor-owned-nursing-homes-draw-scrutiny-as-deals-
flourish.
70. Nursing Home Law Basics, FINDLAW (May 17, 2021),
https://www.findlaw.com/elder/elder-care-law/nursing-home-law-
basics.html; MaryBeth Musumeci & Priya Chidambaram, Key Questions
About Nursing Home Regulation and Oversight in the Wake of COVID-19,
KAISER FAMILY FOUNDATION (Aug. 3, 2020),
https://www.kff.org/coronavirus-covid-19/issue-brief/key-questions-about-
nursing-home-regulation-and-oversight-in-the-wake-of-covid-19/
(“Certification of nursing home compliance with federal Medicare and/or
Medicaid requirements generally is performed by states through regular
inspections known as surveys.”).
71. LTCCC Report: Identification of Resident Harm in Nursing Home
Citations, LONG TERM CARE COMMUNITY COALITION 3 (Feb. 2017),
https://nursinghome411.org/identification-of-resident-harm-in-nursing-
home-citations/ (“[I]t is highly unlikely that a facility will face a penalty for
deficient care unless a violation is identified as having caused harm or
immediate jeopardy to a resident.”).
72. Id. at 5.
73. House Ways & Means Committee Issues Testimony from Long Term
Care Community Coalition, INSURANCE NEWSNET (Nov. 16, 2019),
https://insurancenewsnet.com/oarticle/house-ways-means-committee-
issues-testimony-from-long-term-care-community-coalition; EJ-Issue-
Guide-Fall-2019, LONG TERM CARE COMMUNITY COALITION (2019),
https://nursinghome411.org/wp-content/uploads/2019/12/EJ-Issue-Guide-
Fall-2019.xlsx.
74. EJ-Issue-Guide-Fall-2019, supra note 73.
75. Id.
76. Interview with Lori Smetanka, executive director, National
Consumer Voice (Oct. 12, 2021).
77. Robert Gebeloff et al., How Nursing Homes’ Worst Offenses Are
Hidden from the Public, N.Y. TIMES (Dec. 10, 2021),
https://www.nytimes.com/2021/12/09/business/nursing-home-abuse-
inspection.html.
78. Interview with Lori Smetanka, supra note 76.
79. American Health Care Assn, OPEN SECRETS,
https://www.opensecrets.org/orgs/american-health-care-assn/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle
=2022&outspendcycle=2022&id=D000000192&topnumcycle=A.
80. Genesis Healthcare, OPEN SECRETS,
https://www.opensecrets.org/orgs/genesis-healthcare/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=
2022&id=D000022002&topnumcycle=A; ManorCare Inc., OPEN SECRETS,
https://www.opensecrets.org/orgs/manor-care-inc/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=
2022&id=D000022097&topnumcycle =A; Golden Living, OPEN SECRETS,
https://www.opensecrets.org/orgs/golden-living/summary?
toprecipcycle=2022&contribcycle=2022&lobcycle=2022&outspendcycle=
2022 &id=D000066613&topnumcycle=A.
81. Matthew Cunningham-Cook, Nursing Home Industry Avoids
Scrutiny for Covid-19 Deaths as Powerful Lobby Goes to Work, INTERCEPT
(Feb. 20, 2021), https://theintercept .com/2021/02/20/covid-nursing-home-
cuomo-clyburn/.
82. Robert Gebeloff et al., How Nursing Homes’ Worst Offenses Are
Hidden from the Public, N.Y. TIMES (Dec. 10, 2021),
https://www.nytimes.com/2021/12/09/business/nursing-home-abuse-
inspection.html.
83. Id.
84. Ryan Mills & Melanie Payne, Neglected: Florida’s Largest Nursing
Home Chain Survives Despite Legacy of Poor Patient Care, NAPLES DAILY
NEWS (Jan. 24, 2019), https://www.naplesnews.com/story/news/special-
reports/2018/05/31/neglected-fraud-and-abuse-nursing-homes-
florida/542609002/.
85. Id.
86. Interview with Nicole Snapp-Holloway, attorney (Oct. 15, 2021).
87. Id.
88. Interview with Ernest C. Tosh, attorney (Oct. 8, 2021).
89. Id.
90. David G. Stevenson et al., Nursing Home Ownership Trends and
Their Impact on Quality of Care: A Study Using Detailed Ownership Data
from Texas, 25 J. AGING & SOC. POL’Y 30 (2013).
91. Jordan Rau, Care Suffers as More Nursing Homes Feed Money into
Corporate Webs, N.Y. TIMES (Jan. 2, 2018),
https://www.nytimes.com/2018/01/02/business/nursing-homes-care-
corporate.html. See, e.g., Mills & Payne, supra note 84 (“Despite the big
money generated from Medicare and Medicaid programs serving the poor
and elderly, Consulate’s nursing homes are designed to appear cash-
strapped. While individual nursing home LLCs are essentially empty
shells, they pay rent, management and rehabilitation service fees to
Consulate or Formation Capital–affiliated companies.”).
 92. Stevenson, supra note 90, at 30.
93. Rau, supra note 91.
94. Id.
95. Id.
96. Id.
97. Mills & Payne, supra note 84.
98. Margaret Cronin Fisk, Nursing Home Neglect Trial Fights Shell
Company Transfers, BLOOMBERG (Sept. 22, 2014),
https://www.bloomberg.com/news/articles/2014-09-22/nursing-home-
neglect-trial-fights-shell-company-transfers#xj4y7vzkg.
99. In re: Fundamental Long Term Care Inc., No. 11-bk-22258 (M.D.
Fla. Bankr. 2011).
100. Ed Williams, “An Anything-Goes Situation”: Assessing Arbitration
Agreements at Nursing Homes, LAS CRUCES SUN NEWS (July 12, 2020),
https://www.lcsun-news.com/story/news/2020/07/11/an-anything-goes-
situation/5421301002/.
101. The Truth About Forced Arbitration, AMERICAN ASSOCIATION FOR
JUSTICE 27 (Sept. 2019), https://www.justice.org/resources/research/the-
truth-about-forced-arbitration.
102. About Us, AMERICAN HEALTH CARE ASSOCIATION,
https://members.ahcancal.org/About-Us/NCAL-Board (Michael Wylie of
Genesis was the immediate past chair of the AHCA); AHCA/NCAL Elects
Board of Governors, Directors, AMERICAN HEALTH CARE ASSOCIATION (Oct.
7, 2020), https://www.ahcancal.org/News-and-Communications/Press-
Releases/Pages/AHCANCAL-Elects-Board-of-Governors,-Directors.aspx
(Phil Fogg of Marquis served as AHCA vice chair).
103. Alex Spanko, CMS Finalizes Reversal of Arbitration Ban in
Nursing Homes, Proposes Partial Phase 3 RoP Delay, SKILLED NURSING
NEWS (July 16, 2019), https://skillednursingnews .com/2019/07/cms-
finalizes-reversal-of-arbitration-ban-in-nursing-homes-proposes-partial-
phase-3-rop-delay/.
104. Scott Loftin & Ragini A. Acharya, Federal District Court Upholds
CMS Pre-Dispute Arbitration Rule, HUSCH BLACKWELL (April 13, 2020 ),
https://www.healthcarelawinsights .com/2020/04/federal-district-court-
upholds-cms-pre-dispute-arbitration-rule/.
 105. Christopher Rowland, Long-Term-Care Facilities Are Using the
Pandemic as a Shield, Even in Lawsuits Unrelated to Covid-19, WASH.
POST (Aug. 20, 2021), https://www
.washingtonpost.com/business/2021/08/20/nursing-home-immunity-covid-
lawsuits/.
106. Debbie Cenziper et al., As Nursing Home Residents Died, New
Covid-19 Protections Shielded Companies from Lawsuits. Families Say
That Hides the Truth, WASH. POST (June 8, 2020),
https://www.washingtonpost.com/business/2020/06/08/nursing-home-
immunity-laws/.
107. Id.
108. Id.
109. Interview with Ernie Tosh (Oct. 5, 2021).
110. O’Grady, supra note 52, at 15.
111. Jessica Silver-Greenberg & Robert Gebeloff, Maggots, Rape and
Yet Five Stars: How U.S. Ratings of Nursing Homes Mislead the Public,
N.Y. TIMES (Aug. 4, 2021),
https://www.nytimes.com/2021/03/13/business/nursing-homes-ratings-
medicare-covid .html.
112. Amended Complaint ¶ 27, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Aug. 2, 2012), ECF No. 16;
Mills & Payne, supra note 84.
113. Amended Complaint ¶ 36, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Aug. 2, 2012), ECF No. 16.
114. Second Amended Complaint ¶ 164–184, US ex rel. Ruckh v. La Vie
Health Care Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. June 3, 2013), ECF
No. 75.
115. Mills & Payne, supra note 84.
116. Id.
117. Id. The company was also organized so that, in practice, it was
difficult to immediately understand who actually is the owner of a nursing
homes’ owners. For instance, Ruckh’s initial suit was not against
Consulate, but “La Vie Health Care Centers, Inc.,” only later identified to
be the nursing home chain. Compare Amended Complaint, US ex rel.
Ruckh v. La Vie Health Care Centers, Inc. No. 8:11-cv-1303 (M.D. Fla.
Aug. 2, 2012), ECF No. 16 with Second Amended Complaint ¶ 164–184,
supra note 114.
118. Mills & Payne, supra note 84.
119. Docket, US ex rel. Ruckh v. La Vie Health Care Centers, Inc. No.
8:11-cv-1303 (M.D. Fla. June 10, 2011).
120. Jury Verdict, US ex rel. Ruckh v. La Vie Health Care Centers, Inc.
No. 8:11-cv-1303 (M.D. Fla. Feb. 15, 2017), ECF No. 430; Order Granting
Judgment as a Matter of Law, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc., No. 8:11-cv-1303 (M.D. Fla. Jan. 11, 2018), ECF No. 468.
121. Angela Ruckh v. Salus Rehabilitation, LLC, et al., No. 18-10500
(11th Cir. June 25, 2020).
122. Order on Damages, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Feb. 8, 2021), ECF No. 562.
123. The complaint was filed on June 10, 2011, and judgment was
issued on Feb. 8, 2021.
124. Order Staying Proceedings, US ex rel. Ruckh v. La Vie Health Care
Centers, Inc. No. 8:11-cv-1303 (M.D. Fla. Feb. 8, 2021), ECF No. 570.
125. Danielle Brown, Approved: Consulate Health Care to Pay Just
$4.5 Million of $258 Million Judgment in Inherited Upcoding Case,
MCKNIGHTS LONG-TERM CARE NEWS (Sept. 30, 2021),
https://www.mcknights.com/news/approved-consulate-health-care-to-pay-
just-4-5-million-of-258-million-judgment-in-inherited-upcoding-case/;
Christopher Rowland, How One of the Largest Nursing Home Chains in
Florida Could Avoid Nearly All of $256 Million Fraud Judgment, WASH.
POST (Sept. 14, 2021), https://www
.washingtonpost.com/business/2021/09/14/nursing-home-bankruptcy-
fraud/.
126. Verdict, US ex rel. Ruckh v. La Vie Health Care Centers, Inc. No.
8:11-cv-1303 (M.D. Fla. Feb. 15, 2017), ECF No. 430 (Finding over $80
million in Medicare fraud, the Medicaid verdict was vacated).
127. About, FORMATION CAPITAL, https://formationcapital.com/about/
(May 19, 2022).
128. Interview with Lori Smetanka, supra note 76.
129. Id.
130. Id.
 CHAPTER 5: MAKING IT ALL WORSE
1. Alex Montero et al., Americans’ Challenges with Health Care Costs,
KFF (July 14, 2022), https://www.kff.org/health-costs/issue-
brief/americans-challenges-with-health-care-costs/.
2. Id.
3. Charlotte Morabito, Why Health-Care Costs Are Rising in the U.S.
More Than Anywhere Else, CNBC (Feb. 28 2022),
https://www.cnbc.com/2022/02/28/why-health-care-costs-are-rising-in-the-
us-more-than-anywhere-else-.html.
4. Nirad Jain et al., Healthcare Private Equity Market 2021: The Year in
Review, BAIN (Mar. 16, 2022), https://www.bain.com/insights/year-in-
review-global-healthcare-private-equity-and-ma-report-2022/.
5. See Erin C. Fuse et al., Private Equity Investment as a Divining Rod
for Market Failure: Policy Responses to Harmful Physician Practice
Acquisitions, BROOKINGS INSTITUTION (Oct. 5, 2021),
https://www.brookings.edu/essay/private-equity-investment-as-a-divining-
rod-for-market-failure-policy-responses-to-harmful-physician-practice-
acquisitions/.
6. Sally Tan et al., Trends in Private Equity Acquisition of Dermatology
Practices in the United States, 155 JAMA DERMATOL 1013 (2019).
7. Heather Perlberg, How Private Equity Is Ruining American Health
Care, BLOOMBERG (May 20, 2020),
https://www.bloomberg.com/news/features/2020-05-20/private-equity-is-
ruining-health-care-covid-is-making-it-worse#xj4y7vzkg.
8. Id.
9. Id.
10. Fuse et al., supra note 5.
11. Kara Grant, Is Private Equity a Dangerous Employer?, MEDPAGE
TODAY (Oct. 14, 2021), https://www.medpagetoday.com/special-
reports/exclusives/95022.
12. See, e.g., Dermatologist, Not Private Equity, Group, CHEGG
INTERNSHIPS, https://www .internships.com/posting/bug_39194282087
(“Dermatologist, Not Private Equity, Group”); Dermatologist, NOT Private
Equity, Permanent Group Position (Physician), WBOY12 (Aug. 4, 2022),
https://jobs.wboy.com/jobs/dermatologist-not-private-equity-permanent-
group-position-physician-naperville-illinois/677322663-2/; Dermatologist
—Private Group, NOT Private Equity—Sunset Beach (Physician), KRQE
(Aug. 4, 2022), https://jobs.krqe .com/jobs/dermatologist-private-group-
not-private-equity-sunset-beach-physician-california/677295888-2/;
Houston, TX Dermatology—NOT Private Equity (Physician), WANE (Aug.
18, 2022), https://jobs.wane.com/jobs/houston-tx-dermatology-not-private-
equity-physician-texas/688815409-2/.
13. See Alexander Borsa, When Private Equity Firms Invest in Women’s
Health Clinics, Who Benefits?, STAT NEWS (Sept. 14, 2020),
https://www.statnews.com/2020/09/14/private-equity-firms-invest-
womens-health-clinics-who-benefits/ (“The industry has set its sights on
women’s health in part because of its high profitability and the limited
regulation of fertility services”); EILEEN APPELBAUM & ROSEMARY BATT,
PRIVATE EQUITY BUYOUTS IN Healthcare: Who Wins, Who Loses? 52–53
(Mar. 15, 2020), https://www.ineteconomics .org/uploads/papers/WP_118-
Appelbaum-and-Batt-2-rb-Clean.pdf; Alpesh Patel, Private Equity and Its
Emergence in Orthopaedics, 29 J. AM. ORTHO. SURG. (2021),
https://journals
.lww.com/jaaos/Abstract/2021/10150/Private_Equity_and_Its_Emergence_
in_Orthopaedics.4.aspx#JCL-P-4; Fuse et al., supra note 5; Jane M. Zhu et
al., Private Equity Acquisitions of Physician Medical Groups Across
Specialties, 2013-2016, JAMA (Feb. 18, 2020),
https://jamanetwork.com/journals/jama/fullarticle/2761076?
guestAccessKey =4eb6959c-7cec-43f1-95b3-93a8c6ea6f6b; Justin Doshi
et al., Healthcare Providers: New Roll-Up Candidates and a New Look for
Risk-Bearing Providers, BAIN (Mar. 16, 2021),
https://www.bain.com/insights/providers-global-healthcare-private-equity-
and-ma-report-2021/; Private Equity Investing in Dental Companies,
PRIVATE EQUITY INFO (Sept. 9, 2021),
https://blog.privateequityinfo.com/index.php/2021/09/09/private-equity-
investing-in-dental-companies/; Jane M. Zhu, Private Equity Investment in
Physician Practices, PENN LDI (Feb. 15, 2020), https://ldi.upenn.edu/our-
work/research-updates/private-equity-investment-in-physician-practices/.
 14. Appelbaum & Batt, supra note 13. (Eileen Appelbaum and
Rosemary Batt estimate that private equity firms have bought 2,500 health
care clinics and service. Together, private equity firms bought 2,500 clinics
and small health care services over twenty years and spent over $150
billion to do so.); Fuse et al., supra note 5 (estimating private equity
purchase of 1,283 clinics over eleven years).
15. BAIN & CO., GLOBAL HEALTHCARE PRIVATE EQUITY AND M&A
REPORT 2022 (2022), https://www.bain.com/insights/topics/global-
healthcare-private-equity-ma-report/.
16. The Blackstone Group Completes Major Investment in Vanguard
Health Systems, Inc., BLACKSTONE (Sept. 23, 2004),
https://www.blackstone.com/news/press/the-blackstone-group-completes-
major-investment-in-vanguard-health-systems-inc/.
17. Blackstone Buying Majority of Vanguard Health Systems, PHOENIX
BUS. J. (July 26, 2004),
https://www.bizjournals.com/phoenix/stories/2004/07/26/daily14.html.
18. Kevin Dowd, This Day in Buyout History: KKR, Bain Capital
Complete the Biggest LBO Ever, PITCHBOOK (Nov. 17, 2027),
https://pitchbook.com/news/articles/this-day-in-buyout-history-kkr-bain-
capital-complete-the-biggest-lbo-ever.
19. Appelbaum & Batt, supra note 13.
20. Jack O’Brien, Steward Health Care Buys Back Control from
Cerberus, HEALTHLEADERS (June 2, 2020),
https://www.healthleadersmedia.com/finance/steward-health-care-buys-
back-control-cerberus.
21. John Hechinger & Sabrina Willmer, Life and Debt at a Private
Equity Hospital, BLOOMBERG (August 6, 2020),
https://www.bloomberg.com/news/features/2020-08-06/cerberus-backed-
hospitals-face-life-and-debt-as-virus-rages#xj4y7vzkg.
22. Appelbaum & Batt, supra note 13.
23. Regionals: Vanguard Health Systems Acquires Two Hospitals and
More News, MOD. HEALTHC. (Aug. 9, 2010),
https://www.modernhealthcare.com/article/20100809/MAGAZINE/308099
981/regionals-vanguard-health-systems-acquires-two-hospitals-and-more-
news (Vanguard bought two hospitals in 2010); HCA Healthcare,
WIKIPEDIA, https://en.wikipedia.org/wiki/HCA_Healthcare#United_States.
In 2017, HCA made a number of acquisitions. The company had gone
public a number of years earlier, but KKR continued to hold a small stake
in it. KKR Rep Leaves HCA Board, NASHV. POST (May 17, 2016),
https://www.nashvillepost.com/kkr-rep-leaves-hca-board/article_1bd2e76f-
584e-5cd5-87ea-9ff7418b4847.html; Steward Health Care Completes
Acquisition of Five South Florida Hospitals Bringing Physician-Led Care
to More Communities in the Region, ST. ELIZABETH’S MEDICAL CENTER
(Aug. 2, 2021), https://www.semc.org/domain-
specific/720191/newsroom/2021-08-02/steward-health-care-completes-
acquisition-five-south-florida-hospitals-bringing (Steward bought five
additional hospitals).
24. Appelbaum & Batt, supra note 13, at 22–23.
25. Josh Kosman, Bain’s Huge HCA IPO Gain, N.Y. POST (Mar. 11,
2011), https://nypost.com/2011/03/11/bains-huge-hca-ipo-gain/.
26. Hechinger & Willmer, supra note 21.
27. Id.
28. Id.
29. Id.
30. Id.
31. Id.
32. Envision estimates that about 65 percent of hospitals outsource their
emergency staffing to a third-party company. Envision Healthcare
