This is the second of three days of special coverage of Nebraska' GOP Senate race.
Saturday: Deb Fischer - Why hasn't the Sandhills candidate caught fire? Fischer: Don't count me out
Sunday: Jon Bruning - How has the attorney general grown wealthy in office?
Monday: Don Stenberg - Does he represent a safe harbor or a ship that's sailed? Stenberg: 'Learn from elections lost'
May 1: Republican Race for the Senate: An Omaha World-Herald Debate. Click here to learn more.
LINCOLN — Most millionaire politicians achieve wealth before winning office.
Jon Bruning blazed a different path, one in which an ambition for affluence led to involvement and investment in at least 17 private companies, nearly all while serving as Nebraska's attorney general.
Along the way, the Republican front-runner for the state's open U.S. Senate seat built a multimillion-dollar net worth while drawing a salary that ranged between $75,000 and $95,000 as the state's top lawyer. His business pursuits have emerged as an issue in the campaign, prompting critics to question how he could find the time to fulfill his public responsibilities.
The soon-to-be-43-year-old attorney general has obtained significant ownership in several Nebraska banks, a bank management company and a storage unit company with locations in Nebraska and Iowa.
Those are the companies he kept.
Bruning also has been involved in companies that sold cattle, produced high-tech security systems, purchased insurance policies and administered Botox treatments at an Omaha "rejuvenation clinic." He and a college friend even explored buying a minor league hockey team in Kearney.
Some of the ventures were never intended to turn a profit, some lost money, some never got off the ground.
Some involve state-regulated industries, including banking, livestock and medicine, which raises questions about whether they could present a conflict of interest for the attorney general.
Bruning sat down recently and discussed his business pursuits with The World-Herald. While he makes no apologies for his financial success, he took little credit for it, describing himself as a passive investor in companies run by close friends.
His involvement in the operations is so minimal, he said, he was unaware that the sale price of one of his banks recently was $4.3 million.
"If you're seeing a guy who is moderately disinterested in the day-to-day workings of these business enterprises, you're right," he said. "I mean, I don't have time for it. I've got to be attorney general and I've got to run a campaign."
In an effort to further understand how Bruning made his money while holding a full-time constitutional office, The World-Herald reviewed hundreds of public documents related to his bank enterprises, mortgage loans and home equity lines of credit.
The newspaper also sought out private attorneys, finance professors and some of Bruning's business associates to sort through the complexities of his holdings.
In the past two years, Bruning has pared his ventures to the banks, the storage firm and a stake in retirement communities in Missouri and Texas. He said he needed to simplify, so he kept investments in the businesses that proved successful.
Bruning's federal election disclosure form puts his net worth between $5.3 million and $25.8 million. But Bruning said the true range is between $4 million and $5 million.
He declined, however, to release his tax returns or provide the newspaper with other records or explanations that would help illuminate the extent of his varied business interests. He said it would be too time-consuming and invasive to do so.
Bruning said he has always complied with state and federal disclosure laws, never done his private work on state time and never used his position as attorney general to gain a business advantage.
"I mean, I have a core that knows what's right and what's wrong, and I don't do anything that allows the job I have to become a conflict with any of my investments."
More on Jon Bruning
Click on the tabs below to learn more about the Senate candidate.
Office held: Nebraska attorney general, elected 2002, 2006, 2010. State senator, elected 1996, 2000
Education: Bachelor's degree in history, University of Nebraska-Lincoln, 1990; law degree, UNL, 1994
Family: Married, two children
Faith: United Methodist
Top five industries donating to Bruning's campaign
1. Lawyers/law firms, $138,192
2. Retired, $118,200
3. Securities and investment, $93,800
4. Real estate, $78,100
5. Commercial banks, $72,850
Source: OpenSecrets.org, based on most recent data released by Federal Election Commission (OpenSecrets data aggregates multiple contributions based upon donors' employment and family ties.)
Bruning's financial status
In 2011, total assets ranged from $12.6 million to $61.3 million
In 2007, total assets ranged from $4.4 million to $17.8 million
In 2011, total liabilities ranged from $7.25 million to $35.5 million
In 2007, total liabilities ranged from $3.35 million to $15.8 million
Source: U.S. Senate Financial Disclosure Report in 2007 and 2011
Bruning's business investments
Business investments disclosed by Nebraska Attorney General Jon Bruning. His 26 limited liability companies (LLCs) included nine that never got off the ground or were not intended to make money.
