David Hoffman for US Senate
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January 10, 2010
Bright Start Victim Speaks Out in New Hoffman AdBright Start Victim Speaks Out in New Hoffman Ad
Chicago, January 10, 2010 - Ellen Mrazek, one of the thousands of Illinois parents who suffered extensive losses as a result of Alexi Giannoulias' mismanagement of the Bright Start College Savings Fund, joined David Hoffman today at a press conference to discuss Hoffman's new TV ad "Promises", which begins running tomorrow in Chicago. In the ad, Mrazek discusses her reaction to Giannoulias' misleading Bright Start campaign ad.
"Ellen is outraged that Alexi Giannoulias could mismanage these funds, mislead families about the extent of their losses, and then run television ads touting Bright Start as a great achievement," said Hoffman. "I share her outrage."
Like parents across Illinois, Mrazek invested in the fund promoted by the Treasurer as a "savings" program. The fund turned out to have been heavily invested in mortgage-backed securities and other risky investment vehicles. As has been widely reported in the press, Giannoulias was aware of the problems with the fund for at least seven months before he finally stopped putting the college savings of thousands of Illinois families' money into it.
In the ad, Mrazek says, "I was so surprised he would use running Bright Start as an actual credential."
Giannoulias has never accepted any responsibility for mismanaging the fund and costing those families millions of dollars they entrusted him to protect.
"This is about trust," said Hoffman. "Alexi Giannoulias deceived families about the nature of this investment, deceived them about how much was lost and how much he'd recover, and now he's trying to deceive them with his campaign ads. It is time to set the record straight."
View "Promises" TV ad here.
-30-
Statement from Ellen Mrazek - Bright Start Victim Appearing in Hoffman "Promises" TV Ad
My name is Ellen Mrazek.
I am here because I am a Bright Start account holder who lost a lot of money, and I think the claims that Alexi Giannoulias makes in his ads about Bright Start are misleading.
In his ad, Alexi says he won $77 million for kids to go to college.
But on his watch, Bright Start lost $150 million in just one fund. That would make a net loss to Illinois families of $73 million. Alexi Giannoulias makes the loss sound like a gain.
Alexi Giannoulias says in his candidate statement on David Orr's Web site, "under my leadership, Illinois' Bright Start College Savings Program improved from one of the worst in the nation to one of the best."
I don't understand how he can say this when I've lost thousands.
I have two sons, and my husband and I have been saving for college for them since they were toddlers.
We put a specific amount away each month for each of them.
After we heard of 529 plans, we moved our accounts to Illinois Bright Start.
Our Bright Start accounts were what is called age-based.
According to the Bright Start literature, "age-based portfolios are designed to automatically shift to more conservative investments as a child gets closer to college."?
This is how we understood our accounts would be handled by the Treasurer of the state of Illinois - the steward of our money.
But when my older son was 17, while Alexi Giannoulias was the administrator of Bright Start, a substantial part of his fund (25%) was moved to the Oppenheimer Core Bond Fund.
When my younger son was 14, a substantial part of his fund (30%) was moved to the Oppenheimer Core Bond Fund.
I'm not a financial expert, but I have read that the Oppenheimer Core Bond Fund followed an extremely risky investment strategy with mortgage-backed securities.
I've read that the Core Bond Fund used its assets as collateral to support exotic investments like "credit default swaps" even after AIG and Lehman fell - exposing the fund to catastrophic losses.
Using my sons' college fund as collateral - to compound risk - you'd have to ask a banker, but this doesn't sound like a conservative investment to me.
The Bright Start account of my 18-year-old son, who is going to college in the fall, had lost about 27% of its overall value by the
end of 2008, including losses in other Bright Start funds run by Oppenheimer as well. These losses have not been recovered.
At the same time the fund of my 15-year-old lost about 30% of its overall value. These losses have not been recovered either.
Even if I get 50 cents on the dollar from the settlement of the Core Bond losses, this a 50% loss for this fund alone. I haven't heard anything about the recovery of losses from the other funds run by the same guy at Oppenheimer.
Alexi Giannoulias had no business putting my sons' college funds at risk, especially when we were so close to needing them. I think before Alexi Giannoulias can consider himself a qualified candidate for the U.S. Senate, he needs to give a full accounting of what happened with Bright Start.
