N.Y. attorney general opens probe into private equity firms, including Bain
In this March 18, 2011 file photo, New York Attorney General Eric Schneiderman answers question during a news conference in his New York City office. / AP
(CBS/AP) - The New York attorney general has opened an investigation into numerous private equity firms, including Bain Capital, according to an official familiar with the inquiry, CBS News has confirmed.
Attorney General Eric T. Schneiderman is examining whether the firms used a tax strategy to avoid paying hundreds of millions of dollars in taxes. The practice involved converting some fees collected for managing accounts into fund investments, resulting in a tax rate of 15 percent instead of 35 percent.
Republican presidential candidate Mitt Romney co-founded the private equity firm in 1984. He ran the organization until 1999, although documents show that he remained the sole owner, president and chief operating officer until 2002.
The New York Times first reported the investigation of more than a dozen firms. The report indicates that some observers think it is a political motivated investigation by a Democratic attorney general with relations with President Obama, while others say Schneiderman is seeking additional tax revenue for New York.
Tax experts tell the Times they have differing views about the strategy's legality. The New York Times estimates that Bain saved more than $200 million in taxes.
Though Romney collects benefits as a Bain retired partner, the inquiry isn't focused on the time he ran Bain.
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