Holdings, Inc., Form 10-K (Mar. 2, 2015),
https://www.sec.gov/Archives/edgar/data/1578318/000104746915001498/a
2223319z10-k.htm. TeamHealth estimates that it controls about 20 percent
of the emergency department and hospital medicine market. It says that the
fragmented market “represents an attractive opportunity for further
consolidation.” TeamHealth, Ex.-99.1,
https://www.sec.gov/Archives/edgar/data/1082754/000119312517003669/d
267388 dex991.htm.
33. Ellie Kincaid, Envision Healthcare Infiltrated America’s ERs. Now
It’s Facing a Backlash, FORBES (May 15, 2018),
https://www.forbes.com/sites/elliekincaid/2018/05/15/envision-healthcare-
infiltrated-americas-ers-now-its-facing-a-backlash/?sh=6853c2c4284f.
 34. IPO of Onex’s Emergency Medical Services Priced, CBC NEWS
(Dec. 6, 2005), https://www.cbc.ca/news/business/ipo-of-onex-s-
emergency-medical-services-priced-1.539892; Onex Sells U.S. Medical
Investment, CBC NEWS (Feb. 14, 2011), https://www
.cbc.ca/news/business/onex-sells-u-s-medical-investment-1.1102276.
35. Clayton, Dubilier & Rice Completes $3.2 Billion Acquisition of
Emergency Medical Services Corporation, CLAYTON, DUBILIER & RICE
(May 25, 2011), https://www.cdr-inc.com/news/press-release/clayton-
dubilier-rice-completes-3.2-billion-acquisition-emergency-medical.
36. Gretchen Morgenson, Doctor Fired from ER Warns About Effect of
For-Profit Firms on U.S. Health Care, NBC NEWS (Mar. 28, 2022),
https://www.nbcnews.com/health/health-care/doctor-fired-er-warns-effect-
profit-firms-us-health-care-rcna19975.
37. Aisha Al-Muslim, KKR to Acquire Envision Healthcare for $5.5
Billion, WALL ST. J. (June 11, 2018), https://www.wsj.com/articles/kkr-to-
acquire-envision-healthcare-for-5-5-billion-1528718957.
38. Brovont vs. KS-I Medical Services, P.A. et al., 622 S.W.3d 671 (Mo.
Ct. App. Oct. 13, 2020).
39. Id.
40. Id.
41. Id.
42. Id.
43. Id.
44. Id.
45. Id.
46. William Sullivan, $26M Judgment Against EmCare in Wrongful
Termination Lawsuit, EMERGENCY PHYSICIANS MONTHLY (Aug. 2, 2021),
https://epmonthly.com/article/26m-judgment-against-emcare-in-wrongful-
termination-lawsuit/.
47. Dan Margolies, Appeals Court Restores Most of $29M Verdict to ER
Doctor Who Complained of Staffing Shortages, KCUR 89.3 (Oct. 13,
2020), https://www.kcur.org/health/2020-10-13/appeals-court-restores-
most-of-29m-verdict-to-er-doctor-who-complained-of-staffing-shortages.
48. Ming Lin, I just sent this letter to our cmo, FACEBOOK (Mar. 15,
2020),https://m.facebook.com/story.php?
story_fbid=10216583796603708&id=1122938346.
49. Id.
50. Complaint ¶ 3.37, Lin v. Peacehealth et al., No. 20-2-00700 (Wash.
Sup. Ct. May 28, 2020).
51. Gretchen Morgenson & Emmanuelle Saliba, Private Equity Firms
Now Control Many Hospitals, ERs and Nursing Homes. Is It Good for
Health Care?, NBC NEWS (May 13, 2020),
https://www.nbcnews.com/health/health-care/private-equity-firms-now-
control-many-hospitals-ers-nursing-homes-n1203161; Docket, Lin v.
Peacehealth et al., No. 20-2-00700 (Wash. Sup. Ct. May 28, 2020).
52. Isaac Arnsdorf, Overwhelmed Hospitals Face a New Crisis: Staffing
Firms Are Cutting Their Doctors’ Hours and Pay, PROPUBLICA (Apr. 3,
2020), https://www.propublica.org/article/overwhelmed-hospitals-face-a-
new-crisis-staffing-firms-are-cutting-their-doctors-hours-and-pay.
53. Id.
54. Edited Transcript, Q4 2018 KKR & Co Inc Earnings Call, KKR 10
(Feb. 1, 2019) (KKR’s head of investor relations, Craig Larson, said that
“Envision is an investment where we’re going to be focused together with
management on a series of operational improvement initiatives.”); Kiran
Stacey, US Doctors Fear Patients at Risk as Cost Cuts Follow Private
Equity Deals, FIN. TIMES (Nov. 11, 2021),
https://www.ft.com/content/9eac6649-2df5-4663-aecf-632885462288
(Envision subsequently put doctors on new salary plans, which it estimated
would lower pay by 15% and link pay to doctors’ ability to bill patients.
Also increasingly relied on the use of nurses.); TeamHealth, Ex.-99.1,
https://www.sec.gov/Archives/edgar/data/1082754/000119312517003669/d
267388dex991 .htm. (According to SEC filings, Blackstone decided to
reinvest in TeamHealth in 2016 (it previously owned the company in 2005)
because of “near-term cost reduction opportunities.”)
55. Isaac Arnsdorf, How Rich Investors, Not Doctors, Profit from
Marking Up ER Bills, PROPUBLICA (June 12, 2020),
https://www.propublica.org/article/how-rich-investors-not-doctors-profit-
from-marking-up-er-bills.
56. Interview with Robert McNamara, chief medical officer, Temple
University Physicians (Jan. 7, 2022).
 57. Id.
58. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals (The offending conduct occurred
between 2008 and 2012. The private equity firm Onex bought EmCare in
2004); EmCare, WIKIPEDIA, https://en.wikipedia.org/wiki/EmCare; IPO of
Onex’s Emergency Medical Services priced, CBC NEWS (Dec. 6, 2005),
https://www .cbc.ca/news/business/ipo-of-onex-s-emergency-medical-
services-priced-1.539892; Onex Sells U.S. Medical Investment, CBC NEWS
(Feb. 14, 2011), https://www.cbc.ca/news/business/onex-sells-u-s-medical-
investment-1.1102276.
59. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals.
60. See Robert W. Derlet et al., Corporate and Hospital Profiteering in
Emergency Medicine: Problems of the Past, Present, and Future, 50 J.
EMERG. MED. 902, 905 (2016) (“Hospital stays of any length of time
increase the risk of infection and medical mishaps.”).
61. Two Physician Groups Pay Over $33 Million to Resolve Claims
Involving HMA Hospitals, DEPARTMENT OF JUSTICE (Dec. 19, 2017),
https://www.justice.gov/opa/pr/two-physician-groups-pay-over-33-million-
resolve-claims-involving-hma-hospitals.
62. Julie Creswell & Reed Abelson, Hospital Chain Said to Scheme to
Inflate Bills, N.Y. TIMES (Jan. 23, 2014),
https://www.nytimes.com/2014/01/24/business/hospital-chain-said-to-
scheme-to-inflate-bills.html
63. Jeff Lagasse, TeamHealth Wins Lawsuit Against UnitedHealth,
HEALTHCARE FIN. (Nov. 30, 2021),
https://www.healthcarefinancenews.com/news/teamhealth-wins-lawsuit-
against-unitedhealth.
64. Complaint ¶ 9, United Healthcare Services, Inc. et al., v. Team
Health Holdings, Inc. et al., No. 3:21-cv-00364 (E.D. Tenn. Dec. 27, 2021)
ECF No. 1. TeamHealth largely denied United’s allegations. Answer,
United Healthcare Services, Inc. et al., v. Team Health Holdings, Inc. et al.,
No. 3:21-cv-00364 (E.D. Tenn. June 9, 2022) ECF No. 49.
65. Paige Minemyer, UnitedHealth Lawsuit Claims TeamHealth
Upcoded Claims for $100M in Fraud, FIERCE HEALTHCARE (Oct. 28, 2021),
https://www.fiercehealthcare.com/payer/unitedhealth-lawsuit-claims-
teamhealth-upcoded-claims-for-100m-fraud.
66. Scheduling Order, United Healthcare Services, Inc. et al., v. Team
Health Holdings, Inc. et al., No. 3:21-cv-00364 (E.D. Tenn. Feb. 16, 2022)
ECF No. 43.
67. Yeganeh Torbati, How Private Equity Extracted Hundreds of
Millions of Dollars from a Firm Accused of Medicare Fraud, WASH. POST
(Mar. 1, 2021), https://www.washingtonpost
.com/business/2021/03/01/blackstone-healthcare-private-equity-dividend-
apria/.
68. Acting Manhattan U.S. Attorney Announces $40.5 Million
Settlement with Durable Medical Equipment Provider Apria Healthcare for
Fraudulent Billing Practices, DEPARTMENT OF JUSTICE (Dec. 21, 2020),
https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-attorney-
announces-405-million-settlement-durable-medical-equipment. In a
statement to the Washington Post, Apria said that “[w]e fully cooperated
throughout the review and are pleased to have resolved this civil matter.…
As always, our patients are our top priority and we remain committed to
providing outstanding care and exceptional service.” Torbati, supra note
67.
69. Matthew Goldstein, Private Equity Firms Are Piling on Debt to Pay
Dividends, N.Y. TIMES (Feb. 19, 2021),
https://www.nytimes.com/2021/02/19/business/private-equity-dividend-
loans.html.
70. Torbati, supra note 67.
71. Id. (Nominally the Trump administration did this in response to the
pandemic, but Apria Healthcare had been lobbying on the issue for years.)
72. Torbati, supra note 67.
73. Jacob T. Elberg, Health Care Fraud Means Never Having to Say
You’re Sorry, PROGRAM ON CORPORATE COMPLIANCE AND ENFORCEMENT
(Apr. 28, 2021),
https://wp.nyu.edu/compliance_enforcement/2021/04/28/health-care-fraud-
means-never-having-to-say-youre-sorry/.
74. Issue Brief: Corporate Practice of Medicine, AMERICAN MEDICAL
ASSOCIATION (2015), https://www.ama-assn.org/media/7661/download.
75. Janice Davis & Banee Pachuca, Private Equity and Physician
Practice Acquisitions: Key Legal Considerations, MORGAN LEWIS 9 (Apr.
13, 2021), https://www.morganlewis
.com/-/media/files/publication/presentation/webinar/2021/private-equity-
and-physician-practice-acquisitions-key-legal-considerations.pdf;
Rosemary Batt & Eileen Appelbaum, Private Equity Tries to Protect
Another Profit Center, AM. PROSPECT (Sept. 9, 2019),
https://prospect.org/power/private-equity-tries-protect-another-profit-
center/.
76. AHealthcareZ, Private Equity Owning Doctor Practices…
Corporate Practice of Medicine Laws Explained, YOUTUBE,
https://www.youtube.com/watch?v=2epmk4_-kUI.
77. Redacted First Amended Complaint at 8, American Academy of
Emergency Medicine Physician Group, Inc. v. Envision Healthcare
Corporation et al., No. 3:22-cv-421 (N.D. Cal. Feb. 18, 2022), ECF No.
18-2.
78. Complaint at ¶ 26, American Academy of Emergency Medicine
Physician Group, Inc. v. Envision Healthcare Corporation et al., No. 3:22-
cv-421 (Jan. 21, 2022), ECF No. 1; Redacted First Amended Complaint at
32, American Academy of Emergency Medicine Physician Group, Inc. v.
Envision Healthcare Corporation et al., No. 3:22cv421 (N.D. Cal. Feb. 18,
2022), ECF No. 18-2; Gretchen Morgenson, Doctor Fired from ER Warns
About Effect of For-Profit Firms on U.S. Health Care, NBC NEWS (Mar.
28, 2022), https://www.nbcnews.com/health/health-care/doctor-fired-er-
warns-effect-profit-firms-us-health-care-rcna19975 (describing a
figurehead doctor at EmCare facilities in Missouri).
79. Complaint at ¶ 26, American Academy of Emergency Medicine
Physician Group, Inc. v. Envision Healthcare Corporation et al., No. 3:22-
cv-421 (Jan. 21, 2022), ECF No. 1.
80. Id. at ¶ 38.
 81. Redacted First Amended Complaint at ¶ 45, American Academy of
Emergency Medicine Physician Group, Inc. v. Envision Healthcare
Corporation et al., No. 3:22-cv-421 (N.D. Cal. Feb. 18, 2022), ECF No.
18-2.
82. Id. at ¶ 38.
83. AAEM-PG Files Suit Against Envision Healthcare Alleging the
Illegal Corporate Practice of Medicine, AMERICAN ACADEMY OF
EMERGENCY MEDICINE (Dec. 21, 2021),
https://www.aaemphysiciangroup.com/news-and-updates/aaem-pg-files-
suit-envision-healthcare-alleging-the-illegal-corporate-practice-of-
medicine.
84. Docket, American Academy of Emergency Medicine Physician
Group, Inc. v. Envision Healthcare Corporation et al., No. 3:22-cv-421
(N.D. Cal. Jan. 1, 2022) (as of Oct. 6, 2022, the parties were litigating over
a motion to dismiss).
85. Cory Capps, Physician Practice Consolidation Driven by Small
Acquisitions, so Antitrust Agencies Have Few Tools to Intervene, 36
HEALTH AFFAIRS (Sept. 2017), https://www
.healthaffairs.org/doi/full/10.1377/hlthaff.2017.0054.
86. Id.
87. FTC Requires Community Health Systems, Inc. to Divest Two
Hospitals as a Condition of Acquiring Rival Hospital Operator, FTC (Jan.
22, 2014), https://www.ftc.gov/news-events/news/press-
releases/2014/01/ftc-requires-community-health-systems-inc-divest-two-
hospitals-condition-acquiring-rival-hospital.
88. Melanie Evans, Steward Health Care to Buy Iasis Healthcare for
$1.9 Billion, WALL ST. J. (May 19, 2017),
https://www.wsj.com/articles/steward-health-care-to-buy-iasis-healthcare-
for-1-9-billion-1495199135.
89. Vince Gallaro, FTC Won’t Block Vanguard-DMC Deal, MODERN
HEALTHCARE (Sept. 8, 2010),
https://www.modernhealthcare.com/article/20100908/NEWS/309089983/ft
c-won-t-block-vanguard-dmc-deal; Melanie Evans, Steward Health Care to
Buy Iasis Healthcare for $1.9 Billion, WALL ST. J. (May 19, 2017),
https://www.wsj.com/articles/steward-health-care-to-buy-iasis-healthcare-
for-1-9-billion-1495199135.
90. Eileen Applebaum, How Private Equity Makes You Sicker, AM.
PROSPECT (Oct. 7, 2019), https://prospect.org/health/how-private-equity-
makes-you-sicker/; The Courage to Learn, AMERICAN ECONOMIC LIBERTIES
PROJECT 9 (2021), https://www.economicliberties.us/wp-
content/uploads/2021/01/Courage-to-Learn-Final.pdf.
91. Northern Pacific Railroad Co. v. U.S., 356 U.S. 1, 4 (1958).
92. William Howard Taft, WIKIPEDIA,
https://en.wikipedia.org/wiki/William_Howard_Taft; Peri Arnold, William
Taft: Domestic Affairs, https://millercenter.org/president/taft/domestic-
affairs.
93. Einer Elhauge, Horizontal Shareholding, 129 HARV. L. REV. 1267,
1286 (2016).
94. Id. at 1287 (citing Joseph Alsop & Robert Kintner, Trust Buster: The
Folklore of Thurman Arnold, SATURDAY EVENING POST, Aug. 12, 1939, at 5,
7).
95. Tim Wu, THE CURSE OF BIGNESS 107 (2018).
96. Christopher R. Leslie, Antitrust Made (Too) Simple, 79 ANTITRUST
L. J. 917 (2014), https://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2589598.
97. Modern Antitrust Enforcement, THURMAN ARNOLD PROJECT,
https://som.yale.edu/centers/thurman-arnold-project-at-yale/modern-
antitrust-enforcement.
98. Fred Barbash, Big Corporations Bankroll Seminars for U.S. Judges,
WASH. POST (Jan. 20, 1980),
https://www.washingtonpost.com/archive/politics/1980/01/20/big-
corporations-bankroll-seminars-for-us-judges/8385bf9f-1eb7-451a-8f3d-
bdabb4 648452/.
99. William E. Kovacic, The Antitrust Paradox Revisited: Robert Bork
and the Transformation of Modern Antitrust Policy, 36 WAYNE L. REV.
1413, 1434 n.97 (1990).
100. Henry N. Butler, The Manne Programs in Economics for Federal
Judges, 50 CASE WESTERN L. REV. 351, 352 (1999).
 101. Barbash, supra note 98.
102. Mason Judicial Education Program, ANTONIN SCALIA LAW SCHOOL
LAW & ECONOMICS CENTER, https://masonlec.org/divisions/mason-judicial-
education-program/.
103. Kovacic, supra note 99.
104. Reiter v. Sonotone Corp., 442 U.S. 330 (1979).
105. Matsushita v. Zenith Radio Corp., 475 U.S. 574 (1986).
106. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509
U.S. 209 (1993).
107. Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540
U.S. 398, 407 (2004).
108. In 2001, the Antitrust Division of the Justice Department had a
budget of approximately $121 million; in 2021, $185 million.
Appropriation Figures for the Antitrust Division, DEPARTMENT OF JUSTICE
(Feb. 2020), https://www.justice.gov/atr/appropriation-figures-antitrust-
division. Accounting for inflation, funding for the office actually shrank at
a time when merger and acquisition activity exploded. Similarly, in 2020,
the FTC actually had fewer than 1,200 people working for it, 600 fewer
than it had in 1979. Appropriation and Full-Time Equivalent (FTE)
History, FTC, https://www.ftc.gov/about-ftc/bureaus-offices/office-
executive-director/financial-management-office/ftc-appropriation (last
visited Oct. 7, 2022).
109. 1968 Merger Guidelines, DEPARTMENT OF JUSTICE (Aug. 4, 2015),
https://www .justice.gov/archives/atr/1968-merger-guidelines.
110. Id.
111. Id.
112. Modern Antitrust Enforcement, THURMAN ARNOLD PROJECT,
https://som.yale .edu/centers/thurman-arnold-project-at-yale/modern-
antitrust-enforcement.
113. Horizontal Merger Guidelines, DEPARTMENT OF JUSTICE AND FTC
(Aug. 19, 2010), https://www.justice.gov/atr/horizontal-merger-guidelines-
08192010.
114. Robert H. Lande & Sandeep Vaheesan, Preventing the Curse of
Bigness Through Conglomerate Merger Legislation, 52 ARIZONA STATE L.
J. 75 (2020).
 115. Summary of Antitrust Division Health Care Cases (Since August
25, 1983), DEPARTMENT OF JUSTICE,
https://www.justice.gov/atr/page/file/1077686/download.
116. Domestic market share of leading U.S. airlines from January to
December 2021, STATISTA (Mar. 2022),
https://www.statista.com/statistics/250577/domestic-market-share-of-
leading-us-airlines/.
117. Wireless subscriptions market share by carrier in the U.S. from 1st
quarter 2011 to 2nd quarter 2022, STATISTA (July 2022),
https://www.statista.com/statistics/199359/market-share-of-wireless-
carriers-in-the-us-by-subscriptions/.
118. Corey Stern, CVS and Walgreens Are Completely Dominating the
US Drugstore Industry, BUSINESS INSIDER (July 29, 2015),
https://www.businessinsider.com/cvs-and-walgreens-us-drugstore-market-
share-2015-7.
119. Harris Meyer, Biden’s FTC Has Blocked 4 Hospital Mergers and Is
Poised to Thwart More Consolidation Attempts, KAISER HEALTH NEWS
(July 17, 2022), https://khn.org/news/article/biden-ftc-block-hospital-
mergers-antitrust/.
120. David McCabe, Justice Dept. Sues to Block $13 Billion Deal by
UnitedHealth Group, N.Y. TIMES (Feb. 24, 2022),
https://www.nytimes.com/2022/02/24/business/doj-antitrust-lawsuit-
unitedhealth.html.

