The Kentucky Attorney General’s lawsuit not only targets Wall Street’s predatory pension management practices, but singles out Blackstone CEO and top McConnell and Trump donor Steve Schwarzman.

In a surprise move on Wednesday, Kentucky Attorney General Daniel Cameron intervened in a lawsuit alleging that  the state’s pension system has been exploited and mismanaged by top Wall Street fund managers Blackstone and KKR, drawing attention to not only the predatory business practices that experts say have swindled billions from retirees’ savings, but to specific actors with tremendous influence over American politics.

As journalist and former Bernie Sanders adviser David Sirota emphasized, the lawsuit singles out private equity executives Steve Schwarzman, Henry Kravis, George Roberts, and J. Tomilson Hill for personally benefiting from the investment scheme:

“The new suit from Republican Attorney General Daniel Cameron’s office also specifically targets Steve Schwarzman — a Republican billionaire who is one of the largest financial supporters of Mitch McConnell and Donald Trump’s political machine. Schwarzman has donated $10 million to the Senate Leadership Fund, a super PAC affiliated with McConnell, and $3 million to America First Action, a super PAC backing Trump, this election cycle.”

The Supreme Court previously ruled against retirees seeking legal action against pension management firms, a decision a Kentucky court then cited to block the state pensioners’ suit against Blackstone and KRS. The courts’ prior rulings, in addition to Cameron’s status as a Republican, made the Attorney General’s intervention a particularly surprising political shake-up that could have national ramifications.

The Attorney General’s move makes for the latest round of critical press involving the private equity and hedge fund industries, which were recently singled out in a leaked F.B.I. memo for the high risk they pose for money laundering.

Last month, the Trump administration gave the green-light to large managers of 401ks and individual retirement accounts (IRAs) to invest workers’ retirement savings in private equity firms, a move that experts like American Prospect editor David Dayen and co-director at the Center for Economic and Policy Research Eileen Appelbaum argue will put workers at higher risk and allow predatory financiers to loot billions from their pension funds.

Cameron’s suit, for example, alleges that the firms violated state laws to put retirees’ savings in investments that were “secretive, opaque, illiquid, impossible to properly monitor or accurately value, high-fee, high-risk gambles with no historical record of performance.”

From @robinsreport we have an update on the Labor Department allowing private equity firms to tap 401(k) plans, using worker retirement funds to hurt workers. We ran the numbers on how much this would cost retirement savers. https://t.co/SDDqShiueq

— David Dayen (@ddayen) June 18, 2020

“It’s surprising the state Attorney General’s office would pursue a case that has already been dismissed by the Kentucky Supreme Court,” a Blackstone spokesperson told Citizen Truth in an emailed statement, pointing to a motion to dismiss a previous version of the case. “As we’ve demonstrated repeatedly, these claims have absolutely no merit. We delivered more than $150 million in net profits to Kentucky pensioners – and exceeded by nearly three times the benchmark set by KRS itself.”

Beyond its potential to shed light on the opaque business practices of the hedge fund and private equity industries, the lawsuit reveals a striking internecine conflict at the highest levels of the GOP. In her analysis of the situation, Yves Smith at Naked Capitalism emphasized the political dynamics behind Cameron’s intervention:

The politics of this move are extremely perplexing. Cameron is a protege of Mitch McConnell, and two of the defendants in this suit, Steve Schwarzman and Henry Kravis, are not just Republican heavyweight donors; they are (or at least have been) specifically top McConnell funders…

So what is the political play here? Does McConnell feel the need to bolster his bona fides with Kentucky cops? Recall lead plaintiff Mayberry is an officer. Have the Republicans decided they need to bolster their populist credentials? Recall that the Trump Administration filed an amicus brief in favor of the plaintiffs, as in the lowly pension beneficiaries, in Thole v. US Bank.

Is this revenge? Has Schwarzman or Kravis crossed McConnell? Or has the famously sure-footed and ruthless McConnell miscalculated due to not adequately understanding the terrain? There’s some sort of dark matter exerting force on this equation. It will likely become evident in due course.