>> Bruning Holdings LLC
A holding company for other investments Bruning said produced no income (folded in 2007)
>>BGR Enterprises LLC
A venture that explored starting a Lincoln bank, which never got off the ground (folded in 2007)
>> Cornhusker Road LLC
Dino's Storage unit business in Bellevue (active)
>>DLJ Management LLC
A holding company for investments. Bruning said he never used it. (folded in 2007)
>> Ipanema Ventures LLC
A South American real estate venture Bruning said never got off the ground (folded in 2007)
>> Nebraska Heavy Industries LLC
An investment and management firm (got out in 2005)
>> Gabriel Technologies LLC
An Omaha company that made high-tech shipping locks (got out in 2003)
>> Storm Hockey LLC
A venture to buy Kearney's minor league hockey team; Bruning said it never got off the ground. (folded in 2007)
>> Frontier Holdings LLC
Bank holding company formed after the purchase of Jennings State Bank in Davenport, Neb. (active)
>> Frontier Management LLC
Formed to manage the banks of Frontier Holdings (active)
>> SE 14 LLC
Dino's Storage unit business in Des Moines (active)
>> Redworld LLC
Formed for mutual ownership of Memorial Stadium skybox (active)
>> Eightmile LLC
A member company of Oxxford One LLC, a Michigan company that buys insurance contracts (got out in 2010)
>> Plumpants LLC
A company formed to purchase tickets for entertainment events (inactive)
>> Nebraska Medical Aesthetics LLC
Operates medical rejuvenation clinic in Omaha (got out in 2010)
>> Green Jacket Medical LLC
A member company of Midwest Medical Aesthetics (got out in 2010)
>> Green Jacket Holdings LLC
A holding company for investments and sole member of Green Jacket Medical (folded in 2007)
>> Midwest Medical Aesthetics LLC
Owns Nebraska Medical Aesthetics, Green Jacket Medical and Green Jacket Holdings (got out in 2010)
>> Epsilon Feeders LLC
A venture to buy and sell cattle (folded in 2007)
>> Woodsdale Capital LLC
Precursor to Pathfinder Holdings (folded in 2007)
>> Green Jacket Capital LLC
New name for Green Jacket Holdings (got out in 2009)
>> Retirement Equity Investors LLC
A Nebraska company investing in retirement communities in Missouri and Texas (active)
>> Flatrock LLC
Owns the building that houses the Omaha rejuvenation clinic (got out in 2010)
>> Pathfinder Holdings LLC
A venture, to acquire Nebraska businesses without succession plans, Bruning said never got off the ground (inactive)
>> Nebraska Heavy Industries II
Investment and management firm (got out in 2010)
>> Sandy Properties LLC
Formed for mutual ownership of lakeside home with two Nelnet executives (active)
Business investments disclosed by Nebraska Attorney General Jon Bruning. His 26 limited liability companies (LLCs) included nine that never got off the ground or were not intended to make money.
>> Bruning Holdings LLC A holding company for other investments Bruning said produced no income (folded in 2007)
>>BGR Enterprises LLC A venture that explored starting a Lincoln bank, which never got off the ground (folded in 2007)
>> Cornhusker Road LLC Dino's Storage unit business in Bellevue (active)
>>DLJ Management LLC A holding company for investments. Bruning said he never used it. (folded in 2007)
>> Ipanema Ventures LLC A South American real estate venture Bruning said never got off the ground (folded in 2007)
>> Nebraska Heavy Industries LLC An investment and management firm (got out in 2005)
>> Gabriel Technologies LLC An Omaha company that made high-tech shipping locks (got out in 2003)
>> Storm Hockey LLC A venture to buy Kearney's minor league hockey team; Bruning said it never got off the ground. (folded in 2007)
>> Frontier Holdings LLC Bank holding company formed after the purchase of Jennings State Bank in Davenport, Neb. (active)
>> Frontier Management LLC Formed to manage the banks of Frontier Holdings (active)
>> SE 14 LLC Dino's Storage unit business in Des Moines (active)
>> Redworld LLC Formed for mutual ownership of Memorial Stadium skybox (active)
>> Eightmile LLC A member company of Oxxford One LLC, a Michigan company that buys insurance contracts (got out in 2010)
>> Plumpants LLC A company formed to purchase tickets for entertainment events (inactive)
>> Nebraska Medical Aesthetics LLC Operates medical rejuvenation clinic in Omaha (got out in 2010)
>> Green Jacket Medical LLC A member company of Midwest Medical Aesthetics (got out in 2010)
>> Green Jacket Holdings LLC A holding company for investments and sole member of Green Jacket Medical (folded in 2007)
>> Midwest Medical Aesthetics LLC Owns Nebraska Medical Aesthetics, Green Jacket Medical and Green Jacket Holdings (got out in 2010)
