Mitt Romney and Bain Capital made huge profits when they sold Damon Corporation in 1993. But the strong revenues that the company had posted were created partially by criminal activity. Damon Corporation participated in a large scale Medicare scam, billing the government for blood tests that never occurred.
The Boston Globe show that Romney personally made $473,000 when Corning Inc. purchased Damon Corp. from Bain in 1993. Romney sat on the board of Damon Corp. from 1990-1993, when a large amount of the fraud was occurring. After the sale of the company, Bain reaped in profits of over $7.4 million.
In 1996, Damon Corporation pled guilty to federal conspiracy and defrauding the government out of $25 million. The record fine of $119 million was harsh penalty for scheme labeled by then US Attorney Donald Stern “a case, pure and simple, of corporate greed run amok.”
Romney, claimed in 2002, when first confronted over the case during his tenure at Bain, replied that once he discovered the fraud he “put in place a program to stop that immediately.”
Romney’s claim of taking corrective action was refuted by court documents the Boston Globe obtained in 2002. The documents showed that fraudulent activity continued until the time Bain sold the company. Prosecutors gave credit, not to Romney or Bain in fixing the fraudulent practices, but to Corning Corporation.
A federal investigation, however, never implicated Romney or Bain in the scheme, or any other board members of Damon Corp, with the exception of the company’s president.