CHAPTER 6: THIS TIME WILL BE DIFFERENT

1. Andrew F. Tuch, The Remaking of Wall Street, 7 HARV. BUS. L. REV.
315, 316–317, 333–334 (2017).
2. Id. at 319–320.
3. Id. at 366–367 (“For example, they [private equity] recruited
proprietary trading teams from BHCs that downsized in anticipation of the
Volcker Rule’s ban on engaging in proprietary trading.”).
4. Paul J. Davies, Private-Debt Funds Withstand Covid-19, but Bigger
Test Comes Next Year, WALL ST. J. (Dec. 23, 2020),
https://www.wsj.com/articles/private-debt-funds-withstand-covid-19-but-
bigger-test-comes-next-year-11608732001.
5. Report to Congress on Regulation A/Regulation D Performance, SEC
3 (Aug. 2020), https://www.sec.gov/files/report-congress-regulation-a-
d.pdf.
6. Michael Wursthorn & Gregory Zuckerman, Fewer Listed Companies:
Is That Good or Bad for Stock Markets?, WALL ST. J. (Jan. 4, 2018),
https://www.wsj.com/articles/fewer-listed-companies-is-that-good-or-bad-
for-stock-markets-1515100040?mod=article_inline.
7. Miriam Gottfried, Sixth Street Partners Amasses One of the Largest
Private-Capital Funds, WALL ST. J. (Aug. 16, 2020),
https://www.wsj.com/articles/sixth-street-partners-amasses-one-of-the-
largest-private-capital-funds-11597575600.
8. Debora Vrana, Ares Management to Take New Fund Public, L.A.
TIMES (Apr. 22, 2004), https://www.latimes.com/archives/la-xpm-2004-apr-
22-fi-ares22-story.html.
9. Investor Day, ARES 17 (Aug. 12, 2021),
https://s1.q4cdn.com/524527723/files/doc_downloads/2021/08/Ares-
Investor-Day-8.12.21-vF.pdf.
10. Arleen Jacobins, Blackstone AUM Skyrockets 42% in Year to $880.9
Billion, PENSION & INVESTMENTS (Jan. 27, 2022),
https://www.pionline.com/alternatives/blackstone-aum-skyrockets-42-year-
8809-billion.
11. Growth of Private Credit Has Systemic Implications, MOODY’S
(Nov. 3, 2021),
https://www.moodys.com/web/en/us/about/insights/podcasts/moodys-talks-
focus-on-finance/growth-of-private-credit-has-systemic-implications.html.
12. Id.
13. Daniel Rasmussen & Greg Obenshain, High-Yield Was Oxy. Private
Credit Is Fentanyl, INSTITUTIONAL INVESTOR (Jan. 28, 2020),
https://www.institutionalinvestor .com/article/b1k369v2lg69qt/High-Yield-
Was-Oxy-Private-Credit-Is-Fentanyl.
14. Interview with Dan Rasmussen, founder, Verdad (Dec. 8, 2021).
15. Private Credit’s Rapid Growth: A Secular Trend, BLACKSTONE (Apr.
2022), https://www.bcred.com/wp-
content/uploads/sites/11/2020/10/Private-Credits-Rapid-Growth_A-
Secular-Trend.pdf?v=1649296149.
16. Elisabeth de Fontenay, The Deregulation of Private Capital and the
Decline of the Public Company, 68 HASTINGS L. J. 445, 467–468 (2017).
17. Id. at 467–468.
18. Id. at 468.
19. National Securities Markets Improvement Act of 1996, H.R. 3005,
104th Cong. (1996).
20. de Fontenay, supra note 16, at 445, 468–469.
21. Jumpstart Our Business Startups, H.R. 3606, 112th Cong. (2011).
22. Critics argue that it was actually the overregulation of the stock
market, rather than the deregulation of the private credit market, that led to
the fall in public companies. But this tells, at best, only part of the story,
given that the number of public companies started falling years before then.
Why Are There So Few Public Companies in the U.S.?, NBER (Sept.
2015), https://www.nber.org/digest/sep15/why-are-there-so-few-public-
companies-us. And even if overregulation burdened public companies,
borrowers would have had no place to go without the deregulation around
syndication and solicitation in the private credit markets.
23. 2018 Blackstone Investor Day, BLACKSTONE 5 (Sept. 21, 2018),
https://www.blackstone .com/wp-content/uploads/sites/2/2018/10/2018-
blackstone-investor-day-conference_pdfdownload_2.pdf.
24. Blackstone Life Sciences (BXLS), BLACKSTONE,
https://www.blackstone.com/our-businesses/life-sciences/.
25. Tuch, supra note 1, at 315, 343; Shawn Tully, How Blackstone
Became the World’s Biggest Corporate Landlord, FORBES (Feb. 17, 2020),
https://fortune.com/2020/02/17/blackstone-commercial-real-estate-
business-brep-breit/.
26. See, e.g., Investor Day, KKR & CO. INC. 16 (Apr. 13, 2021),
https://ir.kkr.com/app/uploads/2021/05/April-2021-Investor-Day.pdf (KKR
lists private equity as just one of its businesses, which include real estate,
infrastructure, credit, and hedge funds); Deutsche Bank Global Financial
Services Conference, CARLYLE 3 (June 2022), https://ir.carlyle .com/static-
files/84a996cd-9328-4772-9914-70af12a4b0df (Carlyle’s business is
organized around private equity, credit, and “investment solutions”);
Investor Presentation, APOLLO GLOBAL MANAGEMENT 3 (2020) (Apollo
describes four groups of assets under management: institutional, retail,
capital markets, and retirement services).
27. Apollo Closes Second Dedicated Infrastructure Fund with More
Than $2.5 Billion in Capital Commitments, APOLLO GLOBAL MANAGEMENT
(Jan. 6, 2022), https://www.apollo .com/media/press-releases/2022/01-06-
2022-130444186.
28. Health Care Growth, KKR, https://www.kkr.com/businesses/health-
care-growth.
29. Id.
30. Davies, supra note 4. See, e.g., Jeanine Prezioso, Blackstone Eyes
More Funding for Prop Trading, REUTERS (Sept. 28, 2010),
https://www.reuters.com/article/us-blackstone-creditsuisse/blackstone-
eyes-more-funding-for-prop-trading-idUSTRE68R3YH 20100928; Steve
Eder & Megan Davies, Goldman Proprietary Traders Jump to KKR,
REUTERS (Oct. 21, 2010), https://www.reuters.com/article/us-kkr-
goldman/goldman-proprietary-traders-jump-to-kkr-
idUSTRE69K3A020101021.
31. Tuch, supra note 1, at 315, 344.
32. See, e.g., The Carlyle Group Completes Acquisition of Diversified
Global Asset Management, CARLYLE GROUP (Feb. 4, 2014),
https://www.carlyle.com/media-room/news-release-archive/carlyle-group-
completes-acquisition-diversified-global-asset (Carlyle describes itself as
an “alternative asset manager”); Ares Management Corporation, ARES,
https://www.aresmgmt.com/ (Ares describes itself as an “alternative asset
manager”).
33. Tuch, supra note 1, at 315, 337–349.
34. Id. at 341.
35. Id. at 349.
36. William Alden, A Mad Scramble for Young Bankers, N.Y. TIMES
(July 5, 2014), https://www.nytimes.com/2014/07/06/business/wall-street-
banks-and-private-equity-firms-compete-for-young-talent.html (Private
equity firms pay “around $300,000 a year, including salary and bonus,
roughly double what a second-year banker might earn at Goldman.”).
 37. Tomi Kilgore, Goldman Sachs CEO David Solomon Total
Compensation Slipped 3% to Below $24 Million in 2020, MKT. WATCH
(Mar. 19, 2021), https://www.marketwatch.com/story/goldman-sachs-ceo-
david-solomon-total-compensation-slipped-3-to-below-24-million-in-2020-
2021-03-19.
38. Blackstone (BX) CEO Receives 20% Hike in 2020 Compensation,
YAHOO!, https://www.yahoo.com/now/blackstone-bx-ceo-receives-20-
165704021.html (“Blackstone’s president, Jonathan Gray received a total
pay package of $216.1 million. This consisted of $123.2 million in
compensation and $92.8 million in dividends.”).
39. Mark Vandevelde, How Private Equity Came to Resemble the
Sprawling Empires It Once Broke Up, FIN. TIMES (Oct. 15, 2021),
https://www.ft.com/content/2c56a7da-6435-469c-90d8-28e966f20379.9.
40. The CEOs of the largest full-service investment banks are Jamie
Dimon (JP Morgan Chase), David Solomon (Goldman Sachs), Brian
Moynihan (BofA Securities), Jamie Gorman (Morgan Stanley), and Jane
Fraser (Citigroup). Jamie Dimon is worth an estimated $1.9 billion. Jamie
Dimon, FORBES, https://www.forbes.com/profile/jamie-dimon/?
sh=6c4e32135063. None of the rest appear on Forbes’s list of billionaires.
41. Davies, supra note 4.
42. KKR & Co. Inc., Form 425 (June 1, 2009), https://ir.kkr.com/sec-
filings-annual-letters/sec-filings/?attchment=1&secFilingId=38ea3895-
0b6e-47dd-8a6c-f88e8b9c40 b6&format=convpdf.
43. Davies, supra note 4.
44. FACTBOX-Blackstone IPO Reveals Firm’s Financials, REUTERS
(Mar. 22, 2007), https://www.reuters.com/article/blackstone-ipo-
stats/factbox-blackstone-ipo-reveals-firms-financials-
idUSN2239653520070322.
45. BLACKSTONE 2020 LETTER 1 (on file); APOLLO INVESTOR DAY
PRESENTATION 23 (2020) (on file); Apollo Aims to Double Its Asset Under
Management to $1 Trillion by 2026, REUTERS (Oct. 19, 2021),
https://www.reuters.com/business/finance/apollo-aims-double-its-asset-
under-management-1-trillion-by-2026-2021-10-19/.
46. Unless stated otherwise, I refer to life insurance and annuity
companies interchangeably.
 47. Miriam Gottfried, Carlyle Signs New Advisory Deal with Fortitude
Re, WALL ST. J. (Mar. 31, 2022), https://www.wsj.com/articles/carlyle-
signs-new-advisory-deal-with-fortitude-re-11648720800.
48. Katherine Chiglinsky & Heather Perlberg, Blackstone to Buy an
Allstate Life Insurance Business for $2.8 Billion, BLOOMBERG (Jan. 27,
2021), https://www.bloomberg .com/news/articles/2021-01-26/blackstone-
to-buy-an-allstate-life-business-for-2-8-billion#xj4y7vzkg.
49. KKR Closes Acquisition of Global Atlantic Financial Group
Limited, GLOBAL ATLANTIC FINANCIAL GROUP (Feb. 1, 2021),
https://www.globalatlantic.com/news/KKR-closes-acquisition-of-Global-
Atlantic-Financial-Group-Limited.
50. Apollo Completes Merger with Athene and Finalizes Key
Governance Enhancements, APOLLO (Jan. 3, 2022),
https://www.apollo.com/media/press-releases/2022/01-03-2022-
120051006.
51. Alwyn Scott, Analysis: Chasing Yield, U.S. Private Equity Firms
Nudge Up Risk on Insurers, REUTERS (June 1, 2021),
https://www.reuters.com/business/finance/chasing-yield-us-private-equity-
firms-nudge-up-risk-insurers-2021-06-01/.
52. Alexander R. Cochran et al., Insurance Investments: Key
Considerations for Investors in the United States, Europe and Asia,
DEBEVOISE & PLIMPTON (May 2021),
https://www.debevoise.com/insights/publications/2021/05/insurance-
investments-key-considerations-for.
53. Michael J. Mishak, Drinks, Junkets and Jobs: How the Insurance
Industry Courts State Commissioners, WASH. POST (Oct. 2, 2016),
https://www.washingtonpost.com/investigations/drinks-junkets-and-jobs-
how-the-insurance-industry-courts-state-
commissioners/2016/10/02/1069e7a0-6add-11e6-99bf-
f0cf3a6449a6_story.html.
54. Id.
55. See, e.g., Alwyn Scott & David French, U.S. Insurance Asset Sales
Attract New Private Equity Players, Strategies, REUTERS (Feb. 8, 2021),
https://www.reuters.com/article/us-insurance-m-a/u-s-insurance-asset-
sales-attract-new-private-equity-players-strategies-idUSKBN2A811G
(Apollo charges Athene for identifying higher yielding assets).
56. Greg Iacurci, Private Equity Is Buying Up Annuity and Life
Insurance Policies. That May Be Bad for Consumers, CNBC (Apr. 24
2021), https://www.cnbc.com/2021/04/24/private-equity-is-buying-up-
annuity-and-life-insurance-policies.html.
57. Kerry Pechter, Bermuda’s Role in a Changing Annuity Industry,
RETIREMENT INCOME J. (Sept. 10, 2021),
https://retirementincomejournal.com/article/bermudas-role-in-a-changing-
annuity-industry/.
58. Id.; Leslie Scism, Private-Equity Firms Put Retirees’ Annuities in
Higher Risks but Also More Cash, WALL ST. J. (July 1, 2021),
https://www.wsj.com/articles/private-equity-firms-put-retirees-annuities-in-
higher-risks-but-also-more-cash-11625130001.
59. Zachary R. Mider, Apollo-to-Goldman Embracing Insurers Spurs
State Concerns, BLOOMBERG (Apr. 22, 2013),
https://www.bloomberg.com/news/articles/2013-04-22/apollo-to-goldman-
embracing-insurers-spurs-state-concerns#xj4y7vzkg.
60. Id.
61. Miriam Gottfried, A $433 Billion Wall Street Giant Has a
Reputation Problem. It’s Josh Harris’s Job to Fix It., WALL ST. J. (Oct. 31,
2020), https://www.wsj.com/articles/a-433-billion-wall-street-giant-has-a-
reputation-problem-its-josh-harriss-job-to-fix-it-11604116827; Sabrina
Willmer et al., A Brawl Between Billionaire Founders at Apollo Sidelines
One of Its Own, BLOOMBERG (April 30, 2021),
https://www.bloomberg.com/news/articles/2021-04-30/apollo-apo-
billionaire-founders-brawl-shunting-aside-josh-harris; Matthew Goldstein,
Leon Black Leaves Apollo Sooner Than Expected, N.Y. TIMES (Mar. 26,
2021), https://www .nytimes.com/2021/03/22/business/leon-black-
apollo.html.
62. Miriam Gottfried, A $433 Billion Wall Street Giant Has a
Reputation Problem. It’s Josh Harris’s Job to Fix It., WALL ST. J. (Oct. 31,
2020), https://www.wsj.com/articles/a-433-billion-wall-street-giant-has-a-
reputation-problem-its-josh-harriss-job-to-fix-it-11604116827.
 63. Daniel Davies, Morning Coffee: 28 Year-Olds Working 20 Hour
Days for $450k Salaries Decide to Quit. The Biggest Egomaniacs in
Banking, EFINANCIALCAREERS (Mar. 18, 2021),
https://www.efinancialcareers.com/news/2021/03/working-hours-private-
equity.
64. Willmer et al., supra note 61.
65. Matthew Goldstein & Steve Eder, What Jeffrey Epstein Did to Earn
$158 Million from Leon Black, NEW YORK TIMES (Jan. 26, 2021),
https://www.nytimes.com/2021/01/26/business/jeffrey-epstein-leon-black-
apollo.html; Sabrina Willmer & Miles Weiss, Apollo Co-Founder Harris
Steps Back After Missing Out on CEO, BLOOMBERG (May 20, 2021),
https://www.bloomberg.com/news/articles/2021-05-20/apollo-co-founder-
harris-stepping-back-after-missing-out-on-ceo#xj4y7vzkg.
66. Matthew Goldstein et al., The Billionaire Who Stood by Jeffrey
Epstein, N.Y. TIMES (Oct. 13, 2020),
https://www.nytimes.com/2020/10/12/business/leon-black-jeffrey-
epstein.html; Memorandum from Dechert LLP to Apollo Conflicts
Committee (Jan. 22, 2021),
https://www.sec.gov/Archives/edgar/data/1411494/000119312521016405/d
118102dex991.htm.
67. @GuzelGanieva3, TWITTER, https://twitter.com/guzelganieva3?
lang=en; Reuters, Woman’s Lawsuit Accuses Leon Black of Defamation,
Violent Behavior, CNBC (June 2, 2021),
https://www.cnbc.com/2021/06/02/womans-lawsuit-accuses-leon-black-of-
defamation-violent-behavior.html.
68. Miriam Gottfried & Leslie Scism, Apollo Reabsorbs Athene in All-
Stock Deal That Values Firm at $11 Billion, WALL ST. J. (Mar. 8, 2021),
https://www.wsj.com/articles/apollo-strikes-11-billion-all-stock-merger-
with-athene-11615211824.
69. Athene Holding Ltd., Athene Announces $4.9 Billion Pension Risk
Transfer Transaction with Lockheed Martin, CISION (Aug. 3, 2021),
https://www.prnewswire.com/news-releases/athene-announces-4-9-billion-
pension-risk-transfer-transaction-with-lockheed-martin-301347561.html.
70. Athene Holding Ltd., Athene Completes Significant Pension Risk
Transfer Transaction with JCPenney, CISION (Apr. 1, 2021),
https://www.prnewswire.com/news-releases/athene-completes-significant-
pension-risk-transfer-transaction-with-jcpenney-301261013 .html.
71. Gottfried & Scism, supra note 68.
72. Id.; Paul J. Davies, Apollo Wants to Be a Bit Like Buffett, But It’s
Complicated, WASH. POST (Nov. 1, 2021),
https://www.washingtonpost.com/business/apollo-wants-to-be-a-bit-like-
buffett-but-its-complicated/2021/10/29/42677550-387e-11ec-9662-
399cfa75efee_story.html.
73. Tom Gober, http://tomgober.com/.
74. Email with Tom Gober, forensic accountant (Mar. 8, 2022).
75. Interview with Tom Gober, forensic accountant (Feb. 17, 2022).
76. Email with Tom Gober, supra note 74.
77. Guaranty Funds Safeguard Consumers When Insurance Companies
Fail, NATIONAL CONFERENCE OF INSURANCE GUARANTY FUNDS (Oct. 10,
2018), https://www.ncigf.org/about-us/guaranty-funds-safeguard-
consumers-when-insurance-companies-fail/.
78. John Pitlosh, Are You Protected if Your Insurance Company Goes
Belly-Up?, INVESTOPEDIA (Aug. 31, 2021),
https://www.investopedia.com/articles/insurance/09/insurance-company-
guarantee-fund.asp.
79. See Miriam Gottfried, Blackstone, Other Large Private-Equity
Firms Turn Attention to Vast Retail Market, WALL ST. J. (June 7, 2022),
https://www.wsj.com/articles/blackstone-other-large-private-equity-firms-
turn-attention-to-vast-retail-market-11654603201.
80. Andrew Ackerman, Labor Nominee Scalia Earned More Than $6
Million as Corporate Law Partner, WALL ST. J. (Aug. 30, 2019),
https://www.wsj.com/articles/labor-nominee-scalia-earned-more-than-6-
million-as-corporate-law-partner-11567179475.
81. Noam Scheiber, Trump’s Labor Pick Has Defended Corporations,
and One Killer Whale, N.Y. TIMES (July 19, 2019),
https://www.nytimes.com/2019/07/19/business/economy/eugene-scalia-
labor-lawsuits.html.
82. Ackerman, supra note 80.
83. Eyal Press, Trump’s Labor Secretary Is a Wrecking Ball Aimed at
Workers, NEW YORKER (Oct. 19, 2020),
https://www.newyorker.com/magazine/2020/10/26/trumps-labor-secretary-
is-a-wrecking-ball-aimed-at-workers (“This fall, however, OSHA informed
employers that they no longer have to report COVID-19 hospitalizations
unless an employee was admitted within twenty-four hours of a workplace
exposure—a highly unlikely scenario, given that symptoms are usually
delayed.”).
84. Sarah Chaney, Labor Secretary Eugene Scalia Opposes Extension of
Extra $600 in Unemployment Benefits, WALL ST. J. (June 9, 2020),
https://www.wsj.com/articles/labor-secretary-eugene-scalia-opposes-
extension-of-extra-600-in-unemployment-benefits-11591728182.
85. Ben Protess & Matthew Goldstein, Trump’s S.E.C. Nominee
Disclosure Offers Rare Glimpse of Clients and Conflicts, N.Y. TIMES (Mar.
8, 2017), https://www.nytimes .com/2017/03/08/business/dealbook/sec-
nominee-jay-clayton-client-list-conflicts-interest .html.
86. Dave Michael & Liz Hoffman, SEC Pick Jay Clayton Is a 180 from
Chairman Mary Jo White, WALL ST. J. (Jan. 4, 2017),
https://www.wsj.com/articles/president-elect-trump-to-nominate-jay-
clayton-securities-and-exchange-commission-chairman-1483545999;
About Us, PHILADELPHIA CRICKET CLUB,
https://www.philacricket.com/about-us (Oct. 7, 2022).
87. Joseph Walter Clayton, Executive Branch Personnel Public
Financial Disclosure Report (OGE Form 278e) 2 (Mar. 10, 2017),
https://s3.documentcloud.org/documents/4388156/Jay-Clayton-Financial-
Disclosure.pdf (Jay Clayton was directly invested in funds from Apollo,
Warburg Pincus, TPG, Bain, Centerbridge Hellman & Friedman, and
Thoma Bravo).
88. Dave Michaels, SEC Chair Nominee Clayton’s Ethics Report
Reveals Range of Possible Conflicts, WALL ST. J. (Mar. 8, 2017),
https://www.wsj.com/articles/sec-chair-nominee-claytons-ethics-report-
reveals-range-of-possible-conflicts-1488988744.
89. Tom Dreisbach, Under Trump, SEC Enforcement of Insider Trading
Dropped to Lowest Point in Decades, NPR (August 14, 2020),
https://www.npr.org/2020/08/14/901862355/under-trump-sec-enforcement-
of-insider-trading-dropped-to-lowest-point-in-decade.
90. Id.
 91. Mark Schoeff Jr., Clayton Wants Retirement Investors to Have More
Access to Private Funds, INV. NEWS (Apr.9, 2019),
https://www.investmentnews.com/clayton-wants-retirement-investors-to-
have-more-access-to-private-funds-79000.
92. Id.
93. Chris Cumming, U.S. Labor Department Allows Private Equity in
401(k) Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-
labor-department-allows-private-equity-in-401-k-plans-11591229396;
Warren Rojas, Private Equity Cracks 401(k)s with Teamwork, Help from
D.C. Firm, BLOOMBERG TAX (June 19, 2020), https://news
.bloombergtax.com/crypto/private-equity-cracks-401ks-with-teamwork-
help-from-d-c-firm?context=article-related (Bloomberg reports that
Clayton “len[t] his support” to advocate for the information letter).
94. Chris Cumming, U.S. Labor Department Allows Private Equity in
401(k) Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-
labor-department-allows-private-equity-in-401-k-plans-11591229396.
95. Private Equity Trend Report 2020, PRICEWATERHOUSECOOPERS
(2020), https://www
.mergermarket.com/assets/42033_PETR_2020_200225_SCREEN.pdf.
96. Chris Cumming, U.S. Labor Department Allows Private Equity in
401(k) Plans, WALL ST. J. (June 3, 2020), https://www.wsj.com/articles/u-s-
labor-department-allows-private-equity-in-401-k-plans-11591229396.
97. Melissa Mittelman, Schwarzman’s “Dream” Tested as Private
Equity Eyes Your Nest Egg, BLOOMBERG (Apr. 20, 2017),
https://www.bloomberg.com/news/articles/2017-04-20/schwarzman-s-
dream-tested-as-private-equity-eyes-your-nest-egg.
98. What They Are Saying: Expanding Access to Private Equity Will
Strengthen Retirement Security for Millions of Americans, AM. INV.
COUNCIL (June 10, 2020), https://www .investmentcouncil.org/what-they-
are-saying-expanding-access-to-private-equity-will-strengthen-retirement-
security-for-millions-of-americans/.
99. Id.
100. David Bradley Isenberg, Wall Street Is Looting the American
Retirement System. The Trump Administration Is Helping, ROLLING STONE
(Aug. 23, 2020), https://www.rollingstone .com/politics/politics-
features/retirement-private-equity-trump-administration-wall-street-
1047576/.
101. Id.
102. Jay Clayton (Attorney), WIKIPEDIA,
https://en.wikipedia.org/wiki/Jay_Clayton_(attorney).
103. Noor Zainab Hussain & Chibuike Oguh, Leon Black Leaves Apollo
Executive Roles After Epstein Investigation, REUTERS (Mar. 22, 2021),
https://www.reuters.com/business/apollo-names-ex-sec-chief-clayton-non-
executive-chairman-2021-03-22/.
104. Former U.S. Secretary of Labor Eugene Scalia Returns to Gibson
Dunn, GIBSON DUNN (Mar. 30, 2021),
https://www.gibsondunn.com/former-u-s-secretary-of-labor-eugene-scalia-
returns-to-gibson-dunn/.
105. Eugene Scalia, Biden’s Policies Will Hurt America’s Laborers in
the Long Run, WALL ST. J. (Sept. 2, 2021),
https://www.wsj.com/articles/american-laborers-unemployment-trump-
biden-jobs-11630597010.
106. Daniel Rasmussen & Greg Obenshain, High-Yield Was Oxy.
Private Credit Is Fentanyl., INSTITUTIONAL INV. (Jan. 28, 2020),
https://www.institutionalinvestor.com/article/b1k369v2lg69qt/High-Yield-
Was-Oxy-Private-Credit-Is-Fentanyl.
107. Tuch, supra note 1 at 357. (“Accordingly, if a firm’s funds suffered
significant losses or failed, the firm’s management fees would dry up,
cutting off its primary revenue source. It would lose its (typically modest)
investments in those funds, but the bulk of the funds’ losses would be borne
by outside investors and creditors, rather than by the firm.”).
108. William J. Marx & Julie K. Stapel, Department of Labor Waves
Caution Flag for 401(k) Private Equity Investing, MORGAN LEWIS (Jan. 4,
2022), https://www.morganlewis
.com/blogs/mlbenebits/2022/01/department-of-labor-waves-caution-flag-
for-401k-private-equity-investing.
109. Austin R. Ramsey, Private Equity Firms Are Winning the Fight for
Your 401(k), BLOOMBERG L. (Jan. 31, 2022),
https://news.bloomberglaw.com/daily-labor-report/private-equity-firms-are-
winning-the-fight-for-your-401k.
 CHAPTER 7: CAPTIVE AUDIENCE
1. Marcus Henderson, US Prison Commissary Giants Are Set to Merge,
SAN QUENTIN NEWS (Jan. 31, 2017), https://sanquentinnews.com/us-prison-
commissary-giants-merge/; H.I.G. Capital Acquires Trinity Services Group,
MERGR, https://mergr.com/h.i.g.-capital-acquires-trinity-services-group.
2. Aventiv, PLATINUM EQUITY, https://www.platinumequity.com/our-
portfolio/portfolio/2017/aventiv.
3. David Shepardson, Inmate Calling Services Companies Drop Merger
Bid After U.S. Regulatory Opposition, REUTERS (Apr. 2, 2019),
https://www.reuters.com/article/us-fcc-inmate-merger/inmate-calling-
services-companies-drop-merger-bid-after-u-s-regulatory-opposition-
idUSKCN1RE2L7.
4. Global Tel Link Acquired by American Securities, CRUNCHBASE,
https://www .crunchbase.com/acquisition/american-securit-acquires-
global-tel-link--ddf38327.
5. Wellpath, H.I.G. CAPITAL,
https://higcapital.com/portfolio/company/403.
6. Matt Blois, Investment Firm Acquires Corizon, NASHV. POST (June
30, 202), https://www.nashvillepost.com/investment-firm-acquires-
corizon/article_eeba5a0a-486c-5779-886c-2d50b1befc5a.html.
7. 3M Sells Israeli Subsidiary to Apax for $200M, GLOBES (Oct. 10,
2017), https://en .globes.co.il/en/article-3m-sells-israeli-subsidiary-to-apax-
for-200m-1001207560.
8. Release Cards, PRISON POLICY INITIATIVE,
https://www.prisonpolicy.org/releasecards/.
9. Aventiv, supra note 2.
10. Pay-per-Minute E-Readers in West Virginia Prisons Jeopardize
Access to Literature, PEN AMERICA (Nov. 22, 2019), https://pen.org/press-
release/pay-per-minute-e-readers-in-west-virginia-prisons-jeopardize-
access-to-literature/.
11. Eli Hager, Debtors’ Prisons, Then and Now: FAQ, THE MARSHALL
PROJECT (Feb. 24, 2015),
https://www.themarshallproject.org/2015/02/24/debtors-prisons-then-and-
now-faq.
12. Convict Leasing, WIKIPEDIA,
https://en.wikipedia.org/wiki/Convict_leasing.
13. Recovering Correctional Costs Through Offender Fees, NATIONAL
INSTITUTE OF JUSTICE 1 (June 1990),
https://www.ojp.gov/pdffiles1/Digitization/125084NCJRS .pdf.
14. Steven J. Jackson, Ex-Communication: Competition and Collusion
in the U.S. Prison Telephone Industry, CRITICAL STUD. IN MEDIA COMMC’NS
263, 267 (2005).
15. Id. at 268; Stephen Raher, The Company Store and the Literally
Captive Market: Consumer Law in Prisons and Jails, 17 HASTINGS RACE &
POVERTY L. J. 3, 24 (2020) (“The Commission’s involvement with the
industry dates back to 1993, when ICS carriers asked the FCC to deregulate
payphone rates in correctional facilities. The FCC ultimately granted the
request mere days before the entire telecommunications industry changed
with the enactment of the Telecommunications Act of 1996.”).
16. Jackson, supra note 14, at 268.
17. Id.
18. H.I.G. Capital Acquires Evercom Holdings, Inc.—Forms Securus
Technologies, Inc., H.I.G. CAPITAL (Sept. 10, 2004),
https://higcapital.com/news/release/h.i.g.-capital-acquires-evercom-
holdings-inc.-forms-securus-technologies-inc.
19. Castle Harlan Acquires Securus Technologies, CASTLE HARLAN
(Nov. 10, 2011), http://castleharlan.com/news/item/194-castle-harlan-
acquires-securus-technologies.
20. Greg Roumeliotis, Platinum Equity Nears Deal to Buy Prison
Phone Company Securus: Sources, REUTERS (May 16, 2017),
