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Klarman’s Undisclosed Financial Transactions Aren’t Limited To Puerto Rico

The recent revelation that the hedge fund controlled by Boston billionaire Seth Klarman owns nearly $1 billion in Puerto Rican debt shouldn’t have surprised anyone following Klarman’s involvement in political issues.

Klarman, a mega-donor to Jewish and other communal causes, has often chosen to utilize “dark money” when it comes to causes in which a billionaire’s footprint would not seem advantageous. Most notably, Klarman dispersed funds to support charter schools and fight teachers’ unions in political campaigns through groups that are not required to disclose their donors.

Reporting on Klarman’s previously undisclosed holding of Puerto Rican debt, The Intercept noted the great lengths The Baupost Group, Klarman’s firm, went to in order to hide the investments in the island’s distressed debts—presumably to avoid the negative publicity drawn to investors who profit from the financial troubles of others.

“What’s incredible about this is these people were actually hiding,” an anti-hedge fund activist, Julio López Varona, told The Intcerept. “Our work right now will be about activating our community in Boston, letting them know this person has been hiding and making sure we go to his houses and his companies to hold them accountable.”

Klarman, 60, founded The Baupost Group in 1982. Since then, he has gained a reputation as one of the most successful investors in America. Klarman’s personal fortune is estimated at $1.55 billion.

Large parts of this wealth are directed to philanthropy through the Klarman Family Foundation, which he established with his wife Beth, and through political contributions directed, with some notable exceptions, to conservative and Republican causes.

However, much of Klarman’s activism goes unnoticed through donations to not-for-profit groups involved in public advocacy. These channels, often referred to as “dark money,” allow backers like Klarman to maintain their anonymity while impacting the public debate.

Klarman has a special interest in charter schools, which he sees as a solution to the public education system’s problems. Klarman grew up in the Pimlico neighborhood of Baltimore, a majority African-American area with a struggling school system. He attended a magnet school before attending Cornell University and Harvard Business School.

University of Massachusetts professor Maurice Cunningham, who keeps tabs on the role Klarman’s dark money plays in the state’s education debates, wrote on the website of local public TV station WGBH that Klarman was the largest donor to the pro-charter group Families for Excellent Schools, giving $3 million for its Massachusetts campaign. He also helped support the group’s efforts in New York state.

In 2012, Klarman backed another nonprofit, Stand for Children, which was fighting the Boston teacher’s union. Cunningham also listed several other education-related organizations supported by Klarman, claiming that the Baupost owner and other top donors, whom he described as “Massachusetts plutocrats,” are “trying to buy policy” and promote privatization of the public education system through their undisclosed donations.

However, Klarman has been open about other donations. The 2016 election cycle saw donations of over $3.2 million from Klarman and his investment firm. Most donations supported the presidential runs of Republicans Jeb Bush, Chris Christie and Carly Fiorina. Notably, Klarman was one of few top GOP donors who persisted in their opposition to Donald Trump even after Trump won the nomination. Calling Trump “unqualified” to serve as president, Klarman made a point of writing a $100,000 check for a pro-Hillary Clinton PAC.

Trump’s qualifications were not the only issue on which Klarman has broken with the Republican Party. He has also sometimes supported Democratic members of Congress known for their pro-Israel positions, such as Cory Booker, Steve Israel, Brad Sherman and Eliot Engel. And he has provided financial backing to pro-gay marriage initiatives, describing Republicans who opposed equal marriage rights as “neanderthals.” Most of Klarman’s work on LGBT issues was done with fellow Republican Jewish mega-donor Paul Singer.

Outside politics, Klarman’s philanthropic giving is focused on Jewish causes as well as local Boston charities and organizations working to advance education and the arts. His Jewish giving portfolio is made up of many mainstream Jewish organizations, including Boston’s Combined Jewish Philanthropies, Birthright-Israel, Hadassah, and the Technion-Israel Institute of Technology. But he has also supported more groups holding a more hawkish approach toward Israel and America’s defense posture, including the media watchdog group CAMERA, Commentary magazine, and the conservative think tank Foundation for Defense of Democracies.

Contact Nathan Guttman at [email protected] or on Twitter @nathanguttman


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