In a desperate attempt to distract voters from the failures of single party rule in Delco, Andy Reilly - boss of the party machine- dumped an array of sloppy, misleading and inaccurate statements regarding the business records of Kevin Madden and Brian Zidek. Brian Zidek and Kevin Madden are two successful small businessmen challenging a machine that will say and do anything to keep their pay-to-play schemes running so they can continue lining their pockets and those of their political cronies and campaign contributors. Party boss Reilly knows that their gravy train is coming to an end and they are desperate to cling to power at any cost. Voters just can’t trust any words that come out of their mouths.
We fact check their statements here:
Republicans are lying about Kevin and Brian’s ties to Delaware County
Implying that Brian Zidek and Kevin Madden don’t have Delaware County values is asinine. Both have longstanding ties to the county. Kevin Madden is a third generation Delco native and Brian Zidek has lived here for 17 years and is raising three children in Delco.
FACT: Zidek Has Lived in Delaware County for More than 17 Years. Brian Zidek has lived in Delaware County since 2000. (Delaware County Deeds Search)
FACT: Madden is a Third-Generation Native to Delaware County. Kevin Madden was born and raised in Media, PA, until he was 19 and went to college. When he got married three years ago, he and his wife Kate moved back home to raise a family and live in Haverford. (Kevin Madden Biography)
FACT: The donations to Brian Zidek’s and Kevin Madden’s respective campaigns were raised much like any other campaign. They simply called their friends and business associates and asked them to invest in their campaigns. Like most successful businesspeople they have friends and associates who live all over the country. Brian Zidek and Kevin Madden’s donors are giving because they believe in Zidek and Madden personally and know that they will promote transparent, ethical government in Delco.
Republicans are Lying about Kevin Madden’s record on the Environment
Global Brass & Copper
FACT: Olin Corporation Agreed to Take on Environmental Problems Upon Sale to KPS. According to an SEC filing, Olin Corporation, which sold Global Brass & Copper Holdings to KPS Capital, agreed to retain responsibility for pending environmental issues upon sale of the company.
(Global Brass and Copper Holdings 10-K, Mar. 9, 2016)
FACT: KPS Spent $22 Million to Clean Up Discharges from 2002-2007; Quality of Water Drastically Improved Under Their Watch. KPS purchased Blue Ridge Paper Products in 1999. Between 2002 and 2007, the company spent millions helping clean up the notoriously dirty river, and for the first time in nearly 30 years, announced it was ok to eat fish coming from the river in 2007.
"It is a good example of an industry addressing a potential public health problem by changing its processes," state Health Director Leah Devlin said in a written statement. "I'm pleased we can close the book on this one." (Associated Press, Jan. 10, 2007)
Republicans are lying about Kevin Madden’s record on jobs and pensions.
Kevin Madden and KPS Capital specialized in buying distressed companies that were facing plant closures and tens of thousands of job losses. KPS helped turn these companies around, saving companies and jobs. Additionally, the vast majority of the returns on KPS investments flow to their public and union pension fund investors. Kevin Madden’s work at KPS saved union jobs and strengthened union pensions. To assert otherwise is misleading and disingenuous.
FACT: KPS Capital Is Known for Their Good Working Relationship with Labor. KPS Capital Partners is one of the most labor-friendly private equity firms, specializing in buying distressed companies and turning them around. The firm has been credited with saving thousands of jobs.
"They believe in building up companies instead of ripping them apart."– Damon Silver, associate general counsel for AFL-CIO (St. Louis Post-Dispatch, Mar. 28, 2008)
“It’s been a productive relationship,” Larkin said. “It was quite a successful deal in this one case, where many people had written it off as hopeless.” That’s a reputation Psaros has trumpeted more so than its profits, estimating KPS has saved more than 15,000 manufacturing jobs. (St. Louis Post-Dispatch, Mar. 28, 2008)
Thomas Buffernbarger, president of the International Association of Machinists, which represents 730,000 workers across North America, credits KPS for trying to work with unions, rather than sideline them. AS a sign of its support, IAM has invested its members’ money in KPS’s funds.
“They are willing to share information with unions, so they are seen as a partner we can work with,” Mr. Buffenbarger says. “Just about every other hedge fund or private equity fund doesn’t even want to have a union agreement.” (Financial Times, Mar. 27, 2009)
“I don’t have a relationship like this with any other equity funds out there,” says Dave Foster, a district leader for the Midwest and northwestern United States at United Steelworkers of America, who helped KPS source its latest investment, in AmeriCast Technologies Inc., which makes steel and iron sand castings. “With KPS, we can deal with issues in a way that doesn’t threaten the majority of our members’ jobs.” (The Deal Mar. 15, 2004)
"What they do is not easy. They save a lot of companies. They save a lot of jobs. They are remarkable at it," said Edward J. Grefenstette, president and chief investment officer of the Dietrich Foundation. (Pittsburgh-Post Gazette, Feb. 16, 2014)
FACT: KPS Saved Hundreds of Jobs with Purchase of Blue Heron. According to Thomas Croft, author of “Helping Workers’ Capital Work Harder,” KPS’ purchase of Blue Heron in 2000 saved hundreds of jobs.
