Memo 2

YUCAIPA COMPANIES: “POSTER CHILD FOR THE ILLS OF POLITICAL DONATIONS AND BUSINESS” Yucaipa is a holding company that invests across a wide range of industries—from groceries to logistics to magazine distribution. Ronald Burkle, chairman of Yucaipa, has been a multi-million fundraiser and donor for Bill and Hillary Clinton and in Bill Clinton’s post-presidency, Burkle has emerged as a close friend and rainmaker for the Clintons – and the friendship has been prosperous for both. “The mainstream business press beats up on [Burkle], essentially for buying access and influence among politicians and leaders of the pension funds that invest with him (FORBES included). ‘I basically became the poster child for the ills of political donations and business. It’s preposterous!’ Burkle protests.” [Forbes, 12/11/06]

BILL CLINTON AND YUCAIPA 2006: Bill Clinton Has Guaranteed Payments “Over $1,000” From Yucaipa And Has Invested In Several Yucaipa Funds. Hillary’s financial disclosure report indicates that Bill Clinton has “over $1,000” in guaranteed payments from Yucaipa Global Holdings. Because the Clintons are not required to report the actual amount or any range of income that is more specific than “over $1,000” we do not know how much Bill has been compensated. Through WJC International Investments GP, Bill Clinton invests in Yucaipa Global Holdings and Yucaipa Global Partnership. The Yucaipa Global Partnership Fund “invests in securities of corporations that conduct significant operations in foreign countries.” Clinton reported interest income between $201-$1,000 from Yucaipa Global Holdings and between $1,001-$2,500 from Yucaipa Global Partnership Fund. [2006 Sen. Clinton Senate Financial Disclosure Report; 6, 8]

2005: Bill Clinton Has Guaranteed Payments “Over $1,000” From Yucaipa And Has Invested In Several Yucaipa Funds. Hillary Clinton’s Senate annual financial-disclosure statement for 2005 show Bill Clinton receiving ‘guaranteed’ partnership payments from the Yucaipa Global Opportunities Fund I LLC of ‘over $1,000.’ A spokesman for Bill Clinton said he owns a one-third share of that fund. The two other Yucaipa funds involving the former president the Yucaipa American Fund and the Yucaipa Corporate Initiative Fund aren’t listed on Hillary Clinton’s disclosure form. Bill Clinton’s spokesman said he would only receive remuneration from those two funds if they meet certain investment benchmarks. Since he hasn’t received any monies from them, no disclosure is required, the spokesman said.” [Wall Street Journal, 5/2/07] ∞

WSJ: Bill Clinton May Receive Millions From Yucaipa. “After leaving the White House, Bill Clinton became a senior adviser to Yucaipa and involved in three of its investment funds. When Clinton joined Yucaipa in 2002, the company said he would ‘provide counsel’ and ‘participate in events related to the funds and provide advice in the development of potential investments.’ Neither Yucaipa nor Mr. Clinton has released full details about the former president’s compensation. Some observers have estimated he could make millions of dollars or more from his Yucaipa connection. [Wall Street Journal, 5/2/07]

YUCAIPA BUSINESS DEALS TRUCKING DEAL: BILL CLINTON HOOKS BURKLE UP WITH HOFFA, TEAMSTERS Bill Clinton Assisted Billionaire Hillary Clinton Bundler Ron Burkle In A Controversial Effort To Take Over The Car Hauling Business. Los Angeles billionaire Ron Burkle has stirred up controversy with his effort to take control of a big chunk of the nation’s car-hauling business, with some help from Bill Clinton. In 2006 two investment funds in Burkle’s Yucaipa Cos. bought big holdings of Allied Holdings Inc. debt, making Yucaipa the largest unsecured creditor of the company, which sought bankruptcy-court protection in 2005. Ear-

lier this year, Yucaipa gained control of Performance Transportation Services, another big car hauler. Allied and Performance together account for an estimated 50 percent of the new vehicles hauled by truck in the U.S. The International Brotherhood of Teamsters agreed to back a 15 percent wage cut for those workers. By bringing Burkle together with teamsters boss James Hoffa, Bill Clinton helped to pave the way for the two sides to work together in the effort to reorganize Allied and bring it out of bankruptcy proceedings. [Wall Street Journal, 5/2/07] ∞

