Wheeler to Divest Significant Telecom Investments if Confirmed as FCC Chairman

Wheeler said he would resign as partner and managing director of Core Capital Partners, a D.C.-based private equity firm, and agree to receive no further contributions from the company if he is confirmed as FCC chairman, according to the ethics disclosures. His ownership stake in Core Capital Partners is valued at between $500,001 and $1,000,000, the filing said. Wheeler received an annual salary from the company of more than $400,000 in 2012 and a $50,000 bonus in 2013, it said. His 401(K) plan with Core Capital Partners is valued between $100,001 and $250,000, the filing said.

Wheeler said he plans to divest his interests and not participate in any FCC matters related to two funds affiliated with Core Capital Partners: the Core Capital Fund II and III, according to the ethics filings. His investments in the two funds are each valued at between $250,001 and $500,000, the documents show. Wheeler said that for a period of one year after his resignation from the company he will not participate in any commission matters involving parties which are represented by Core Capital Partners. Core Capital Partners manages $350 million in assets and has invested in more than 40 small to mid-sized technology companies.

If confirmed as FCC chairman, Wheeler said he would cease operations and receive no further contributions from his consulting fund, the Shiloh Group, which he has owned since 2004. Last year he received a $100,000 annual salary from the Shiloh Group and received consulting fees from Rutberg & Co., a client of the Shiloh Group, according to the disclosures. Wheeler said he would not participate in any FCC matters that have a “direct and predictable effect” on the financial interests of the firm nor any matters that involve his former clients for one year, if confirmed as FCC chairman.

Wheeler said he would resign as board member of EarthLink, an information technology services and communications provider, if confirmed as FCC chairman. He said he would also divest all common stock, restricted stock units and incentive stock options in the company within 90 days of his confirmation, the filings said. He has EarthLink stock valued between $250,001 and $500,000 for which he received dividends between $5,001 and $15,000, the OGE documents said. Wheeler also receives $70,000 in fees for his membership on the EarthLink board of directors, has 37,500 shares in EarthLink incentive stock options and has restricted stock units worth more than $10,000, the documents show. Wheeler said that until he forfeits all his financial interests in the company, he would not participate in any agency matter that has a “direct and predictable effect” on the company.

Wheeler resigned from the board of Transaction Network Services (TNS), a communications provider, when the company was sold to Siris Capital in February, the OGE filings said. Wheeler said he no longer has any equity in the company and will not participate in any matters involving TNS parties, if confirmed as FCC chairman. The OGE documents said Wheeler had previously owned TNS restricted stock options worth $63,000, incentive stock options worth $126,000 and received $163,835 for sitting on the board of directors of the company.

Wheeler plans to resign as chairman of the board at SmartBrief, an electronic information service for industries including telecom he co-founded. Wheeler’s ownership portion of SmartBrief is valued at between $5 million and $25 million and he received a $35,000 fee for his role as chairman of the board, the OGE documents revealed. He also plans to resign his board membership at a handful of other companies he has worked with including: The Shiloh Foundation, GSMA, Roundbox, MoBo Systems and Twisted Pair Solutions. He received $50,000 in director’s fees as a board member at GSMA, and $50,000 for his chairmanship of the advisory board at NTT DoCoMo. Wheeler said he would also resign from his positions at the Foundation for the National Archives, the mHealth Alliance, and the John Glenn School of Public Affairs at his alma mater, Ohio State University.

Wheeler holds stock in AT&T and Verizon valued between $500,001 and $1 million, according to the OGE report. Wheeler has stock in Frontier Communications valued between $50,001 and $100,000 for which he received dividends between $1,001 and $2,500. Wheeler has stock investments valued at less than $15,000 in 76 other technology and media companies. They include: Intel, Amazon, AMC Networks, Apple, Broadcom, Cablevision, Cisco, Comcast, DirecTV, Dish Network, eBay, Google, IBM, L-3 Communications, Liberty Media, Microsoft, Motorola Solutions, News Corp., Qualcomm, SAP, Time Warner Cable, Vodafone, Disney, Deutsche Telekom, Sprint Nextel, Harris Corp. and Clearwire. He receives a dividend from his shares in Atlantic Wireless/Aloha Partners valued at between $250,001 and $500,000. He also has investments in Hoak Media, the Tennis Channel, Overture Networks, SiTV Media and Seven Networks of undisclosed value.

"Tom Wheeler has a fortune invested in the very companies he would be overseeing as FCC chairman,” said Sascha Meinrath, director of the New America Foundation’s Open Technology Institute. “This revelation underscores the inappropriateness of having the former chief lobbyist for two industry trade groups now overseeing these same corporations. The fact that he continues to enrich himself by investing in these companies only adds to the myriad concerns that have already been raised.”

"It’s hard not to be more skeptical that Tom Wheeler was the right choice for this job,” said Craig Aaron, president of Free Press, after he reviewed the disclosures. “It certainly raises some eyebrows” that Wheeler has invested in “78 companies that will have business before the FCC including some that he holds more than half a million dollars in investments,” he said. Aaron has no doubt Wheeler will “do everything by the book” when it comes to ethical disclosures, he said. “If he is going to be a public interest warrior, I hope he will prove it quickly.”

"This is a probably another opportunity for people to take a shot at Wheeler,” said Guggenheim Securities analyst Paul Gallant. “But it’s not like he’s going to hold these stocks once he’s chairman. So other than showing that he’s optimistic about the future of this sector, it really tells you nothing about what his policies will be.” Julius Genachowski also had many high-technology investments before confirmed as chairman in 2009, which agency officials said later he divested or took other steps to comply with ethics rules (CD April 8/09 p4). Genachowski’s last day was Friday.

The disclosures reveal that Wheeler’s interests include all sectors of the industry, “so there is no sense he'd be more favorably inclined towards one or another sector,” said public interest lawyer Andrew Schwartzman. “The list also highlights one of Mr. Wheeler’s strengths, which is that he’s already made his money. He’s 67 years old and wealthy, so he isn’t going to be worried about his next job. That gives him a lot of independence to do what he thinks is best.” Schwartzman had signed an April letter endorsing Wheeler as chairman at a time when lawmakers and public interest groups were calling on the president to nominate other candidates (CD April 15 p3).