In May 2000, KPS acquired the newsprint assets of the bankrupt Smurfit-Stone Corporation in Oregon City, Oregon. KPS worked in partnership with senior management, the Steelworkers and the Association of Western Pulp & Paper Workers (AWPPW) to create Blue Heron, saving, in the process hundreds of jobs. Today, Blue Heron Paper Company, with annual revenue of $220m and a production capacity of over 360,000 tons, is one of North America’s leading producers of newsprint and other specialty products from a predominantly recycled fiber base. In September 2006, after completing a very successful turnaround of Blue Heron and subsequent re-growth of the company, KPS sold its controlling equity ownership interest to a 100% ESOP. KPS returned more than five times its invested capital in Blue Heron to its investors. (Helping Workers’ Capital Work Harder: A report on global Economically Targeted Investments)
FACT: Blue Heron filed for bankruptcy long after KPS sold it. Blue Heron filed for bankruptcy in Dec. 2009, more than 3 years after KPS sold it, because of increasing raw material costs and the worst recession to hit the U.S. in nearly 80 years, none of which KPS could have anticipated or had anything to do with.
In a release announcing the closing, Mike Siebers, Blue Heron’s president, says, "The initial plan was successful in restoring profitability, and the company received meaningful support from its suppliers and other creditors. But lately those profits began to erode due to escalating waste paper prices and limited availability of that raw material. "All the paper products we manufacture use a high percentage of recycled fiber in them.” (Recycling Today, Feb. 24, 2011)
Republicans are lying about Brian Zidek’s Business Property
Brian Zidek works for Excess Reinsurance Underwriters and there has helped create dozens of jobs. His efforts to improve working conditions for his employees resulted in reportedly over $2 million being spent fixing up the company’s headquarters in Woodbury, where he and the local government agreed to a 30-year PILOT program where the company will pay up to $30,000 per year in the final years of the deal. After the deal was completed, Woodbury Mayor Volk said he was “so grateful” to Brian Zidek for saving the building and bringing new life to downtown. An appropriate follow up question is why County Council isn’t trying to make those kinds of deals to revive Chester and other distressed areas and properties across the county.
FACT: Brian Zidek Helped Create Dozens of Jobs. According to a 2014 report, Excess Reinsurance employed about 35 people. (Courier-Post, Sep. 10, 2014)
Fact: Zidek Spent $2 Million Fixing Up Building Where Company’s HQ is Located. According to Brian Zidek, Excess Reinsurance spent more than $2 million to renovate the old Freemason temple where his company is located. (South Jersey Times, Apr. 13, 2014)
FACT: Company Will Make Up to $30,000 in Annual Payments by End of Agreement. According to Woodbury documents, 48 North Broad Street Urban Renewal (Zidek’s company controlling the property) and the City of Woodbury entered into a 30-year payment in lieu of tax (PILOT) agreement in 2013 in which the company would make payments ranging from $6,000 per year the first three years and gradually increase the payment to $30,000 from years 26-30. (Financial Agreement between the City of Woodbury and 48 North Broad Street Urban Renewal LLC)
FACT: Local Government Praised Deal. Upon completion of the deal, Mayor Volk stated, “The City is so grateful to Brian Zidek, his family and his partners for saving one of our historic buildings and bring new life to the facility and the downtown. The interior of the office is beautiful and, the fact that they kept the exterior intact, preserving its historic ambiance on Broad Street, shows a great amount of respect for this City, its residents and our longstanding history in Gloucester County.” (City of Woodbury Press Release, Aug. 14, 2004)
Republicans are lying about Brian Zidek’s taxes
Brian Zidek is being attacked for his role at Argo Capital, but the fact is that he has never dodged any taxes and pays his fair share.
FACT: Argo Capital and Excess Reinsurance have not been involved any “Hedge Fund” dodges like those described in the GOP smear. It is false to assert that Brian Zidek is the beneficiary of any such loopholes.
FACT: Brian Zidek did not found Argo Capital in Bermuda. Brian Zidek was still in school when Argo Capital was founded and only went to work for the company years later. But for clarity, Argo was formed in Bermuda because at the time of its formation, no US jurisdiction had yet established the legal framework necessary to accomplish the sought after reinsurance structure. Over the past 15 years, many states have now established such a structure, but it simply didn't exist when Argo was established decades ago.
FACT: Brian Zidek pays the highest individual tax rate on his income from Argo Capital. All income is reported as subpart F income on Brian Zidek’s federal tax returns. This income is treated as ordinary income (just like wages). Brian Zidek pays the highest personal income tax rate on this income. It is also separately reported to the IRS on a 5471 form.