Lawsuit Says Yucaipa Interfered With Teamsters To Push Own Reorganization Plan. Now, a federal lawsuit filed in Atlanta by some union members, three Allied directors and several outside investors alleges Yucaipa interfered in Allied’s talks with the Teamsters as a way to push through its own reorganization plan. They also say that as an owner of a major Allied competitor, Yucaipa has a conflict of interest and is looking to gain an improper amount of market power in the car-hauling business. In the Allied matter, Burkle has credited President Clinton with persuading Hoffa to work with Yucaipa as a union-friendly employer a feat that Burkle said he couldn’t have pulled off on his own. Teamster and Yucaipa officials say that in 2003 Clinton suggested to Hoffa that he look to Yucaipa if any companies employing Teamsters got into financial trouble.” [Wall Street Journal, 5/2/07]

Mickey Kaus: Clinton-Burkle-Hoffa Deal Has Implications If Hillary Is President. Kaus wrote, “Yucaipa arranged for Clinton to make a speech at a Teamsters conference in 2003, and later Clinton urged Teamsters President James Hoffa Jr. to trust Burkle and present him with possible deals. Result: This spring Yucaipa paid $100 million to buy a controlling stake in Allied Holdings, a trucking outfit in bankruptcy proceedings. ‘Clinton got it to the point where Hoffa actually helped us with that deal, something I couldn’t have gotten on my own,’ Burkle says. So Hoffa helps Clinton with a deal that makes Clinton and Burkle money. And if Hoffa needs something in a few years from President Hillary Clinton’s White House ...” [Mickey Kaus, Slate, 12/28/06] INVESTMENTS IN ASTROLOGICAL SOFTWARE AND DISTRIBTION OF PLAYBOY Recent Yucaipa Investments Have Included Alliance Entertainment Corp. And Source Interlink. According to the Philadelphia Inquirer, “Alliance Entertainment Corp., Florida, is a music and magazine distributor. Yucaipa paid an estimated $130 million for the company in 1999, and traded the firm for stock worth more than $300 million in 2005 to Source Interlink Cos., leaving Yucaipa as Source Interlink’s largest shareholder.” [Philadelphia Inquirer, 3/26/06]

MATRIX SOFTWARE Matrix Software, Part Of Alliance Entertainment, Is The Leading Astrological Software Provider. “Matrix Software is the leading developer and publisher of specialty astrological software for use on personal PC’s. Founded in 1977 Matrix is one of the oldest continuously operating PC software companies in existence today. Matrix Software became a part of Alliance Entertainment in 1995 when it was purchased with its sister company All Media Guide (AMG). Today Matrix catalog of more than sixty programs are used by astrologers, and the astrologically curious in over 119 countries. The Matrix Oracle online is one of the most visited astrology sites on the web.” [Alliance Entertainment website, accessed 5/23/07]

SOURCE INTERLINK Source Interlink Renewed Full Distribution And Marketing Agreements With Playboy. A Source Interlink press release included, under the heading “Recent Business Highlights”: “The Company renewed full distribution and marketing services agreements with Playboy Enterprises International, Inc. and Scientific American, Inc. for the international marketplace. [PR Newswier, 4/17/06]

Source Interlink Secured Exclusive Distribution Of All Magazines To And Borders Stores… In a May 2007 Source Interlink press release, Michael Duckworth, chairman of Source Interlink, commented “We are very pleased to have been selected by Borders Group as its exclusive supplier of magazines and we consider this to be an outstanding opportunity to help expand the category. We look forward to working with the company and our publisher partners to enhance the customer experience at newsstands.” [Source interlink press release, 11/04/05, accessed 5/23/07; Source interlink press release, 5/7/07, accessed 5/23/07]

…And Penthouse Sales Grew At Borders. Mediaweek wrote, “Penthouse has stopped taking ads with strong sexual content, resulting in a 4.1 percent drop in ad pages year to date, according to the Mediaweek Magazine Monitor. But circulation has increased. The title is back at many more Borders and Barnes & Noble outlets, and paid and verified circ was up 2.9 percent, to 366,024, in the six months ended June 30, according to the Audit Bureau of Circulations.” [Mediaweek, 10/9/06] DEAL WITH CALIFORNIA PUBLIC RETIREMENT SYSTEM 2006: Calpers: We Chose To Invest In Yucaipa Funds Because Of Their Track Record, Commitment To Disadvantaged Communities. The New York Times wrote, “The California Public Employees Retirement System, often called Calpers, is a major investor in the two domestic funds of Yucaipa, committing $400 million since 2002 with an option to invest another $275 million, according to public records. Calpers officials said they chose to invest with Yucaipa because it has a stellar track record and it invests in communities that have trouble attracting other investment capital.” [New York Times, 4/23/06] 2002: Experts: Bill Clinton Is Worth $5 Million A Year To Raise Investment Funds From Unions. The New York Post wrote, “Bill Clinton has landed a real job. And if the ex-president rakes in enough cash for the coffers of Yucaipa Cos., a group of investment funds based in Los Angeles, his pay could top $5 million a year, experts estimated. ‘He can get that [$5 million] and more,’ said one. ‘He’s worth it.’ The fund managers want Clinton to help raise $1.5 billion, mainly from the nation’s $400 billion in union pension funds.” [New York Post, 4/12/02] ∞