https://www.reuters.com/article/us-securus-tech-m-a-
abrypartners/platinum-equity-nears-deal-to-buy-prison-phone-company-
securus-sources-idUSKCN18C2FU.
21. Aventiv, supra note 2.
22. Global Tel Link Acquired by American Securities, supra note 4.
23. Davide Scigliuzzo, HIG Plans Spinoff of Prison Phone Operator
After Failed Merger, BLOOMBERG (Jan. 24, 2020),
https://www.bloomberg.com/news/articles/2020-01-24/hig-plans-spinoff-
of-prison-phone-operator-after-failed-merger?leadSource=uverify
%20wall.
24. See Tom McLaughlin, “Families Die by a Thousand Cuts.”
Companies Like JPay Make Big Bucks Billing Florida Inmates for
Essentials, NW. FLA. NEWS (May 5, 2022),
https://www.nwfdailynews.com/story/news/2021/12/22/companies-like-
jpay-make-big-bucks-billing-florida-inmates-essentials/5469115001/.
25. Peter Wagner & Alexi Jones, The Biggest Priorities for Prison and
Jail Phone Justice in 40 States, PRISON POLICY INITIATIVE (Sept. 11, 2019),
https://www.prisonpolicy.org/blog/2019/09/11/worststatesphones/.
26. Tim Requarth, How Private Equity Is Turning Public Prisons into
Big Profits, NATION (Apr. 30, 2019),
https://www.thenation.com/article/archive/prison-privatization-private-
equity-hig/.
27. Timothy Williams, The High Cost of Calling the Imprisoned, N.Y.
TIMES (Mar. 30, 2015), https://www.nytimes.com/2015/03/31/us/steep-
costs-of-inmate-phone-calls-are-under-scrutiny.html.
28. Omari Sankofa II & Angie Jackson, Detroit Pistons Owner Tom
Gores Speaks About Controversy over Securus, DETROIT FREE PRESS (Feb.
6, 2021), https://www.freep .com/story/sports/nba/pistons/2021/02/04/tom-
gores-detroit-pistons-securus-prison-phone-calls/4139871001/.
29. Id.
30. Colin Lecher, Criminal Charges, VERGE,
https://www.theverge.com/a/prison-phone-call-cost-martha-wright-v-
corrections-corporation-america (May 11, 2016).
31. Id.
32. Saneta deVuono-powell et al., Who Pays? The True Cost of
Incarceration on Families, ELLA BAKER CENTER, FORWARD TOGETHER,
RESEARCH ACTION DESIGN 30 (2015), http://whopaysreport.org/wp-
content/uploads/2015/09/Who-Pays-FINAL.pdf.
33. Requarth, supra note 26.
34. Tom Gores, WIKIPEDIA, https://en.wikipedia.org/wiki/Tom_Gores;
Buyout Buccaneer, FORBES (July 9, 2001),
https://www.forbes.com/forbes/2001/0723/065.html?sh =1716ef9562f9.
 35. Tom Gores, supra note 34; Steven Bertoni, Meet Tom Gores: The
Detroit Piston’s New Billionaire Boss, FORBES (June 3, 2011),
https://www.forbes.com/sites/stevenbertoni/2011/06/03/meet-tom-gores-
the-detroit-pistons-new-billionaire-boss/?sh=4a380 e52069c.
36. Steven Bertoni, Ready to Play, FORBES (Oct. 2, 2009),
https://www.forbes.com/forbes/2009/1019/forbes-400-rich-list-09-buyout-
firms-gores-ready-to-play.html?sh =6357fc611464.
37. McGraw-Hill, PLATINUM EQUITY,
https://www.platinumequity.com/mcgraw-hill.
38. Jostens, PLATINUM EQUITY, https://www.platinumequity.com/jostens.
39. Lisa Bannon, Gores Brothers Jockey for Same Deals in Grown-Up
Game of Sibling Rivalry, WALL ST. J. (Apr. 9, 2002),
https://www.wsj.com/articles/SB1018299410443735120; Jason Dean, Tom
Gores: Balancing Family, Business, and the Detroit Pistons, CSQ (July 9,
2011), https://csq.com/2011/07/tom-gores-balancing-family-business-
detroit-pistons/#.YW ShzRDMIUQ.
40. Bianca Barragan, Ridiculous Holmby Hills Spec House Now
Belongs to Detroit Pistons Owner Tom Gores, CURBED L.A. (Oct. 24,
2016), https://la.curbed.com/2016/10/24/13388372/detroit-pistons-tom-
gores-la-spec-house.
41. Id.
42. Id.; Neal J. Leitereg, Tom Gores Buys Holmby Hills Spec House in
$100-Million Deal Involving Multiple Properties, L.A. TIMES (Oct. 21,
2016), https://www.latimes.com/business/realestate/hot-property/la-fi-
hotprop-100-million-home-sale-los-angeles-20161021-snap-story.html.
43. Roumeliotis, supra note 20.
44. See Jabari Young, Detroit Pistons Owner Tom Gores Has a New
Perspective as Team Tries to Restore Its Brand and Culture, CNBC (Oct. 8,
2021), https://www.cnbc.com/2021/10/08/pistons-owner-tom-gores-has-a-
new-perspective-as-team-enters-restoration-process.html.
45. Vince Ellis, Pistons Owner Gores to Taise $10M for Flint Crisis,
DETROIT FREE PRESS (Jan. 28, 2016),
https://www.freep.com/story/sports/nba/pistons/2016/01/28/flint-water-
crisis-tom-gores/79452146/.
46. Young, supra note 44.
 47. Statement from Tom Gores and the Detroit Pistons, NBA (June 2,
2020), https://www.nba.com/pistons/news/statement-tom-gores-and-
detroit-pistons.
48. Interview with Bianca Tylek, executive director, Worth Rises (Oct.
26, 2021).
49. Letter from Bianca Tylek, director, Corrections Accountability
Project, to commissioner’s secretary, FCC (July 16, 2018),
https://ecfsapi.fcc.gov/file/10717225630127/2018.07.16%20-
%20Corrections%20Accountability%20Project%2018-193%20Comment
%20.pdf.
50. Chairman Pai Statement on Withdrawal of Inmate Calling Merger,
FCC (Apr. 2, 2019), https://www.fcc.gov/document/chairman-pai-
statement-withdrawal-inmate-calling-merger.
51. Stephen Caruso, State Employee Retirement Board Balks at
Investing in Prison-Linked Private Equity Firm, PA. CAPITAL-STAR (Sept.
27, 2019), https://www.penncapital-star.com/blog/state-employee-
retirement-board-balks-at-investing-in-prison-linked-private-equity-firm/.
52. Id.
53. Id.
54. Shiri, Tom Gores Resigns from Board of the LACMA, CANYON NEWS
(Oct. 11, 2020), https://www.canyon-news.com/tom-gores-resigns-from-
the-board-of-the-lacma/134727.
55. @scavendish, TWITTER (Dec. 20, 2020),
https://twitter.com/scavendish/status/1340699398242709504.
56. Eric Woodyard, As Nonprofit Group Pushes for Him to Sell Team,
Detroit Pistons Owner Tom Gores Says He’s Committed to Changing
System, but Needs Time, ESPN (Dec. 26, 2020),
https://www.espn.com/nba/story/_/id/30602718/as-nonprofit-group-pushes-
sell-team-detroit-pistons-owner-tom-gores-says-committed-changing-
system-needs.
57. Sankofa II & Jackson, supra note 28.
58. Victory: San Francisco Makes Jail Phone Calls Free and Eliminates
Jail Commissary Markups, WORTH RISES (June 21, 2019),
https://worthrises.org/pressreleases/2019/6/12/victory-san-francisco-makes-
jail-phone-calls-free-and-eliminates-jail-commissary-markups.
 59. Campaigns, WORTH RISES, https://worthrises.org/ourcampaigns.
60. Connecticut Makes History as First State to Make Prison Calls
Free, WORTH RISES (June 16, 2021),
https://worthrises.org/pressreleases/connecticut-makes-history-as-first-
state-to-make-prison-calls-free.
61. Families of Prisoners Sue Nation’s Largest Providers of Inmate
Calling Services for Fixing and Lying About Services, JUSTICE CATALYST
LAW (July 20, 2021), https://catalystlaw .org/2020/06/30/prison-telecom-
press-release/.
62. Keaton Ross, “Sued Every Way and Sunday.” New Prison Phone
Provider Has Troubled History, OKLAHOMA WATCH (Aug. 27, 2020),
https://oklahomawatch.org/2020/08/27/sued-every-way-and-sunday-new-
prison-phone-provider-has-troubled-history/.
63. Id.; Brigette Honaker, Securus Prison Call Recording Class Action
Settlement Gets OK, TOP CLASS ACTIONS (June 22, 2020),
https://topclassactions.com/lawsuit-settlements/jail-prison/securus-prison-
call-recording-class-action-settlement-gets-ok/ (The defendants admitted
no wrongdoing as part of the lawsuit); Final Approval Order and Judgment,
Crane v. Corrections Corporation of America et al., No. 4:16-cv-00947
(W.D. Mo. Dec. 23, 2020), ECF No. 275; Largest Detention
Communications Companies, NATIONAL ASSOCIATION OF CRIMINAL
DEFENSE LAWYERS, https://www.nacdl.org/getattachment/da45649f-b63c-
4fbd-a155-c5243592fecb/detention-facilities-communication-companies
.pdf; Karl Bode, Securus Quietly Settles Lawsuit over Illegally Spying on
Inmate Attorney Conversations, TECHDIRT (June 1, 2020),
https://www.techdirt.com/2020/06/01/securus-quietly-settles-lawsuit-over-
illegally-spying-inmate-attorney-conversations/.
64. Dave Abel Named Chief Executive Officer of Aventiv Technologies
and Its Corrections Subsidiary Securus Technologies, CISION (Jan. 13,
2020), https://www.prnewswire.com/news-releases/dave-abel-named-chief-
executive-officer-of-aventiv-technologies-and-its-corrections-subsidiary-
securus-technologies-300985675.html.
65. Sankofa II & Jackson, supra note 28.
66. Eric Woodyard, As Nonprofit Group Pushes for Him to Sell Team,
Detroit Pistons Owner Tom Gores Says He’s Committed to Changing
System, but Needs Time, ESPN (Dec. 26, 2020),
https://www.espn.com/nba/story/_/id/30602718/as-nonprofit-group-pushes-
sell-team-detroit-pistons-owner-tom-gores-says-committed-changing-
system-needs.
67. Tyler J. Davis, Why Detroit Pistons’ Tom Gores Says It’s a
“Blessing” to Own Prison Telecom Firm, DETROIT FREE PRESS (Dec. 28,
2020), https://www.freep.com/story/sports/nba/pistons/2020/12/28/tom-
gores-detroit-pistons-securus-worth-rises/4050901001/.
68. Woodyard, supra note 66.
69. Id.
70. Aventiv, supra note 2.
71. Wright, et al. v. Corrections Corp et al., No. 1:00-cv-293 (D.D.C.
Feb. 16, 2000).
72. Lecher, supra note 30.
73. Interview with Mignon Clyburn, former FCC commissioner (Oct.
29, 2021).
74. Id.
75. Id.
76. Id.
77. Requarth, supra note 26.
78. Letter from Larry D. Amerson, president of the National Sheriff’s
Association to Marlene H. Dortch, secretary, FCC (Mar. 25, 2013),
https://www.sheriffs.org/sites/default/files/1.%202013.03.25%20NSA%20
Comments.pdf.
79. Barbara Koeppel, The Prison Phone Rip-Off, WASH. SPECTATOR
(July 5, 2021), https://washingtonspectator.org/the-prison-phone-rip-off/;
Corporate Partnership Information, NATIONAL SHERIFF’S ASSOCIATION,
https://www.sheriffs.org/partners/corporate-partnership-information.
80. Lecher, supra note 30.
81. Ann E. Marimow, FCC Made a Case for Limiting Cost of Prison
Phone Calls. Not Anymore., WASH. POST (Feb. 5, 2017),
https://www.washingtonpost.com/local/public-safety/fcc-made-a-case-for-
limiting-cost-of-prison-phone-calls-not-anymore/2017/02/04/9306fbf8-
e97c-11e6-b82f-687d6e6a3e7c_story.html.
 82. Kate Rose Quandt, Lawsuit Reveals How Tech Companies Profit off
the Prison -Industrial Complex, THINKPROGRESS (Feb. 9, 2018),
https://archive.thinkprogress.org/prison-technology-companies-inmates-
9d4242805363/.
83. Shepardson, supra note 3; Memorandum Opinion and Order, In the
Matter of Joint Application of Securus Investment Holdings, LLC, No. 17-
126 (FCC Oct. 30, 2017).
84. Ajit Pai, LINKEDIN, https://www.linkedin.com/in/ajit-pai-
bb014816a/.
85. Interview with Mignon Clyburn, supra note 73.
86. Marie Feyche, FCC Approves Plan to Lower Interstate and
International Jail and Prison Phone Call Rates, JURIST (May 23, 2021),
https://www.jurist.org/news/2021/05/fcc-approves-plan-to-lower-interstate-
and-international-jail-and-prison-phone-call-rates/.
87. Harper Neidig, Court Strikes Down FCC Caps on In-State Prison
Phone Rates, THE HILL (June 13, 2017),
https://thehill.com/policy/technology/337593-court-strikes-down-in-state-
prison-call-rates/.
88. Marie Feyche, FCC Approves Plan to Lower Interstate and
International Jail and Prison Phone Call Rates, JURIST (May 23, 2021),
https://www.jurist.org/news/2021/05/fcc-approves-plan-to-lower-interstate-
and-international-jail-and-prison-phone-call-rates/.
89. Id.
90. Duckworth, Portman, Booker, Schatz Introduce Bipartisan Bill to
Ensure Just and Reasonable Phone Rates in Criminal Justice System,
OFFICE OF SENATOR TAMMY DUCKWORTH (May 10, 2021),
https://www.duckworth.senate.gov/news/press-releases/duckworth-port
man-booker-schatz-introduce-bipartisan-bill-to-ensure-just-and-reasonable-
phone-rates-in-criminal-justice-system.
91. Interview with Mignon Clyburn, supra note 73.
92. Id.
93. Léon Digard et al., VERA INST. OF JUST., CLOSING THE DISTANCE: THE
IMPACT OF VIDEO VISITS IN WASHINGTON STATE PRISONS (2017),
https://www.vera.org/downloads/publications/The-Impact-of-Video-Visits-
on-Washington-State-Prisons.pdf.
 94. Wendy Sawyer, How Much Do Incarcerated People Earn in Each
State?, PRISON POLICY INITIATIVE (Apr. 10, 2017),
https://www.prisonpolicy.org/blog/2017/04/10/wages/.
95. Securus Ends Its Ban on In-Person Visits, Shifts Responsibility to
Sheriffs, PRISON POLICY INITIATIVE (May 6, 2015),
https://www.prisonpolicy.org/blog/2015/05/06/securus-ends-ban/ (70% of
the contracts the Prison Policy Initiative reviewed had terms saying that
“[f]or non-professional visitors, Customer will eliminate all face to face
visitation through glass or otherwise at the Facility.”).
96. Natasha Haverty, Video Calls Replace In-Person Visits in Some
Jails, NPR (Dec. 5, 2016),
https://www.npr.org/2016/12/05/504458311/video-calls-replace-in-person-
visits-in-some-jails.
97. Id.
98. Securus Ends Its Ban on In-Person Visits, Shifts Responsibility to
Sheriffs, PRISON POLICY INITIATIVE (May 6, 2015),
https://www.prisonpolicy.org/blog/2015/05/06/securus-ends-ban/.
99. See, e.g., Teresa Mathew, How Jails Are Replacing Visits with Video,
THE APPEAL (Apr. 22, 2019), https://theappeal.org/how-jails-are-replacing-
visits-with-video/ (discussing two Missouri counties that ended in-person
visits).
100. Nate Raymond, Private Equity Firm HIG Capital Settles Fraud
Case for $20 Million, REUTERS (Oct. 14, 2021),
https://www.reuters.com/legal/government/private-equity-firm-hig-capital-
settles-fraud-case-20-million-2021-10-14/.
101. David M. Reutter, Michigan’s New Prison Food Service Provider
Failing to Meet Contract Terms, PRISON LEGAL NEWS (Jan. 8, 2018),
https://www.prisonlegalnews.org/news/2018/jan/8/michigans-new-prison-
food-service-provider-failing-meet-contract-terms/.
102. Paul Egan, More Problems for State’s Prison Food Contractor:
Maggots Found in Chow Served to Inmates, DETROIT FREE PRESS (Nov. 6,
2017),
https://www.freep.com/story/news/local/michigan/2017/11/06/maggots-
food-cotton-prison-jackson-michigan-trinity-services/825834001/ (Trinity
declined to comment); Michigan Prison Food Worker Says He Was Fired
for Refusing to Serve Rotten Potatoes, CBS NEWS DETROIT (Aug. 25,
2017), https://www.cbsnews.com/detroit/news/rotten-prison-potatoes/.
103. Paul Egan, Prison Food Worker: “I Was Fired for Refusing to
Serve Rotten Potatoes,” DETROIT FREE PRESS (Aug. 25, 2017),
https://www.freep.com/story/news/local/michigan/2017/08/25/prison-
trinity-kinross-fired-rotten-potatoes/596849001/ (Trinity did not respond to
a request for comment).
104. Tom Perkins, Michigan’s Failed Effort to Privatize Prison Kitchens
and the Future of Institutional Food, SALON (Aug. 29, 2018),
https://www.salon.com/2018/08/29/michigans-failed-effort-to-privatize-
prison-kitchens-and-the-future-of-institutional-food_partner/ (Trinity did
not respond to a request for comment).
105. Tom Perkins, Something Still Stinks in Michigan and Ohio’s Prison
Kitchens, CLEVE SCENE (Feb. 17, 2016),
https://www.clevescene.com/news/empty-promises-something-still-stinks-
in-michigan-and-ohios-prison-kitchens-4705549.
106. Reutter, supra note 101.
107. Tom Perkins, We Spoke with Michigan Inmates About Rotten Food,
Maggots, and More Prison Kitchen Problems, METRO TIMES (Jan. 18,
2018), https://www.metrotimes.com/food-drink/we-spoke-with-michigan-
inmates-about-rotten-food-maggots-and-more-prison-kitchen-problems-
8686387.
108. Id.
109. Paul Egan, Riot or Reined-In? Prison Officials Disagree on U.P.
Skirmish, DETROIT FREE PRESS (Sept. 20, 2016),
https://www.freep.com/story/news/local/michigan/2016/09/20/disturbance-
kinross-prison-riot/90742082/ (according to the Detroit Free Press, two
issues that motivated the riot were poor food and low wages).
110. Tom Perkins, Michigan’s Failed Effort to Privatize Prison Kitchens
and the Future of Institutional Food, SALON (Aug. 29, 2018),
https://www.salon.com/2018/08/29/michigans-failed-effort-to-privatize-
prison-kitchens-and-the-future-of-institutional-food_partner/.
111. Paul Egan, Prison Worker Fired After Kitchen Sex with Inmate,
WUSA9 (May 11, 2017),
https://www.wusa9.com/article/news/local/michigan/prison-worker-fired-
after-kitchen-sex-with-inmate/69-438865568.
112. April Stevens, MDOC Ends Contract with Private Food Service,
Going Back to State-Run Resources, WZZM13 (Feb. 7, 2018),
https://www.wzzm13.com/article/news/local/michigan/mdoc-ends-
contract-with-private-food-service-going-back-to-state-run-resources/69-
51566592.
113. Perkins, supra note 110.
114. Elizabeth Whitman, Arizona Prison Food Was Labeled “Not for
Human Consumption,” Ex-Inmates Say, PHOENIX NEW TIMES (Sept. 25,
2019), https://www.phoenixnewtimes .com/news/ex-inmates-arizona-
prison-food-was-not-for-human-consumption-11362468.
115. Id. Trinity said in a statement to the Phoenix New Times that “[w]e
have never intentionally bought expired food. Just as in any food service
operation or high end restaurant, on occasion, a vendor may deliver a
product that does not meet our quality standard and in such an instance,
that product is either discarded or returned.”
116. Complaint at 9, Young v. Trinity Services Group, Inc. et al., No.
3:19-cv-2465 (N.D. Oh. Oct. 22, 2019), ECF No. 1 (Trinity largely denied
the allegations, and the litigation remains ongoing); Answer, Young v.
Trinity Services Group, Inc. et al., No. 3:19-cv-2465 (N.D. Oh. Nov. 5,
2019), ECF No. 5.
117. Mark Shenefelt, Maggots, Mold and Dirt Reported in Weber Jail
Food, STANDARD EXAM’R (Jan. 14, 2018), https://www.standard.net/police-
fire/2018/jan/14/maggots-mold-and-dirt-reported-in-weber-jail-food/
(Trinity did not comment).
118. Alan Judd, Jail Food Complaints Highlight Debate over
Outsourcing Public Services, ATLANTA J.-CONST. (Jan. 1, 2015),
https://www.ajc.com/news/public-affairs/jail-food-complaints-highlight-
debate-over-outsourcing-public-services/PpVFFB46k OLExOmv6UX7SJ/
(Trinity said that the company’s dieticians ensure prisoners “the right
product in the right amount and served correctly.”); letter from Sarah
Geraghty, Southern Center for Human Rights, to Sheriff Mitch Ralston,
Gordon County sheriff’s office (Oct. 28, 2014),
https://www.schr.org/files/post/files/SCHR%20to%20Sheriff
%20Ralston%2010%2028%2014.pdf.
119. Judd, supra note 118.
120. See, e.g., Lyons v. Trinity Servs. Grp., Inc., 401 F. Supp. 2d 1290
(S.D. Fla. 2005).
121. See, e.g., Spurling v. Trinity Servs. Grp., Inc., No. 4:19-cv-2872,
2020 WL 1862674, at *2 (N.D. Ohio Apr. 14, 2020).
122. Cradle v. Trinity Food Servs., No. 2:10-cv-1962, 2010 WL
4340336, at *2 (D.S.C. Aug. 9, 2010), Report and Recommendation
Adopted, No. 2:10-cv-01962, 2010 WL 4281790 (D.S.C. Oct. 21, 2010).
123. Wilson v. White, No. 3:19-cv-441HTW, 2020 WL 5163528, at *2
(S.D. Miss. Aug. 2, 2020), Report and Recommendation Adopted, No.
3:19-cv-441, 2020 WL 5121348 (S.D. Miss. Aug. 31, 2020).
124. Est. of Ricardez v. Cty. of Ventura, No. 20-cv-79, 2020 WL
3891460, at *4 (C.D. Cal. June 24, 2020), cert. denied sub nom. Ricardez v.
Cty. of Ventura, No. 20-cv-79, 2020 WL 7862129 (C.D. Cal. Aug. 6, 2020).
125. Steve Coll, The Jail Health-Care Crisis, NEW YORKER (Feb. 25,
2019), https://www.newyorker.com/magazine/2019/03/04/the-jail-health-
care-crisis.
126. Jason Szep, Special Report: U.S. Jails Are Outsourcing Medical
Care—and the Death Toll Is Rising, REUTERS (Oct. 26, 2020),
https://www.reuters.com/article/us-usa-jails-privatization-special-
repor/special-report-u-s-jails-are-outsourcing-medical-care-and-the-death-
toll-is-rising-idUSKBN27B1DH.
127. Coll, supra note 125.
128. Beth Schwartzapfel, How Bad Is Prison Health Care? Depends on
Who’s Watching, MARSHALL PROJECT (Feb. 26, 2018),
https://www.themarshallproject.org/2018/02/25/how-bad-is-prison-health-
care-depends-on-who-s-watching. The litigation in which this was alleged
remains ongoing. Docket, Jensen et al. v. Shinn et al., No. 2:12-cv-601 (D.
Ariz. 2022).
129. Inmate Correctional Healthcare Contract Awarded, ARIZONA
DEPARTMENT OF CORRECTIONS (Jan. 18, 2019),
https://corrections.az.gov/article/inmate-correctional-healthcare-contract-
awarded.
 130. Schwartzapfel, supra note 128.
131. Notice of Impending Death, Parsons v. Ryan, No. 2:12-cv-601 (D.
Ariz. Aug. 29, 2017), ECF No. 2262.
132. Schwartzapfel, supra note 128.
133. AFT, Private Prisons and Investment Risks: How Private Prison
Companies Fuel Mass Incarceration—and How Public Pension Funds Are
at Risk, AMERICAN FEDERATION OF TEACHERS 6 (2020),
https://www.aft.org/sites/default/files/media/2020/private-prisons-invest-
2019-part2.pdf.
134. Kristine Phillips, “Something Is Eating My Brain,” an Inmate
Said. A Lawsuit Claims He Was Left to Die, WASH. POST (Oct. 30, 2017),
https://www.washingtonpost .com/news/post-
nation/wp/2017/10/27/something-is-eating-my-brain-an-inmate-said-a-
lawsuit-says-he-was-left-to-die/.
135. Order Granting Motion for Summary Judgment, Walker et al. v.
Corizon Health, Inc. et al., No. 2:17-cv-2601 (D. Kans. June 3, 2022), ECF
No. 311 (The matter is now on appeal).
136. Marsha McLeod, The Private Option, ATLANTIC (Sept. 12, 2019),
https://www.theatlantic.com/politics/archive/2019/09/private-equitys-grip-
on-jail-health-care/597871/; Mark Lungariello, Controversies Swirl as
Westchester County Jail Considers New Health Care Provider, LOHUD
(Apr. 12, 2019),
https://www.lohud.com/story/news/local/westchester/2019/04/12/westchest
er-county-jail-health-care-correct-care-correct-care-solutions-wellpath-
tennessee-mcnulty/3237201002/.
137. Blake Ellis & Melanie Hicken, Dangerous Jail Births,
Miscarriages, and Stillborn Babies Blamed on the Same Billion Dollar
Company, CNN (May 7, 2019), https://www.cnn
.com/2019/05/07/health/jail-births-wellpath-ccs-invs/index.html; David M.
Reutter, Medical, Mental Health Care Lacking at Florida Jail Despite 43
Years of Court Oversight, PRISON LEGAL NEWS (Dec. 10, 2019),
https://www.prisonlegalnews.org/news/2019/dec/10/medical-mental-
health-care-lacking-florida-jail-despite-43-years-court-oversight/.
138. Coll, supra note 125.
 139. Susan Sharon, Maine State Prison Inmate Files Suit, Says
Hundreds of Inmates Were Denied Hepatitis C Treatment, MAINE PUBLIC
(June 26, 2019), https://www .mainepublic.org/courts-and-crime/2019-06-
26/maine-state-prison-inmate-files-suit-says-hundreds-of-inmates-were-
denied-hepatitis-c-treatment; Susan Sharon, Maine Expands Chronic
Hepatitis C Treatment for Prisoners After Lawsuit Settlement, MAINE
PUBLIC (Oct. 1, 2020), https://www.mainepublic.org/health/2020-10-
01/maine-expands-chronic-hepatitis-c-treatment-for-prisoners-after-
lawsuit-settlement.
140. Letter from Grace Kingman, Office of the Pierce County
Prosecuting Attorney, to Keith Kubik, Kubik Mediation 2 (Mar. 26, 2016),
https://www.documentcloud .org/documents/5978547-Pierce-County-
March-2016-memo-to-CCS.html.
141. Id. at 3.
142. Id.
143. Jury Sides with Pierce County in Jail Health Care Lawsuit,
ASSOCIATED PRESS (Mar. 9, 2019),
https://apnews.com/article/f8f7558ae11c49429515ad7f386aed3a; Blake
Ellis & Melanie Hicken, Jail Heath Care CSS Investigation, CNN (June
25, 2019), https://www.cnn.com/interactive/2019/06/us/jail-health-care-
ccs-invs/ (Correct Care Solutions appealed the decision).
144. See e.g., Sanchez v. Oliver, 995 F.3d 461, 472 (5th Cir. 2021)
(Predecessor to Wellpath had an indemnification clause); Crawford v.
Corizon Health, Inc., No. 17-cv-113, 2019 WL 3208001, at *1 (W.D. Pa.
July 15, 2019) (Corizon had an indemnification clause).
145. For instance, Corizon repeatedly relies on the law firm O’Connor
Kimball, LLP to handle its defense, see, e.g., Rosado v. Aramark et al., No.
2:14cv3033 (E.D. Pa. May 29, 2014); Rodriguez v. Corizon Health, Inc. et
al., No. 2:12cv7250 (E.D. Pa. Dec. 31, 2012), while Wellpath repeatedly
relied on Cassiday Schade LLP; see, e.g., Hall-Adejola v. Will County et
al., No. 1:20-cv-2699 (N.D. Ill. May 4, 2020); Hirsch v. Will County et al.,
No. 1:19-cv-7398 (N.D. Ill. Nov. 7, 2019).
146. HIG Capital’s and Wellpath’s Correctional Healthcare Investment
Risks, PRIVATE EQUITY STAKEHOLDER PROJECT (July 2019),
https://pestakeholder.org/wp-content/uploads/2019/07/HIG-Capitals-
Correctional-Healthcare-Investment-Risks-PESP-070819 .pdf (CMFG was
bought by H.I.G. Capital and eventually merged into Wellpath).
147. Rupert Neate, Welcome to Jail Inc: How Private Companies Make
Money off US Prisons, GUARDIAN (June 16, 2016),
https://www.theguardian.com/us-news/2016/jun/16/us-prisons-jail-private-
healthcare-companies-profit.
148. Order Granting Motion to Dismiss at 2, Bible-Marshall et al. V.
Montgomery County et al., No. 4:20-cv-28 (S.D. Tex. June 1, 2021), ECF
No. 47.
149. Id. at 7.
150. Id.
151. Complaint, Reichert et al., v. Keefe Commissary Network, LLC et
al., No. 3:17-cv-5848 (W.D. Wash. Oct. 20, 2017), ECF No. 1. Keefe
largely initially denied the accusations, though as noted below, it ultimately
settled a portion of the case and agreed to repay a percentage of the fees it
took from prisoners. See Answer by Defendant Keefe Commissary
Network, LLC, Reichert et al., v. Keefe Commissary Network, LLC et al.,
No. 3:17-cv-5848 (W.D. Wash. May 15, 2018), ECF No. 55.
152. Complaint at ¶ 74–75, Reichert et al., v. Keefe Commissary
Network, LLC et al., No. 3:17-cv-5848 (W.D. Wash. Oct. 20, 2017), ECF
No. 1.
153. Id. at ¶ 82–83.
154. Quandt, supra note 82.
155. Unopposed Motion for Approval of Settlement Agreement at 1–2,
Reichert et al. v. Keefe Commissary Network, LLC et al., No. 3:17-cv-5848
(W.D. Wash. June 9, 2022), ECF No. 166.
156. Aaron Gregg, CFPB Orders Prison Banker to Pay $6 Million for
Charging Inmates ‘Unfair’ Fees, WASH. POST (Oct. 19, 2021),
https://www.washingtonpost.com/business/2021/10/19/cfpb-jpay-fine/.
157. Id.
158. An Introduction to Platinum Equity, PLATINUM EQUITY 4 (July
2022), https://www .platinumequity.com/wp-
content/uploads/2022/08/Platinum-Equity-Introduction-July-2022.pdf.

