SPRINGFIELD — Republican Bruce Rauner has touted his success as a businessman as a reason Illinois voters should support his bid for governor.
But, just as Democratic Gov. Pat Quinn has been at the helm of a financially troubled state, a number of companies owned by Rauner's firm also have faced turbulent financial waters.
Playing out in a federal bankruptcy court in Florida this week is the complicated case of Trans Healthcare — a nursing home chain owned by Rauner's old firm GTCR.
While the Quinn campaign has sought to shine a light on the company's breakup as an example of how Rauner operated as a venture capitalist, a review of court records and news accounts found 11 additional companies owned by Rauner's firm went bankrupt during or soon after his two decades as captain of GTCR.
Of those companies, Rauner served as a board member on seven of them, including the Polymer Group, Lason, Leapsource, U.S. Aggregates, Cherrydale Farms, Zefer and Homebanc.
Other GTCR companies that went bankrupt, according to a review by the Lee Enterprises Springfield bureau, include Graceway Pharmaceuticals, Vector, Sorenson and Wilton Industries.
Rauner spokesman Mike Schrimpf said Rauner, who reported $53 million in income in 2012, has had more successes than failures as an investor.
"Most of GTCR's investments were successful, but some did not work out. That's the nature of investing," Schrimpf said.
Among the companies that went bankrupt was Sorenson Communications, a company purchased by GTCR in 2005 that provides telephone services to hearing- and speech-impaired customers.
The federal government pays companies like Sorenson with revenue from a special tax on phone bills.
A 2009 article in the Philadelphia Inquirer quotes a Federal Communications Commission official saying the program was a "classic fleecing of America." The government, said Thomas Chandler, the chief of the FCC disability-rights office, was reimbursing companies at "ridiculously high rates."
In 2010, records show the Federal Communications Commission alleged Sorenson was overcharging for the service and announced it was planning to reduce the compensation rate. After Sorenson threatened to enter bankruptcy, the commission agreed to less of a reduction.
Reports indicate Sorenson nonetheless laid off 300 workers.
At one Sorenson office in New Hampshire, one of the two dozen American Sign Language interpreters told the Concord Monitor that employees were given little notice of their ouster.
Karen Braz said she and several other employees were called into a meeting with company executives and were told, "We are closing the center as of today. You have 20 minutes to gather your things. We have boxes. That's it. You're done. Goodbye."
"And we were shell-shocked, to say the least," Braz told the newspaper.
In 2013, after Rauner had left GTCR to run for governor, the company agreed to pay $15.75 million to settle an FCC investigation into whether the company billed the fund for questionable calls.
Sorenson filed for bankruptcy in March, citing an inability to stay afloat because of the reduction in FCC rates.
Another company owned by GTCR, Graceway Pharmaceuticals, also butted heads with federal regulators over one of its key products— a medicine designed to treat skin cancer.
The company was unsuccessful in keeping its patent on Aldara, allowing cheaper generic versions to hit the market. Although cancer patients had access to less expensive options, that meant the company's revenue plummeted from $320 million to $52 million.
"The loss of exclusivity with respect to Aldara, and the resulting decrease in net sales, is the primary factor that has led" to the bankruptcy, noted Gregory C. Jones, Graceway's executive vice president of strategic development.
As the company was heading into bankruptcy in 2010, GTCR took $9 million in cash out of the company. The company later was forced to pay more than $6 million of that money back.
Quinn campaign spokeswoman Brooke Anderson said the bankruptcies raise red flags about Rauner's track record.
"It's no wonder why so many Illinoisans are frightened about the prospect of Bruce Rauner bringing his slash-and-burn approach that destroyed so many companies to state government," Anderson said in an email Wednesday.
Despite the bankruptcies, Schrimpf said the risks taken by Rauner and GTCR have resulted in positive returns for the state's employee pension funds.
"Building industries and companies is extremely challenging, but Bruce took it on and produced great results for state worker retirement funds as well as the taxpayers," Schrimpf noted in an email.