WASHINGTON - As national finance director for Mitt Romney’s presidential campaign in 2008, Spencer Zwick frequently called big-money supporters looking for contributions.
After Romney dropped out of the race, Zwick did not stop calling.
Diving for the first time into the other sphere of the Romney universe - private-equity investing - the trusted aide began asking Romney’s backers to invest at least $10 million each in a financial partnership Zwick launched with Romney’s oldest son, Taggart.
Using their close ties to Romney and a hefty political Rolodex, the partners raised more than $200 million for the startup business, Solamere Capital, despite brutal market conditions and their limited experience in the world of high finance. In their prospectus, they said they expected to reinvest the money in an array of equity funds, each of them also managed by Romney political supporters.
The story of Solamere offers a rare glimpse into the intersecting worlds of Romney’s business and political operation, which continues to employ Zwick as chief fund-raiser for the 2012 campaign. Although campaign finance specialists say his overlapping missions are permitted by law, some ethics watchdogs say the arrangement presents an appearance that key political contributors could be rewarded with business opportunities.
“This setup screams what’s wrong with our broken system,’’ said Bob Edgar, chief executive of Common Cause, a national nonprofit advocacy group that frequently speaks out against the influence of money and lobbying in politics. “This is a business deal, and Romney is the investment. If he’s elected, they will have access and influence at the White House. If he’s not the next president, they’ll still make a bundle on the deal. Either way, they will be rewarded.’’
Mitt Romney and Solamere’s principals declined through representatives to be interviewed. Solamere said in a statement that there was no consideration given to political connections or support in Solamere’s business strategies and that the firm “adhered to the highest ethical standards.’’ Romney spokeswoman Gail Gitcho said Solamere and the candidate’s political interests are completely separate.
Solamere does not disclose the identities of its investors. Although the prospectus obtained by the Globe lists equity and venture firms that would be potential investment targets, the company would not confirm where it has placed its money. The lack of transparency makes it difficult to verify whether Zwick is appropriately managing his overlapping roles, critics say.
“If the campaign [fund-raiser] is on the one hand getting people to invest in the equity fund and then telling the recipients of the fund, ‘Hey why don’t you write a check to Mitt Romney?’, that’s an issue,’’ said Donald H. Schepers, director of the Robert Zicklin Center for Corporate Integrity at Baruch College in New York.
Another political analyst said there did not appear to be anything improper about the arrangement, chalking it up to typical coziness between a political organization and its friends.
“It’s really a story about back-scratching by influential people, money moving around,’’ said historian Stephen Hess, a senior fellow at the Brookings Institution, a Washington think-tank, who served in the Eisenhower and Nixon administrations and advised presidents Gerald Ford and Jimmy Carter.
Hess said Solamere is an example of how such business and political elites operate “in the first-class compartment.’’
It is well established that Romney’s business background and ties helped build his political power. In 2008, Zwick flipped that formula upside down, using political leverage to kick off a multimillion-dollar investment firm.
Solamere Capital was named for a private community in Deer Valley, Utah, where Romney owned a ski mansion. It was launched just two weeks after Romney dropped out of the presidential race in February 2008 and incorporated at the same Boston address where the campaign headquarters had been, records show. It later shared an address with Romney’s political action committees in Lexington, before moving to its current Back Bay office.
Solamere is a so-called “fund of funds,’’ meaning it primarily invests in the holdings of other equity firms. Its $200 million initial goal made it a relatively small firm in a world of billion-dollar equity behemoths. The prospectus promised investors “unique access’’ to high-quality equity deals secured through the partners’ “close personal and business relationships.’’
A key element in the initial sales pitch to investors was the Solamere connection to Romney, who cofounded Bain Capital in 1984 and helped turn it into a $66 billion giant in the world of equity investing.
Zwick told potential investors that Romney was the first to invest in Solamere with $10 million, according to three people Zwick pitched who spoke on condition of anonymity - a move that undoubtedly built immediate credibility for the enterprise. During the past two years, according to financial disclosures, Romney has received between $100,000 and $1 million from the investment.
The founders - besides Zwick and Tagg Romney - also included Eric Scheuermann, the only one of the three who listed private equity experience on Solamere’s prospectus. Scheuermann, a lawyer who worked in a clerkship for the late Supreme Court chief justice William Rehnquist, was previously a partner in New York-based Jupiter Partners, Solamere’s website said.