>> Epsilon Feeders LLC A venture to buy and sell cattle (folded in 2007)
>> Woodsdale Capital LLC Precursor to Pathfinder Holdings (folded in 2007)
>> Green Jacket Capital LLC New name for Green Jacket Holdings (got out in 2009)
>> Retirement Equity Investors LLC A Nebraska company investing in retirement communities in Missouri and Texas (active)
>> Flatrock LLC Owns the building that houses the Omaha rejuvenation clinic (got out in 2010)
>> Pathfinder Holdings LLC A venture, to acquire Nebraska businesses without succession plans, Bruning said never got off the ground (inactive)
>> Nebraska Heavy Industries II Investment and management firm (got out in 2010)
>> Sandy Properties LLC Formed for mutual ownership of lakeside home with two Nelnet executives (active)
Most voters will not object to Bruning's financial success unless they suspect he exploited his position to achieve it, said Michael Wagner, assistant political science professor at the University of Nebraska-Lincoln.
"Especially what they don't like is the idea of the self-interested public servant who uses the office to make his life better," Wagner said. "The more upfront he can be about how he made his money, the better."
In past interviews, Bruning has credited stock market profits from the tech boom of the 1990s with providing the cash to invest in his current ventures. More recently, he altered that narrative somewhat, saying his first job out of college provided him with the finances to get his start in business.
After graduating with a law degree from UNL in 1994, Bruning joined Vital Learning, a small Omaha company that designed sales training programs for corporations.
When it came to hiring its sales force, the company used a scientifically designed survey that screened out 95 of 100 applicants. Bruning was brought on to provide in-house legal counsel and sell product.
The sales proved highly lucrative, especially for a young lawyer. He said he made in the low six figures each of the three years he worked for Vital Learning.
"It was the Wild West, because we were getting 20 percent commissions," he said. He recalled signing a $200,000 contract with Sprint and receiving $40,000 in his next paycheck.
"Then I went to the Legislature and went down to 12,000 bucks a year in 1997," he said. "Then my legal practice started to become successful."
He started a single-lawyer practice as a way to generate income when he wasn't at the State Capitol. His first significant client, Cox Communications, came on board and was followed by other telecommunications clients.
At the same time, his wife, Deonne Bruning, was working as a staff attorney for the Nebraska Public Service Commission, which has regulatory authority over certain aspects of telecommunications. Although she no longer works for the commission, she continues to be a registered state lobbyist for telecommunications and maintains her own law practice.
Some of his early state disclosure forms show Bruning owned shares in widely known companies such as Oracle, Intel and MCI. But investing in the stock market wasn't for him, he said.
"I realized I don't have any particular skill," he said.
So in 2001, Bruning turned to a college friend, Doug Ayer, to help him find a privately owned company to invest in. Ayer and Bruning had been roommates at the Sigma Phi Epsilon fraternity house at UNL.
Ayer, who worked at Pinnacle Bank in Omaha, introduced Bruning to Dave Paladino. The owner of an Omaha real estate agency, Paladino wanted to grow his self-storage businesses and was told by his lenders he needed investors.
Paladino said during his first meeting with Bruning, he made it clear he wanted only an investment, not input. In other words, he wanted a true silent partner.
"It's really hard to tell the attorney general 'no,' " Paladino said. "But I tell him 'If I want your opinion, I'll ask you. I just want your money. I'll make no promises, other than I won't steal your money.'"
Bruning emptied his stock trading account and may have tapped a home equity line of credit to come up with the $350,000 to help buy a former Payless Cashways lumberyard in Bellevue and transform it into a Dino's Storage location. Paladino invested $250,000 — a lesser amount, because he had to do the work.
They formed a limited liability company — a pattern Bruning would follow repeatedly in subsequent years — and called it Cornhusker Road LLC. They split ownership 50-50.
"Was it a big risk? Hell, yes. I mean, a little crazy," Bruning said. "I don't think most people would do it."
