Governor Scott: About your blind trust

By Dian Vujovich

We should all be so financially fortunate as Governor Rick Scott—- his net worth grew by over 50 percent last year. That’s remarkable given that the S&P 500 was up only 30 percent.

Earlier this week The Palm Beach Post reported that Governor Scott’s net worth grew from $83.8 million to $132.7 million last year. Of that, $100 million was in a blind trust.

Before talking blind trusts, and trying to figure out how Scott’s fortunes grew so impressively, here’s a look back at how the markets performed last year and the kinds of returns most of the rest of us saw.

If we were really lucky, one of the more rewarding countries on the globe to invest in was Dubai. Its market finished the year with a gain of almost 108 percent. Behind it was Japan. The market there gained nearly 57 percent.

Here at home, the three companies with the biggest gains in 2013 were Netflix, up almost 300 percent. (297 percent), Micron Technology, up 243 percent and Best Buy, up 237 percent.

Had Scott’s trustee stuck to index-based investments, however, returns were impressive but puny based upon the hefty growth of assets for the governor’s blind trust.

According to USA TODAY, the S&P 500 gained 29.6 percent in 2013, its best performance since 1997; the DJIA rose 26.5 percent, the best return it has had since 1995; the NASDAQ Composite was up more than 38 percent, its biggest gain since 2009; and the small-cap Russell 2000 skyrocketed 37%, its best annual return since 2003.

Then again, maybe commodities played a part. Aluminum was last year’s best bet there, up over 26 percent.

Or maybe it was a hedge fund investment. Barron’s top ranked hedge fund last year was the Glenview Offshore Opportunity fund—up a whopping 101.74 percent in 2013. Yes, maybe it was that fund that got a piece of Scott’s blind trust dollars given that health-related ties have been said to help create his wealth.

Barron’s reported that one-third of Glenview’s portfolio managed by Larry Robbins, was invested in hospital, managed-care, life science and pharmaceutical stocks. And we all know that Scott does have a ’s hospital-related history.

But speculation aside, Scott is not likely to say how his blind trust money is invested for two reasons. The first, he’s not a big talker. If you remember, when questioned in a deposition about his role as CEO of Columbia/HCA, he pleaded the Fifth Amendment 75 times. Of course that didn’t help much given that in the end, and under his tutelage, his company still holds the honor of being responsible for the largest Medicare fraud in history.

The second reason we’re not likely to know exactly how that growth was accomplished is because in a blind trust, a third-party fiduciary has complete control over how and where the assets in the trust are invested. So the trust’s beneficiaries are blind to what’s happening.

That means Scott doesn’t select, approve or have a say in how/where the monies are invested. His advisor or the fund’s trustee does it all. (FYI, Scott’s use of a blind trust is being challenged.) The reason elected officials like blind trusts is because having them avoids conflict of interest accusations.

Even so, that doesn’t stop anyone from wondering how his blind trust returns were made. And how they might get a piece of that action.