Did New York Times’ Dealbook Throw a Source Under the Bus in TPG Suit Against Ex-Employee/Ex-White House Staffer?

If a lawsuit filed yesterday by TPG is to be taken at face value, the private equity kingpin has been the subject of a nasty extortion attempt by a vengeful now former employee, Adam Levine. Levine allegedly not only threatened to use his PR clout to bring down the firm, but purloined confidential materials from TPG’s systems and doctored at least one before sending it to a reporter at New York Times’ Dealbook. And TPG further claims it had good reason to be worried because Levine asserted that it was his grand jury testimony, shortly after he left the Bush White House as a member of its communications team, that brought down Scooter Libby.

We’re embedding the complaint, which was first reported in the Wall Street Journal yesterday, at the end of the post. It is short and colorful, and we suggest you read it in full.

While there may be exculpating facts on Levine’s side, the TPG account makes him sound completely self-interested, frustrated by his failure to get promoted to partner, and no whistleblower, contrary to the statement of his representative to the Wall Street Journal. As much as we are sympathetic to whistleblowers and well aware of how they are too often ignored and marginalized, as we will discuss, Levine will need to provide a good deal of additional information to dispel the impact of the e-mails and statements cited in TPG’s filing. These may have been carefully cherry picked out of a much larger context, but in isolation, it will be hard for Levine to counter the impression they leave.

But the real bombshell in the TPG filing is the way that the New York Times’ Dealbook looks to have thrown Levine, a source, under the bus. Levine was presumably behind a January 5 article about dubious expense-charging practices by a TPG portfolio company, the yogurt company Chobani. The filing clearly states that an unnamed New York Times reporter sent an e-mail that it had gotten from a source to TPG. TPG used that e-mail to identify Levine as the apparent leaker and further asserts that Levine had tampered with the e-mail obtained by the Times.

Why Levine Looks to Be in Serious Hot Water

The allegations are consistent with well-documented stories by the Wall Street Journal’s Mark Maremont, and the New York Times’ Gretchen Morgenson, about private equity firms charging fees that investors in the firms’ funds were confident were being largely rebated to them. In fact, due to limited partner complacency and cluelessness, as well as a troubling lack of vigilance by their attorneys and consultants, the private equity firms through both legal legerdemain and in many cases, what the SEC alleges is outright stealing, took more than their limited partners had been led to believe they were skimming off.

However, as Emerson said, “If you strike at a king, you must kill him.” Levine appears to have badly estimated who he was up against.

The core of TPG’s charges is that Levine violated confidentiality agreements with TPG as well as firm written policies and his fiduciary duty in providing documents and information to the New York Times and possibly other media outlets, and that he has also refused to return a laptop and Blackberry provided by TPG. TPG also claims that after Levine’s dispute with TPG heated up and he started resorting to threats, that he came into the firm at off hours, including Christmas Eve and Christmas Day, to download documents, including ones to which he normally would not have access.

Note that one can make a legal argument that confidentiality agreements are not binding if they are contrary to public policy. Using confidentiality agreements and claims of trade secrets to hide damaging information from regulators and wronged investors would presumably fall in that category. But there’s no statutory right to waive those agreements; you need to rely on case law and a sympathetic hearing from a judge.

And most important, at least as TPG tells the story, Levine did not try to act as a whistleblower first, either by making complaints internally or going to authorities. Now that issue is in dispute: Levine’s representative says that Levine “alerted TPG senior management to serious issues of noncompliance and defrauding its investors of millions of dollars in fees and expenses.” And while I am normally inclined to believe that type of charge, the reason it does not ring as true here as it might otherwise is that a press person at a private equity firm is normally removed from the action. He would not be routinely interacting with portfolio documents or legal filings to see this sort of chicanery first hand. The type of person you would expect to make this sort of claim would be someone who saw the money flows, either financial or potentially operating staff at a porfolio company or at TPG itself.

Thus, it is conceivable Levine might have been fielding queries from limited partners about TPG’s practices, now that the SEC and the press have made them a hot topic, and not liked the caliber of response he was getting from firm partners. But even so, by background and experience, he would not be well suited to determine whether any doubts were valid.

