Mitt Romney's National Co-Chair and Former Obama White House Chief of Staff's Brother Could Cost Michigan Millions

Raleigh’s state of the art studio in Pontiac, which opened only ten months ago, defaulted on its $630,000 bond payment on $18 million in state issued bonds that were part of the financing for the $80 million complex.

In an email to The Oakland Press, Michigan Department of Treasury spokesman Terry Stanton confirmed the studio was not able to make the $630,000 payment to the bondholders by Feb. 1. That forced the Michigan state employee’s pension fund, which invested in the studio in 2009, to make a $630,000 payment immediately, and put them on the hook for potentially millions more in payments in the future.

"The State of Michigan Retirement System (SMRS) entered into an agreement to guarantee the bonds, under the previous administration," Stanton wrote. Raleigh had made two previous payments in February and August of last year, but has not made required monthly escrow set-aside payments since October, according to an article that appeared in the Detroit News last month.

The impact of the default on the facility in Pontiac, Michigan is still unclear but it is not expected to affect other properties operated by Raleigh Studios – which bills itself as largest independent studio operator in the United States – located in Hollywood, Manhattan Beach, Playa Vista, Baton Rouge, Atlanta and Budapest.

The facility was the brainchild of Chairman and CEO Linden Nelson and investors Taubman Company founder A. Alfred Taubman, Walbridge CEO and Mitt Romney for President National Co-Chair John Rakolta Jr. and William Morris Endeavor Entertainment Co-CEO Ari Emanuel, whose brother is Rahm Emanual the Former Obama White House Chief of Staff and current Mayor of Chicago.

 "It is uncertain whether the SMRS will have to make any future payments, as the company's ability to fulfill its responsibility for the bond payments depends on the future use/leasing of the facility."