Bruning said he figured he was young enough, he'd have time to make up any losses if the investment failed. But he never worried about that possibility much.
Bruning and Paladino have since launched a second storage unit location in Des Moines. Paladino owns additional units by himself.
A check of public records shows that in 2006 they borrowed a combined $13 million for construction upgrades to the two locations. Bruning now estimates the debt at about $10 million, while the storage units are worth about $16 million — a net value of $6 million. His share would be $3 million.
In late 2002, Bruning won the attorney general's election after longtime incumbent Don Stenberg stepped down to return to private practice. Bruning had to give up his legal practice, which dropped his annual income to the attorney general's $75,000 salary. He now is paid $95,000 annually, a figure set by the Legislature.
In early 2003, he and his family moved from Omaha to Lincoln and paid $450,000 for a house in the Country Club neighborhood.
A review of public records shows eight different loans taken out on the home from 2003 to 2010. Bruning said he has been aggressive about maximizing mortgages and home equity lines of credit to keep a ready source of cash. Some of the transactions can be explained by refinancing, he added.
At times, he may have used the lines of credit to help fund his business ventures, he said.
Some of the loans also have a connection to Bruning's college roommate.
Ayer handled the 2003 transactions when he worked for Pinnacle Bank, but he said he did not issue the loans to Bruning on his own — they were reviewed by other bank officers.
"We did not do anything out of the normal course of business with Mr. Bruning," he said.
In 2004, a year after he became attorney general, Bruning had more cash to invest and he turned to two other close friends to help him find a place for it.
David Gale and David Rogers, both members of Sigma Phi Epsilon, joined with Bruning to buy Jennings State Bank in Davenport, Neb.
Gale, son of Nebraska Secretary of State John Gale, is a lawyer. Rogers has a master's degree in business from the Wharton School in Pennsylvania and experience working as an investment banker for J.P.Morgan in San Francisco. Additionally, Rogers and Bruning have been friends since they were next-door neighbors as children.
The three rounded up several other investors and, in early 2004, bought a 51 percent stake in the bank for $1.4 million. They changed the name to Frontier Bank, and Bruning assumed the chairmanship of the board.
Records filed with the Nebraska Banking Department show Bruning intended to pay $250,000 cash and borrow $167,000 for his share of the bank investment.
A few months later, Bruning, Rogers and Gale were joined by R. Robert Butler, whom they met while he was chairman of the former First National Bank and Trust of Syracuse.
The four started two limited liability companies to pursue the acquisition of community banks. The first, called Frontier Holdings, would own the banks. The second, called Frontier Management, would provide management services to their banks.
Each of the four owners kicked in $500 to start the companies. In 2005 they brought in more "accredited investors," defined as having a net worth of at least $1 million or a minimum income of $200,000 for two consecutive years.
Their strategy of buying small banks was about to produce impressive growth.
Frontier Holdings bought the Bank of Madison in the summer of 2005 for nearly $9 million. About two years later, the company added Pender State Bank for $12 million.
Looking to grow again in 2011, the company brought in more investors, raising about $18 million. Weeks later, Frontier Holdings bought Richardson County Bank and Trust in Falls City for just under $13 million.
Last year, Frontier Holdings — which also operates a bank branch in Lincoln and a loan office in Omaha — reported total equity of $53 million to the Federal Deposit Insurance Corp., which represented $18 million in growth over 2010. The holding company has since, however, sold the Davenport bank.
As the pool of owners in the bank holding company has expanded over the years, Bruning has chosen to reduce his ownership from 15 percent to about 11 percent of the banks.
Gale no longer remains directly involved with the companies he helped start. He now holds a position with a bank in Bassett, Neb.
Rogers and Butler, meanwhile, have assumed the top executive roles in the two banking companies. Bruning said they are responsible for the day-to-day operations and carrying out the acquisition strategy.
Bruning continues to be listed in state documents as a member of the board of directors.
Despite his professed lack of involvement, Bruning receives compensation from the two companies.
Bruning said he receives dividend income from the holding company.
Bruning's ownership of the management company has grown slightly over the years to 27.5 percent. Frontier Management derives its funding by charging the banks quarterly fees plus an additional transaction fee each time a new bank is purchased.
The management company pays Bruning what he described as a modest salary. On his most recent federal election disclosure form, Bruning reported his salary was $57,500 for 2010.
Still, he emphasized the income he receives from the two banking companies doesn't cover payments on his $4.5 million share of the bank debt. He said he typically has to come up with an additional $80,000 annually.