Perhaps we’ll hear Levine’s defense amplified and supported with evidence in a counter-claim, that the refusal to promote him was based on him raising too many uncomfortable questions about the firm’s practices. But even so, if that were the case, Levine should have gone first to the SEC, then to the press, not only for his own protection but because the SEC now pays significant awards for whistleblower filings that it pursues and wins. Absent Levine’s side demonstrating that he did indeed act as a whistleblower in concert with his media war against TPG, he is going to have a very rough time at trial.

The Wall Street Journal fingers a New York Times January 5 story on Chobani as Levine’s presumed handiwork. This story falls short of getting the goods on TPG. Mind you, it has a salacious story line, that TPG was double-charging clients by billing a firm partner in the San Francisco office to portfolio companies. Investors would assume someone that senior was being paid for out of the typically 2% annual management fee, as in that he was part of firm overhead. Instead, the article alleges he was being billed to Chobani:

But in the biggest deal struck last year by the Texas private equity giant TPG, investment clients are effectively paying twice for a partner’s time — once through management fees and again through a separate fee based on the partner’s work on the particular investment…

Mr. Burns, who continues to draw a full salary from TPG, has spent most of his time at Chobani since quietly taking on the management role in early September, the people said. The additional payments for his Chobani work — which TPG officially classifies as reimbursements — flow to TPG itself, which is owned by Mr. Burns and the other partners.

This sounds really bad, no? The Times effectively walks back the allegation in the very next paragraph:

Such a payment plan appears to fall within TPG’s stated business practices. Members of the firm’s operations group may serve in management roles at the firm’s portfolio companies, at the expense of clients, according to a regulatory filing by TPG in March. Nevertheless, the existence of the arrangement, which has not previously been reported, highlights a thorny issue in private equity that is being scrutinized by the Securities and Exchange Commission.

Here’s why the information from Levine looks to have fallen short of what was needed, and suggests he lacked the savvy to take on TPG. The regulatory filing mentioned is almost certain to have been TPG’s form ADV, filed with the SEC now that private equity firms are subject to the agency’s oversight. But whether or not the double billing was kosher has nada to do with what that particular filing says. What matters is whether the firm’s marketing materials prior to when the fund was closed were misleading, and whether the fund’s limited partnership agreement gave TPG enough wriggle room to assert that it was within its rights to be charing these fees. In other words, even if Levine saw or heard things that he thought proved that TPG’s was not on the up and up, he appears not to have had the sophistication to understand what documents he needed to obtain to see if their conduct was merely unseemly, or rose to being an actual violation of their agreements.

What looks even worse is the charge that Levine fabricated evidence. TPG claims it found “certain information having been added, certain information having been deleted, and certain information having been changed” in an e-mail that we will discuss in more detail shortly. Now mind you, this is based on a “TPG…forensic investigation” which really means an internal investigation not verified by outside experts. Nevertheless, this is ugly.

Finally, Levine shockingly looks not to have any legal representation. The court filings do not show any law firm representing Levine. If someone were in an serious employment dispute, it would be normal to have retained counsel, and once as an individual is represented, official legal communications, including filings, typically go to counsel. In addition, even though the original TPG complaint was filed Monday the 26th and the amended complaint on Tuesday before 10:00 AM in Texas on the 27th, there has yet to be a response filed on behalf of Levine. A seasoned lawyer with litigation experience told me that if there is no filing by mid-day today, it looks as if Levine has yet to find representation, a terrible position for him to be in.

Further confirmation that Levine may be way out of his depth comes in the Wall Street Journal account. Levine’s representative is identified as one Barbara Rohn. Neither I nor an attorney could find any evidence that she is a lawyer. Normally in litigation, any response to media inquiries is made by counsel, because the attorney will want to make sure that the presentation to the press is consistent with the facts of the case and the intended legal strategy (plus of course they want the media visibility). Even worse, it does not even appear that Rohn is working as a public relations professional. I left messages with a Barbara Rohn that I am reasonably certain is Levine’s representative and got no reply.

Why Dealbook’s Conduct Looks Shameful

Here is the eyepopping section discussing the New York Times’ role, from the First Amended Complaint:

Screen shot 2015-01-29 at 6.22.13 AM

Read paragraph 27 again. The reporter contacted TPG on December 30 about a story that ran January 5. The reporter subsequently, at a date unspecified, provided the e-mail to TPG.