Success Raising Funds From Unions Motivated Creation Of The Second Domestic Fund. The New York Times wrote, “The two funds started by Yucaipa first got their start last year when the California Public Employees’ Retirement System, one of the nation’s largest and most influential pension plans, approved a $475 million initiative to invest in blighted urban and rural communities throughout the state. The retirement system then picked 11 investment firms as partners with the hope it would spur development in areas ignored by venture capitalists. Yucaipa was allotted $200 million by the retirement system and set up a fund. But Mr. Burkle liked the idea enough to start another fund, the American Fund, which has raised $560 million from state and union pensions.” [New York Times, 4/11/02]

2004: Data Showed Zero Return From Yucaipa Funds. The New York Times wrote, “Mr. Scheer also said that the information would help settle longstanding questions about whether some investment partnerships were favored because they had cultivated relationships with politicians and celebrities. A family of private investment partnerships created by the Yucaipa Companies, for instance, sometimes sponsors appearances by former President Bill Clinton at conferences for pension trustees. The new data show that Calpers paid fees around $8.6 million to three Yucaipa investment partnerships in 2003. The return from those partnerships was zero.” [New York Times, 12/8/04]

Burkle Won No-Auction Deals From CALPERS, Leaned On Ties To Influential Politicians. Forbes wrote, “In 2000 Burkle decided to launch a few private equity funds aimed at big no-auction deals (he has been the sole bidder in 75% of his transactions), and he brandished a well-honed talent for mixing business and politics. California’s then $165 billion state pension plan, Calpers, committed $760 million to Burkle’s funds. More scorn for Burkle: In the mid-1990s he had contributed money to the campaigns of Governor Gray Davis, San Francisco’s former mayor Willie Brown (his former lawyer) and State Treasurer Philip Angelides, and later Brown and Angelides joined the Calpers board. ‘How were we supposed to know in the mid-1990s that Willie Brown was going to be on the board of Calpers?’ he says. You would never have guessed unless maybe you knew that Willie Brown was about as well-connected as any politician in California’s history.” [Forbes, 12/11/06] ∞

CALPERS Board Drew Criticism For Awarding Investment Deal To Yucaipa Despite Ties To The Company and Burkle. “Bob Stern, president of the Center for Governmental Studies, a consumer watchdog group in Los Angeles, said he is concerned that CalPERS board members are ‘in the position of voting to invest with people who have made campaign contributions. I think there’s a problem with that.’ […] Nine of the board’s 13 members are elected officials. Six are elected to the board directly by current and former state employees, and three more seats are held by San Francisco Mayor Brown, State Treasurer Phil Angelides and State Controller Kathleen Connell. [AP, 7/18/02]

∞

Key CalPERS Decision Makers Received Campaign Contributions. “State records show that Brown, Angelides and Connell all received campaign contributions from supermarket magnate Ron Burkle, his wife or his companies. All three later voted to invest hundreds of millions with Burkle’s Yucaipa Co…Paul Sanford at the Center for Responsive Politics in Washington, D.C., a nonpartisan group that tracks money in politics, said those who had received money from Burkle should have recused themselves. ‘That doesn’t even seem like a close call,’ he said.” [AP, 7/18/02]

CLINTON APPOINTEE STEERS BURKLE TOWARDS (BUNGLED) FEMA CONTRACT Burkle Firm, AmeriCold Logistics, Won FEMA Contract With James Lee Witt’s Help. USA Today wrote, “A firm headed by former Federal Emergency Management Agency director James Lee Witt helped a Georgia company win federal contracts worth up to $85 million in work related to Hurricane Katrina and other major 2005 storms, interviews and government records show. James Lee Witt Associates received $40,000 in lobbying fees this year for representing Atlanta-based AmeriCold Logistics, one of the nation’s largest cold-storage companies, federal records show. As part of the lobbying effort, Witt’s firm arranged a meeting between FEMA officials and AmeriCold last spring, before the start of the hurricane season, Witt spokesman Barry Scanlon said.” According to the Philadelphia Inquirer, “AmeriCold Logistics, Atlanta, is the nation’s largest coldstorage company. Yucaipa paid $145 million for 21 percent of AmeriCold in 2004.” [Philadelphia Inquirer, 3/26/06; USA TODAY, 10/13/05]