CHAPTER 8: SUING THEIR OWN CUSTOMERS

 1. Complaint, Castellanos v. Mariner Finance, LLC, No. 1:17-cv-3168
(D. Md. Oct. 27, 2017) ECF No. 2.
2. Id.
3. Id.
4. Id.
5. Id.
6. Santoni, Vocci, & Ortega, https://www.svolaw.com/.
7. Motion to Compel Arbitration at 4, Castellanos v. Mariner Fin., LLC,
No. 17-cv-3168 (D. Md. Nov. 3, 2017), ECF No. 7-2.
8. Motion to Compel Arbitration at 15, Castellanos v. Mariner Fin.,
LLC, No. 17-cv-3168 (D. Md. Nov. 3, 2017), ECF No. 7.
9. Opposition to Motion to Compel Arbitration at 5–7, Castellanos v.
Mariner Fin., LLC, No. 17-cv-3168 (D. Md. Nov. 15, 2017), ECF No. 12.
10. Castellanos v. Mariner Fin., LLC, No. 17-cv-3168, 2018 WL
488725, at *1 (D. Md. Jan. 19, 2018).
11. Marginal Order Granting Stipulation of Dismissal with Prejudice,
Opposition to Motion to Compel Arbitration, Castellanos v. Mariner Fin.,
LLC, No. 17-cv-3168 (D. Md. May 8, 2018), ECF No. 19.
12. Mariner Finance, WARBURG PINCUS,
https://warburgpincus.com/investments/mariner-finance/.
13. Curo Financial Technologies, FFL PARTNERS,
https://www.fflpartners.com/investments/curo-financial-technologies.
14. PRIV. EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES INTO
PAYDAY LENDING AND OTHER SUBPRIME CONSUMER LENDING (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
15. David French, Blackstone to Sell Lendmark Financial to Lightyear
Capital: Sources, REUTERS (June 24, 2019),
https://www.reuters.com/article/us-lendmarkfinancial-m-a-
lightyearcapita/blackstone-to-sell-lendmark-financial-to-lightyear-capital-
sources-idUSKCN1TP2C7.
16. Lone Star Funds Completes Acquisition of DFC Global Corp.,
BUSINESS WIRE (June 13, 2014),
https://www.businesswire.com/news/home/20140613005800/en/Lone-Star-
Funds-Completes-Acquisition-of-DFC-Global-Corp.
 17. Consumer Financial Protection Bureau, CFPB DATA POINT: PAYDAY
LENDING 4 (2014),
https://files.consumerfinance.gov/f/201403_cfpb_report_payday-
lending.pdf.
18. JLL Partners Completes Acquisition of ACE Cash Express, Inc.,
TMCNET (Oct. 5, 2006),
https://www.tmcnet.com/usubmit/2006/10/05/1961548.htm; Populous
Financial Group, JLL PARTNERS, https://www.jllpartners.com/our-
companies/populus-financial-group/ (JLL continues to own the company
through Populus Financial Group).
19. Advance America, ZOOMINFO,
https://www.zoominfo.com/c/advance-america-cash-advance-centers-
inc/1985111 (estimating $2 billion in annual revenue for Advance
America); ACE Cash Express, ZOOMINFO,
https://www.zoominfo.com/c/ace-cash-express-inc/427413.
20. Consumer Complaint Database—Advance America, CONSUMER
FINANCIAL PROTECTION BUREAU (Oct. 7, 2022),
https://www.consumerfinance.gov/data-research/consumer-
complaints/search/?
chartType=line&dateInterval=Month&date_received_max=2022-01-
01&date_received_min=2012-01-
01&lens=Overview&searchField=all&searchText
=%22advance%20america%22&tab=Trends.
21. Complaint Database—ACE Cash Express, CONSUMER FINANCIAL
PROTECTION BUREAU (Oct. 7, 2022),
https://www.consumerfinance.gov/data-research/consumer-
complaints/search/?
chartType=line&dateInterval=Month&date_received_max=2022-01-
01&date_received_min=2012-01-
01&lens=Overview&searchField=all&searchText
=%22ace%20cash%22&tab=Trends.
22. Complaint 5287308, CONSUMER FINANCIAL PROTECTION BUREAU
(Mar. 4, 2022), https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5287308; Complaint 5199725, CONSUMER
FINANCIAL PROTECTION BUREAU (Feb. 8, 2022),
https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5199725.
23. Complaint 5195180, CONSUMER FINANCIAL PROTECTION BUREAU
(Feb. 7, 2022), https://www.consumerfinance.gov/data-research/consumer-
complaints/search/detail/5195180.
24. Complaint 5249656, CONSUMER FINANCIAL PROTECTION BUREAU
(Feb. 22, 2022), https://www.consumerfinance.gov/data-
research/consumer-complaints/search/detail/5249656.
25. Danielle Douglas, Payday Lender Ace Cash Express to Pay $10
Million over Debt-Collection Practices, WASH. POST (July 10, 2014),
https://www.washingtonpost.com/business/economy/payday-lender-ace-
cash-express-fined-over-abusive-debt-collection-
practices/2014/07/10/04e9fa08-0858-11e4-8a6a-19355c7e870a_story.html.
26. Consumer Complaint Database—Lendmark, CONSUMER FINANCIAL
PROTECTION BUREAU (Oct. 7, 2022),
https://www.consumerfinance.gov/data-research/consumer-
complaints/search/?
chartType=line&dateInterval=Month&dateRange=All&date_received_max
=2022-10-07&date_received_min=2011-12-01&lens=Overview&search
Field=all&searchText=lendmark&tab=Trends.
27. Search for “Plaintiff-Litigant (Mariner Ginance),” LEXIS COURTLINK,
https://advance.lexis.com/search/?pdmfid=1519217&crid=a4e6f7ec-90ff-
438d-9d28-390925e3 cf61&pdsearchterms=plaintiff-
litigant(mariner+finance)&pdstartin=hlct%3A1%3A1&pdcaseshlctselected
byuser=false&pdtypeofsearch=searchboxclick&pdsearchtype=SearchBox
&pdqttype=and&pdpsf=hlct%3A1%3A1&pdquerytemplateid=&ecomp=pb
rwk&earg =pdpsf&prid=69facea1-c07b-43dc-b9fd-a272a9ad5557.
28. Bailey McCann, Fortress Backed Springleaf to Acquire OneMain,
PRIVATE EQUITY INTERNATIONAL (Mar. 3, 2015),
https://www.privateequityinternational.com/fortress-backed-springleaf-to-
acquire-onemain/.
29. Search for “Plaintiff-Litigant (OneMain),” LEXIS COURTLINK,
https://advance.lexis .com/search/?pdmfid=1519217&crid=9bea117a-6d62-
4da5-b4f9-dfc6ae9e75e0&pdsearchterms=plaintiff-
litigant(onemain)&pdstartin=hlct%3A1%3A1&pdcaseshlctse
lectedbyuser=false&pdtypeofsearch=searchboxclick&pdsearchtype=Search
Box&pdqttype
=and&pdpsf=hlct%3A1%3A1&pdquerytemplateid=&ecomp=pbrwk&earg
=pdpsf &prid=a4e6f7ec-90ff-438d-9d28-390925e3cf61.
30. See, e.g., Writ of Attachment on a Judgment, SUPERIOR COURT OF
THE DISTRICT OF COLUMBIA,
https://www.dccourts.gov/sites/default/files/pdf-forms/writ_wages.pdf.
31. Arbitration Schedule of Fees and Costs, JAMS,
https://www.jamsadr.com/arbitration-fees.
32. See, e.g., Mark D. Gough, The High Costs of an Inexpensive Forum:
An Empirical Analysis of Employment Discrimination Claims Heard in
Arbitration and Civil Litigation, 35 BERKELEY J. EMP. & LAB. L. 91, 91
(2014); Arbitration Study, CONSUMER FINANCIAL PROTECTION BUREAU
(Mar. 2015), https://files.consumerfinance.gov/f/201503_cfpb_arbitration-
study-report-to-congress-2015.pdf.
33. Scott Horsley, Payday Loans—and Endless Cycles of Debt—
Targeted by Federal Watchdog, NPR (Mar. 26, 2015),
https://www.npr.org/2015/03/26/395421117/payday-loans-and-endless-
cycles-of-debt-targeted-by-federal-watchdog.
34. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A
Look Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/.
35. Aliyyah Camp, What Is the Community Financial Services
Association of America?, FINDER (Oct. 16, 2021),
https://www.finder.com/community-financial-services-association-of-
america. Private equity-backed lenders included Community Choice
Financial and Speedy Cash.
36. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A
Look Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/; PRIV. EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES INTO
PAYDAY LENDING AND OTHER SUBPRIME CONSUMER LENDING 7 (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
37. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A
Look Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/; PRIVATE EQUITY STAKEHOLDER PROJECT, PRIVATE EQUITY PILES
INTO PAYDAY LENDING AND OTHER SUBPRIME CONSUMER LENDING 7 (2017),
https://pestakeholder.org/wp-content/uploads/2017/12/PE-Investment-in-
Payday-Installment-Lending-AFR-PESP-121117-with-links.pdf.
38. Jackie Wattles, Cordray Resignation Sets Off Scramble over
Consumer Financial Protection Bureau, CNN MONEY (Nov. 25, 2017),
https://money.cnn.com/2017/11/24/news/cfpb-richard-cordray-
resignation/index.html.
39. Emily Stewart, Mick Mulvaney Once Called the CFPB a “Sick,
Sad” Joke. Now He Might Be in Charge of It, VOX (Nov. 16, 2017),
https://www.vox.com/policy-and-politics/2017/11/16/16667266/mick-
mulvaney-cfpb-cordray-omb-joke.
40. Client Profile: JLL Partners, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000052577.
41. Client Profile: Lendmark Financial Services, OPEN SECRETS,
https://www.opensecrets .org/federal-lobbying/clients/summary?
cycle=2018&id=D000071049.
42. Client Profile: Mariner Finance, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000084066.
43. Client Profile: OneMain Financial, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/summary?
cycle=2018&id=D000020937.
44. Katherine Kirkpatrick et al., CFPB Focus on Payday Lending: A
Look Around the Corner, JD SUPRA (Jan. 15, 2021),
https://www.jdsupra.com/legalnews/cfpb-focus-on-payday-lending-a-look-
7629208/.
45. Congress Overturns CFPB Arbitration Rule, BAKER & HOSTETLER
(Nov. 1, 2017), https://www.bakerlaw.com/alerts/congress-overturns-cfpb-
arbitration-rule.
46. Cotton Statement on the CFPB’s New Arbitration Rule, OFFICE OF
SENATOR TOM COTTON (July 11, 2017),
https://www.cotton.senate.gov/news/press-releases/2017/07/11/cotton-
statement-on-the-cfpb-and-146s-new-arbitration-rule.
47. AFR Report: Payday Lobbying and Campaign Spending Top $15
Million for 2014 Election Cycle, AMERICANS FOR FINANCIAL REFORM (July
7, 2015), https://ourfinancialsecurity .org/2015/07/payday-lender-lobbying-
and-campaign-spending-top-15-million-for-2014-election-cycle-afr-report-
finds/.
48. Search for “Cotton for Senate, Inc,” “Cotton Victory,” and
“Blackstone,” FEDERAL ELECTION COMMISSION,
https://www.fec.gov/data/receipts/individual-contributions/?
committee_id=C00499988&committee_id=C00571018&contributor_empl
oyer =blackstone.
49. Jessica Silver-Greenberg, Consumer Bureau Loses Fight to Allow
More Class-Action Suits, N.Y. TIMES (Oct. 24, 2017),
https://www.nytimes.com/2017/10/24/business/senate-vote-wall-street-
regulation.html.
50. Letter from Keith A. Noreika, acting comptroller of the currency, to
Richard Cordray, director, Consumer Financial Protection Bureau (July 10,
2017), https://finservblog .bakerhostetlerblogs.com/wp-
content/uploads/sites/20/2017/11/07-10-2017.pdf.
51. Jeffrey L. Hare & Adam Dubin, Congress Overturns CFPB’s
Arbitration Rule, DLA PIPER (Nov. 1, 2017),
https://www.dlapiper.com/en/us/insights/publications/2017/11/congress-
overturns-cfpb-arbitration-rule/.
52. Cotton Statement on Senate Vote to Repeal the CFPB’s Arbitration
Rule, OFFICE OF SENATOR TOM COTTON (Oct. 24, 2017),
https://www.cotton.senate.gov/news/press-releases/cotton-statement-on-
senate-vote-to-repeal-the-cfpb-and-146s-arbitration-rule.
53. Tom Cotton, OPEN SECRETS https://www.opensecrets.org/members-
of-congress/tom-cotton/summary?cid=N00033363&cycle=2018&type=I.
54. Peter Whoriskey, “A Way of Monetizing Poor People”: How Private
Equity Firms Make Money Offering Loans to Cash-Strapped Americans,
WASH. POST (July 1, 2018,
https://www.washingtonpost.com/business/economy/a-way-of-monetizing-
poor-people-how-private-equity-firms-make-money-offering-loans-to-
cash-strapped-americans/2018/07/01/5f7e2670-5dee-11e8-9ee3-
49d6d4814c4c_story.html.
55. Wendi C. Thomas et al., A Private Equity–Owned Doctors’ Group
Sued Poor Patients Until It Came Under Scrutiny, NPR (Nov. 27, 2019),
https://www.npr.org/sections/health-shots/2019/11/27/783449133/a-private-
equity-owned-doctors-group-sued-poor-patients-until-it-came-under-scru.
56. Id.
57. Jordan Rau, Patients Eligible for Charity Care Instead Get Big
Bills, KAISER HEALTH NEWS (Oct. 11, 2019), https://khn.org/news/patients-
eligible-for-charity-care-instead-get-big-bills/.
58. Thomas et al., supra note 55.
59. Id.
60. Consent Order ¶ 15, In the Matter of: Transworld Systems, Inc., No.
2017-CFPB-0018, (US Consumer Financial Protection Bureau, Sept. 18,
2017) (Transworld provided documentation in support of the National
Collegiate Student Loan Trusts’ lawsuits).
61. PRIV. EQUITY STAKEHOLDER PROJECT, PLATINUM EQUITY-OWNED
TRANSWORLD SYSTEMS FINED $2.5 MILLION FOR ILLEGAL STUDENT DEBT
COLLECTION LAWSUITS, DRAWS THOUSANDS OF CONSUMER COMPLAINTS 1
(2019), https://pestakeholder.org/wp-content/uploads/2019/07/Platinum-
Equity-Owned-Transworld-Systems-Fined-2.5-Million-PESP-071619.pdf.
62. Id.
63. Ori Lev, CFPB Suffers Embarrassing Court Loss, MAYER BROWN
(June 4, 2020), https://www.mayerbrown.com/en/perspectives-
events/blogs/2020/06/cfpb-suffers-embarrassing-court-loss; Transworld
System’s Motion to Intervene, CFPB v. National Collegiate Master Student
Loan Trust, et al., 1:17-cv-1323 (D. Del. Sept. 22, 2017), ECF No. 9.
64. Platinum Equity-Owned Transworld Systems Fined $2.5 Million for
Illegal Student Debt Collection Lawsuits, Draws Thousands of Consumer
Complaints, PRIVATE EQUITY STAKEHOLDER PROJECT 4 (July 2019),
https://pestakeholder.org/wp-content/uploads/2019/07/Platinum-Equity-
Owned-Transworld-Systems-Fined-2.5-Million-PESP-071619.pdf
(Transworld bought Nationwide Credit, Inc. and NCC Business Services).
It also bought debt collection management company Altisource. PE-backed
Transworld Systems to acquire Altisource’s financial services business,
S&P GLOBAL (Mar. 29, 2019),
https://www.spglobal.com/marketintelligence/en/news-
insights/trending/3QTPWjMZlN 9q1P7Hs21fjg2.
65. Pilar Sorensen, Pandemic Evictor: Don Mullen’s Pretium Partners
Files to Evict Black Renters, Collects Billions from Investors, PRIVATE
EQUITY STAKEHOLDER PROJECT (Apr. 2021), https://pestakeholder.org/wp-
content/uploads/2021/04/Pandemic-Evictor-Pretium-Partners-PESP-
041421.pdf.
66. See, e.g., Vero Beach v. Harvey Smith Jr., No. 05-2018-CC-027948
(Fla. Cir. Ct., Brevard Cty., May 11, 2018) (suit by consulate to collect
unpaid debts of resident and demanding attorney’s fees).
67. See, e.g., Dowell Properties v. Ellen Balentine and Justin Balentine,
No. SC-2012-2915 (Okla. Dist. Ct. July 13, 2012) (suit alleging
indebtedness of resident).
68. James Fontanella-Khan, Sujeet Indap & Barney Thompson, How a
Private Equity Boom Fuelled the World’s Biggest Law Firm, FIN. TIMES
(June 6, 2019), https://www .ft.com/content/13696928-86d5-11e9-a028-
86cea8523dc2.
69. Id.
70. Id.
71. Id.
72. See, e.g., Private Equity, LATHAM & WATKINS,
https://www.lw.com/practices/private equity; Private Equity,
HOGANLOVELLS, https://www.hoganlovells.com/en/service/private-equity;
Private Equity Fund Litigation, QUINN EMANUEL URQUHART & SULLIVAN,
LLP, https://www.quinnemanuel.com/practice-areas/investment-fund-
litigation/private-equity-fund-litigation/; Private Equity, GIBSON DUNN,
https://www.gibsondunn.com/practice/private-equity/; Private Equity,
GREENBERG TRAURIG,
https://www.gtlaw.com/en/capabilities/corporate/private-equity.
73. Private Equity Fund Litigation, QUINN EMANUEL URQUHART &
SULLIVAN, LLP, https://www.quinnemanuel.com/practice-areas/investment-
fund-litigation/private-equity-fund-litigation/.
74. Private Equity Litigation, SIDLEY AUSTIN,
https://www.sidley.com/en/services/commercial-litigation-and-
disputes/private-equity-litigation.
75. Complaint, Salley v. Heartland-Charleston of Hanahan, SC, LLC et
al., No. 2:10-cv-791 (D.S.C. Mar. 29, 2010), ECF No. 1.
76. Id.
77. Id.
78. Motion to Dismiss at 4, Salley v. Heartland-Charleston of Hanahan,
SC, LLC et al., No. 2:10-cv-791 (D.S.C. June 25, 2010), ECF No. 15.
79. Order on Motion to Dismiss at 9, Salley v. Heartland-Charleston of
Hanahan, SC, LLC et al., No. 2:10-cv-791 (D.S.C. Dec. 10, 2010), ECF
No. 45.
80. Id.
81. David G. Stevenson, Nursing Home Ownership Trends and Their
Impact on Quality of Care: A Study Using Detailed Ownership Data from
Texas, 25 J. AGING SOC. POL’Y (2013),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4825679/.
82. Scott Brass Overview, PITCHBOOK,
https://pitchbook.com/profiles/company/10474-03#overview.
83. Sun Capital Acquires Scott Brass, MERGERS & ACQUISITIONS (Feb.
19, 2007), https://www.themiddlemarket.com/news/sun-capital-acquires-
scott-brass.
84. Complaint, Sun Capital Partners III, LP, et al. v. New England
Teamsters & Trucking Industry Pension Fund, (D. Mass. June 4, 2010),
ECF No. 1.
85. Federal Court Finds Investment Funds Not Liable for Portfolio
Company-Employer’s Withdrawal Liability, AKIN GUMP (Nov. 9, 2012),
https://www.akingump.com/en/news-insights/federal-court-finds-
investment-funds-not-liable-for-portfolio.html.
86. First Circuit Sun Capital Decision Increases ERISA Exposure for
Private Equity Funds, DAVIS POLK (Aug. 6, 2013),
https://www.davispolk.com/sites/default/files/08.06.13.Sun_.Capital.pdf.
87. First Circuit Overturns Sun Capital Decision, SULLIVAN &
CROMWELL LLP (Dec. 2, 2019), https://www.sullcrom.com/files/upload/SC-
Publication-First-Circuit-Overturns-Sun-Capital-Decision.pdf.
88. Martina Barash, Sun Capital Advisors Wins Battle over Teamsters
Pension Fund, BLOOMBERG LAW (Nov. 22, 2019),
https://news.bloomberglaw.com/employee-benefits/teamsters-pension-
fund-cant-recover-from-private-equity-funds.
89. Maria Glover, Mass Arbitration, 74 STAN. L. REV. 1283 (2022);
Myriam Giles, The Day Doctrine Died: Private Arbitration and the End of
Law, U. ILL. L. REV. 371, 278–290 (2016).
90. Robert H. Klonoff, The Decline of Class Actions, 90 WASH. U. L.
REV. 729 (2013).
91. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011);
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983) (“Section 2 is a congressional declaration of a liberal federal policy
favoring arbitration agreements.”).
92. AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).
93. American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304
(2013).
94. Epic Systems v. Lewis, 138 S. Ct. 1612, 1626 (2018).
95. Glover, supra note 89.
96. Id.; Scott Medintz, Forced Arbitration: A Clause for Concern,
CONSUMER REPORTS (Jan. 30, 2020),
https://www.consumerreports.org/mandatory-binding-arbitration/forced-
arbitration-clause-for-concern.
97. Glover, supra note 89.
98. See, e.g., Ed Williams, “An Anything-Goes Situation”: Assessing
Arbitration Agreements at Nursing Homes, LAS CRUCES SUN NEWS (July
11, 2020), https://www.lcsun-news.com/story/news/2020/07/11/an-
anything-goes-situation/5421301002/ (Discussing arbitration agreements at
the private equity–owned Genesis nursing home chain).
99. Preston Darron v. Invitation Homes, No. 2020-M6-001029 (Ill. Cir.
Jan. 23, 2020) (compelling case to arbitration).
100. Complaint at ¶ 206, Mayberry et al., v. KKR & Co., LP, et al., No.
CI-17-1348 (Ky. Cir. Ct. Feb. 26, 2018).
101. Overstreet v. Mayberry, 603 S.W.3d 244, 256 (Ky. 2020).
102. Id.
 103. Kentucky Supreme Court Dismisses $50 Billion Derivative Action
Against Hedge Fund Managers for Lack of Standing, PAUL WEISS,
https://www.paulweiss.com/practices/transactional/investment-
management/publications/kentucky-supreme-court-dismisses-50-billion-
derivative-action-against-hedge-fund-managers-for-lack-of-standing?id
=37533.
104. E.g., Michael Corkery, Amazon Ends Use of Arbitration for
Customer Disputes, N.Y. TIMES (Sept. 28, 2021),
https://www.nytimes.com/2021/07/22/business/amazon-arbitration-
customer-disputes.html (Noting that “Amazon faces potentially tens of
millions of dollars in fees that it will have to pay the private arbitrators to
have those cases heard.”); Alison Frankel, Forced into Arbitration, 12,500
Drivers Claim Uber Won’t Pay Fees to Launch Cases, REUTERS (Dec. 6,
2018), https://www.reuters.com/article/legal-us-otc-uber/forced-into-
arbitration-12500-drivers-claim-uber-wont-pay-fees-to-launch-cases-
idUSKBN1O52C6. (“Under Uber’s arbitration provisions, it’s up to the
company to pay initial arbitration fees.”); Nicholas Iovino, DoorDash
Ordered to Pay $9.5M to Arbitrate 5,000 Labor Disputes, COURTHOUSE
NEWS (Feb. 10, 2020), https://www.courthousenews.com/doordash-
ordered-to-pay-12m-to-arbitrate-5000-labor-disputes/ (“DoorDash refused
to pay its share of fees”).
105. Glover, supra note 89; FanDuel Announces Series E Financing of
$275 Million from KKR, Google Capital and Time Warner, BUSINESS WIRE
(July 14, 2015),
https://www.businesswire.com/news/home/20150714005506/en/FanDuel-
Announces-Series-E-Financing-of-275-Million-from-KKR-Google-
Capital-and-Time-Warner9/26/2022; Ben Penn, Buffalo Wild Wings Case
Tests Future of Class Action Waivers, BLOOMBERG L. (July 12, 2018),
https://news.bloomberglaw.com/daily-labor-report/buffalo-wild-wings-
case-tests-future-of-class-action-waivers.
106. Alison Frankel, “This Hypocrisy Will Not Be Blessed”: Judge
Orders DoorDash to Arbitrate 5,000 Couriers’ Claims, REUTERS (Feb. 11,
2020), https://www.reuters.com/article/us-otc-doordash/this-hypocrisy-
will-not-be-blessed-judge-orders-doordash-to-arbitrate-5000-couriers-
claims-idUSKBN2052S1.
 107. Id.
108. Glover, supra note 89; Michael Holecek, As Mass Arbitrations
Proliferate, Companies Have Deployed Strategies for Deterring and
Defending Against Them, GIBSON DUNN (May 24, 2021),
https://www.gibsondunn.com/as-mass-arbitrations-proliferate-companies-
have-deployed-strategies-for-deterring-and-defending-against-them/.
109. Order on Motion to Dismiss at 2, In re: Nine West LBO Securities
Litigation, No. 1:20-md-2941 (S.D.N.Y. Dec. 4, 2020), ECF No. 423.
110. Id. at 6.
111. Id. at 29.
112. William D. Cohan, The Private Equity Party Might Be Ending. It’s
About Time., N.Y. TIMES (Feb. 28, 2021),
https://www.nytimes.com/2021/02/28/opinion/private-equity-
reckoning.html.
113. Stipulation of Voluntary Dismissal, In re: Nine West LBO
Securities Litigation, No. 1:20-md-2941 (S.D.N.Y. Dec. 4, 2020), ECF No.
429.
114. Cohan, supra note 112.
115. Interview with Cathy Hershcopf, partner, Cooley (Jan. 12, 2022).
116. Gillian Tan, Debt Rises in Leveraged Buyouts Despite Warnings,
WALL ST. J. (May 20, 2014),
https://www.wsj.com/articles/SB1000142405270230442270457957418410
1045614; Chibuike Oguh, Analysis: Private Equity Investors Fret over
Record U.S. Buyout Prices, REUTERS (Mar. 16, 2021),
https://www.reuters.com/business/private-equity-investors-fret-over-
record-us-buyout-prices-2021-03-16.