There is no way to pretty this up. The most a reporter owes the target of a story is the opportunity to correct and rebut the conclusions a story reaches. Sharing the actual evidence is a shocking breach of journalistic practice. Documents contain metadata; sending a source’s e-mail would make it easy for a company to identify when it was created and who created it. Even if the reporter only sent on a copy of the text, as opposed to the original record that the source supplied to the Times, that would also give a company a route for finding out who might have been responsible, as the TPG filing demonstrates. It was far too easy for TPG to isolate who had accessed that message and when.

And this gets even worse. If the Times reporter sent the message to TPG before the story ran, it seems unlikely that TPG had responded to it. If TPG had determined that the e-mail was doctored prior to the story appearing, you’d expect them to go to the Times immediately. That would so impugn the source as to kill the story. Thus the odds seem high that the reporter gave the e-mail to TPG after the story appeared, possibly to placate them or prove he had the goods. But again, at that point in time, the onus would be on TPG to prove the story was wrong, with its own evidence, and demand a retraction or a correction. But the claims in the story were so weak that no correction has been made, even in the face of a supposedly bogus e-mail.*

Thus it appears that the Dealbook reporter cooperated with TPG in its efforts to identify and punish a leaker. Why should anyone with an operating brain cell every trust a Dealbook reporter, which now encompasses virtually the entirety of the New York Times’ business reporting staff, after this incident?**

This conduct is particularly appalling given that it seems utterly at odds with Times’ executive editor Dean Baquet’s claims that he wants to improve the Grey Lady’s standing with sources. From an interview with Der Spiegel, We Were Arrogant, flagged by Lambert in Links earlier this week:

SPIEGEL: How painful was it as an institution that Edward S didn’t approach the New York Times?

Baquet: It hurt a lot. It meant two things. Morally, it meant that somebody with a big story to tell didn’t think we were the place to go, and that’s painful. And then it also meant that we got beaten on what was arguably the biggest national security story in many, many years. Not only beaten by the Guardian, because he went to the Guardian, but beaten by the Post, because he went to a writer from the Post. We tried to catch up and did some really good stories that I feel good about. But it was really, really, really painful.

So pray tell, how likely is it that the next Snowden, or for that matter, any source with information that puts him at risk, will come come to the Times, now that Dealbook burned a source?

Dealbook has shown the true face of the Times. It confirms and reinforces the reputational damage the Times suffered for spiking the James Risen story on warrentless surveillance, which is what led Snowden to bypass the Times.

If Baquet wants to restore the Times to its former stature, the first thing he needs to do is clean house at Dealbook. As we have said previously, it is effectively a firm within a firm, a model that brought both Drexel Burnham Lambert and AIG to ruin. The Times has no business treating what amounts to an in-house trade journal, which is inevitably too willing to cater to its pet sources, which are also major advertisers, as a bona fide journalistic operation. Baquet needs to deal with the considerable problems and conflicts that Dealbook embodies promptly and effectively.

* It is possible that the bogus e-mail was a set-up that Levine fell into. I spoke with a former senior securities regulator/examiner, and he and I both came up with multiple scenarios as to how Levine might not have been the one to tamper with the original e-mail.
** This is another stunning example of Levine’s lack of sophistication in his own area of expertise. Why would you ever give an anti-finance story to a Dealbook reporter? Gretchen Morgenson has broken all of New York Times stories on private equity fee shenanigans. It looks as if Levine was overconfident enough to go to a reporter to which he had ready access, by virtue of Dealbook doing normal private equity trade journal type reporting. But this was not at all that kind of story.

TPG v Levine First Amended Complaint

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      1. Yves Smith Post author

        I was polite and didn’t name him, but you can find out who wrote the January 5 New York Times article about Chobani by following the link early in the post.

  1. Clive

    If you are a whistle-blower, there has to be at least some mitigating circumstances (under EU Human Rights law, I imagine this isn’t radically different in the US jurisdiction) why you didn’t flag up and attempt to resolve the issue in play with the party (usually a corporation, public body, local authority etc.) on whom you are blowing the whistle. Or, as Yves suggests, the relevant regulator. Once you start (what looks here to be at least on some interpretations) stealing confidential information or intellectual property, that mitigation has to be very strong for a court to offer you any protection. You’d have to most likely show reasonable cause to believe that the information could be destroyed, that law enforcement needed to have the information and also need to act on it without delay — or similar.

