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Sunday, September 25, 2005

The Not So Blind Trust

The Not So Blind Trust

 “It’s always been a matter of trust

-Billy Joel   

One of the most important  positions in the world  is the Majority Leader in the United States Senate. 

It’s only a few steps from Majority Leader to President.    Lyndon Johnson made it.  Bob Dole and others tried.   

Current Majority Leader Bill Frist has  his eye on the White House.  He may be looking at a stay in the big house instead.

Frist is from an incredibly rich family.  His father and brother founded Hospital Corporation of America (HCA), the nation’s largest hospital chain.   Senator Frist disclosed that he is worth somewhere between $7 million and $35 million.

You won’t find him in the line  to get a payday loan.  

Like many rich people, he owns stock that can make or lose money because of decisions the government makes. 

Most wealthy senators, including Frist, put  their  money in something called a “blind trust.”   They turn their money over to someone else and not supposed to know how it is invested.

I know a lot about blind trusts.  One of my friends ran for Governor of Kentucky several year ago  and asked me to manage  his blind trust if he won.

If I ran through the money, he wouldn’t find out until he got out of office. 

I was honored but stressed.  I would have been  responsible for him and his family.  If I screwed up, his kids did not go to college.

He lost the election but his children will be well educated.

Jimmy Carter did a really stupid thing with his blind trust.  He put Billy Carter, his beer swilling, red neck brother, in charge.

Jimmy lost re-election and  found that  Billy’s shrewd  money management caused Jimmy to be broke and  heavily in debt.  Jimmy had to  start writing books   to get out of hock.

Frist does not have Carter’s problem.  His family knows how to handle money.  The question is whether they know tricks that hurt the public.  

Two possible scandals have erupted for Senator Frist.  The first is that the Senator and HCA are  being investigated by the Securities and Exchange Commission and the Justice Department for possible insider trading. 

 Senator Frist was able to sell its HCA stock right before it dropped 15%.  The Senator was either tipped off or incredibly lucky.

Insider trading is the same thing that Martha Stewart went to jail for.  She went for chump change.  If found guilty, Frist would be looking at a serious sentence.

Company executives have  to sit tight when they have information  that the public doesn’t  know about.   People will not buy stocks if they think the market is rigged.

Friends of Frist say he would not have done something illegal  because he is rich. He does not need the money.

ANYONE accused of insider trading is rich.  It is a crime committed by wealthy  stockholders and their friends at the country club.

You don’t see people on food stamps being accused of insider trading. 

When the Justice Department stops   by HCA  to drop off a subpoena, things are very serious.

Especially since the leaders at Justice were appointed by Frist’s close friend George  W. Bush.

Insider traders have to be stupid  as technology makes it easy to catch them.  If  HCA did wrong, we will know.

A bigger concern is that  Frist’s  blind trust  had a  seeing eye dog, Senator Frist himself.

Numerous documents show  that Frist kept a close eye on his money.  He was actively involved in many of the “blind” trust decisions, including the one to dump the HCA.

The blind trust  seemed to have 20/20 vision.

Along with being greedy, Frist might be a  liar. 

 In a 2003 television interview, he said that “as far as I know, I own no HCA stock.”   Two weeks before that interview, the trustee had given  Frist an update on the  HCA stock he owned.

Frist is in a position that effects every American.   Forget the fact that he is dying to be President,  he has a huge amount of power right now.  

He can use it to help us or use it to line his pocket.   If he is going to stay a United States Senator, he needs to show that he is obeying the law.

It is a matter of trust.

Don McNay is President of McNay Settlement Group where  insider traders need not apply.  You can write to him at or read other things he has written at