Sen. Ted Cruz (R-TX) did not publicly disclose a financial relationship with a Caribbean holding company during his 2012 Senate campaign, according to Time magazine, which reported on Friday that the omission may have violated ethics rules.
Cruz first reported the relationship — which began with a $6,000 investment in a firm founded by a college roommate — in 2013, but did not fully identify the holding company and its location. Senate Select Committee on Ethics staff then looked into the matter, prompting a second amended disclosure. According to Time, Cruz is now preparing to make additional corrections.
Cruz says he has not had any relationship with the private equity firm since he cashed out an initial investment of $6,000 for a total return of $100,000 a decade ago in a private agreement with his former college roommate, a Jamaican Rhodes scholar named David Panton, with whom Cruz co-founded the firm. Cruz says the agreement yielded him $25,000 in cash and $75,000 in the form of a promissory note on the holding company. The agreement included an oral provision for the accrual of reasonable interest on the debt, Cruz says. He says he initially deferred and then paid capital gains taxes on his profits from the investment.
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