Witt’s Lobbying Brought About $750,000 Contract. USA Today wrote, “A registration filed May 12 with the secretary of the Senate shows AmeriCold hired Witt Associates as a lobbyist for “all matters pertaining to provision of water and ice in connection with disaster response.” A subsequent report shows that Witt’s firm specifically lobbied FEMA officials on AmeriCold’s behalf. As part of that effort, Witt Associates brought FEMA and AmeriCold representatives together for a meeting in Atlanta last April or May, Scanlon said…AmeriCold got a $750,000 General Services Administration award for ice storage and transportation shortly before Hurricane Dennis struck the Florida Panhandle in early July. FEMA, which had requested the services, modified the AmeriCold award on Sept. 3 into a larger contract of up to $85 million, she said. The new agreement called for AmeriCold to store ice and transport and store other disaster supplies for the balance of the 2005 hurricane season, Andrews said. “Certainly, it looks like it (the Atlanta meeting) must have been helpful,” Scanlon said. [USA TODAY, 10/13/05]

Burkle’s Company Let Ice Intended For Katrina Victims Melt. USA Today wrote, “FEMA’s ice-supply efforts after Hurricane Katrina became a subject of public questions after truckers who were paid $800 a day hauled ice from state to state without unloading, then delivered their cargoes to AmeriCold and other storage facilities as far away from the Gulf Coast as Maine... In a Sept. 20 letter to FEMA and the Army Corps of Engineers, Sen. Susan Collins, R-Maine, chairwoman of the Committee on Homeland Security, sought details about the costly, circuitous trips. The letter questioned ‘whether the federal government is using relief resources efficiently in order to provide maximum benefits possible to the victims of Hurricane Katrina.’ Amy Swanstrom, a spokeswoman for Collins, said agency officials had not yet replied. Ashdown, criticizing FEMA’s handling of ice distribution after Hurricane Katrina, said AmeriCold ‘was part of the team’ FEMA assembled for the work. ‘The contractors that we had weren’t able to get the job done,’ he said.” [USA TODAY, 10/13/05]

RONALD BURKLE AND THE CLINTONS RON BURKLE GAVE BILL CLINTON A MAJOR FINANCIAL ASSIST Bill Clinton Will Be Paid Based On Fund Performance. The Venture Capital Journal wrote, “Former President Bill Clinton has jumped into the VC business, courtesy of longtime friend and billionaire Ronald W. Burkle. Clinton will be a ‘senior advisor’ to two funds that Burkle has set up to invest in low-income urban areas, the $200 million Yucaipa Corporate Initiatives Fund and the $560 million Yucaipa American Fund. The ex prez will be paid based on fund performance.” [Venture Capital Journal, 5/1/02] Larry Sabato: With His Record On Personal Finances, the Only Thing “More Absurd” Than Bill Clinton Working for Yucaipa Would Be If He Were “Appointed As an Ethics Adviser.” “Bill Clinton’s finances were so snarled that they led to many Whitewater charges and was a great damage to his presidency, and now he’s advising a big company and investors on financing,” said Larry Sabato, a University of Virginia political scientist. “The only thing more absurd is if he was appointed as an ethics adviser.” [Houston Chronicle, 4/14/02] Burkle Defended, Profited From Bill Clinton’s Lobbying. Vanity Fair wrote, “Burkle says that Clinton’s predecessor, George Bush the Elder, lobbies far more extensively and dubiously (on one occasion, with the former military ruler of Indonesia on behalf of a Canadian gold-mining company for a project later revealed to be a fraud), and that the calls Clinton’s made thus far-to the chairman of Boeing and the chairman of TRW, among others-were to save jobs. And, not so incidentally, to make money for Yucaipa.” [Vanity Fair, 6/04] ∞

Both Bill Clinton And Ron Burkle Exaggerated Yucaipa’s “Benevolent Image” In The Los Angeles Community. Forbes wrote, “Clinton writes of noticing that some stores were spared the widespread looting and arson in the riots and that he learned these outlets were owned by Ron Burkle, benefactor of the working poor. But it turns out that Burkle’s stores, too, sustained damage – upward of $30 million, with a few stores that were burned to the ground, the Orange County Business Journal reported at the time.” [Forbes, 12/11/06]