    Of course, Snowden didn’t do this which is why he is in a spot of bother. And here it does get tricky — the world is rightly indebted to Snowden for his actions. And, too, with the benefit of hindsight, any reasonable court procedure should conclude that the NSA would not have released this information, would have destroyed it if it thought it could enter the public domain and would not have agreed to any request by Snowden to, like, quit with the mass surveillance stuff. But it would be tricky to show that law enforcement needed to act on the information Snowden provided. And influential politicians (yes, in theory at least in the U.S. the judiciary is independent of the political establishment, but still, well..) have already pronounced Snowden “guilty”.

    This is, then, a fraught area when you talk about the principles and the rights whistle-blowers should be entitled to.

    But Levine don’t sound like any Snowden to me.

  2. Ned Ludd

    Nice detective work on Dealbook. As an FYI, The New York Times changes the articles on their website, without posting notice of significant modifications (or even complete rewrites) unless they are compelled to by bad publicity.

    Blumenthal asks, “I have never witnessed anything like this before. Is it standard practice for online New York Times reports to be scrubbed from existence and replaced with revised, updated articles containing different content? And if so, why was the replacement not acknowledged somewhere in the text of the article?”

    Given their willingness to “morph” their stories without telling readers, the author of The New York Times story might update the linked article in a way that undercuts some of your points. The reporter, for example, could add a claim from TPG that evidence had been doctored by a disgruntled employee, which would undercut your observation about the timetable for sharing the email with TPG.

  3. Steve Cook

    What we have here is a case study in credulity. Your observations are only “shocking” or “stunning” if you assume these accusations are true, which you clearly do (despite some CYA hedging).

    How about we consider another theory: the accusations are false. Levine didnt have an attorney because he had done nothing wrong and never imagined he would be sued. An “anti finance” story was fed to the wrong reporter because the source was not a communications professional. The Chobani story does not imply a fully baked whistleblower complaint because he was not the source and those revelations are not what he was referring to.

    Another thing. Did you bother googling the attorneys involved here? Kasowitz is the firm that relentlessly harassed short sellers on behalf of Biovail and Fairfax. They threatened and spied on critics of scummy corporate clients. They have had a bunch of ethics scandals. They sued New York Times journalist Timothy O’Brien on behalf of Donald Trump for the crime of accurately reporting Trump’s wealth. Marc Kasowitz stalked O’Brien and whispered to him at a book signing “we’re going to get you.” So do you think maybe its possible that we shouldnt take what they say about a corporate critic at face value?

    Moral of the story: if your reasoning leads to a bunch of “shocking” and “stunning” conclusions maybe youre just wrong. PS — the part about dealbook burning a source was good.

    1. Yves Smith Post author

      It appears you have a reading comprehension problem. The post is has even more than the customary level of journalistic flags warning readers that this is one side of the story and we have yet to hear from Levine, starting with the very opening: If a lawsuit filed yesterday by TPG is to be taken at face value…

      Moreover, another media outlet that ran the Chobani story with the same underlying documents contemporaneously with the Times story has winked and nodded to me in a way that is consistent with the notion that Levine was the source for the Times.

      And Levine is most certainly acting like a guilty party. He’s continued to refuse to turn in his laptop and Blackberry. TPG has filed a second claim against him, in part because the first peculiarly failed to ask for injuntive relief, but clearly also because they still don’t have the devices back. Nearly a full month later, the court docket shows he has not been served. Seasoned litigators have told me it looks like he’s on the lam and evading service. He also has virtually no web presence, and NO photos, save a single, very out of date picture from his White House days.

      The choice of law firm is irrelevant. TPG wanted to file in Texas to have a home court advantage, and they wanted a sonofabitch litigating firm. And your argument only serves to strengthen the case regarding Levine behaving in a manner that is way out of the norm for anyone who is the target of a suit. If he were innocent, why is the equipment still missing? Why hasn’t Levine surfaced? And why can’t such a badass firm find him?

      Did it not occur to you that TPG is somewhat working against its own interest by filing this case at all? It makes a story that was an embarrassment to the more visible by calling attention to it a second time. And if an employee turned as erratic as the documents say Levine did, that calls their judgement into question. Behavior like that rarely comes out of the blue.

      You attack the posts SOLELY based on the law firm that TPG hired and use that to spin an entire scenario out of whole cloth. And the ethics scandal behavior took place outside the court Lawyer are required by the court to file materials that are accurate to the best of their knowledge. Failure to do so is sanctionable. Moreover, judges take VERY VERY poorly to a lawyer that makes inaccurate representations to the court. Doing that in a court filing and having the other side demonstrate that it was false (say by being able to show that TPG was making it up by saying the e-mail they got back from the NYT was doctored, that they had doctored it themselves or just made it up) would be fatal to their case. And given that they asked for a jury trial (longer process and typically more visible), that sort of fabrication would be a PR disaster for TPG.