Chicago, January 10, 2010 - Ellen Mrazek, one of the thousands of Illinois parents who suffered extensive losses as a result of Alexi Giannoulias' mismanagement of the Bright Start College Savings Fund, joined David Hoffman today at a press conference to discuss Hoffman's new TV ad "Promises", which begins running tomorrow in Chicago. In the ad, Mrazek discusses her reaction to Giannoulias' misleading Bright Start campaign ad.
"Ellen is outraged that Alexi Giannoulias could mismanage these funds, mislead families about the extent of their losses, and then run television ads touting Bright Start as a great achievement," said Hoffman. "I share her outrage."
Like parents across Illinois, Mrazek invested in the fund promoted by the Treasurer as a "savings" program. The fund turned out to have been heavily invested in mortgage-backed securities and other risky investment vehicles. As has been widely reported in the press, Giannoulias was aware of the problems with the fund for at least seven months before he finally stopped putting the college savings of thousands of Illinois families' money into it.
In the ad, Mrazek says, "I was so surprised he would use running Bright Start as an actual credential."
Giannoulias has never accepted any responsibility for mismanaging the fund and costing those families millions of dollars they entrusted him to protect.
"This is about trust," said Hoffman. "Alexi Giannoulias deceived families about the nature of this investment, deceived them about how much was lost and how much he'd recover, and now he's trying to deceive them with his campaign ads. It is time to set the record straight."
View "Promises" TV ad here.
-30-
Statement from Ellen Mrazek - Bright Start Victim Appearing in Hoffman "Promises" TV Ad
My name is Ellen Mrazek.
I am here because I am a Bright Start account holder who lost a lot of money, and I think the claims that Alexi Giannoulias makes in his ads about Bright Start are misleading.
In his ad, Alexi says he won $77 million for kids to go to college.
But on his watch, Bright Start lost $150 million in just one fund. That would make a net loss to Illinois families of $73 million. Alexi Giannoulias makes the loss sound like a gain.
Alexi Giannoulias says in his candidate statement on David Orr's Web site, "under my leadership, Illinois' Bright Start College Savings Program improved from one of the worst in the nation to one of the best."
I don't understand how he can say this when I've lost thousands.
I have two sons, and my husband and I have been saving for college for them since they were toddlers.
We put a specific amount away each month for each of them.
After we heard of 529 plans, we moved our accounts to Illinois Bright Start.
Our Bright Start accounts were what is called age-based.
According to the Bright Start literature, "age-based portfolios are designed to automatically shift to more conservative investments as a child gets closer to college."?
This is how we understood our accounts would be handled by the Treasurer of the state of Illinois - the steward of our money.
But when my older son was 17, while Alexi Giannoulias was the administrator of Bright Start, a substantial part of his fund (25%) was moved to the Oppenheimer Core Bond Fund.
When my younger son was 14, a substantial part of his fund (30%) was moved to the Oppenheimer Core Bond Fund.
I'm not a financial expert, but I have read that the Oppenheimer Core Bond Fund followed an extremely risky investment strategy with mortgage-backed securities.
I've read that the Core Bond Fund used its assets as collateral to support exotic investments like "credit default swaps" even after AIG and Lehman fell - exposing the fund to catastrophic losses.
Using my sons' college fund as collateral - to compound risk - you'd have to ask a banker, but this doesn't sound like a conservative investment to me.
The Bright Start account of my 18-year-old son, who is going to college in the fall, had lost about 27% of its overall value by the
end of 2008, including losses in other Bright Start funds run by Oppenheimer as well. These losses have not been recovered.
At the same time the fund of my 15-year-old lost about 30% of its overall value. These losses have not been recovered either.
Even if I get 50 cents on the dollar from the settlement of the Core Bond losses, this a 50% loss for this fund alone. I haven't heard anything about the recovery of losses from the other funds run by the same guy at Oppenheimer.
Alexi Giannoulias had no business putting my sons' college funds at risk, especially when we were so close to needing them. I think before Alexi Giannoulias can consider himself a qualified candidate for the U.S. Senate, he needs to give a full accounting of what happened with Bright Start.