Tagg Romney had worked at a half dozen different jobs after getting his MBA from Harvard Business School in 1998, including as a marketing executive for the Los Angeles Dodgers and Reebok. He was a senior aide on his father’s presidential campaign in 2008 and his gubernatorial campaign in 2002.
While Tagg had the Romney name, it was Zwick, according to the prospectus, who was “most responsible for building the Solamere network.’’
Zwick met Mitt Romney during the lead-up to the Salt Lake City Olympic Games in 2002, which Romney oversaw. A 21-year-old newlywed and Brigham Young University student, he had been volunteering at the Games when Romney recruited him to be his personal assistant. He grew so close that Romney and his wife have referred to him as their “sixth son,’’ family friends and associates said.
He was a personal aide on the gubernatorial campaign trail in Massachusetts, deputy chief of staff when Romney became governor, chief fundraiser for Romney’s political action committees, and then national finance director for the 2008 campaign. It was in that post that Zwick built a formidable network, raising $23 million in the first three months of 2007 alone, more than the campaigns of any other GOP candidate at the time.
When Zwick set out to raise money for Solamere, it was members of that network he pitched, according to separate interviews with four people who received calls. Thomas Tellefsen, a major bundler for Romney, said Zwick excelled at equity fund-raising.
“Everything that I have observed and seen in him in the fund-raising to help Mitt, I see in his capabilities in helping to manage a private equity fund,’’ said Tellefsen, who did not invest but connected Zwick with others.
By May 2009, Solamere had raised $186 million from 39 investors, close to its $200 million target. Last year, Solamere reported to the SEC that it had raised another $56 million from 17 investors. The three partners - Zwick, Romney, and Scheuermann- stood to get $16.8 million in management fees, SEC records show.
Zwick and his partners raised the money despite the terrible economic climate. The amount of new capital raised by equity firms dropped 71 percent, from $300 billion in 2008 to $86 billion in 2010.
Without the Romney name and connections, specialists said, Solamere would have faced more difficulties.
“That shows you the power of relationships,’’ said Harry Cendrowski, a Chicago corporate consultant and coauthor of “Private Equity: History, Governance, and Operations.’’ He said the extent of the fund’s success, given Zwick and Tagg Romney’s limited experience and the equity market conditions, was “highly unusual.’’
“That’s a very large amount for somebody getting started,’’ Cendrowski said.
The prospectus shows that the Solamere team told would-be investors their money would potentially be reinvested among 13 funds - each managed by Romney’s political contributors.
Those firms include some of the largest in the industry as well as small, so-called niche firms. The list includes TA Associates, whose chairman C. Kevin Landry gave $17,100 to Romney’s presidential campaign and Free and Strong America political action committees. Another firm is SCF Partners, whose founder L.E. Simmons and managing directors Anthony F. DeLuca and David C. Baldwin gave $65,200
The list also includes firms whose top executives are big-money contributors to the Restore Our Future super PAC, which supports Romney for president but is not affiliated with his campaign. Bain Capital managing director Paul Edgerley gave $500,000 to Restore Our Future. Another managing director, Stephen Zide, gave $250,000. A partner at TPG Capital, Richard W. Boyce, gave $100,000, and at H.I.G. Capital, co-founding partner Anthony Tamer gave $50,000.
Super PACs, a new phenomenon made possible by a recent Supreme Court ruling, are permitted to solicit contributions of unlimited size.
None of the firms or executives commented for this story. TPG, Bain Capital, TA Associates, and their executives declined, while the others did not respond to messages.
The Romney campaign said Zwick’s private equity fund-raising and political fund-raising are separate. During the same period he raised money for Solamere, Zwick also was raising funds for Romney’s Free and Strong America PACs.
“Free and Strong America PAC, the Romney for President campaign and Mitt Romney have followed the highest ethical standards and have operated squarely within the bounds of FEC rules in all circumstances,’’ Gitcho, the campaign spokeswoman, said.
Solamere said there was a strong division between Romney’s political operation and the firm.
“Our investors come from a variety of political persuasions, and there is absolutely no connection between the personal decisions they may make to support certain candidates and the premier funds and companies that were carefully selected for our portfolio,’’ the company said in a statement. Solamere would not identify the investors of varied political persuasions it was citing.
Hess, of the Brookings Institution, said the intertwining of Solamere and the Romney network should be viewed “in a context of how society works at that level.
“At a lower level, you’re a police captain and what do you do for your friends’ sons?’’ he said. “The same game is played.’’
Michael Kranish of the Globe staff contributed to this report. Donovan Slack can be reached at dslack@globe.com. Follow her on Twitter @donovanslack. 