      So your remark looks like a classic case of projection. You don’t have your arms around what is known here and you have the temerity to attack this site, well after the post ran, which suggest you have an agenda and found this post based on very narrow web searches. Take you spurious charges elsewhere.

  4. Steve Cook

    Hrm.. shoot.. I started a flamewar. Pls accept my apology. Your post was good IMHO + thats why I came back to it. Noone else does the work you (and Lambert) do.

    Maybe let’s agree to disagree on whether having a limited web presence is suspicious. Or whether not being in town after leaving a job means you’re on the lam (travel?). Or whether suing over a blackberry makes any sense. Or whether law firms don’t have different ethical standards which matter.

    Ive seen hundreds maybe thousands of complaints and this reads like a SLAPP. Nasty insinuations. Vagueness. Rapidly escalating amended filings. No rational goal except intimidation. Everything done to maximize cost. The “fraudulent email” thing which is an absolute classic. But opinions differ I get that. We are spectators and dont.. cant know whats true.

    Follow up.. you said “another media outlet.. winked and nodded to me in a way that is consistent with the notion that Levine was the source.” Does this mean the WSJ burned its source as well? HOly smokes.

    1. Yves Smith Post author

      I don’t know where you get your idea of what normal conduct is. No litigator I’ve spoken to sees this amount of delay as anything other than deliberate evasion of service. And taking and keeping your employer’s property is theft, independent of the legal agreements to return the devices when Levine’s employment ceased. I can’t fathom how you defend that behavior.

      It is unheard of for anyone who is the target of litigation not to have hired an attorney to deal with it by now, particularly since he is clearly aware of the suit as in he has a spokesperson, who appears to be a travel agent, respond to the Wall Street Journal. I tried contacting his spokesperson and left messages at her home and office and I was prepared to give him advice as to what to do (get to the SEC ASAP with a USB drive of what he had) as well as put him onto an expert who has made PE whistleblower filings who’d help him assess what he did have on his devices (as to whether it was damaging and how).

      I must also reiterate that you clearly did not read our original post carefully. You apparently did not read the WSJ story, to which we linked, in which Levine’s representative does not deny that he is the source of the NYT story. If he hadn’t been, that would be the first line of defense: “The allegations here are crazy. My client never spoke to the Times about Chobani.” That would be far more devastating to TPG that the “He’s a whistleblower” line. And our use of words like “shocking” related to the New York Times giving the e-mailst to TPG.

      It also appears you have not read our work on private equity or know the industry. Private equity firms have gotten either laws passed in every 50 states or favorable state attorney general opinions to preserve an extraordinary degree of secrecy around their operations. Private equity limited partnership agreements are the only contracts that state and local governments enter into that are exempt from disclosure. And if you try getting information from public pension funds about private equity that is not exempt from disclosure under law, say their correspondence with general partners, odds are high they won’t give it to you. They’ll contact the general partners and run whatever lame excuse they give the public pension fund. CalPERS, which I had to sue to get private equity return data, is actually better than most on this front.

      Similarly, a top investigative reporter at a major who must go unnamed but has broken major private equity stories says he has never found it so hard to do the story as the one on private equity. Literally no one in the industry would talk. The code of omerta in PE is well beyond that which exists in any other field.

      TPG’s reaction is thus what you’d expect from a major firm in this industry.

      1. Steve Cook

        Gosh I was really tryin to cool things down. Maybe its me still. OK maybe let’s walk through this.

        “No litigator I’ve spoken to sees this amount of delay as anything other than deliberate evasion of service”

        He just left his job. Could he maybe be traveling?

        “taking and keeping your employer’s property is theft”

        Do you have confirmation that he took it, other than the complaint? Have they filed a police report?

        “I can’t fathom how you defend that behavior.”

        Well I wasnt. The point was no one files a lawsuit like this over a missing blackberry, not that stealing is good.

        “It is unheard of for anyone who is the target of litigation not to have hired an attorney to deal with it by now”

        It is not at all unheard of for an ordinary Joe who has no regular contact with the justice system to take some time finding representation especially if the complainant is venue shopping.

        “I was prepared to give him advice as to what to do”

        That is very nice of you. She might be getting nonstop calls. You might also have had the wrong number.

        “I must also reiterate that you clearly did not read our original post carefully. You apparently did not read the WSJ story”

        Must you? I read them both. Closely.

        “…in which Levine’s representative does not deny that he is the source of the NYT story”

        Statements in response to lawsuits are usually broad denials of merit or attempts to reframe the allegations. Respondents are typically advised against commenting on specific facts.

        “And our use of words like “shocking” related to the New York Times giving the e-mailst (sic) to TPG.”

        False. Having ahem read your article closely, I note the use of words like “shocking” with respect to his apparent lack of representation (“Levine shockingly looks not to have any legal representation”) and the foolishness of leaking to DealBook which you assume he did (“another stunning example of Levine’s lack of sophistication”).

        “It also appears you have not read our work on private equity or know the industry.”

        Even if this were correct, I dont get how this contributes to civil dialogue or helps your point.

        “TPG’s reaction is thus what you’d expect from a major firm in this industry.”

        So..because the industry values privacy it is therefore logical to file a lawsuit in which, were it seen through, key management would be deposed and boatloads of this firm’s internal documents would enter the record? Erm I dont follow. Can you offer any examples where a firm sued simply to defend “omerta”? This reaction is what one would expect from a corporation, in almost any industry based on my experience, fearful of further revelations from a critic. As I said the complaint reads like a SLAPP.

        “You attack the posts SOLELY based on the law firm that TPG hired”

        Well no. The main criticism was that the post superficially raises the possibility these claims might be false (by sprinkling CYA statements throughout) without ever really exploring that possibility. But for the NYT / source part, nearly all of its conclusions rely on assertions in the complaint.

        “And the ethics scandal behavior took place outside the court”

        Some did..some did not. Biovail fired Kasowitz for misusing documents covered by a protective order. Duane Reade won a fee dispute lawsuit against Kasowitz. Look at the Fairfax case. Examples abound.

        “Lawyer are required by the court to file materials that are accurate to the best of their knowledge. Failure to do so is sanctionable. Moreover, judges take VERY VERY poorly to a lawyer that makes inaccurate representations to the court.”

        Erm..thanks.. youre not actually an attorney right? Plaintiffs’ attorneys in SLAPP situations use creative wording to maximize reputational damage to the critic without technically lying. The goal is for the critic to rapidly capitulate in the face of escalating, overwhelming pressure so that the complainant never has to answer for their overblown assertions. If that doesn’t work and they do have to substantiate them, they just say “Oh what we meant was..” They do this because it works.

        “…say by being able to show that TPG was making it up by saying the e-mail they got back from the NYT was doctored”

        Look at what the complaint actually says about the email. How might a creative attorney define “information”? Formatting. Blank lines. An email signature. If a material change had been made, this firm would have told the NYT and the NYT would have issued a correction or retraction. It’s a classic trick because most journalists will report it as if the entire doc were allegedly fake.

        “another media outlet.. winked and nodded to me in a way that is consistent with the notion that Levine was the source”

        Does this mean the WSJ burned its source as well? I asked in the last post but you didnt address.

        1. Yves Smith Post author

          You really have a vested interest in this, don’t you?

          I’m keenly critical of the private equity industry but at the same time, I have dealings with wanna be whistleblowers. I’ve also read hundreds of legal filings and have access to nationally recognized attorneys and law professors who are to a person on the anti-bank side. None of them have any sympathy for Levine ducking service. He clearly knows a suit is out there, given that the did respond through a spokesperson.

          And he’s not an average Joe. He worked for TPG for years and in the White House before that. Anyone with any professional experience, particularly in a business where lawyers are routinely involved (any form of fancy finance) knows when you get in legal trouble you call an attorney ASAP. He should be even MORE attuned to that as a PR person.

          Similarly, if Levine was serious about whistleblowing, again his first stop would be an attorney. The SEC pays very good money these days for whistleblower filings it pursues, as does the IRS, and the SEC is making very serious noises about going after abuses in private equity. Levine have been making hundreds of thousands of dollars in his job per year. He certainly has the experience, and should have the dough, to get a lawyer if he intended to respond. And any lawyer would tell him to accept service (the attorney can accept service on behalf of his client, so Levine does not have to be in California) and file a response.