MULTI-MILLION DONOR WON TRADE MISSION TRIPS, LINCOLN BEDROOM STAYS 2007: Ron Burkle Hosted A $2.6 Million Fundraiser For Hillary Clinton. The New York Post wrote, “Clinton raised a cool $1 million in the San Francisco Bay Area yesterday, according to the Clinton camp - just a day after hauling in a reported $2.6 million at grocery store billionaire Ron Burkle’s Beverly Hills mansion.” Burkle has donated over $11,000 to Hillary Clinton’s Senate campaigns. [New York Post, 3/26/07, FEC filings]

Burkle Gave To Clinton Library, Legal Defense—Won Lincoln Bedroom Stay. The New York Times wrote, “Mr. Burkle contributed millions of dollars to Mr. Clinton’s campaigns and to the Democratic Party and has been a significant benefactor of the Clinton Library in Little Rock, Ark. He also helped pay part of the more than $11 million in legal bills Mr. Clinton accrued during the Whitewater and Monica Lewinsky investigations. Mr. Burkle was among the dozens of Democratic donors rewarded with a stay in the Lincoln Bedroom in the White House.” According to The Washington Post, Burkle pledged to donate $5 million to $10 million to Clinton’s presidential library. [New York Times, 4/23/06; Vanity Fair, 6/04] 1993: The Dates Of Burkle’s Donations To Democratic Party Sandwich His Attendance On A Commerce Dept. Trade Mission. The Boston Globe wrote, “Coveted slots on US foreign trade missions generated a major fund-raising bonanza for the Democratic Party during President Clinton’s first term, with the business leaders who were invited on such trips contributing $ 15 million to Democratic Party committees over the four-year period. In 1995, the same year the White House began holding regular coffee meetings that raised millions of dollars, the Commerce Department dramatically increased its roster for overseas travel. That year, 264 business leaders went along on department-sponsored foreign trips - up from 54 in 1993. Contributions from those who went in 1995 increased four-fold from 1993. […] The analysis of contributions by trade mission participants, done for The Boston Globe by Campaign Study Group, also uncovered many instances in which they donated tens of thousands of dollars to Democratic Party committees just before or after the trips. Ronald Burkle, the owner of a California supermarket chain, for example, contributed $97,000 to the party between Oct. 20 and Dec. 10, 1993. Between those dates, he joined Brown and others on a trade mission to South Africa in late November 1993. [Boston Globe, 2/9/97] BILL & BURKLE ARE BEST BUDS Bill Clinton Has A Room At Burkle’s House, Spends Hundreds Of Hours A Year With Him. Forbes wrote, “President Clinton has a bedroom at Greenacres mansion in Beverly Hills and has stayed there every time he has been in Los Angeles since taking office in 1992. They talk weekly, and at Clinton’s sixtieth birthday party in New York in October, Burkle sat behind his partner as the Rolling Stones prepared to play a private gig at the Beacon Theater. […] Burkle and Clinton spend hours flying together onboard Burkle’s Boeing 757. When Clinton and former President George H.W. Bush traveled to Thailand after the tsunami that struck in late 2004, Burkle flew with them on Air Force Two. Burkle figures he accompanies Clinton at least half the time Clinton travels abroad.” The New York Times wrote, “Now, Mr. Burkle says, that he and Mr. Clinton spend about 500 hours a year together, traveling the world aboard Mr. Burkle’s plane to attend conferences and meetings with foreign leaders.” [Forbes, 12/11/06; New York Times, 4/23/06] Bill Clinton Is Tapping Into An Elite Group With “Bigger Planes To Lend” Like Ronald Burkle. David Remnick wrote in The New Yorker, “Clinton is the first post-President to tap into the newer generation of wealth-the hedge-fund and retail moguls, who have bigger planes to lend and more cash to burn than their upper-class predecessors ever had. Ronald Burkle, a supermarket tycoon, is another frequent traveling companion and airplane lender; Burkle made Clinton a partner in one of his investment funds. Clinton’s appeal for these tycoons is obvious: in exchange for giving money to a good cause-the Clinton Foundation’s budget last year was thirty million dollars-you not only have the usual tax break and the knowledge that you are doing good but also get to play Oh Hell until five in the morning with a two-term ex-President who knows how to have a good time. [New Yorker, 9/18/06] Burkle Said That His Jet Belonged To His Company And Was Not Used For Personal Trips. The Los Angeles Times wrote, “[Janet] Burkle said her husband owned a private 757 jet and a helicopter. He used the jet to fly himself, their young son, Andrew, and Clinton and his family to South Africa in 2003 for Nelson Mandela’s birthday celebration, she said. [… Ronald] Burkle, in the papers, called the accounts exaggerated, saying that the aircraft, for example, belonged to his company and was not used for personal trips. [Los Angeles Times, 5/20/06]