Rennie: Ann Lamont's IPO For BMJ Was DOA

Behind every great fortune there are many stories, writes the Hartford Courant's Kevin Rennie. Connecticut Democratic Senate challenger Ned Lamont, who has contributed millions to his campaign, enjoys three fortunes: the one he was born into, the one he made, and the one his wife created. There should be enough tales in the accumulation of that treasure to keep Shaharazade busy for weeks.

The Lamonts have many financial interests. The candidate’s financial disclosure to the Senate shows he is worth between $90M and $300M. The accumulation of vast amounts of money over several generations requires a single-minded pursuit that is not always attractive to the public or those who’ve gambled and lost along the way.

Lamont’s wife, venture capitalist Ann Huntress Lamont, was sued for securities fraud over her role in a disastrous '98 Initial Public Offering of stock in BMJ Medical Management, Inc.

BMJ stock, sold at the IPO in 2/98 for $7 a share, had lost 98.7% of its value by the time the company declared bankruptcy 10 months later, trading then at a dismal eight cents a share. It was, according to the plaintiffs’ complaint, the most unsuccessful IPO of the year.

BMJ, a '96 start-up based in FL, managed 25 medical practices with 117 physicians in seven states, according to Bloomberg. It went into bankruptcy amid falling revenues, debilitating debts and litigious customers that claimed the company did not meet its obligations.

Ann Lamont was a member of BMJ’s board of directors at the time of the IPO by virtue of her venture capital company’s significant investment in funding the start-up of BMJ. The plaintiffs alleged that Lamont, other directors and venture capital investors in the company materially understated BMJ’s 1997 losses, claiming they were 350% greater than disclosed in the IPO documents.

Shareholders also charged that the directors of BMJ, including Ann Lamont, allocated more than 80% of the $28.3 million raised in the IPO to pay debt owed to their own companies, leaving BMJ hopelessly under-funded and doomed to fail at the expense of wronged investors.

While some of the documents in the class-action suit are sealed, records show that a settlement was approved by Federal District Court Judge Adalberto Jordan in which Lamont and other defendants paid $3,550,000 to a fund for duped shareholders. The accounting firm Ernst & Young paid an additional $250,000.

Tom Swan, manager of the Lamont campaign, said Oak Partners lent the company $1,000,000 which it was paid back from the IPO. He said the company made no money on BMJ stock. Ann Lamont owned no stock herself, and she received no compensation as a board member. The specific details of the $3,350,000, namely who contributed what amounts, are sealed by court order and will not be disclosed, he said. As part of the settlement, the defendants did not admit liability.