          As for the NYC and retractions, it’s been a minor focus of this site to shred NYT articles. I also know prominent individuals who have had erroneous material presented in stories that was used as part of an effort to dent their credibility and they were unable to get the story corrected. In other words, the bar for getting a retraction or correction from the Times is very high. If you had looked at the story, the e-mail at issue was only a minor element of the piece. The investor presentation versus the Form ADV disclosures mentioned are in and of themselves proof of the thesis, that investors appear not to have gotten adequate disclosure by the SEC’s standards. The e-mail adds salacious journalistic detail but is not core to the account. If I were the Times, I would ignore a compliant about the e-mail, since it doesn’t change the thrust of the story.

          Moreover, if the changes to the e-mail were merely cosmetic, Levine’s side would use that in court to assail the credibility of the entire filing. Trying to make changes like that sound like bad faith has high odds of backfiring, particularly in a jury trial.

          Levine’s background and the NYT story strongly suggest he would not know where the dirt lies in private equity. They don’t have much if any exposure to the investors (that is handled by the top people at the firm), the legal agreements or negotiation of the fundraising, or the acquisitions, and most of all, the fund flows out of the acquired company. He appears to have come across the optically bad Chobani conduct via being in a small office (the person highlighted was also in the San Francisco office) rather than via his role as an in-house PR person.

          There are documents and records that Levine could have taken (assuming he did take records as the filing alleges, that would be the presumed reason for going after his Blackberry and firm laptop, as well as to see any e-mails he was unwise enough to have sent from them, although they’d get that in discovery anyhow) that the firm would absolutely not want made public. Absent guidance from someone who knew contract in and outs, Levine would be highly unlikely to know how they might serve as important parts of a whistleblower filing (there is only one law firm that might be able to guide him, which is one reason I had tried to contact Levine; it takes highly technical knowledge specific to people who know private equity contracts and practices, to know where to begin). The most important would be the contracts with investors, the so-called limited partnership agreements. Other important information would be the books and records of the portfolio companies, or the records at the relevant TPG legal entities of transactions with those firms. Access to the financial records is usually highly restricted, so I doubt Levine would have been able to get to that through the firm’s regular systems. It’s more probable, but still not likely, that he could get to the LPAs.

          It also should be noted that embarrassing e-mails (which is more likely to be the sort of information that Levine has, along with memos and presentations) are often not enough to make a case. For instance, when the DoJ tried prosecuting two hedge fund managers at Bear, it did so on damaging-looking e-mails. Most industry experts thought the DoJ case was remarkably wrong-headed, since the Bear hedge funds were basically stupid victims who bought bad mortgage product. The DoJ appears to have gotten overly confident based on the e-mails, which the Bear employees were able to defeat in court by showing they were taken in isolation (the fund managers had days when they were very very worried about the funds as well as more optimistic) and most important, their sales of their interests in the fund had nada to do with their worries (they were sales scheduled for other reasons, which they were able to demonstrate, and the funds failed with them still having large interests in them). So that is a long-winded way of saying that even prosecutors can go off half-baked when they get damning-looking cameos.

          Mind you, I am NOT saying that TPG is clean. I have every reason to think they have engaged in plenty of bad conduct, since it appears to be the norm in the industry. But there is reason to question whetherLevine is actually a whistleblower, or even if he were trying to be one, that he can substantiate allegations to the level of representing real regulatory or contractual liability for TPG. And thus the case of a soi-disant whistleblower who at best is unlikely to have the goods hurts the cause of whistleblowers generally.

          As to your point about discovery, you’ve unwittingly raised the biggest issue that works against Levine being the whistleblower that his spokesperson says he is. If he were a bona-fide whistleblower, this would be a gift from God, particularly since TPG asked for a jury trial, ie, a public process. He’d take service and go after them. TPG doing discovery on him would be a short and uncomplicated process, while if he really had allegations he was making against the firm, they’d be valid avenues for discovery and the firm would have just opened itself up to have him demand relevant records and depose witnesses.

          As for motive? This could be as simple as the partner in the SF office who was mentioned in the story being furious. By leaving the firm with equipment and documents, which if true would be clear violations of agreements he’s signed, Levine looks to have set up an easy case. The reason for a junkyard dog firm might be simple revenge (that sort of firm is expert at making the process costly for defendants) and/or pour decourager les autres (the people at the firm who are vastly more likely than Levine to know of any bad conduct).

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