"That's why you've got a home equity line of credit," he said.
As for the storage companies, Bruning said at best he breaks even. So none of the primary investments produces a net income, Bruning said — at least, not yet.
"I'm living on what I make and what my wife makes," he said.
But as long as the companies continue to flow cash, and Bruning pays down his debts, he stands to reap a future reward, he said — when, for example, the businesses are sold.
"So I say — gulp — 'Hang on and hope these guys keep doing well,' " he said.
Along the way, Bruning said, he avoided conflicts by revealing his bank businesses to state banking regulators and in annual reports with the Nebraska Accountability and Disclosure Commission.
Although lawyers at the Nebraska Department of Banking and Finance handle legal questions related to regulations, the department must turn over certain tasks to the attorney general, such as bank closings or criminal investigations.
Banking Department files do include several disclosure letters from Bruning, the earliest in 2005. In them, he advises the department to hire outside legal counsel if necessary to handle any matters with his banking companies.
"I write this letter so you will not inadvertently contact me or anyone in my office with such details, in the event they arise," he wrote.
But the files also include another note, one from 2011, written in Bruning's own hand. On the cover letter of his personal financial disclosure, Bruning asked regulators to "Please treat this entire filing as confidential ... given that I serve as Attorney General."
When asked about the confidentiality request, Bruning said he was referring to personal information only, such as his Social Security number and bank account numbers.
"I didn't want the whole world to look at it," he said.
Bruning's form was not treated differently because of the confidentiality request, said Patricia Humlicek Herstein, lead attorney for the Banking Department.
More 2012 election coverage
Debate: GOP Senate candidates Jon Bruning, Deb Fischer and Don Stenberg will come together in Omaha at 7 p.m. on May 1. Watch live on NET TV and Omaha.com, and follow along with updates in a live chat on Omaha.com. To submit a question for consideration, send an email to Robynn.Tysver@owh.com.
Omaha.com: Our new election page is the best resource for campaign coverage. Read recent stories and tweets from our reporters and the candidates, and find your polling place and get to know the issues in our candidate bios. Omaha.com/election
When asked how he balances his business interests with the demands of the Attorney General's Office, Bruning said he has never needed much sleep.
Additionally, because his businesses are run by friends whom he trusts implicitly, he said he feels no need to be actively involved in them.
Although he remains listed as a director on the boards of the Madison and Davenport banks and the holding company, he said he hasn't attended a meeting in more than a year.
"I've never even been to our bank in Pender," he said. "The newest one, in Falls City? Again, I've never even been to it."
State banking regulations require bank board members to attend meetings and take an active role in oversight of the bank as part of their directorship, Herstein said. Although minutes of a bank's board meetings are not public, she said examiners do review them, and they note if a director fails to attend.
Directors who cannot meet their obligation are asked to step down to an advisory role on the board, Herstein said.
When asked to reconcile the regulation with his lack of attendance at board meetings, Bruning said he has never been a director of the Pender and Falls City banks and he stepped off of the boards for Madison and Davenport about the time he filled out his most recent federal disclosure form, in 2011.
As for potential conflicts of interest, Bruning said he relies on his own judgment to avoid them.
He also said while he has passed on business opportunities over the years because they involved people he didn't know or trust, he never put on the brakes because of a potential conflict with the Attorney General's Office.
As for written guidelines regarding an attorney general's business involvements and conflict of interest, there are none, said James Tierney, director of the National State Attorneys General Program at Columbia Law School in New York. A state's disclosure laws would represent the de facto guide.
Bruning said he meets the legal standard by complying with state law.
He also said he paid $40,000 to a private law firm to examine his financial records and fill out the federal disclosure form, in part because he knew it would be picked apart by news media and political adversaries.
Washington, D.C., lawyers with expertise on Senate ethics rules said Bruning could be required to step down from the bank boards or any position that would put him in control of the companies. But he could likely keep his investments.
If he becomes Nebraska's next U.S. senator, Bruning said, he will accept whatever recommendation he receives from the U.S. Senate Select Committee on Ethics. If a blind trust is recommended, so be it.
In the meantime, he said he's not conflicted over the matter.
"In fact, we have gone the extra mile to over-disclose and be more transparent than the law requires," he said. "The public has more information about my finances than any other public official in the state.''
World-Herald staff writer Steve Jordon contributed to this report.
Contact the writer: