RICHMOND, Va. — Newly retired, Judy Pavlick was among hundreds of seniors who enjoyed the low cost-of-living and friendly atmosphere at Plaza Del Rey, a sprawling mobile home park in Sunnyvale, California. Then the Carlyle Group acquired the property and things began to change.
Pavlick's rent surged by more than 7%. Additional increases followed. She said the unexpected jump forced her and her neighbors, many on fixed incomes and unable to relocate, to sometimes choose between food and medicine.
The 2015 acquisition and subsequent sale of Pavlick's mobile home park is a core business practice for private equity firms such as Carlyle, which buy and restructure private companies to build value for their investors, sometimes cutting jobs and services in the process.
But the deal, one of hundreds Carlyle executed in recent years, could become a political liability for Carlyle's former co-CEO, Glenn Younkin, who is now running as the Republican candidate for governor in Virginia and highlighting his experience "building businesses and creating jobs."
"They don't realize that these are peoples' homes. We're not just numbers on a spreadsheet," said Pavlick, now 74 years old. "They have no conscience."
Beyond mobile home parks, Youngkin helped Carlyle make money for investors by targeting nursing homes, auto parts manufacturers, energy companies and even a business that produces "less-lethal" weapons used by governments that have cracked down on democracy advocates. More than 1,000 jobs were moved offshore in recent years as companies were restructured. Hundreds more were laid off after Carlyle instituted a series of cost-cutting measures at a nationwide nursing home chain; complaints of deteriorating service and neglect followed.
There are no allegations of illegality or wrongdoing, but Youngkin's political aspirations have drawn new scrutiny to his dealings at the Washington-based investment firm, where he generated a net worth estimated at over $300 million before retiring as co-CEO last summer.
Perhaps not since former Republican presidential nominee Mitt Romney, now a Utah senator, has a candidate sought higher office with such strong ties to the world of private equity. Romney, too, sold himself as a successful businessman and job creator, but stories of megadeals that routinely put profits over people undercut his White House ambitions.
Youngkin now faces another wealthy former businessman, former Democratic Gov. Terry McAuliffe, in November's general election, which has already emerged as the nation's top political contest of 2021.
While McAuliffe's ties to big donors and lobbyists are well-established, Youngkin has only begun to confront difficult questions about his business background. His team declined to address any of Carlyle's specific deals.
"As a young man, Glenn joined a small company and over the next 25 years worked his way up to the top of the company, helping to grow it into a hugely successful enterprise that turned good businesses into great businesses, created tens of thousands of jobs, and funded the retirement pensions of police officers, firefighters, and teachers," said Youngkin spokesman Macaulay Porter. "Under Glenn's leadership, The Carlyle Group employed nearly 2,000 people and managed assets totaling nearly four times the size of Virginia's yearly budget."
Youngkin has made his business experience and status as a political outsider central to his pitch to voters. But more often than not, he discusses his career in broad strokes, without mentioning his lofty position or even the name of his former firm.
He leans on the phrase "building business and creating jobs" when talking about his career, typically without specific description of the types of deals he oversaw.
Asked in a February interview with a former state lawmaker that was streamed on social media how he viewed the role of private equity in the economy, Youngkin responded: "We invest in companies, and we try to take good companies and make them great companies. And we do that by helping them expand, to launch new products, to see new futures, to hire new people."
While creating big profits for the firm's investors, Carlyle's deals sometimes triggered rounds of layoffs, outsourced jobs and complaints from the people directly served by the companies acquired.
The details in some cases may be politically damaging for Youngkin, but the situation is also complicated for his Democratic critics, who have tried to brand Youngkin as too close to former President Donald Trump. McAuliffe himself invested in Carlyle before and after becoming Virginia's governor in 2014.
The former Democratic governor's public disclosures show no current ties, but records reveal that McAuliffe invested at least $690,000 in Carlyle funds between December 2007 and the end of 2016. The actual figure is likely much higher because the disclosures require candidates to acknowledge only a broad range of investment with no upper limit in some cases.
McAuliffe spokesperson Christina Freundlich said McAuliffe has made no investments in Carlyle since 2014, describing him as a passive investor with no role in crafting the deals. She noted that many major institutions were among the investors, including the California Public Employees' Retirement System.
"Glenn Youngkin's record is clear: shipping American jobs overseas and harming seniors and homeowners, all for his own profit," Freundlich said. "Virginians deserve better than an extreme, Trump-endorsed job killer with a track record of always putting his own wealth first."
Carlyle made investments in several companies under Youngkin's leadership that moved at least 1,300 American jobs offshore, according to Department of Labor data.
They include Metaldyne LLC, a North Carolina car parts company that sent 176 jobs to Korea in 2008; the Texas company Commemorative Brands, which produced class rings and sent more than 260 jobs to Mexico between 2005 and 2013; and Ohio-based car part manufacturer Veyance Technologies, which sent nearly 300 jobs to Mexico between 2009 and 2011.
After they were restructured, all three companies were sold for hundreds of millions of dollars more than they were acquired for.
Veyance Technologies was among those companies in a larger fund in which McAuliffe had invested; that means he would have profited from the deal.
A representative for Carlyle declined to comment for this story. The company's leadership has struggled to defend some of their decisions at times.
The firm in 2005 acquired a minority stake in Combined Systems Inc., a "less-lethal" munitions manufacturer that produced tear gas and "super-sock bean bags" subsequently used by governments in Tunisia, Egypt and China to crack down on pro-democracy protesters.
Combined Systems' officials said at the time that they could not control how their products were used. But the U.S. State Department condemned the excessive use of force against protesters in Egypt in particular and launched an investigation into the misuse of tear gas after pictures of CSI-branded tear gas canisters were published on social media.
By all measures, Carlyle is a behemoth in the world of private equity, with 29 offices spread across five continents staffed by more than 1,800 professionals. The firm raised over $27 billion of new capital in 2020, according to its annual report. Despite what it described as a "difficult environment" because of the pandemic, Carlyle delivered distributable earnings of $762 million to its investors last year, its highest total in the past five years.
Youngkin joined the firm in 1995 and rose up through the ranks steadily in the subsequent years, becoming head of the industrial sector investment team by 2005. By March 2011, he had become the chief operating officer and within seven years, he was named co-CEO.
Carlyle announced Youngkin's retirement last summer amid speculation that he was interested in running for office. In the announcement, Youngkin said it was the "professional journey of a lifetime and my honor to be part of building Carlyle into the global institution it is today."
Youngkin's annual compensation package in 2019, his last full year at the company, approached $17 million, according to published reports at the time. That same year, Carlyle sold Sunnyvale's Plaza Del Rey for $237 million after buying it for $152 million four years earlier.
Acquiring higher-end mobile home parks, now referred to as manufactured housing, was part of a broader strategy for Carlyle that included large properties in Arizona and Florida. Such investments are an emerging trend among private equity firms that recently recognized investment potential in mobile home parks.
Critics, including Sen. Elizabeth Warren, D-Mass., have accused the firms of preying upon aging residents with steady income streams and limited options to move when rents and fees go up.
Six years after Carlyle entered Pavlick's life, she is still fighting rent and fee increases, which continued to surge after Carlyle sold her community to another out-of-state investment firm two years ago.
"This park used to be called the park with the heart," Pavlick said. "They just turned everybody's happy home upside down."