CHAPTER 9: PRIVATIZING THE PUBLIC SECTOR

1. Julianne Mattera, Middletown Approves 50-Year Water, Sewer Lease
with United Water, PENN-LIVE (Sept. 30, 2014),
https://www.pennlive.com/midstate/2014/09/middletown_approves_50-
year_wa.html.
2. Comprehensive Annual Financial Report for the Fiscal Year Ended
December 31, 2014, TOWNSHIP OF MIDDLETOWN 19 (2015),
https://www.middletownbucks.org/Departments/Finance/Financial-
Reports/Reports/CAFR_2014.
3. Middletown, Dauphin County, Pennsylvania, WIKIPEDIA,
https://en.wikipedia.org/wiki/Middletown,_Dauphin_County,_Pennsylvani
a.
4. Middletown Borough, Pennsylvania, CENSUS BUREAU,
https://www.census.gov/quick
facts/fact/table/middletownboroughpennsylvania,US/SEX255221 (the
Middletown per capita income is $29,575; the US per capita income is
$37,638).
5. Complaint at ¶ 59, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018), ECF No. 1.
6. Mattera, supra note 1.
7. Id.
8. Complaint at ¶ 12, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
9. Memorandum on Order on Motion to Dismiss at 4, Middletown
Borough v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D.
Pa. Mar. 27, 2019), ECF No. 66 (Middletown Water ultimately made a final
offer of a $43 million payment, with annual payments of $750,000).
10. United Water and KKR Sign Utility Partnership with Borough of
Middletown, BUSINESS WIRE (Dec. 11, 2014),
https://www.businesswire.com/news/home/20141211006533/en/United-
Water-and-KKR-Sign-Utility-Partnership-with-Borough-of-Middletown-
PA.
11. Memorandum on Order on Motion to Dismiss at 2, Middletown
Borough v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D.
Pa. Mar. 27, 2019), ECF No. 66.
12. Complaint at ¶ 56, Middletown Borough v. Middletown Water Joint
Venture LLC, No. 1:18cv861 (M.D. Pa. Apr. 20, 2018).
13. Jackie Foster, FACEBOOK (Mar. 8, 2018).
https://www.facebook.com/middletown
.borough/posts/1263031863827564.
14. Sheila Hinkson, FACEBOOK (Mar. 9, 2018),
https://www.facebook.com/middletown
.borough/posts/1263031863827564.
15. Tom Buck, FACEBOOK (Mar. 9, 2018),
https://www.facebook.com/middletown
.borough/posts/1263031863827564.
16. Julianne Mattera, Middletown Approves 50-Year Water, Sewer Lease
with United Water, PENNLIVE 9 (Sept. 30, 2014)
https://www.pennlive.com/midstate/2014/09/middletown_approves_50-
year_wa.html; Benjamin Kapenstein, LINKEDIN,
https://www.linkedin.com/in/benjamin-kapenstein-798a3756/.
17. Complaint at ¶ 24-27, Middletown Borough v. Middletown Water
Joint Venture LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
18. Docket, Middletown Borough v. Middletown Water Joint Venture
LLC, No. 1:18-cv-861 (M.D. Pa. Apr. 20, 2018).
19. Memorandum on Order on Motion to Dismiss at 13, Middletown
Borough v. Middletown Water Joint Venture LLC, No. 1:18-cv-861 (M.D.
Pa. Mar. 27, 2019), ECF No. 66 (Middletown Water ultimately made a final
offer of a $43 million payment, with annual payments of $750,000).
20. Public Notice, SUEZ (2018), https://middletownborough.com/wp-
content/uploads/2018/07/Middletown-Boil-Water-Advisory-FAQs.pdf.
21. Andrew Vitelli, KKR Makes Splash with US Water PPP Exits,
INFRASTRUCTURE INVESTOR (Jan. 26, 2018),
https://www.infrastructureinvestor.com/66833-2/.
22. A Tale of Two Public-Private Partnership Cities, KNOWLEDGE AT
WHARTON (June 10, 2015), https://knowledge.wharton.upenn.edu/article/a-
tale-of-two-public-private-partnership-cities/.
23. United Water and KKR Sign Unique Utility Partnership with City of
Bayonne, NJ, KKR (Dec. 20, 2012), https://media.kkr.com/news-details/?
news_id=a371ff23-5bc6-48ab-8ca8-c4b8769837d0&type=1&download=1.
24. United Water, United Water Announces Commitment to Action at
2012 Clinton Global Initiative Annual Meeting, CISION (Sept. 25, 2012),
https://www.prnewswire.com/news-releases/united-water-announces-
commitment-to-action-at-2012-clinton-global-initiative-annual-meeting-
171193121.html; United Water and KKR Sign Unique Utility Partnership
with City of Bayonne, NJ, BUSINESS WIRE (Dec. 20, 2012), https://www
.businesswire.com/news/home/20121220005674/en/United-Water-and-
KKR-Sign-Unique-Utility-Partnership-with-City-of-Bayonne-NJ.
25. Peter D’Auria, Frustration over Bayonne’s Water Contract Has
Reached a Boiling Point. Can the City Find a Way Out?, JERSEY J. (June 8,
2021), https://www.nj.com/hudson/2021/06/frustration-over-bayonnes-
water-contract-has-reached-a-boiling-point-can-the-city-find-a-way-
out.html.
26. Dan Israel, Come Hell or High Water, HUDSON RPTR. (May 19,
2021), https://hudsonreporter.com/2021/05/19/come-hell-or-high-water/.
27. Corey W. McDonald, Bayonne Hit with 9 Percent Water Rate Hike
—Second Highest Increase Since 2012 Contract, JERSEY J. (Feb. 13, 2019),
https://www.nj.com/hudson/2019/02/bayonne-hit-with-9-percent-water-
rate-hike-second-highest-increase-since-2012-contract.html.
28. Andrew Vitelli, KKR Makes Splash with US Water PPP Exits,
INFRASTRUCTURE INV. (Jan. 26, 2018),
https://www.infrastructureinvestor.com/66833-2/.
29. Israel, supra note 26.
30. D’Auria, supra note 25.
31. Danielle Ivory et al., In American Towns, Private Profits from
Public Works, N.Y. TIMES (Dec. 24, 2016),
https://www.nytimes.com/2016/12/24/business/dealbook/private-equity-
water.html.
32. Ray C. Fair, U.S. Infrastructure: 1929–2019 (Cowles Foundation
Discussion Paper No. 2187, July 2019),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=343 2670.
33. Michael A. Pagano & Christopher W. Hoene, City Budgets in an Era
of Increased Uncertainty, BROOKINGS INSTITUTION 4–5 (July 2018),
https://www.brookings.edu/wp-
content/uploads/2018/07/20180718_Brookings-Metro_City-fiscal-policy-
Pagano-Hoene-final.pdf.
34. Carlyle Commits Over $100 Million in Battery Storage and Electric
Vehicle Infrastructure Technologies to Accelerate the Energy Transition,
CARLYLE (Jan. 14, 2022), https://www.carlyle.com/media-room/news-
release-archive/carlyle-commits-over-100-million-battery-storage-electric-
vehicle-infrastructure-energy-transition.
 35. KKR Portfolio, KKR, https://www.kkr.com/businesses/private-
equity/kkr-portfolio (KKR invested in Genesis Energy, LP and Rocky
Mountain Midstream).
36. As Climate Change Requires Cuts to Coal, Private Equity Buys
More, PRIVATE EQUITY STAKEHOLDER PROJECT (June 2020),
https://pestakeholder.org/wp-content/uploads/2020/07/PESP-As-Coal-
Declines-PE-Buys-More.pdf.
37. Blackstone Infrastructure Partners Acquires Stake in Phoenix Tower
International, BLACKSTONE (Jan. 18, 2022),
https://www.blackstone.com/news/press/blackstone-infrastructure-partners-
acquires-stake-in-phoenix-tower-international/.
38. Macky Tall & Pooja Goyal, Addressing the Global Infrastructure
Funding Gap, CARLYLE (Oct. 15, 2021), https://www.carlyle.com/global-
insights/addressing-global-infrastructure-funding-gap-macky-tall-pooja-
goyal.
39. Greg Roumeliotis, KKR Joins Private Equity Charge in U.S. Water,
REUTERS (Dec. 20, 2012), https://www.reuters.com/article/us-kkr-
water/kkr-joins-private-equity-charge-in-u-s-water-
idUSBRE8BJ0GL20121220.
40. Investor Group Buys West Corp., N.Y. TIMES (June 1, 2006),
https://www.nytimes .com/2006/06/01/business/01west.html. Despite
several changes, the company stayed in the hands of private equity. Lee and
Quadrangle took the company public again in 2013, though along with the
companies’ founders, continued to hold a near majority of shares in the
business. West Corporation Enters into Definitive Agreement to Be
Acquired by Certain Funds Affiliated with Apollo Global Management for
$23.50 per Share in Cash, THOMAS H. LEE PARTNERS (May 10, 2017),
https://thl .com/news-post/west-corporation-enters-into-definitive-
agreement-to-be-acquired-by-certain-funds-affiliated-with-apollo-global-
management-for-23-50-per-share-in-cash/. In 2017, Apollo Global
Management bought the business outright, taking it private once again.
Apollo Global to Buy West Corp for About $2 billion, REUTERS (May 8,
2017), https://www.reuters.com/article/us-west-m-a-apollo-global/apollo-
global-to-buy-west-corp-for-about-2-billion-idUSKBN1852RN.
 41. April 2014 Multistate 911 Outage Report, FCC 4 (Oct. 17, 2014),
https://www.fcc .gov/document/april-2014-multistate-911-outage-report.
42. Order, In the Matter of Intrado Communications Inc., No. EB-SED-
14-00017191 (FCC Apr. 6, 2015),
https://apps.fcc.gov/edocs_public/attachmatch/DA-15-421A1.pdf.
43. Colin Wood, 911 Vendor Intrado Takes Responsibility for
Widespread Outage, STATESCOOP (Oct. 2, 2020),
https://statescoop.com/911-outage-intrado/.
44. Phil Harvey, CenturyLink, West Safety Agree to Pay Up for 911
Outage, LIGHT READING (Nov. 5, 2019),
https://www.lightreading.com/automation/centurylink-west-safety-agree-
to-pay-up-for-911-outage/d/d-id/755381; WSC Settles for $175K over
Multi-State 911 Outage in Aug 2018, FCC (Nov. 4, 2019),
https://www.fcc.gov/document/wsc-settles-175k-over-multi-state-911-
outage-aug-2018.
45. FCC Report on CenturyLink Network Outage, FCC 3 (Aug. 19,
2019), https://www.fcc.gov/document/fcc-report-centurylink-network-
outage.
46. Colin Wood, 911 Vendor Intrado Takes Responsibility for
Widespread Outage, STATE SCOOP (Oct. 2, 2020),
https://statescoop.com/911-outage-intrado/.
47. FCC Reaches Settlement of Intrado 911 Outage Investigation, FCC
(Dec. 17, 2021), https://www.fcc.gov/document/fcc-reaches-settlement-
intrado-911-outage-investigation.
48. West Corporation Reports Fourth Quarter and Full Year 2006
Results, WEST CORPORATION (Jan. 31, 2007), https://ir.intrado.com/static-
files/240d47fc-e3e4-48b2-839a-8669d88924f3.
49. West Corporation Annual Report 2016, WEST CORPORATION 31
(2017),
https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDA
Q_WSTC_2016_0efc2cea0e5740f881650788b08ebab2.pdf.
50. Apollo Global to Buy West Corp for About $2 Billion, REUTERS
(May 9, 2017), https://www.reuters.com/article/us-west-m-a-apollo-
global/apollo-global-to-buy-west-corp-for-about-2-billion-
idUSKBN1852RN.
 51. Fitch Downgrades Intrado’s IDR to “B-,” Outlook Stable,
FITCHRATINGS (Aug. 25, 2021),
https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-
intrado-idr-to-b-outlook-stable-25-08-2021.
52. Robin A. Johnson, The Future of Local Emergency Medical Service:
Ambulance Wars or Public-Private Truce?, REASON PUBLIC POLICY
INSTITUTE (2001), https://reason.org/wp-
content/uploads/2001/08/02987706670b6394141064d6c60f0d80.pdf.
53. Id.
54. Steven Potter, Sounding the Alarm, PROGRESSIVE MAGAZINE (Feb. 1,
2019), https://progressive.org/magazine/sounding-the-alarm/.
55. Tom Corrigan, Ambulance Operator Controlled by Lynn Tilton Files
for Bankruptcy, WALL ST. J. (Feb. 25, 2016),
https://www.wsj.com/articles/ambulance-operator-controlled-by-lynn-
tilton-files-for-bankruptcy-1456438453; Olivia Webb, Private Equity
Chases Ambulances, AM. PROSPECT (Oct. 3, 2019),
https://prospect.org/health/private-equity-chases-ambulances-emergency-
medical-transport/; Chris Anderson, Private Equity Firm Buys Emergency
Medical Services for $3.2 Billion, HEALTHCARE FINANCE (Feb. 15, 2011),
https://www.healthcarefinancenews.com/news/private-equity-firm-buys-
emergency-medical-services-32-billion; KKR Buys AMR for $2.4bn,
FINANCIER WORLDWIDE (Oct. 2017),
https://www.financierworldwide.com/kkr-buys-amr-for-24bn.
56. John Tozzi, Air Ambulances Are Flying More Patients Than Ever,
and Leaving Massive Bills Behind, BLOOMBERG (June 11, 2018),
https://www.bloomberg.com/news/features/2018-06-11/private-equity-
backed-air-ambulances-leave-behind-massive-bills.
57. Danielle Ivory et al., When You Dial 911 and Wall Street Answers,
N.Y. TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-
911-and-wall-street-answers.html. (Envision Healthcare, which bought
Rural/Metro, told the New York Times that “[w]e are continuing to hire
paramedics and E.M.T.s,” while Warburg Pincus said that “[d]espite several
initiatives undertaken by the company’s board and management team…
[the] challenges Rural/Metro faced were too difficult to overcome.”).
 58. Id.
59. See, e.g., PatientCare EMS Solutions Acquires MedFleet Ambulance
Service, A&M CAPITAL PARTNERS (Feb. 12, 2020), https://www.a-
mcapital.com/patientcare-ems-solutions-acquires-medfleet-ambulance-
service; Harbour Point Capital Completes Investment in Midwest Medical
Transport, PRIVATE EQUITY WIRE (Jan. 27, 2022),
https://www.privateequitywire.co.uk/2022/01/27/311601/harbour-point-
capital-completes-investment-midwest-medical-transport.
60. Rebecca Pifer, Ground Ambulance Costs Continue to Soar, Study
Finds, HEALTH CARE DIVE (Feb. 22, 2022),
https://www.healthcaredive.com/news/ground-ambulance-costs-continue-
to-soar-study-finds/619195/.
61. Analysis: Half of Emergency Ambulance Rides Lead to Out-of-
Network Bills for Privately Insured Patients, KAISER FAMILY FOUNDATION
(June 24, 2021), https://www.kff .org/health-costs/press-release/analysis-
half-of-emergency-ambulance-rides-lead-to-out-of-network-bills-for-
privately-insured-patients/.
62. Loren Adler, High Air Ambulance Charges Concentrated in Private
Equity–Owned Carriers, BROOKINGS INSTITUTION (Oct. 13, 2020),
https://www.brookings.edu/blog /usc-brookings-schaeffer-on-health-
policy/2020/10/13/high-air-ambulance-charges-concentrated-in-private-
equity-owned-carriers/.
63. David Lohr, Arizona Firefighters Charge Family Nearly $20,000
After Home Burns Down, HUFFPOST (Nov. 11, 2013),
https://www.huffpost.com/entry/justin-purcell-fire_n_4242734.
64. Id.
65. Ivory et al., supra note 57.
66. Henry Kravis, BLOOMBERG,
https://www.bloomberg.com/billionaires/profiles/henry-r-kravis/.
67. Two Decades of Change in Federal and State Higher Education
Funding, PEW CHARITABLE TRUST (2019),
https://www.pewtrusts.org/en/research-and-analysis/issue-
briefs/2019/10/two-decades-of-change-in-federal-and-state-higher-
education-funding.
 68. Id. (In 1990, state per student funding was almost 140 percent more
than federal government. As of 2018, state per student funding was 18
percent more than the federal government.)
69. Tuition Costs of Colleges and Universities, NATIONAL CENTER FOR
EDUCATION STATISTICS, https://nces.ed.gov/fastfacts/display.asp?id=76.
70. Richard D. Kahlenberg et al., Policy Strategies for Pursuing
Adequate Funding of Community Colleges, CENTURY FOUNDATION (Oct. 25,
2018), https://tcf.org/content/report/policy-strategies-pursuing-adequate-
funding-community-colleges/; Melanie Hanson, Average Cost of
Community College, EDUCATION DATA INITIATIVE (Dec. 27, 2021),
https://educationdata.org/average-cost-of-community-college.
71. Alex Goldstein & Jim Baker, Private Equity’s Failing Grade:
Private Equity Investment in For-Profit Colleges, PRIVATE EQUITY
STAKEHOLDER PROJECT 10 (Mar. 2018), https://pestakeholder.org/wp-
content/uploads/2018/03/Private-Equitys-Failing-Grade-PESP-AFR-
032218-2.pdf.
72. Stephanie Hall, The Students Funneled into For-Profit Colleges,
CENTURY FOUND. (May 11, 2021), https://tcf.org/content/report/students-
funneled-profit-colleges/.
73. 10 Key Facts About Student Debt in the United States, PETER G.
PETERSON FOUNDATION (May 5, 2021),
https://www.pgpf.org/blog/2021/05/10-key-facts-about-student-debt-in-the-
united-states.
74. Hall, supra note 72.
75. Stephanie Riegg Cellini, The Alarming Rise in For-Profit College
Enrollment, BROOKINGS INSTITUTION (Nov. 2, 2020),
https://www.brookings.edu/blog/brown-center-chalkboard/2020/11/02/the-
alarming-rise-in-for-profit-college-enrollment/.
76. Charlie Eaton et al., When Investor Incentives and Consumer
Interests Diverge: Private Equity in Higher Education 2 (Nat’l Bureau of
Econ. Rsch., Working Paper No. 24976, 2019)
https://www.nber.org/papers/w24976.
77. Complaint ¶ 26, California v. Ashford University, LLC et al., No.
37-2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
 78. Bridgepoint Education, Inc.: A Case Study in For-Profit Education
and Oversight, S. Hrg. 112-774 (Mar. 10, 2011),
https://www.govinfo.gov/content/pkg/CHRG-112shrg81200/html/CHRG-
112shrg81200.htm.
79. Id.
80. Complaint, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
81. Id. at ¶ 29.
82. Id. at ¶ 116.
83. Veterans Education Success, VETERAN AND SERVICEMEMBER
COMPLAINTS ABOUT MISCONDUCT AND ILLEGAL PRACTICES AT ASHFORD
UNIVERSITY 12 (2017), https://vetsedsuccess.org/wp-
content/uploads/2018/09/VES-Ashford-Report-2017-Fall.pdf.
84. Id.
85. Complaint at ¶ 37, California v. Ashford University, LLC et al., No.
37-2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017). Ashford
was eventually found guilty. Statement of Decision, California v. Ashford
University, LLC et al., (Cal. Super. Ct., San Diego Cty Nov. 8, 2021).
86. Complaint ¶ 107, California v. Ashford University, LLC et al., No.
37-2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
87. Id.
88. Id. at ¶ 34.
89. Trends in College Pricing and Student Aid 2021, COLLEGE BOARD 3
(2021), https://research.collegeboard.org/media/pdf/trends-college-pricing-
student-aid-2021.pdf.
90. Complaint, California v. Ashford University, LLC et al., No. 37-
2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
91. Veteran and Servicemember Complaints About Misconduct and
Illegal Practices at Ashford University, VETERANS EDUCATION SUCCESS 8
(2017), https://vetsedsuccess.org/wp-content/uploads/2018/09/VES-
Ashford-Report-2017-Fall.pdf.
92. Id. at 12.
93. Complaint ¶ 48, California v. Ashford University, LLC et al., No.
37-2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017).
94. Id. at ¶ 8.
 95. Id. at ¶ 3.
96. Id. at ¶ 43.
97. Attorney General Bonta: Ashford University Must Pay $22 Million
in Penalties for Defrauding California Students, CALIFORNIA DEPARTMENT
OF JUSTICE (Mar. 7, 2022), https://oag.ca.gov/news/press-releases/attorney-
general-bonta-ashford-university-must-pay-22-million-penalties.
98. See, e.g., Bridgepoint Education, Inc., supra note 78 (In their
materials to U.S. News & World Report, the college said that “[f]ounded in
1918, Ashford University is committed to providing accessible, affordable,
innovative, high-quality degree programs to its campus, online, and
accelerated students.”).
99. Shellie Nelson, Ashford University to Close Campus in Clinton,
Iowa, WQAD NEWS 8 (July 9, 2015),
https://www.wqad.com/article/news/education/ashford-university-to-close-
campus-in-clinton-iowa/526-f5b9cde9-b200-496b-84a9-07890263f254.
100. Tamar Lewin, Hearing Sees Financial Success and Education
Failures of For-Profit College, N.Y. TIMES (Mar. 10, 2011),
https://www.nytimes.com/2011/03/11/education/11college.html.
101. Bridgepoint Education, Inc., supra note 78.
102. Id.
103. Consumer Financial Protection Bureau Takes Action Against
Bridgepoint Education, Inc. for Illegal Student Lending Practices,
CONSUMER FINANCIAL PROTECTION BUREAU (Sept. 12, 2016),
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-
protection-bureau-takes-action-against-bridgepoint-education-inc-illegal-
student-lending-practices/.
104. Ashford University and Parent Company Bridgepoint Education
Agree to $7.25 Million Payment and Major Changes After Miller Alleges
Consumer Fraud, OFFICE OF THE IOWA ATTORNEY GENERAL (May 16,
2014), https://www.iowaattorneygeneral.gov/newsroom/ashford-university-
and-parent-company-bridgepoint-education-agree-to-7-25-million-
payment-and-majo.
105. Law Enforcement Actions Against Predatory Colleges,
DEPARTMENT OF EDUCATION (2018),
https://sites.ed.gov/naciqi/files/2018/05/NACIQI-Enclosure-1-law-
enforcement .pdf.
106. Jake Steinberg, UA Acquires For-Profit Ashford University,
Launches New Online “Campus.” ARIZ. PUB. MEDIA (Dec. 1, 2020),
https://news.azpm.org/p/news-splash/2020/12/1/184791-ua-acquires-for-
profit-ashford-university-launches-new-online-campus/ (Ashford was sold
for a symbolic one dollar, but Zovio, Ashford’s parent, was entitled to over
19 percent of the tuition revenue coming from the school).
107. Bridgepoint Education, Inc., PROSPECTUS (Aug. 3, 2011),
https://www.sec.gov/Archives/edgar/data/1305323/000119312511208297/d
424b3.htm (“In January 2004, our principal investor, Warburg Pincus
Private Equity VIII, L.P. (‘Warburg Pincus’), and our CEO and president,
Andrew Clark, as well as several other members of our current executive
management team, launched Bridgepoint Education, Inc. to establish a
differentiated postsecondary education provider.”). Andrew Clark, How I
Did It: Andrew Clark, Bridgepoint Education, INC.COM (Sept. 1, 2008),
https://www.inc.com/magazine/20080901/how-i-did-it-andrew-clark-
bridgepoint-education.html (Andrew Clark, cofounder of Bridgepoint’s
parent company, said that “I started knocking on the doors of investors and
soon forged a relationship with Warburg Pincus.”).
108. Melissa Korn, Bridgepoint Investor Files for Stake Sale, WALL ST.
J. (July 25, 2011),
https://www.wsj.com/articles/SB1000142405311190359110457646819339
6752056; Megha Mandavia, Investors Seen as Too Tough on Bridgepoint,
REUTERS (July 23, 2012), https://www.reuters.com/article/us-bridgepoint-
accreditation/investors-seen-as-too-tough-on-bridgepoint-
idUSBRE86M12I20120723.
109. Bridgepoint Education, Inc., U.S. SENATE COMMITTEE ON HEALTH,
EDUCATION, LABOR AND PENSIONS 2,
https://www.help.senate.gov/imo/media/for_profit_report/PartII/Bridgepoin
t.pdf.
110. Senator Harkin’s hearing was in March 2011. Warburg Pincus filed
papers to divest in July of that year. Tamar Lewin, Hearing Sees Financial
Success and Education Failures of For-Profit College, N.Y. TIMES (Mar.
10, 2011), https://www.nytimes .com/2011/03/11/education/11college.html;
Melissa Korn, Bridgepoint Investor Files for Stake Sale, WALL ST. J. (July
25, 2011),
https://www.wsj.com/articles/SB1000142405311190359110457646819339
6752056.
111. Bridgepoint Education, Inc., supra note 78.
112. Bridgepoint Education (BPI) Prices 7.56M Share Secondary
Offering by Warburg Pincus LLC; Announces 2.1M Share Buyback, STREET
INSIDER (Nov. 17, 2017), https://www
.streetinsider.com/Corporate+News/Bridgepoint+Education+
(BPI)+Prices+7.56M+Share
+Secondary+Offering+by+Warburg+Pincus+LLC;+Announces+2.1M+Sha
re+Buyback/13521346.html.
113. Zovio, WIKIPEDIA, https://en.wikipedia.org/wiki/Zovio (“On
November 15, 2017, Bridgepoint suspended enrolling GI Bill students for
Ashford University after a controversial exposé on the school appeared in
the Chronicle of Higher Education. On November 17, 2017, Warburg
Pincus, Bridgeport Education’s major underwriter, announced its complete
divestment from Bridgepoint.”).
114. Bridgepoint Education, Inc., supra note 78.
115. Goldstein and Baker, supra note 71, at 2.
116. Ben Unglesbee, Private Equity’s Role in the Rise—and Fall—of
For-Profit Colleges, HIGHER ED DEEP DIVE (May 6, 2019),
https://www.highereddive.com/news/private-equitys-role-in-the-rise-and-
fall-of-for-profit-colleges/554077/.
117. For-Profit College Company to Pay $95.5 Million to Settle Claims
of Illegal Recruiting, Consumer Fraud and Other Violations, DEPARTMENT
OF JUSTICE (Nov. 16, 2015), https://www.justice.gov/opa/pr/profit-college-
company-pay-955-million-settle-claims-illegal-recruiting-consumer-fraud-
and (As part of the settlement, Education Management did not admit to any
liability).
118. For-Profit Education Company to Pay $13 Million to Resolve
Several Cases Alleging Submission of False Claims for Federal Student
Aid, DEPARTMENT OF JUSTICE (June 24, 2015),
https://www.justice.gov/opa/pr/profit-education-company-pay-13-million-
resolve-several-cases-alleging-submission-false (As part of the settlement,
Education Affiliates did not admit to any liability).
119. Hayley Brown, Private Equity in Higher Education: A Full Ride at
Student and Taxpayer Expense?, CENTER FOR ECONOMIC AND POLICY
RESEARCH, https://cepr.net/private-equity-in-higher-education-a-full-ride-
at-student-and-taxpayer-expense/; Vatterott College System Closes All 15
Campuses, ASSOCIATED PRESS (Dec. 18, 2018), https://apnews
.com/article/us-news-education-st-louis-us-department-of-education-
71a07fb863bf4e459 a7f1c2417cb1ecd; Major For-Profit College Chain
Abruptly Announces Closure of Dozens of Schools, NBC NEWS (Dec. 6,
2018), https://www.nbcnews.com/news/education/major-profit-college-
chain-abruptly-announces-closure-dozens-schools-n944696.
120. Complaint ¶ 30, California v. Ashford University, LLC et al., No.
37-2018-00046134 (Cal. Super. Ct., Alameda Cty. Nov. 29, 2017)
(specifically, Ashford got between 80.9 and 86.8 percent of its revenue
from the federal government).
121. Goldstein & Baker, supra note 71, at 2.
122. Allie Bidwell, Education Department’s Gainful Employment Rules
Rebuffed, U.S. NEWS & WORLD REPORT (Oct. 30, 2014),
https://www.usnews.com/news/articles/2014/10/30/obama-administrations-
gainful-employment-rules-upset-student-groups-for-profits.
123. Danielle Douglas-Gabriel, Biden Administration Clashes with
Consumer Groups over the Reinstatement of Obama-Era Career Training
Regulation, WASH. POST (Nov. 18, 2021),
https://www.washingtonpost.com/education/2021/11/17/gainful-
employment-rule-biden-administration/.
124. Goldstein & Baker, supra note 71, at 5; Paul Fain, Some U of
Phoenix Programs Fail Gainful Employment Standard, INSIDE HIGHER ED
(Nov. 28, 2016),
https://www.insidehighered.com/quicktakes/2016/11/28/some-u-phoenix-
programs-fail-gainful-employment-standard.
125. Goldstein & Baker, supra note 71, at 6.
126. Fain, supra note 124.
127. Jackie Roberts, Erie’s Fortis Institute to Close Its Doors, YOUR
ERIE (July 18, 2018), https://www.yourerie.com/news/local-news/eries-
fortis-institute-to-close-its-doors/; Fortis Institute-Baltimore, COLLEGE
TUITION COMPARE, https://www.collegetuition
compare.com/edu/450076/fortis-institute-baltimore/.
128. Karen Campbell & Tim Tooten, Brightwood College Suddenly
Closes Leaving Students Frustrated, WBAL-TV (Dec. 6, 2018),
https://www.wbaltv.com/article/brightwood-college-suddenly-closes-
leaving-students-frustrated/25425539.
129. Institute for College Access & Success, Fact Sheet: What to Know
About the Gainful Employment Rule, HIGHER ED NOT DEBT (August 12,
2019), https://higherednotdebt .org/blog/fact-sheet-what-to-know-about-
the-gainful-employment-rule.
130. Eric Lichtblau, With Lobbying Blitz, For-Profit Colleges Diluted
New Rules, N.Y. TIMES (Dec. 9, 2011),
https://www.nytimes.com/2011/12/10/us/politics/for-profit-college-rules-
scaled-back-after-lobbying.html.
131. Russ Choma, Rep. Kline Turns Chairmanship into Profitable For-
Profit Haul, OPEN SECRETS (July 15, 2013),
https://www.opensecrets.org/news/2013/07/for-profit-education/; The
Gainful Employment Regulation: Limiting Job Growth and Student Choice,
House SUBCOMMITTEE ON REGULATORY AFFAIRS OF THE COMMITTEE ON
OVERSIGHT AND GOVERNMENT REFORM ET AL., 11th Cong. (2012),
https://www.govinfo.gov/content/pkg/CHRG-112hhrg71822/html/CHRG-
112hhrg71822.htm; Education Regulations: Roadblocks to Student Choice
in Higher Education, HOUSE COMMITTEE ON EDUCATION AND THE
WORKFORCE, 112th Cong. (2011),
https://www.govinfo.gov/content/pkg/CHRG-112hhrg65011/html/CHRG-
112hhrg65011.htm.
132. Joseph Ax, Judge Upholds U.S. “Gainful Employment” Rules for
For-Profit Colleges, REUTERS (May 25, 2015),
https://www.reuters.com/article/us-usa-education-lawsuit/judge-upholds-u-
s-gainful-employment-rules-for-for-profit-colleges-idUSKBN0
OC2J520150527.
133. Id.; Andy Thomason, Federal Court Upholds Gainful-Employment
Rule, Dealing For-Profit Group Another Loss, CHRONICLE OF HIGHER
EDUCATION (Mar. 8, 2016), https://www
.chronicle.com/blogs/ticker/federal-court-upholds-gainful-employment-
rule-dealing-for-profit-group-another-loss.
134. Danielle Douglas-Gabriel, Biden Administration Clashes with
Consumer Groups over the Reinstatement of Obama-Era Career Training
Regulation, WASH. POST (Nov. 18, 2021),
https://www.washingtonpost.com/education/2021/11/17/gainful-
employment-rule-biden-administration/.
135. Erica L. Green, DeVos Repeals Obama-Era Rule Cracking Down
on For-Profit Colleges, N.Y. TIMES (June 28, 2019),
https://www.nytimes.com/2019/06/28/us/politics/betsy-devos-for-profit-
colleges.html.
136. Douglas-Gabriel, supra note 134.
137. Ben Miller & Laura Jimenez, Inside the Financial Holdings of
Billionaire Betsy DeVos, CENTER FOR AMERICAN PROGRESS (Jan. 27, 2017),
https://www.americanprogress .org/article/inside-the-financial-holdings-of-
billionaire-betsy-devos/.
138. Hayley Brown, Private Equity in Higher Education: A Full Ride at
Student and Taxpayer Expense?, CENTER FOR ECONOMIC AND POLICY
RESEARCH, https://cepr.net/private-equity-in-higher-education-a-full-ride-at-
student-and-taxpayer-expense/.
139. Patricia Cohen, Betsy DeVos’s Hiring of For-Profit College Official
Raises Impartiality Issues, N.Y. TIMES (Mar. 17, 2017),
https://www.nytimes.com/2017/03/17/business/education-for-profit-robert-
eitel.html; Erin Dooley, Exclusive: Former For-Profit College Executive
Shaped Education Department Policy That Could Benefit Former
Employers: Documents, ABC NEWS (May 15, 2018),
https://abcnews.go.com/US/exclusive-profit-college-executive-shaped-
education-department-policy/story?id=55108981. Eitel began working for
the Department of Education without leaving his old job, simply taking an
unpaid leave of absence. He finally gave up his private employment in
April 2018, after being hired to work full-time as a senior adviser to
Secretary DeVos.
140. Stacy Cowley, Delayed Obama-Era Rule on Student Debt Relief Is
to Take Effect, N.Y. TIMES (Oct. 16, 2018),
https://www.nytimes.com/2018/10/16/business/student-loan-debt-
relief.html.
141. Danielle Douglas-Gabriel, House Falls Short of Overriding
Trump’s Veto of Measure to Overturn Student Loan Forgiveness Rule,
WASH. POST (June 26, 2020),
https://www.washingtonpost.com/education/2020/06/26/house-falls-short-
overriding-trumps-veto-measure-overturn-student-loan-forgiveness-rule/.
142. Id.

