DFL-aligned group and McFadden square off over his business record

The liberal group Alliance for a Better Minnesota (ABM) is working to define Republican U.S. Senate candidate Mike McFadden before the public gets to know him.

One day after McFadden announced that he intends to challenge DFL Sen. Al Franken, ABM released a web video criticizing McFadden for his role in the restructuring at a Duluth paper mill that resulted in job cuts.

“Mike McFadden’s job-killing Lazard is directly responsible for thousands of layoffs — including layoffs in Duluth,” Carrie Lucking, Executive Director of the Alliance for a Better Minnesota, wrote in a press release. “McFadden is just another rich guy who likes to fire people.”

But McFadden’s campaign manager, Tom Erickson, said McFadden and his company, Lazard Middle Market, had nothing to do with the restructuring. ABM should take the video down, Erickson said.

“Lazard Middle Market was not involved in the deal portrayed in the video,” Erickson said. “This is a classic attempt by Al Franken’s allies to distort Mike McFadden’s record in business.”

The video claims McFadden and his company, Lazard Middle Management, played a role in the restructuring of NewPage Corporation that led to cutting 5 percent of the workforce. It also says Lazard was paid $250,000 a month and an $11 million bonus from NewPage for its work.

Erickson said Lazard Middle Market, the firm where McFadden is co-CEO, is a subsidiary of Lazard Limited, which he said was involved in the restructuring at NewPage.

But Lucking said McFadden’s company did play a role in NewPage’s restructuring. She points to Lazard Middle Market’s website that says NewPage was one of the transactions done by McFadden’s company.

Erickson insisted the company run by McFadden had nothing to do with the deal.

“Lazard Middle Market is a subsidiary of Lazard. That’s a larger company,” Erickson said. “Lazard Middle Market, which is a company that is run by Mike and someone else, did not do this deal.”

ABM’s appears to be taking a page from President Obama’s campaign playbook. The Obama campaign worked and its allies tied Republican candidate Mitt Romney’s firm Bain Capital to companies that cut jobs.

At yesterday’s campaign announcement, McFadden said his work at Lazard was nothing like Romney’s work at Bain Capital.

“What I do is very different than Mitt Romney,” McFadden said. “Mitt Romney makes private equity investments. We advise companies. We raise capital for change of control events and for growth. We don’t make investments for our clients. We don’t own anything. We’re not making the operational decisions. So it’s very different.”

McFadden compared his work to a real estate agent. He said, like a real estate agent, his company receives a fee after its work with businesses is done. In response to questions, he did not specifically deny that his company’s work sometimes results in job losses.

ABM, which is funded by several wealthy DFL donors, labor unions and other DFL aligned groups, has been successful in shaping the campaign narrative in past races.

Their criticism of Republican legislators helped Democrats win control of the 2012 election. They also linked 2010 Republican gubernatorial nominee Tom Emmer’s drunken driving arrests to his legislative efforts to soften penalties for drunk driving arrests.