Does Romney Have an In-Law Problem?

ABC News
Does Romney Have an In-Law Problem?
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Mitt Romney's rise in business and politics has served as a marketing bonanza for two of his wife's closest relatives, both Utah-based businessmen who have benefited from, and are said to have traded on, their connection to the presidential candidate even as they suffered a succession of embarrassing business and legal difficulties.

Ann Romney's brother Roderick Davies, who filed for bankruptcy in 2010, and nephew Ryan Davies, who oversaw a now-bankrupt green energy venture, have both been out on the campaign trail to offer support for Romney. But back in Utah, the two men have left a trail of unhappy business partners, a number of whom spoke with ABC News to express concern about how the two might try and capitalize on a Romney presidency.

Andy Neff, a Florida financial advisor who says he lost a top client and his own savings investing in Ryan Davies's ill-fated solar energy venture, said Davies repeatedly assured him that his famous uncle Mitt was mentoring him, right up until his company filed for bankruptcy.

"To be quite honest with you," Neff said, "if you're running for President of the United States, you should probably make sure all your family's doing the right, ethical things with people, and not taking advantage of hardworking guys like me and taking my money."

The two have been said to tout their family connections when courting business partners – Neff noted that Ryan Davies once told him a potential investor was welcome to stay at Mitt Romney's Park City mansion (though she never did) when she traveled to Utah for the Sundance Film Festival. Davies also told potential clients in a public presentation that Romney's son Josh was a vice president of his Utah clean energy company, Renewable Energy Development Company (REDCO).

After ABC News emailed a question to the Romney campaign about Josh Romney's role in REDCO, Davies phoned to say he had made a mistake.

"That was more of my wish than what actually happened," Ryan Davies said. "Josh had no role in REDCO. I shouldn't have said that he did."

A few shaky branches on the family tree is nothing new in presidential politics. Bill Clinton's brothers-in-law contributed a stream of unflattering headlines during his tenure, and Neil Bush, Billy Carter and Donald Nixon all found notoriety when their brothers moved into the White House.

ABC News attempted to contact Roderick Davies, both at listed phone numbers and through the campaign, but was unable to reach him. ABC News spoke briefly to Ryan Davies last week as he sought to clarify Josh Romney's role in his company, but he did not respond to messages left this week to follow up.

Romney's campaign would not discuss his efforts to help his in-laws with their various business ventures, but through interviews and public records, ABC News has found ample evidence that the presidential candidate made repeated efforts to assist them, even if those efforts sometimes ended badly.

In January, The Wall Street Journal reported on Romney's push to have Bain Capital invest in an off-beat company that wanted to sell customized dolls designed to look like the children who bought them. The company, Lifelike Co., called the dolls "My Twinn." In 1996, Bain invested $2.1 million in Lifelike Co. and Romney took a seat on the company's board. Soon after, Roderick Davies was hired and became a vice president. Kenneth Thiess, former CEO of Lifelike, said in an interview that Davies told prospective suppliers that, through him, they were establishing a link to a future President of the United States.

Davies left the company in 2003 and became embroiled in a caustic legal imbroglio with the company's other managers -- with them accusing Davies of trying to steal their idea and start a rival doll company. The case was suspended when Lifelike declared bankruptcy in 2004.

Davies told the Journal the accusations against him were "spurious," adding: "When a company fails, there's a lot of finger pointing."

Bain also invested in a troubled internet start-up that employed Ryan Davies from 1997 to 2001, a Utah-based firm called Found Inc. that struggled and was later purchased by another firm. In a biographical write-up Davies published as promotional material for another venture, he said he helped Found Inc. raise "over $46 million in private equity from Bain Capital, Accel Partners, Kohlberg Kravis Roberts, Sun Microsystems and others."

Romney's in-laws continued to find opportunities in their famous relative's orbit. While he headed the Salt Lake Organizing Committee for the 2002 Winter Olympics, the organization hired a start-up company that Ryan Davies helped oversee, called 02 Blue. The company helped buy and sell mobile emissions credits, and Davies told ABC News he hoped the work for the Olympics would put his company on the map. It didn't -- the company shut its doors not long after. Davies told ABC News that he landed the Olympics contract without his uncle's help. "This is not anything I went directly to him about," he said.

