Documents unsealed by a court in Massachusetts today show that Mitt Romney created a special share of stock to help a friend give his ex-wife less money during a nasty divorce, and then testified that she got a fair price, even though she made a fraction of what the shares were worth just a year later.
Romney testified that Tom Stemberg, the founder of Staples, had properly appraised the value of the company’s shares at $2.25 during the divorce. But a year later the share price closed at exactly 10 times that amount on the first day of its IPO.
As we noted yesterday, the divorce testimony was the “October Surprise” with the most potential to actually be surprising. It seems like it may not disappoint. While initial rumors that Romney lied about Staples’ value under oath appear overblown, the story is not particularly flattering at a time when both candidates are desperately trying to attract female voters.
Celebrity lawyer Gloria Allred is representing Maureen Sullivan Stemberg, but failed to get the court today to lift a gag order on her client. The Boston Globe, however, was successful in its motion to release the testimony. The paper’s Callum Borchers explains what happened:
Stemberg left his wife in February 1987, and the divorce was finalized in July 1988. Before the official split, the couple negotiated an agreement in which Sullivan Stemberg got 500,000 shares of Staples stock, which Stemberg valued at $2.25 per share… “In my opinion, that’s a good price to sell the securities at,” Romney, now the Republican nominee for president, testified in June 1991 [when Maureen Bain Capital sued to renegotiate the deal after Staples went public] .
But on April 28, 1989, barely a year after Sullivan Stemberg sold more than half of her shares on the premise that they were worth less than $2.50 apiece, the company made its initial public offering at $19 per share and ended its first day at $22.50. The closing price made Staples, which operated 23 stores at the time, worth more than $200 million. Stemberg, holding 567,000 shares, claimed $12.8 million in company stock. Sullivan Stemberg’s 245,000 remaining shares were worth $5.5 million, but she had lost out on millions more by accepting low sale prices in 1988.