Report: Commerce Secretary Wilbur Ross allegedly helped siphon money from associates

Kevin McCoy | USA TODAY

Show Caption Hide Caption Forbes: Wilbur Ross overstated his wealth by $2 billion It seems Commerce Secretary Wilbur Ross purposefully overstated his wealth by approximately $2 Billion dollars in statements to Forbes Magazine. Veuer's Chandra Lanier has the story.

A new report paints an unflattering portrait of Commerce Secretary Wilbur Ross, depicting him as a businessman who may have improperly had a role in siphoning more than $120 million from business associates.

The conclusion stems from lawsuits, reimbursements and the findings from a Securities and Exchange Commission investigation that ended with a civil penalty, according to the Forbes magazine report posted online Tuesday.

"If even half of the accusations are legitimate, the current United States secretary of commerce could rank among the biggest grifters in American history," the report said.

President Donald Trump, a Ross friend, nominated the veteran businessman and investor to head the Department of Commerce in November 2016. The Senate confirmed the nomination in February 2017. The Department of Commerce on Tuesday denied the accusations and conclusions in the new report and questioned the motivation behind it.

"The anonymously sourced Forbes story is based on false rumors, innuendo, and unverifiable claims," the department said in a formal statement. "The fact remains that no regulator has made any of these accusations against the Secretary. This rehash of old stories is clearly the result of a personal vendetta. The baseless claims made in this story were well publicized long ago and are not news."

The new allegations follow a December report in which the business magazine reported that Ross had fabricated his wealth in an apparent effort to maintain his position on the Forbes 400 list of the richest Americans.

The latest report is based on information from 21 people who know Ross. Some were identified by name, but others were not. In all, the report outlined a series of lawsuits, payments and the SEC penalty.

One of the matters involves a lawsuit filed in 2015 by David Storper, a former senior managing director of Ross' WL Ross & Co. from April 2000 through late 2012.

Seeking $4 million in damages, Storper alleged that Ross and others "systematically deprived him of allocations worth millions of dollars, transferring the money to themselves, to affiliated persons or entities, or to others."

Attorneys representing Ross acknowledged in court filings that one of Ross' companies took Storper's interest and reallocated part of it to Ross, the report said. The attorneys said the transfers were permissible under internal business agreements, the report added.

The case ended in a confidential settlement this month, averting a scheduled civil trial in New York Supreme Court.

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The SEC fine stemmed from an investigation of WL Ross, a Ross private equity firm that focused on investing in and restructuring financially distressed companies. The firm "failed to disclose its fee allocation practices" to some of the companies it advised, an SEC investigation concluded.

As a result, the company violated a rule that prohibits an investment adviser from directly or indirectly engaging "in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client," the SEC said.

WL Ross settled the case by agreeing to pay $2.3 million civil penalty without admitting or denying the SEC findings.

Along with the penalty, the SEC decision disclosed that WL Ross had voluntarily reimbursed nearly $11.9 million that should have gone to investors while Ross was running the company.

The Forbes report also cited a December 2016 lawsuit in which a former WL Ross employee alleged that Ross had "looted" his accounts. A judge dismissed the case, but the former employee is pursuing an appeal, the report said.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc