Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) on Thursday pressed Treasury Secretary Steven Mnuchin on allegations that he and other Sears board members stole billions of dollars from the collapsing retailer.
In a Thursday letter to Mnuchin, Warren and Ocasio-Cortez asked the Treasury secretary to explain his role in a series of financial maneuvers that stripped Sears of its most profitable assets and loaded the now-bankrupt company with debt.
“We are deeply concerned by the financial engineering and potentially illegal activity that took place at Sears Holding Corporation while you served on the company’s board,” the lawmakers wrote in a five-page letter.
Warren, a Democratic presidential candidate, and Ocasio-Cortez also released a video explaining the letter and their concerns with Mnuchin’s involvement in the company’s financial collapse.{mosads}
Mnuchin was a member of Sears’s board of directors until President Trump asked him to be Treasury secretary in December 2016. The iconic retailer filed for bankruptcy in October 2018 after closing 3,500 stores and laying off 20,000 workers.
Sears’s creditors sued the Treasury secretary, along with the company’s former chief executive Eddie Lampert, a college roommate and close friend of Mnuchin, and several former directors in April.
The suit alleges Lampert and the board bankrupted Sears by “transferring more than $2 billion in assets to shareholders and taking an irresponsible amount of debt while enriching themselves.”
“Had Defendants not taken these improper and illegal actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy filing,” the suit alleges.
A Mnuchin spokesman did not immediately respond to a request for comment.
Lampert and his hedge fund ESL Investments, which purchased Sears and is named in the lawsuit, have denied the allegations.
The lawmakers asked Mnuchin how he advised Lampert on his decisions to buy back nearly $6 million in Sears stock while slashing expenses, take on “large amounts of debt” and spin off major assets to shareholders, selling 235 of the company’s most profitable locations to a real-estate investment trust.
Warren and Ocasio-Cortez also asked Mnuchin whether he has been involved in decisions related to Sears and the Pension Benefit Guaranty Corporation (PBGC), a federal insurer now responsible for the company’s underfunded pensions.
Mnuchin, along with the secretaries of Commerce and Labor, is a statutory member of the PBGC, which insures retirement benefits and pension plans from private companies.
Sears transferred control of the company’s two pension plans, covering 90,000 workers, to PBGC in February.
While Mnuchin agreed in January 2017 to recuse himself from any decisions related to Sears for one year, Warren and Ocasio-Cortez asked the secretary if he’s been involved any actions regarding the retailer since the recusal period expired.