CHAPTER 10: THE INDUSTRY’S STRONGEST ADVOCATES

1. Totals, OPEN SECRETS,
https://www.opensecrets.org/industries/totals.php?cycle
=2022&ind=F2600.
2. Id.
3. Client Profile: KKR & Co, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/lobbyists?
cycle=2022&id=D000000358 (former reps. Dennis Cardoza and Scott
Klug lobbied for KKR); Client Profile: Apollo Global Management, OPEN
SECRETS, https://www.opensecrets.org/federal-lobbying/clients/lobbyists?
cycle=2021&id=D000021845&t0-
Former+Members+of+Congress=Former+Members+of+Congress (former
senators Mark Pryor and Steven Symms lobbied for Apollo); Client
Profile: Blackstone Group, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/clients/lobbyists?cy
cle=2021&id=D000021873&t0-
Former+Members+of+Congress=Former+Members+of +Congress (former
representative Luke Messer lobbied for Blackstone); Client Profile: Carlyle
Group, OPEN SECRETS, https://www.opensecrets.org/federal-
lobbying/clients/lobbyists?cycle=2020&id=D000000810&t0-
Former+Members+of+Congress=Former+Members +of+Congress (former
representative Ileana Ros-Lehtinen lobbied for Carlyle).
4. Employment History: Bayh, Evan, OPEN SECRETS,
https://www.opensecrets.org/revolving/rev_summary.php?id=76382
(former senator Birch Bayh serves as a senior adviser to Apollo);
Corporate Governance, BLACKSTONE, https://ir.blackstone.com/corporate-
governance/default.aspx (former Senator Kelly Ayotte serves on the board
of Blackstone).
5. People who lobbied for Carlyle included Stacey A. Dion, former
counsel to the House Republican leader, Jeff Forbes, former chief of staff
to Senator Max Baucus; Libby Greer, former chief of staff to Congressman
Allen Boyd, Dan Tate, former special assistant to the president; Ryan
Welch, former legislative director to Richard Shelby; Client Profile:
Carlyle Group, supra note 3; Lobbyist Profile: Stacey A Dion, OPEN
SECRETS, https://www.opensecrets.org/federal-
lobbying/lobbyists/official_positions?cycle=2022&id =Y0000037370L;
Stacey Dion, LINKEDIN, https://www.linkedin.com/in/staceydion/; Lobbyist
Profile: Jeff Forbes, OPEN SECRETS, https://www.opensecrets.org/federal-
lobbying/lobbyists/official_positions?cycle=2022&id=Y0000032896L;
Lobbyist Profile: Libby Greer, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions ?
cycle=2022&id=Y0000038065L; Lobbyist Profile: Dan C Jr Tate, OPEN
SECRETS, https://www.opensecrets.org/federal-
lobbying/lobbyists/official_positions?cycle=2022 &id=Y0000040940L;
Lobbyist Profile: Ryan Welch, OPEN SECRETS, https://www.open
secrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2022&id=Y0000042198L.
6. Chad Terhune, Life-Threatening Heart Attack Leaves Teacher with
$108,951 Bill, NPR (Aug. 27, 2018), https://www.npr.org/sections/health-
shots/2018/08/27/640891882/life-threatening-heart-attack-leaves-teacher-
with-108-951-bill.
7. Id.
8. Id.
9. Id.
10. Private Equity Is the Driving Force Behind Surprise Medical
Billing, AMERICANS FOR FINANCIAL REFORM (Oct. 2021),
https://ourfinancialsecurity.org/2021/10/fact-sheet-private-equity-is-the-
driving-force-behind-surprise-medical-billing/.
11. Rachel Bluth & Emmarie Huetterman, Investors’ Deep-Pocket Push
to Defend Surprise Medical Bills, KAISER HEALTH NEWS (Sept. 11, 2019),
https://khn.org/news/investors-deep-pocket-push-to-defend-surprise-
medical-bills/.
12. Eileen Appelbaum & Rosemary Batt, Private Equity and Surprise
Medical Billing, INST. FOR NEW ECON. THINKING (Sept. 4, 2019),
https://www.ineteconomics.org/perspectives/blog/private-equity-and-
surprise-medical-billing.
13. Karen Pollitz et al., An Examination of Surprise Medical Bills and
Proposals to Protect Consumers from Them, PETERSON-KFF HEALTH
SYSTEM TRACKER (Feb. 10, 2020),
https://www.healthsystemtracker.org/brief/an-examination-of-surprise-
medical-bills-and-proposals-to-protect-consumers-from-them-3/.
14. Air Ambulance: Available Data Show Privately-Insured Patients Are
at Financial Risk, GOVERNMENT ACCOUNTABILITY OFFICE 2 (Mar. 2019),
https://www.gao.gov/assets/gao-19-292.pdf.
15. Bluth & Huetterman, supra note 11.
16. Julie Creswell et al., Mystery Solved: Private-Equity-Backed Firms
Are Behind Ad Blitz on “Surprise Billing,” N.Y. TIMES (Sept. 13, 2019),
https://www.nytimes.com/2019/09/13/upshot/surprise-billing-laws-ad-
spending-doctor-patient-unity.html.
17. TeamHealth Named to Fortune Magazine’s List of “World’s Most
Admired Companies” for Third Consecutive Year, TEAMHEALTH,
https://www.teamhealth.com/news-and-resources/press-release/teamhealth-
named-to-fortune-magazines-list-of-worlds-most-admired-companies-for-
third-consecutive-year/?r=1.
18. Joel Stinnett, Completion of $9.9B Deal Leaves Nashville with One
Fewer Public Health Care Company, NASHV. BUS. J. (Oct. 11, 2018),
https://www.bizjournals.com/nashville/news/2018/10/11/completion-of-9-
9b-deal-leaves-nashville-with-one.html.
19. Envision Healthcare Corporation, Form 10-K (Feb. 23, 2018),
https://www.sec
.gov/Archives/edgar/data/1678531/000167853118000033/evhc10k2017123
1.htm.
20. Miriam Gottfried, Ill-Timed Health-Care Buyouts Bruise KKR and
Blackstone, WALL ST. J. (May 28, 2020), https://www.wsj.com/articles/ill-
timed-health-care-buyouts-bruise-kkr-and-blackstone-11590658201;
Gretchen Morgenson & Emmanuelle Saliba, Private Equity Firms Now
Control Many Hospitals, ERs and Nursing Homes. Is It Good for Health
Care?, NBC NEWS (May 13, 2020),
https://www.nbcnews.com/health/health-care/private-equity-firms-now-
control-many-hospitals-ers-nursing-homes-n1203161.
21. Loren Adler et al., High Air Ambulance Charges Concentrated in
Private Equity–Owned Carriers, BROOKINGS INSTITUTION (Oct. 13, 2020),
https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-
policy/2020/10/13/high-air-ambulance-charges-concentrated-in-private-
equity-owned-carriers/.
22. Olivia Webb, Private Equity Chases Ambulances, AM. PROSPECT
(Oct. 3, 2019), https://prospect.org/health/private-equity-chases-
ambulances-emergency-medical-transport/.
23. Adler et al., supra note 21.
24. Danielle Ivory et al., When You Dial 911 and Wall Street Answers,
N.Y. TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-
911-and-wall-street-answers.html.
25. Julie Creswell et al., The Company Behind Many Surprise
Emergency Room Bills, N.Y. TIMES (July 24, 2017),
https://www.nytimes.com/2017/07/24/upshot/the-company-behind-many-
surprise-emergency-room-bills.html.
26. Id.
27. Id.
28. Richard M. Scheffler, Soaring Private Equity Investment in the
Healthcare Sector: Consolidation Accelerated, Competition Undermined,
and Patients at Risk, AMERICAN ANTITRUST INSTITUTE 13 (May 2021),
https://publichealth.berkeley.edu/wp-content/uploads/2021/05/Private-
Equity-I-Healthcare-Report-FINAL.pdf.
29. Creswell et al., supra note 25.
30. Id.
31. Appelbaum & Batt, supra note 12.
32. Paul McLeod, A Deal to End Surprise Medical Billing Was Tanked
at the Last Minute, BUZZFEED NEWS (Dec. 19, 2019),
https://www.buzzfeednews.com/article/paulmcleod/surprise-billing-deal-
richard-neal.
33. Id.
34. Zack Cooper et al., Surprise! Out-of-Network Billing for Emergency
Care in the United States, 128 J. OF POLITICAL ECONOMY 3626–3677
(2020), https://isps.yale.edu/research/publications/isps17-22.
35. TeamHealth owes $2.7 billion by 2024, Envision owes $5.4 billion
by 2021. Eileen Appelbaum & Rosemary Batt, Why It’s So Hard to End
Surprise Medical Bills, CENTER FOR ECONOMIC POLICY RESEARCH (Feb. 19,
2020), https://cepr.net/report/why-its-so-hard-to-end-surprise-medical-
bills/.
36. Eileen Applebaum, A Surprise Ending for Surprise Billing?, AM.
PROSPECT (Dec. 16, 2020), https://prospect.org/health/surprise-ending-for-
surprise-billing/.
37. Creswell et al., supra note 25.
38. Id.
39. Applebaum & Batt, supra note 35.
40. Jessie Hellman, Private Equity–Funded Doctors Coalition Spends
$4 Million Lobbying on “Surprise” Medical Billing, THE HILL (Oct. 21,
2019), https://thehill.com/policy/health care/466756-doctors-coalition-
funded-by-private-equity-spends-4-million-lobby ing-on/.
41. Physicians for Fair Coverage, POLITIFACT (Aug. 7, 2019),
https://www.politifact .com/factchecks/2019/aug/07/physicians-fair-
coverage/doctors-argue-plans-remedy-surprise-medical-bills-/.
42. Bob Herman, Doctors Flood Congress with Lobbyists on Surprise
Medical Bills, AXIOS (Aug. 20, 2019),
https://www.axios.com/2019/08/20/surprise-medical-billing-lobbying-
congress; Client: US Physician Partners (Informal Coalition), Lobbying
Firm: Akin, Gump, Strauss, Hauer & Feld, PROPUBLICA (July 1, 2019–June
30, 2022), https://projects.propublica.org/represent/lobbying/r/301022149.
43. Herman, supra note at 42.
44. Adam Lewis, PE Digs in as Battle to End Surprise Medical Bills
Rages On, PITCHBOOK (Mar. 6, 2020),
https://pitchbook.com/news/articles/pe-digs-in-as-battle-to-end-surprise-
medical-bills-wages-on.
 45. Ways and Means Committee Surprise Medical Billing Plan, HOUSE
COMMITTEE ON WAYS AND MEANS,
https://waysandmeans.house.gov/sites/democrats.waysandmeans
.house.gov/files/documents/WM%20Surprise%20Billing%20Summary.pdf.
46. McLeod, supra note 32.
47. Paul McLeod, Surprise Medical Billing Is Finally Coming to an End
After Congress Reached a Last-Minute Deal, BUZZFEED NEWS (Dec. 22,
2020), https://www.buzzfeednews.com/article/paulmcleod/suprise-medical-
billing-banned-congress-coronavirus; Akela Lacy, Effort to Take on
Surprise Medical Billing in Coronavirus Stimulus Collapses, THE
INTERCEPT (Dec. 8 2020), https://theintercept.com/2020/12/08/surprise-
medical-billing-neal-covid/ (One member of Congress said, “The one
stumbling block has been of course, Richie trying to scuttle it.” Neal
himself said he wanted to wait another year to address the issue).
48. McLeod, supra note 47.
49. Susannah Luthi & Rachel Roubein, How Powerful Health Providers
Tamed a “Surprise” Billing Threat, POLITICO (Dec. 21, 2020),
https://www.politico.com/news/2020/12/21/surprise-billing-health-
providers-congress-449759.
50. Andrew Hurst, Ambulance Rides Have Cost $1,189 on Average
Since 2010—Totaling More Than $46 Billion, VALUEPENGUIN (Sept. 13,
2021), https://www.valuepenguin.com/cost-ambulance-services.
51. Hailey Mensik, Ground Ambulances, Excluded from Surprise
Billing Ban, to Get Scrutiny from Federal Committee, HEALTHCARE DIVE
(Nov. 22, 2021), https://www.healthcaredive .com/news/federal-committee-
ground-ambulances-no-surprises-act/610451/.
52. Luthi & Roubein, supra note 49.
53. Marty Stempniak, 150 Members of Congress Pressure
Administration to Fix Surprise Billing Rule They Say Favors Insurers,
RADIOLOGY BUS. (Nov. 10, 2021),
https://radiologybusiness.com/topics/healthcare-policy/congress-
administration-surprise-billing-insurers.
54. Thomas Suozzi (D-N.Y.) received $7,500 from US Anesthesia
Partners; Brad Wenstrup (R-Ohio) received $11,200 from Blackstone; Raul
Ruiz (D-Calif.) received $31,605 from KKR (his largest contribution that
cycle); Larry Bucshon (R-Ind.) received $12,500 from US Anesthesia
Partners. US Anesthesia Partners was in turned owned by Welsh, Carson,
Anderson & Stowe. Tom Suozzi, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/tom-
suozzi/contributors?cid =N00038742&cycle=2020&recs=100&type=I;
Brad Wenstrup, OPEN SECRETS, https://www.opensecrets.org/members-of-
congress/brad-wenstrup/contributors?cid
=N00033310&cycle=2020&recs=100&type=I; Raul Ruiz, OPEN SECRETS,
https://www .opensecrets.org/members-of-congress/raul-ruiz/contributors?
cid=N00033510&cycle =2020&type=I; Larry Bucshon, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/larry-
bucshon/contributors?cid=N00031227&cycle=2020&recs=100&type=I;
Welsh, Carson, Anderson & Stowe and Healthcare Industry Veteran
Announce Formation of U.S. Anesthesia Partners, Inc., US ANESTHESIA
PARTNERS, https://www.usap.com/news-and-events/news/welsh-carson-
anderson-stowe-and-healthcare-industry-veteran-announce-formation.
55. Bill Cassidy, OPEN SECRETS, https://www.opensecrets.org/members-
of-congress/bill-cassidy/contributors?
cid=N00030245&cycle=2020&recs=100&type=I.
56. Maggie Hassan, OPEN SECRETS,
https://www.opensecrets.org/members-of-con gress/maggie-
hassan/contributors?cid=N00038397&cycle=2020&recs=100&type=I;
https://www.opensecrets.org/members-of-congress/maggie-hassan/contribu
tors?cid=N00038397&cycle=2020&recs=100&type=I. US Acute Care
Solutions was then owned by Welsh Carson Anderson & Stowe.
57. Austin Ahlman, Congressional Democrats Join Republicans to
Undermine Biden Administration’s Surprise Medical Billing Rule, THE
INTERCEPT (Jan. 17 2022), https://theintercept .com/2022/01/17/surprise-
medical-billing-lawsuit/.
58. Kevin Brady, OPEN SECRETS, https://www.opensecrets.org/members-
of-congress/kevin-brady/contributors?
cid=N00005883&cycle=2020&recs=100&type=I; Austin Ahlman,
Congressional Democrats Join Republicans to Undermine Biden
Administration’s Surprise Medical Billing Rule, THE INTERCEPT (Jan. 17,
2022), https://theintercept.com/2022/01/17/surprise-medical-billing-
lawsuit/.
59. Richard E Neal, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/richard-e-
neal/contributors?cid=N00000153&cycle=2020&recs=100&type=I.
60. AHA, AMA and Others File Lawsuit over No Surprises Act Rule
That Jeopardizes Access to Care, AMERICAN HOSPITAL ASSOCIATION (Dec.
9, 2021), https://www.aha.org/news/news/2021-12-09-aha-ama-and-others-
file-lawsuit-over-no-surprises-act-rule-jeopardizes-access.
61. Victor Fleischer, Two and Twenty: Taxing Partnership Profits in
Private Equity Funds, 83 NYU L. REV. 1 (2008) (While published in 2008,
the draft article reached congressional staffers in 2006); Andrew Ross
Sorkin, A Professor’s Word on a Buyout Tax Battle, N.Y. TIMES (Oct. 3,
2007), https://www.nytimes.com/2007/10/03/business/03tax.html.
62. H.R. 3970, Tax Reduction and Reform Act of 2007, 110th Cong.
(2007); Levin—Legislation Fixes Carried Interest Loophole, HOUSE WAYS
& MEANS COMMITTEE (Jan. 18, 2012),
https://waysandmeans.house.gov/media-center/press-releases/levin-
legislation-fixes-carried-interest-loophole; Louis Jacobson & Molly
Moorhead, Tax Carried Interest as Ordinary Encome, POLITIFACT (Jan. 2,
2013), https://www.politifact.com/truth-o-
meter/promises/obameter/promise/42/tax-carried-interest-as-ordinary-
income/.
63. Client Profile: Blackstone Group, supra note 3.
64. Apollo Global Management, OPEN SECRETS,
https://www.opensecrets.org/orgs/apollo-global-management/lobbying?
id=D000021845; KKR & Co, OPEN SECRETS,
https://www.opensecrets.org/orgs/kkr-co/lobbying?id=D000000358;
Carlyle Group, OPEN SECRETS, https://www.opensecrets.org/orgs/carlyle-
group/lobbying?id=D000000810.
65. Peter Lattman, Carried Interest Tax Break Comes Under Fire Again,
N.Y. TIMES (Sept. 12, 2011),
https://archive.nytimes.com/dealbook.nytimes.com/2011/09/12/carried-
interest-tax-break-comes-under-fire-again/.
 66. Richard Rubin, Obama Attacks Carried Interest Again to Shrugs in
Congress, BLOOMBERG (May 12, 2015),
https://www.bloomberg.com/news/articles/2015-05-12/obama-attacks-
carried-interest-again-to-shrugs-in-u-s-congress.
67. Id.
68. Alan Rappeport, Trump Promised to Kill Carried Interest. Lobbyists
Kept It Alive., N.Y. TIMES (Dec. 22, 2017),
https://www.nytimes.com/2017/12/22/business/trump-carried-interest-
lobbyists.html.
69. Justin Elliott & Theodoric Meyer, Susan Collins Backed Down from
a Fight with Private Equity. Now They’re Underwriting Her Reelection.,
PROPUBLICA (Oct. 29, 2020), https://www.propublica.org/article/susan-
collins-backed-down-from-a-fight-with-private-equity-now-theyre-
underwriting-her-reelection.
70. Susan Collins, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/susan-
collins/contributors?cid=N00000491&cycle=2020&type=I.
71. Elliott & Meyer, supra note 69.
72. Alan Rappeport, Mnuchin’s Private Equity Fund Raises $2.5 Billion,
N.Y. TIMES (Oct. 28, 2021),
https://www.nytimes.com/2021/09/20/us/politics/mnuchin-saudi-private-
equity.html.
73. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
74. Id.
75. Nancy Cook & Bernie Beckert, Top Treasury Aide to Leave
Administration for Private Equity Trade Group, POLITICO (June 7, 2018),
https://www.politico.com/story/2018/06/07/drew-maloney-treasury-
leaving-white-house-631547.
76. Allyson Versprille, Carried-Interest Tax Break Shrinks, Survives in
Democrats’ Plan, BLOOMBERG (Sept. 13, 2021),
https://www.bloomberg.com/news/articles/2021-09-13/house-democrats-
maintain-a-scaled-back-private-equity-tax-break; Michael A. Bloom et al.,
Summer Update: Where Do We Stand on President Biden’s Proposal to
Eliminate the Carried Interest Loophole?, VENABLE (July 2021),
https://www.venable.com/insights/publications/2021/07/summer-update-
where-do-we-stand-on-pres.
77. Versprille, supra note 76.
78. Christina Wilkie, Lobbyists Shielded Carried Interest from Biden’s
Tax Hikes, Top White House Economist Says, CNBC (Sept. 30, 2021),
https://www.cnbc.com/2021/09/30/lobbying-kept-carried-interest-out-of-
bidens-tax-plan-bernstein-says.html.
79. Id.
80. Id.
81. Carlyle Group, supra note 64; Blackstone Group, OPEN SECRETS,
https://www.open secrets.org/orgs/blackstone-group/lobbying?
id=D000021873; KKR & Co, supra note 64.
82. Apollo Global Management, supra note 64.
83. Lobbyist Profile: Marc Lampkin, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000015980L5.
84. Lobbyist Profile: Brian Wild, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000009894L.
85. Lobbyist Profile: Nadeam Elshami, OPEN SECRETS,
https://www.opensecrets.org/federal-lobbying/lobbyists/official_positions?
cycle=2021&id=Y0000054026L.
86. Client Profile: Apollo Global Management, supra note 3.
87. Kyrsten Sinema, OPEN SECRETS,
https://www.opensecrets.org/members-of-congress/kyrsten-
sinema/contributors?cid=N00033983&cycle=2022.
88. Reckless Tax and Spend Spree Amendment Tracker, SENATE
REPUBLICAN POLICY COMMITTEE, https://www.rpc.senate.gov/policy-
papers/reckless-tax-and-spend-spree-amendment-tracker; Christopher
Hickey, Not the Year for Women and Parents, CNN (Aug. 12, 2022),
https://www.cnn.com/2022/08/12/politics/inflation-reduction-children-
families/index.html.
89. Jennifer L. Bragg, Senate Passes Landmark Bill with Climate, Tax,
Energy and Health Care Implications, SKADDEN (Aug. 7, 2022),
https://www.skadden.com/insights/publications/2022/08/senate-passes-
landmark-bill.
90. Oscar Valdes-Viera et al., Public Money for Private Equity:
Pandemic Relief Went to Companies Backed by Private Equity Titans, Anti-
Corruption Data Collective ET AL. 2 (2021),
https://ourfinancialsecurity.org/wp-content/uploads/2021/09/public-money-
for-private-equity-9-13-21.pdf.
91. Id. at 8.
92. David Kocieniewski & Caleb Melby, Private Equity Lands Billion-
Dollar Backdoor Hospital Bailout, BLOOMBERG (June 2, 2020),
https://www.bloomberg.com/news/features/2020-06-02/private-equity-
lands-billion-dollar-backdoor-hospital-bailout.
93. Id.
94. Id.; CMS Announces New Repayment Terms for Medicare Loans
Made to Providers During COVID-19, CENTER FOR MEDICARE AND
MEDICAID SERVICES (Oct. 8, 2020), https://www .cms.gov/newsroom/press-
releases/cms-announces-new-repayment-terms-medicare-loans-made-
providers-during-covid-19.
95. Kocieniewski & Melby, supra note 92.
96. Valdes-Viera et al., supra note 90, at 7.
97. Id. at 21.
98. Ryan Gallagher, SolarWinds Adviser Warned of Lax Security Years
Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
99. Drew Harris & Doug MacMillan, Investors in Breached Software
Firm SolarWinds Traded $280 Million in Stock Days Before Hack Was
Revealed, WASH. POST (Dec. 15, 2020),
https://www.washingtonpost.com/technology/2020/12/15/solarwinds-
russia-breach-stock-trades/.
100. Ezequiel Minaya, SolarWinds to Be Bought by Silver Lake, Thoma
Bravo, WALL ST. J. (Oct. 21, 2015),
https://www.wsj.com/articles/solarwinds-to-be-bought-by-silver-lake-and-
thoma-bravo-1445438835.
 101. Miriam Gottfried, Orlando Bravo Rides Software Deals to Heights
of Private-Equity Industry, WALL ST. J. (Sept. 22, 2020),
https://www.wsj.com/articles/orlando-bravo-rides-software-deals-to-
heights-of-private-equity-industry-11600767001.
102. Antoine Gara, Buyout Firm Thoma Bravo Goes from Niche to Big
League, FIN. TIMES (Dec. 6 2021), https://www.ft.com/content/456f2fd7-
f868-4ea6-abd7-fce34e783333.
103. E.g., SolarWinds Worldwide, SolarWinds MSP Acquires
SpamExperts to Enhance Its Growing Product Portfolio, GLOBENEWSWIRE
(Aug. 29, 2017), https://www.globenewswire .com/news-
release/2017/08/29/1101687/0/en/SolarWinds-MSP-Acquires-
SpamExperts-to-Enhance-its-Growing-Product-Portfolio.html; SolarWinds
Adds Access Rights Management to Its IT Management Portfolio,
Following the Acquisition of 8MAN, SOLARWINDS (Nov. 15, 2018),
https://investors.solarwinds.com/news/news-details/2018/SolarWinds-
Adds-Access-Rights-Management-to-Its-IT-Management-Portfolio-
following-the-Acquisition-of-8MAN/default.aspx; Frederic Lardinois,
SolarWinds Acquires Real-time Threat-Monitoring Service Trusted Metrics,
TECHCRUNCH (July 10, 2018), https://techcrunch
.com/2018/07/10/solarwinds-acquires-real-time-threat-monitoring-service-
trusted-metrics/; Frederic Lardinois, SolarWinds Acquires Log-Monitoring
Service Loggly, TECHCRUNCH (Jan. 8, 2018),
https://techcrunch.com/2018/01/08/solarwinds-acquires-log-monitoring-
service-loggly/.
104. The New York Times reported that the company shifted software
engineering resources to Poland, the Czech Republic, and Belarus. The last
of these appears to have occurred under Silver Lake and Thoma Bravo’s
oversight. In the company’s 2015 quarterly statement, its last year before
its acquisition, it makes no reference to operations in Belarus, while its
2021 financial statement after acquisition does. Compare SolarWinds
Corporation, Form 10-Q (Nov. 3, 2015),
https://www.sec.gov/Archives/edgar/data/1428669/000142866915000067/s
wi-2015930x10q.htm with SolarWinds Corporation, Form 10-K (Feb. 24,
2021), https://d18rn0p25nwr6d.cloudfront.net/CIK-0001739942/48bd02f7-
3c52-4abc-a5e9-60401f9a4e8b.pdf.
 105. David E. Sanger et al., As Understanding of Russian Hacking
Grows, So Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html. This appears to have occurred during the private equity
firms’ ownership of the company: between 2020 and 2021, for instance, the
company managed to reduce the overall cost of revenue. 2021 Analyst &
Investor Day, SOLARWINDS 75 (2021),
https://s22.q4cdn.com/673701899/files/doc_downloads/2021/11/Analyst-
Day-PDF-Version-(2).pdf.
106. Ryan Gallagher, SolarWinds Adviser Warned of Lax Security Years
Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
107. Consolidated Complaint ¶ 8, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. (June 1, 2021), ECF No.
26.
108. Raphael Satte et al., Hackers Used SolarWinds’ Dominance
Against It in Sprawling Spy Campaign, REUTERS (Dec. 15, 2020),
https://www.reuters.com/article/global-cyber-solarwinds/hackers-at-center-
of-sprawling-spy-campaign-turned-solarwinds-dominance-against-it-
idUSKBN28P2N8.
109. Id.
110. Consolidated Complaint ¶ 111, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No.
26.
111. David E. Sanger et al., As Understanding of Russian Hacking
Grows, So Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html.
112. Consolidated Complaint ¶ 6, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No.
26.
113. Id.; Ryan Gallagher, SolarWinds Adviser Warned of Lax Security
Years Before Hack, BLOOMBERG (Dec. 21, 2020),
https://www.bloomberg.com/news/articles/2020-12-21/solarwinds-adviser-
warned-of-lax-security-years-before-hack.
114. Dave Sebastian, SolarWinds Discloses Earlier Evidence of Hack,
WALL ST. J. (Jan. 12, 2021), https://www.wsj.com/articles/solarwinds-
discloses-earlier-evidence-of-hack-11610473937.
115. Dina Temple-Raston, A “Worst Nightmare” Cyberattack: The
Untold Story of the SolarWinds Hack, NPR (Apr. 16, 2021),
https://www.npr.org/2021/04/16/985439655/a-worst-nightmare-
cyberattack-the-untold-story-of-the-solarwinds-hack.
116. Consolidated Complaint ¶ 151, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No.
26.
117. Julia Kisielius, Breaking Down the SolarWinds Supply Chain
Attack, SPYCLOUD (Mar. 11, 2021), https://spycloud.com/solarwinds-
attack-breakdown/.
118. The federal agencies were the Treasury, State, Justice, Commerce,
Defense, and Energy Departments. Sanger et al., supra note 105; Catalin
Cimpanu, DOJ Says SolarWinds Hack Impacted 27 US Attorneys’ Offices,
RECORD (July 30, 2021), https://therecord .media/doj-says-solarwinds-
hack-impacted-27-state-attorneys-offices/.
119. David E. Sanger & Alan Rappeport, Treasury Department’s Senior
Leaders Were Targeted by Hacking, N.Y. TIMES (Jan. 6, 2021),
https://www.nytimes.com/2020/12/21/us/politics/russia-hack-treasury.html.
120. Alan Suderman & Eric Tucker, Justice Department Says Russians
Hacked Federal Prosecutors, ASSOCIATED PRESS (July 30, 2021),
https://apnews.com/article/technology-europe-russia-election-2020-
5486323e455277b39cd3283d70a7fd64.
121. Consolidated Complaint ¶ 150, In re: SolarWinds Corporation
Securities Litigation, No. 1:21-cv-138 (W.D. Tex. June 1, 2021), ECF No.
26.
122. David E. Sanger et al., As Understanding of Russian Hacking
Grows, So Does Alarm, N.Y. TIMES (May 28, 2021),
https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-
government.html.
 123. Hearings on the SolarWinds Hack and Possible Policy Responses,
NAT’L L. REV. (Oct. 9, 2022),
https://www.natlawreview.com/article/hearings-solarwinds-hack-and-
possible-policy-responses; Prevention, Response, and Recovery: Improving
Federal Cybersecurity Post-SolarWinds, SENATE COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS (May 11, 2021),
https://www.hsgac.senate.gov/hearings/prevention-response-and-recovery-
improving-federal-cybersecurity-post-solarwinds; SolarWinds and Beyond:
Improving the Cybersecurity of Software Supply Chains, HOUSE
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, SUBCOMMITTEE ON
INVESTIGATIONS AND OVERSIGHT & SUBCOMMITTEE RESEARCH AND
TECHNOLOGY (May 25, 2021),
https://science.house.gov/hearings/solarwinds-and-beyond-improving-the-
cybersecurity-of-software-supply-chains.
124. Michael Novinson, $286M of SolarWinds Stock Sold Before CEO,
Hack Disclosures, CRN (Dec. 16, 2020),
https://www.crn.com/news/security/-286m-of-solarwinds-stock-sold-
before-ceo-hack-disclosures?itc=refresh (Silver Lake and Thoma Bravo
together owned three-fourths of the company’s stock and controlled a
majority of its board).
125. Search for “SolarWinds,” 116th and 117th Cong., CONGRESS.GOV;
search for “Silver Lake,” 116th and 117th Cong., CONGRESS.GOV (all
references to Silver Lake are to geographies, not the private equity firm);
search for “Thoma Bravo,” CONGRESS.GOV.
126. Drew Harris & Doug MacMillan, Investors in Breached Software
Firm SolarWinds Traded $280 Million in Stock Days Before Hack Was
Revealed, WASH. POST (Dec. 15, 2020),
https://www.washingtonpost.com/technology/2020/12/15/solarwinds-
russia-breach-stock-trades/.
127. Douglas MacMillan & Aaron Schaffer, Breached Software Firm
SolarWinds Faces SEC Inquiry After Insider Stock Sales, WASH. POST
(Mar. 1, 2021), https://www
.washingtonpost.com/business/2021/03/01/solarwinds-sec-inquiry/ (Thoma
Bravo and Silver Lake declined to comment to the Washington Post on the
inquiry).
 128. Miriam Gottfried, China’s Sovereign Fund Sells Out of Pre-Crisis
Blackstone Investment, WALL ST. J. (Mar. 13, 2018),
https://www.wsj.com/articles/chinas-sovereign-fund-sells-out-of-pre-crisis-
blackstone-investment-1520981281.
129. China’s Forex Investment Company to Invest US$3 BLN in
Blackstone, XINHUA (May 21, 2007),
http://en.people.cn/200705/21/print20070521_376576.html.
130. Alexandra Stevenson, China Sells Stake in Blackstone as Deal
Scene Turns Sour, N.Y. TIMES (Mar. 14, 2018),
nytimes.com/2018/03/14/business/blackstone-cic-china.html.
131. Michael Kranish, Trump’s China Whisperer: How Billionaire
Stephen Schwarzman Has Sought to Keep the President Close to Beijing,
WASH. POST (Mar. 12, 2018),
https://www.washingtonpost.com/politics/trumps-china-whisperer-how-
billionaire-stephen-schwarzman-has-sought-to-keep-the-president-close-to-
beijing/2018/03/11/67e369a8-0c2f-11e8-95a5-c396801049ef_story.html.
132. E.g., Blackstone Completes Acquisition of Majority Stake in the
Largest Logistics Park in China’s Greater Bay Area, BLACKSTONE (Jan. 20,
2021), https://www.blackstone.com/news/press/blackstone-completes-
acquisition-of-majority-stake-in-the-largest-logistics-park-in-chinas-
greater-bay-area/; Carol Zhong & Kane Wu, Blackstone Buys China -based
Packager ShyaHsin in $800–900 Million Deal—Sources, YAHOO NEWS
(Nov. 10, 2017), https://www.yahoo.com/news/blackstone-buys-china-
based-packager-072804958.html.
133. Miriam Gottfried, China’s Sovereign Fund Sells Out of Pre-Crisis
Blackstone Investment, WALL ST. J. (Mar. 13, 2018),
https://www.wsj.com/articles/chinas-sovereign-fund-sells-out-of-pre-crisis-
blackstone-investment-1520981281.
134. Kranish, supra note 131.
135. Simon Clark, American Billionaires Vanish from Russian Fund’s
Website, WALL ST. J. (Sept. 3, 2014), https://www.wsj.com/articles/names-
of-u-s-billionaires-vanish-from-russian-funds-website-1409747234.
136. Id.
137. Dylan Tokar & Kristin Broughton, Russian Fund Behind
Coronavirus Aid Shipment Is on U.S. Lending Blacklist, WALL ST. J. (Apr.
2, 2020), https://www.wsj.com/articles/russian-fund-behind-coronavirus-
aid-shipment-is-on-u-s-lending-blacklist-11585873617.
138. Jessica Silver-Greenberg et al., The Benefits of Standing by the
President, N.Y. TIMES (Aug. 19, 2017),
https://www.nytimes.com/2017/08/19/business/the-benefits-of-standing-by-
the-president.html.
139. Kate Kelly & Andrew Ross Sorkin, Massive United States–Saudi
Infrastructure Fund Struggles to Get Going, N.Y. TIMES (Apr. 4, 2018),
https://www.nytimes .com/2018/04/04/business/blackstone-infrastructure-
fund-saudi.html.
140. Natasha Turak, What’s Happening in Saudi Arabia Is
“Extraordinary,” Says Blackstone CEO, CNBC (Jan. 25, 2018),
https://www.cnbc.com/2018/01/25/blackstone-ceo-schwarzman-saudi-
arabia-reforms-are-extraordinary.html.
141. Id.
142. Ben Hubbard, Saudis Say Arrests Target Foreign-Funded
Dissidents, N.Y. TIMES (Sept. 15, 2017),
https://www.nytimes.com/2017/09/15/world/middleeast/saudi-arabia-
arrests.html?mcubz=3&_r=0.
143. Kevin Sullivan & Kareem Fahim, A Year After the Ritz-Carlton
Roundup, Saudi Elites Remain Jailed by the Crown Prince, WASH. POST
(Nov. 5, 2018), https://www .washingtonpost.com/world/a-year-after-the-
ritz-carlton-roundup-saudi-elites-remain-jailed-by-the-crown-
prince/2018/11/05/32077a5c-e066-11e8-b759-3d88a5ce9e19_story.html.
144. Jeanne Whalen, Finance CEOs Pull Out of Saudi “Davos in the
Desert” over Khashoggi, Risking Lucrative Role in Kingdom’s Economic
Reforms, WASH. POST (Oct. 15, 2018),
https://www.washingtonpost.com/business/economy/finance-ceos-pull-out-
of-saudi-davos-in-the-desert-over-khashoggi-risking-lucrative-role-in-
kingdoms-economic-reforms/2018/10/15/b10afea4-d0b8-11e8-b2d2-
f397227b43f0_story.html.
145. Third Quarter 2018 Earnings Investor Call, BLACKSTONE (Oct. 18,
2018),
https://s23.q4cdn.com/714267708/files/doc_events/BLACKSTONE-Third-
Quarter-2018-Investor-Call.pdf (On an earnings call, Blackstone’s
president said that its investment with Saudi was set to grow, regardless of
“some near-term challenges,” that is, Khashoggi’s murder).
146. Nicholas Comfort, Women Were Scared of Working at Blackstone,
Schwarzman Says, BLOOMBERG (Oct. 26, 2021),
https://www.bloomberg.com/news/articles/2021-10-26/women-were-
scared-of-working-at-blackstone-schwarzman-says.
147. Cristina Alesci, Stephen Schwarzman Writes in New Book About
His Role as Trump Interlocutor with China, CNN BUSINESS (Sept. 17,
2019), https://www.cnn.com/2019/09/17/economy/stephen-schwarzman-
trump-china-trade/index.html.
148. Kate Kelly, In Trump, Stephen Schwarzman Found a Chance to
Burnish His Legacy, N.Y. TIMES (Jan. 19, 2021),
https://www.nytimes.com/2021/01/19/business/schwarzman-blackstone-
trump.html.
149. Kranish, supra note 131.
150. Id.; Cristina Alesci, Stephen Schwarzman Writes in New Book
About His Role as Trump Interlocutor with China, CNN (Sept. 19, 2019),
https://www.cnn.com/2019/09/17/economy/stephen-schwarzman-trump-
china-trade/index.html; Kelly, supra note 148.
151. Phleim Kine, From “Momentous” to “Meh”—Trump’s China
Trade Deal Letdown, POLITICO (Jan. 13, 2022),
https://www.politico.com/newsletters/politico-china-
watcher/2022/01/13/from-momentous-to-meh-the-phase-one-trade-deal-
letdown-495705.
152. Silver-Greenberg et al., supra note 138.

