After The New York Times published an investigation into a financial fraud scandal involving Republican Senate candidate Tommy Tuberville, his opponent, former Republican Sen. Jeff Sessions, criticized Tuberville’s actions as a “major fraud scheme that bilked large sums of money from hardworking people,” which “can’t just be swept under the rug.”
“This is an astounding story,” Sessions said. “Based on the facts already uncovered, it is clear that Tommy Tuberville was one of two partners in a major hedge fund fraud scheme that bilked large sums of money from hardworking people, including Alabamians.”
Tuberville’s partner was sentenced to 10 years in prison for the scheme by the court in Opelika, while Tuberville was sued for fraud, paying out a sum of money in a private settlement that has been kept out of the public eye.
“This can’t just be swept under the rug, and Tuberville can’t just brush it aside by falsely claiming he was some innocent victim,” Sessions said. “Indeed, he was a victimizer and held himself out as the ‘managing partner’ of the firm. Tuberville must give a full and complete accounting of this scandal. The people of Alabama deserve to know the complete truth now, before the election, about the man who is asking to be their senator.”
This scandal has been widely talked about in Republican circles for months or longer, but The New York Times article details the allegations for one of the first times in the national spotlight.
Tuberville became a full partner in a hedge fund with former Lehman Brothers broker John David Stroud. Their ventures included TS Capital Management and TS Capital Partners. The T stands for Tuberville and the S for Stroud.
Tuberville did not pick which stocks to buy or sell, and as the head football coach at Texas Tech University and later at the University of Cincinnati, he was not even a frequent presence in the office. Tuberville introduced Stroud to potential investors and even had business cards identifying himself as managing partner. He also leased a BMW and got his health insurance through the company.
The firm’s offices in Auburn were filled with his coaching memorabilia. In 2010, he traveled to New York with Stroud to meet potential brokers, and was kept in the loop on decisions about hiring. A source told APR that a number of SEC coaches were among the people defrauded by TS Capital.
When the money was all lost, Stroud was sentenced to 10 years in prison and Tuberville was sued by the investors for fraud and failure to carry out his fiduciary duties. Tuberville reportedly lost $450,000 of his own money and then had to pay out more than $1 million to the investors. The New York Times reported that his total losses were more than $2 million.
The financial scandal has many Republicans concerned about the viability of Tuberville’s general election campaign to unseat incumbent Sen. Doug Jones, D-Alabama.
“I think that Tuberville did not do anything wrong,” said Rev. John Killian, a conservative activist. “He is a good man, but the Doug Jones campaign, they would use this to the ninth degree.”
“They will shoot Tuberville up in 30 second and 60 second TV spots,” Killian added. “I don’t think Tuberville is crooked, but Doug Jones has $10 million to spend. I think they are lying in wait for Tuberville like they were for Roy Moore.”
Killian said that he will support Tuberville if he wins the Republican nomination, but that he is supporting Jeff Sessions in the primary because he is the strongest general election candidate to face Jones.
Tuberville supporter and Trump Victory National Committee member Perry Hooper Jr. was dismissive of assertions that Tuberville could be vulnerable.
“Coach has a commanding lead. He will win the run-off, and he will crush Doug Jones in the general election in November,” Hooper told APR.
Tuberville maintains that he was a victim of the fraud — not a perpetrator.
“They sued me because I invested in it, and he used my name to get other people to put money in,” Tuberville said. “There was nothing ever implicated by anybody that I’d done anything wrong. I felt bad that he used my name.”
The New York Times has asked Tuberville to release the plaintiffs from their confidentiality agreement. Tuberville to this point has declined. Stroud has been released from prison but has not commented on his relationship with Tuberville. Tuberville faces Sessions in the July 14 Republican runoff.
President Donald Trump has endorsed Tuberville, and Tuberville is leading Sessions in most available polling.