When Romney made his first bid for president in 2007, his campaign hired Rod Davies's importing company, Asian Sources LLC, to supply bobblehead dolls crafted in the candidate's likeness. Federal Election Commission records show the campaign paid Asian Sources $30,000, according to a review by the Center for Responsive Politics. Top Romney fundraiser Spencer Zwick signed letters that accompanied the dolls when they were sent out to scores of donors "as a token of our appreciation." Zwick called the bobblehead doll a "can't-get-it-in-stores" collectable.

Roderick Davies identifies himself on an online resume as heading business development for the green energy firm his son Ryan launched in 2008, called REDCO. Ryan was apparently quick to tout his Romney connections, even when no family help was forthcoming, according to Davies' former clients and investors. REDCO's business was to fund alternative energy projects, such as wind and solar generating plants. In 2009, Davies traveled to the small Mojave Desert town of Needles, Calif., to pitch city officials on a new method of converting the sun's rays into electricity. It was in a slide presentation to the Needles council, obtained from the city through a public records request, that Davies identified Josh Romney as the vice president of business development for his Utah firm.

One top Needles official told ABC News that Davies repeatedly referenced his ties to Mitt Romney, and those connections brought Davies credibility.

"It was my personal hope that if we built this, that [Mitt] Romney would come out here and help get politicians here to draw attention to it so we could build more like it, but obviously, that never happened," the official said, asking that his name not be used because the city signed an agreement not to disparage REDCO and he did not have permission to speak publicly about the matter.

Davies also touted Josh Romney's purported involvement in an August 17, 2009 email to investors, obtained by ABC News, saying Romney would be the company's "business development advisor." Andy Neff, a boyhood friend of Davies, said he put $150,000 of his own money into REDCO with the impression that Mitt Romney himself might be looking over Davies's shoulder. Neff also said he persuaded one of his biggest clients to invest far more than $600,000, saying that he didn't think "my client would have even spoken to him if he wasn't associated with Mitt Romney."

"It's kind of like, how can you go wrong when someone like that is watching over their nephew?" Davies said.

The Needles project was intended to be one of REDCO's biggest payoffs. The idea was to fill dozens of acres of Mojave Desert land with giant towers, each topped with an array of molded plastic panes that were intended to act as a sort of solar collection panel. The technology was the brainchild of a self-trained Utah inventor named Neldon Johnson, who once described his creations as divinely inspired. Davies can be seen on video recordings of Needles City Council meetings touting the technology as cutting edge, and promising the city will be out in front.

"We will have some pretty big cranes out here for awhile," Davies told the council, promising during one council meeting that construction on the towers would be starting soon.

In 2009, the city signed a power purchase agreement with REDCO. But the towers never arrived, and the deal ultimately fell apart.

What went wrong remains unclear. Johnson, the inventor behind the technology, told ABC News he still believes it would have worked. He blames Davies for failing to lure enough investment to see the project through to completion. He said he had always hoped that Davies' ties to Romney would one day put his invention on the map.

"When you have a good name in the family, we felt like it would be a good connection for us," Johnson said. "If it developed into a positive relationship with Ryan, it could bleed over into other relationships with the Romneys, you know?"

Davies told ABC News the problem was with the technology's high cost. As the price of the solar towers rose, he said, the financials showed the project would be "under water before it ever started."

Needles officials told ABC News that they walked away from the experience with serious doubts about both the technology and Davies. And at a time when the city was already severely strapped financially, officials there said the city had to eat roughly $100,000 in costs associated with the failed REDCO deal, mostly legal expenses.

Earlier this year, REDCO filed for bankruptcy. In June, a court-appointed bankruptcy trustee filed a court action demanding that Davies return $179,000 he allegedly borrowed from the company. The money took the form of what the bankruptcy trustee called "cash disbursements lacking support" from company accounts. Former company attorney Sean McBride said Davies "had improperly taken the money." On Dec. 16, 2011, after company board members discovered the spending, McBride said Davies was required to sign a promissory note pledging to repay the money.

Utah-based freelance researcher Lynn Packer contributed reporting to this story.

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