CHAPTER 11: WHAT WE MUST DO

1. Lawrence Mishel & Jori Kandra, Wages for the Top 1% Skyrocketed
160% Since 1979 While the Share of Wages for the Bottom 90% Shrunk,
ECONOMIC POLICY INSTITUTE (Dec. 1, 2020),
https://www.epi.org/blog/wages-for-the-top-1-skyrocketed-160-since-1979-
while-the-share-of-wages-for-the-bottom-90-shrunk-time-to-remake-wage-
pattern-with-economic-policies-that-generate-robust-wage-growth-for-vast-
majority/.
 2. How Does COVID Relief Compare to Great Recession Stimulus?,
COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET (July 1, 2020),
https://www.crfb.org/blogs /how-does-covid-relief-compare-great-
recession-stimulus; Juliana Menasce Horowitz et al., Trends in Income and
Wealth Inequality, PEW RESEARCH CENTER (Jan. 9, 2020),
https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-
and-wealth-inequality/.
3. Value Added by Industry: Manufacturing as a Percentage of GDP,
ST. LOUIS FEDERAL RESERVE,
https://fred.stlouisfed.org/series/VAPGDPMA; Value Added by Industry:
Finance, Insurance, Real Estate, Rental, and Leasing: Finance and
Insurance as a Percentage of GDP, ST. LOUIS FEDERAL RESERVE,
https://fred.stlouisfed.org/series/VAPGDPFI.
4. Elizabeth Warren, End Wall Street’s Stranglehold on Our Economy,
MEDIUM.COM (July 18, 2019), https://medium.com/@teamwarren/end-wall-
streets-stranglehold-on-our-economy-70cf038bac76.
5. William M. Tsutsui & Stefano Mazzotta, The Bubble Economy and
the Lost Decade: Learning from the Japanese Economic Experience, 9 J.
GLOBAL INITIATIVES: POLICY, PEDAGOGY, PERSPECTIVE 57, 65 (2015),
https://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi ?
article=1164&context=jgi.
6. Id. at 71; Matt Jancer, How Eight Conglomerates Dominate Japanese
Industry, SMITHSONIAN MAG. (Sept. 7, 2016),
https://www.smithsonianmag.com/innovation/how-eight-conglomerates-
dominate-japanese-industry-180960356/.
7. Lost Decades, WIKIPEDIA,
https://en.wikipedia.org/wiki/Lost_Decades.
8. Tsutsui & Mazzotta, supra note 5.
9. Bruce Stokes, Japanese More Satisfied with Economy, but Doubts
About Future Persist, PEW RESEARCH CENTER (Oct. 17, 2017),
https://www.pewresearch.org/global/2017/10/17/japanese-more-satisfied-
with-economy-but-doubts-about-future-persist/.
10. Kim Parker et al., America in 2050, PEW RESEARCH CENTER (Mar.
21, 2019), https://www.pewresearch.org/social-trends/2019/03/21/america-
in-2050/ (An almost identical number—20 percent—of Americans believe
that the standard of living for the average American family will improve
over the next thirty years).
11. Daniel A. Crane, Antitrust and Democracy: A Case Study from
German Fascism 1, 16 (U. of Michigan Law & Econ. Research Paper No.
18-009, U. of Michigan Public Law Research Paper No. 595, Apr. 17,
2018), https://papers.ssrn.com/sol3/papers.cfm ?abstract_id=3164467.
12. Jack Beatty, AGE OF BETRAYAL: THE TRIUMPH OF MONEY IN AMERICA,
1865–1900, 12, 40–41, 33–34, 109 (2008).
13. Id. at 42, 157, 187, 218.
14. Id. at 219.
15. Id. at 476.
16. Adamson Act, WIKIPEDIA,
https://en.wikipedia.org/wiki/Adamson_Act.
17. Hepburn Act, WIKIPEDIA,
https://en.wikipedia.org/wiki/Hepburn_Act.
18. Federal Farm Loan Act, WIKIPEDIA,
https://en.wikipedia.org/wiki/Federal_Farm_Loan_Act.
19. United States Postal Savings System, WIKIPEDIA,
https://en.wikipedia.org/wiki/United_States_Postal_Savings_System.
20. Inspection, Enforcement, Compliance, DEPARTMENT OF LABOR,
https://www.dol.gov/general/aboutdol/history/mono-regsafepart03.
21. Progressive Ideas, DEPARTMENT OF LABOR,
https://www.dol.gov/general/aboutdol/history/mono-regsafepart03.
22. Bill Kovarik, Air Pollution, ENVIRONMENTAL HISTORY,
https://environmentalhistory .org/about/airpollution/ (Pittsburgh established
smoke abatement ordinances); Scott Klinger, Breathing Easier Because of
the Clean Air Act, CENTER FOR EFFECTIVE GOVERNMENT (Dec. 31, 2014),
https://www.foreffectivegov.org/blog/breathing-easier-because-clean-air-
act (1910, Massachusetts passes clean air laws regulating smoke output).
23. The Agrarian and Populist Movements, COURSE HERO,
https://www.coursehero .com/study-guides/boundless-ushistory/the-
agrarian-and-populist-movements/.
24. Our Labor History Timeline, AFL-CIO, https://aflcio.org/about-
us/history.
 25. Henny Sender & Monica Langley, How Blackstone’s Chief Became
$7 Billion Man, WALL ST. J. (June 13, 2007),
https://www.wsj.com/articles/SB118169817142333414.
26. Beatty, supra note 12, at 278; see generally Sven Beckert, THE
MONIED METROPOLIS: NEW YORK CITY AND THE CONSOLIDATION OF THE
AMERICAN BOURGEOISIE, 1850–1896 293–295 (2001).
27. James B. Stewart, The Birthday Party, NEW YORKER (Feb. 18,
2008).
28. Alec Tyson & Brian Kennedy, Two-Thirds of Americans Think
Government Should Do More on Climate, PEW RESEARCH CENTER (June 23,
2020), https://www.pewresearch .org/science/2020/06/23/two-thirds-of-
americans-think-government-should-do-more-on-climate/ (showing
widespread support for climate action, including among Republicans);
Katherine Schaeffer, Key Facts About Americans and Guns, PEW RESEARCH
CENTER (Sept. 12, 2021), https://www.pewresearch.org/fact-
tank/2021/09/13/key-facts-about-americans-and-guns/ (showing support
for some gun control policies, including among Republicans); Gaby
Galvin, About 7 in 10 Voters Favor a Public Health Insurance Option.
Medicare for All Remains Polarizing, MORNING CONSULT (Mar. 24, 2021),
https://morningconsult.com/2021/03/24/medicare-for-all-public-option-
polling/ (showing large support for a public option, including among
Republicans).
29. Summary, OPEN SECRETS,
https://www.opensecrets.org/industries/indus.php?ind =F2600.

CHAPTER 12: AN AGENDA FOR REFORM

1. Brendan Ballou, The “No Collusion” Rule, 32 STAN. L. & POL’Y REV.
213 (2021).
2. Beth Schwartzapfel, How Bad Is Prison Health Care? Depends on
Who’s Watching, MARSHALL PROJECT (Feb. 26, 2018),
https://www.themarshallproject.org/2018/02/25/how-bad-is-prison-health-
care-depends-on-who-s-watching.
 3. Elizabeth Whitman, Arizona Prison Food Was Labeled “Not for
Human Consumption,” Ex-Inmates Say, PHOENIX NEW TIMES (Sept. 25,
2019), https://www.phoenixnewtimes .com/news/ex-inmates-arizona-
prison-food-was-not-for-human-consumption-11362468.
4. Alan Judd, Jail Food Complaints Highlight Debate over Outsourcing
Public Services, ATLANTA J. CONST. (Jan. 1, 2015), https://bit.ly/31wc8Tn.
5. Peter Whoriskey, As a Grocery Chain Is Dismantled, Investors
Recover Their Money. Worker Pensions Are Short Millions., WASH. POST
(Dec. 28, 2018), https://www .washingtonpost.com/business/economy/as-a-
grocery-chain-is-dismantled-investors-recover-their-money-worker-
pensions-are-short-millions/2018/12/28/ea22e398-0a0e-11e9-85b6-
41c0fe0c5b8f_story.html.
6. Stephen Miller, DOL Pulls Back on Private Equity in 401(k)s, SHRM
(Jan. 11, 2022), https://www.shrm.org/resourcesandtools/hr-
topics/benefits/pages/dol-pulls-back-on-private-equity-in-401k-plans.aspx.
7. Consumer Financial Protection Bureau Proposes Rule to End Payday
Debt Traps, CONSUMER FINANCIAL PROTECTION BUREAU (June 2, 2016),
https://bit.ly/31DQFrc.
8. Kate Berry, CFPB Poised to Reinstate Tough Stance on Payday
Lenders, AMERICAN BANKER (Mar. 29, 2021),
https://www.americanbanker.com/news/cfpb-poised-to-reinstate-tough-
stance-on-payday-lenders. But see Alan S. Kaplinsky, CFPB Issues Report
on State Payday Loan Extended Payment Plans, BALLARD SPAHR (Apr. 7,
2022), https://www .consumerfinancemonitor.com/2022/04/07/cfpb-issues-
report-on-state-payday-loan-extended-payment-plans/ (“Perhaps more
significant than what the report says is what it does not say—namely, that
the CFPB intends to launch a new rulemaking in the payday lending space
that would purport to reinstate the “ability-to-repay” provisions in former
Director Cordray’s original payday lending rule.”).
9. Questions for the Record, Committee on Banking, Housing, and
Urban Affairs Nominations of the Honorable Gary Gensler and the
Honorable Rohit Chopra, SENATE BANKING COMMITTEE 8 (Mar. 2, 2021),
https://www.banking.senate.gov/imo/media/doc/Chopra%20Resp
%20to%20QFRs%203-2-211.pdf.
 10. CFPB Penalizes JPay for Siphoning Taxpayer-Funded Benefits
Intended to Help People Re-enter Society After Incarceration, CONSUMER
FINANCIAL PROTECTION BUREAU (Oct. 19, 2021),
https://www.consumerfinance.gov/about-us/newsroom/cfpb-penalizes-
jpay-for-siphoning-taxpayer-funded-benefits-intended-to-help-people-re-
enter-society-after-incarceration/.
11. Nursing Homes Need More Staff, NATIONAL CONSUMER VOICE,
https://theconsumer voice.org/uploads/files/issues/Consumer-Fact-Sheet-
Nursing-Home-Staffing.pdf
12. Fact Sheet: Protecting Seniors by Improving Safety and Quality of
Care in the Nation’s Nursing Homes, WHITE HOUSE (Feb. 28, 2022),
https://www.whitehouse.gov/briefing-room/statements-
releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-
disabilities-by-improving-safety-and-quality-of-care-in-the-nations-
nursing-homes/.
13. Charlene Harrington et al., These Administrative Actions Would
Improve Nursing Home Ownership and Financial Transparency in the Post
COVID-19 Period, HEALTH AFFAIRS (Feb. 11, 2021),
https://www.healthaffairs.org/do/10.1377/hblog20210208.597573/full/.
14. Ariel Gelrud Shiro & Richard V. Reeves, The For-Profit College
System Is Broken and the Biden Administration Needs to Fix It, BROOKINGS
INSTITUTION (Jan. 12, 2021), https://www.brookings.edu/blog/how-we-
rise/2021/01/12/the-for-profit-college-system-is-broken-and-the-biden-
administration-needs-to-fix-it/.
15. Id.
16. Id.
17. Stephanie Hall et al., What States Can Do to Protect Students from
Predatory For-Profit Colleges, CENTURY FOUND (May 26, 2020),
https://tcf.org/content/report/states-can-protect-students-predatory-profit-
colleges/.
18. Id.
19. Ben Miller, College Executives Need to Pay Up When Their Schools
Close Abruptly, CENTER FOR AMERICAN PROGRESS (Mar. 19, 2019),
https://www.americanprogress.org/article/college-executives-need-pay-
schools-close-abruptly/.
 20. Shiro & Reeves, supra note 14.
21. Form PF Presentation, SEC (Sept. 13, 2013),
https://www.sec.gov/info/cco/cco-2013-09-13-presentation-form-pf.pdf.
22. Chris Witowsky, LPs Fear an “Erosion” of Fiduciary Duty in Fund
Contracts: ILPA Survey, BUYOUTS (July 13, 2020),
https://www.buyoutsinsider.com/lps-fear-an-erosion-of-fiduciary-duty-in-
fund-contracts-ilpa-survey/ (Limited partners are concerned about
agreements with general partners where the GPs eliminate their fiduciary
duties to the fund. Based on a survey by Institutional Limited Partners
Association, 71% of LPs have seen fiduciary duties modified or eliminated
in the past year.).
23. SEC Proposes to Enhance Private Fund Investor Protection, SEC
(Feb. 9, 2022), https://www.sec.gov/news/press-release/2022-19.
24. Id.; Chris Cumming, SEC Considering New Rules on Private-Fund
Fees, Conflicts, Gensler Says, WALL ST. J. (Nov. 10, 2021),
https://www.wsj.com/articles/sec-considering-new-rules-on-private-fund-
fees-conflicts-gensler-says-11636580410.
25. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.
L. 111-203, § 956, 124 Stat. 1905 (2010).
26. Victor Fleischer, Two and Twenty Revisited: Taxing Carried Interest
as Ordinary Income Through Executive Action Instead of Legislation
(Working Paper Sept. 16, 2015), https://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2661623.
27. Jesse Drucker & Danny Hakim, How Accounting Giants Craft
Favorable Tax Rules from Inside Government, N.Y. TIMES (Sept. 19, 2021),
https://www.nytimes.com/2021/09/19/business/accounting-firms-tax-
loopholes-government.html (For instance, Craig Gerson, who was a tax
specialist at PwC who specialized in advising PE firms, led the
development of fee waiver rulemaking, which was watered down and
allowed some forms. Two months after issuing the regulation, Gerson
rejoined PwC).
28. Jesse Drucker & Danny Hakim, Private Inequity: How a Powerful
Industry Conquered the Tax System, N.Y. TIMES (Sept. 8, 2021),
https://www.nytimes.com/2021/06/12/business/private-equity-taxes.html.
 29. Ryan Tracy, Feds Win Fight over Risky-Looking Loans, WALL ST. J.
(Dec. 2, 2015), https://www.wsj.com/articles/feds-win-fight-over-risky-
looking-loans-1449110383.
30. Joe Rennison, US Borrowers Breach Loan Limit Guidance at
Record Pace, FIN. TIMES (Dec. 16, 2021),
https://www.ft.com/content/67b625e7-87ab-478e-aca1-995f15 0e6b9c.
31. Maya Abood et al., Wall Street Landlords Turn American Dream
into a Nightmare, ACCE INSTITUTE ET AL. 41–43,
https://www.publicadvocates.org/wp-
content/uploads/wallstreetlandlordsfinalreport.pdf.
32. Id.
33. See, e.g., Duty to Serve Underserved Markets Plan: 2022–2024,
FANNIE MAE 8 (2021),
https://www.novoco.com/sites/default/files/atoms/files/fannie-mae-duty-to-
serve-2022-24-proposed-052021.pdf (proposing to “[i]ncrease loan
purchases of MHCs [Mobile Home Communities] owned by government
entities, nonprofit organizations, or residents”); Duty to Serve Underserved
Markets Plan: For 2018–2021, FREDDIE MAC 40
https://www.freddiemac.com/sites/g/files/ynjofi111/files/about/duty-to-
serve/docs/Freddie-Mac-Underserved-Markets-Plan.pdf (proposing to
“Develop a New Offering for Resident-Owned Communities”).
34. Alan Rappeport, Former Top Financial Regulators Warn Against
Move to Ease Oversight of Firms, N.Y. TIMES (May 13, 2019),
https://www.nytimes.com/2019/05/13/us/politics/financial-regulation-
trump-administration.html.
35. Richard M. Scheffler, Soaring Private Equity Investment in the
Healthcare Sector: Consolidation Accelerated, Competition Undermined,
and Patients at Risk, AMERICAN ANTITRUST INSTITUTE 50 (May 2021),
https://publichealth.berkeley.edu/wp-content/uploads/2021/05/Private-
Equity-I-Healthcare-Report-FINAL.pdf.
36. Jack Hoadley et al., Surprise Billing Protections: Help Finally
Arrives for Millions of Americans, COMMONWEALTH FUND (Dec. 17, 2020),
https://www.commonwealthfund .org/blog/2020/surprise-billing-
protections-cusp-becoming-law.
 37. Christopher J. Archibald, Ninth Circuit Upholds California’s Ban on
Mandatory Arbitration of Employment Disputes, BCLP (Sept. 24, 2021),
https://www.bclplaw.com/en-US/insights/blogs/bclp-at-work/ninth-circuit-
upholds-californias-ban-on-mandatory-arbitration-of-employment-
disputes.html.
38. David Seligman, Three June State Law Actions Helping Consumers
Fight Arbitration Requirements, NATIONAL CONSUMER LAW CENTER (July
31, 2019), https://library.nclc .org/three-june-state-law-actions-helping-
consumers-fight-arbitration-requirements.
39. Sam Cleveland, A Blueprint for States to Solve the Mandatory
Arbitration Problem While Avoiding FAA Preemption, 104 MINN. L. REV.
3266 (2020).
40. Seligman, supra note 38.
41. April Kuehnhoff, What States Can Do to Help Consumer Debt
Collection, NATIONAL CONSUMER LAW CENTER,
https://www.nclc.org/images/pdf/debt_collection/fact-sheets/fact-sheet-
debt-collection-state-reform.pdf.
42. Robert J. Hobbs, Model Family Financial Protection Act, NATIONAL
CONSUMER LAW CENTER 4 (2020), https://www.nclc.org/wp-
content/uploads/2022/08/model_family_financial_protection_act.pdf.
43. Common Defenses to Raise, NATIONAL CONSUMER LAW CENTER,
https://library.nclc .org/sd/0404 (“Ask that the debt buyer prove that your
debt has been properly transferred to it. Amazingly, debt buyers often do
not have that proof.”).
44. Joe Bousquin, How Rent Control Policies Could Impact the Single-
Family Market, BUILDER (Feb. 14, 2020),
https://www.builderonline.com/money/how-rent-control-policies-could-
impact-the-single-family-market_o.
45. Yonah Freemark et al., What Does the Rise in Single-Family Rentals
Mean for the Twin Cities?, URBAN INSTITUTE (June 11, 2021),
https://www.urban.org/research/publication/what-does-rise-single-family-
rentals-mean-twin-cities.
46. Id.
47. Will Parker, House Rents Pop Up as New Investors Pile In, WALL
ST. J. (Aug. 31, 2021), https://www.wsj.com/articles/house-rents-pop-up-as-
new-investors-pile-in-11630402201.
48. Policy Agenda 2019–2020, EQUITY IN PLACE (Jan. 2020),
http://thealliancetc.org/wp-content/uploads/2020/01/EIP-Policy-Agenda-
final-Jan-2020.pdf.
49. Id.
50. Hall et al., supra note 17.
51. Id.
52. Id.
53. Id.
54. Id.
55. Id.
56. Id.; Anthony Walsh, Obama-Era Rule Banning Mandatory
Arbitration in College Contracts Carries the Day, CENTURY FOUNDATION
(Dec. 1, 2020), https://tcf.org/content/commentary/obama-era-rule-
banning-mandatory-arbitration-college-contracts-carries-day/?session=1.
57. Hall et al., supra note 17.
58. See, e.g., Memorandum Opinion, Frederick Hsu Living Trust v.
ODN Holding Corp., No. C.A. No. 12108-VCL (Del. Ch. Jan. 31, 2017)
(Plaintiff alleged that the board tried to maximize the VC firm’s redemption
rights, rather than the long-term value of the corporation. In its ruling, the
court said that the board had to promote the interests of the shareholders in
the aggregate, without regard to special rights). Julia Beskin & Samantha
Yantko, Fiduciary Duties of Directors Appointed by Private Equity Firms:
Pitfalls and Best Practices, FINANCIER WORLDWIDE (Oct. 2019),
https://www.financierworldwide .com/fiduciary-duties-of-directors-
appointed-by-private-equity-firms-pitfalls-and-best-
practices#.Y0MTpOzMJKN.
59. Warren, Baldwin, Brown, Pocan, Jayapal, Colleagues Unveil Bold
Legislation to Fundamentally Reform the Private Equity Industry, OFFICE
OF SENATOR ELIZABETH WARREN (July 18, 2019),
https://www.warren.senate.gov/newsroom/press-releases/warren-baldwin-
brown-pocan-jayapal-colleagues-unveil-bold-legislation-to-fundamentally-
reform-the-private-equity-industry.
60. Public Money for Private Equity, OUR FINANCIAL SECURITY 39
(Sept. 13, 2021), https://ourfinancialsecurity.org/wp-
content/uploads/2021/09/public-money-for-private-equity-9-13-21.pdf.
61. Danielle Ivory et al., When You Dial 911 and Wall Street Answers,
N.Y. TIMES (June 25, 2016),
https://www.nytimes.com/2016/06/26/business/dealbook/when-you-dial-
911-and-wall-street-answers.html.
 © Cynthia Barmore

Brendan Ballou is a federal prosecutor and served as Special Counsel for

Private Equity at the U.S. Department of Justice. He began his legal career
in the Department’s National Security Division, where he advised the White
House on counter-terrorism policy. He graduated from Columbia University
and Stanford Law School.
The views expressed in this book do not necessarily represent those of
the U.S. Department of Justice.
 Praise for Plunder

“As shorthand for the crazy unfairness of financialized modern capitalism,

more accurate than Wall Street or hedge fund is private equity—the state-of-
the-art corporate-takeover mode that has brought predatory greed and
ruthlessness to new levels, wrecking companies and workers’ lives as a
matter of course. Plunder is the right word, as Brendan Ballou lucidly
explains in his infuriating, illuminating, essential book. And his practical
plan for reining in this monstrous new centerpiece of our system makes
total sense.”
—Kurt Anderson, author of Evil Geniuses: The
Unmaking of America
“As private equity has risen to seize everything from nursing homes to
clothing retailers to private prisons to our retirement savings, Ballou has
written a cogent and indispensable book on this strange financial world.
Ballou shows how these modern-day robber barons not only target the poor
and serve themselves, but also bore into the foundations of our economy
and society, weakening it for everyone. He ends with a stirring road map for
reform.”
—Jesse Eisinger, ProPublica, author of The
Chickenshit Club: Why the Justice Department
Fails to Prosecute Executives
“Private equity might be the biggest economic story of the century, and yet
so few people understand what it is or how it’s crippling our economy and
our democracy. In Plunder, Ballou tells a complicated story clearly and
explains how private equity shapes your life and, importantly, how it can be
stopped. For anyone who wants to understand why our economy has
become so broken and so unjust—and for anyone who wants to fix it—
Plunder is required reading.”
 —Zephyr Teachout, professor of law, Fordham
Law School, and author of Break ’em Up:
Recovering our Freedom from Big Ag, Big Tech,
and Big Money
“Plunder offers a clear and critical analysis of the private-equity industry.
Ballou shows how some private equity firms have ruined retail businesses,
made housing more expensive, reduced the quality of health care and
nursing homes, and wreaked havoc on families. If you’re interested in
understanding the hidden sources of our economic problems—and in fixing
them—read this book.”
—Ganesh Sitaraman, professor of law, Vanderbilt
University, and author of The Crisis of the Middle-
Class Constitution
“Private equity firms don’t just transform our economy: they co-opt and
compromise our government and our democracy. As few other people can,
Ballou has shown how private equity has been so phenomenally successful
in advancing its agenda at every level of government, and how government
has been so tremendously solicitous of private equity. For anyone who
wants to understand what’s happening in our economy and our democracy,
Plunder is required reading.”
—Russ Feingold, former senator, president of the
American Constitution Society, and author of The
Constitution in Jeopardy: An Unprecedented Effort
to Rewrite Our Fundamental Law and What We
Can Do About It
“Despite owning companies with tens of millions of workers and impacting
the lives of tens of millions more by buying up hospitals, nursing homes,
housing, and other services we depend on, giant private-equity firms still
largely operate in the shadows—and prefer it that way. Ballou’s Plunder
shines an important light on these finance giants that have reshaped the
global economy to their advantage, connecting private equity firms’ actions
directly to the lives of people who are impacted, from workers, to patients,
to students, and many more. Ballou reminds us that in nearly all these cases,
private equity firms have not acted alone—instead they have been aided and
abetted by, and profit massively from, the willing assistance of government.
Perhaps most importantly, Plunder points us toward solutions—the concrete
actions we can take to halt the doom loop of private-equity-driven
inequality and press for a more just economy.”
—Jim Baker, executive director, Private Equity
Stakeholder Project
“The mysterious private-equity industry is one of the most destructive
forces in American society—and one that too few people truly understand.
Ballou’s Plunder promises to change that. At a time when private equity has
never been more powerful, his book shines a floodlight on the corporate
raiders ravaging our economy and lays out a comprehensive road map for
policymakers willing to take them on. For people who want to understand
why America suffers from enormous disparities in wealth and power—and
what we can do to change it—Plunder is essential reading.”
—Sarah Miller, executive director, American
Economic Liberties Project
PublicAffairs is a publishing house founded in 1997. It is a tribute to the
standards, values, and flair of three persons who have served as mentors to
countless reporters, writers, editors, and book people of all kinds, including
me.

I.F. STONE, proprietor of I. F. Stone’s Weekly, combined a commitment to

the First Amendment with entrepreneurial zeal and reporting skill and
became one of the great independent journalists in American history. At the
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ROBERT L. BERNSTEIN, the chief executive of Random House for more than
a quarter century, guided one of the nation’s premier publishing houses.
Bob was personally responsible for many books of political dissent and
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about 1,500 other authors. In 1983, Schnapper was described by The
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books to come.

Peter Osnos, Founder