Romney sat on Damon's board. During Romney's tenure, Damon executives submitted bills to the government for millions of unnecessary blood tests. Romney and other board members were never implicated.

More than a decade later, when Romney was in pursuit of the Massachusetts governorship, his Democratic opponent Shannon O'Brien accused him of lax oversight at Damon and failing to report the fraud.

Romney replied that he had helped uncover the illegal activity at Damon, asking the board's lawyers to investigate. As a result, he said, the board took "corrective action" before selling the company in 1993 to Corning Inc.

But court records suggest that the Damon executives' scheme continued throughout Bain's ownership, and prosecutors credited Corning, not Romney, with cleaning up the situation. Bain, meanwhile, tripled its investment.

Romney personally reaped $473,000.

Money made, jobs lost

In many ways, Damon shows the pitfalls of launching a political career from the buyout industry.

Maximizing the financial return to investors can mean slashing jobs, closing plants, and moving production overseas. While Bain Capital helped expand companies that created jobs, the firm also engaged in some of the business's harsher practices.

During the 2002 gubernatorial campaign in Massachusetts, Democratic candidate Thomas Birmingham charged that Romney had "amassed a fortune on the backs of working people."

Fair or not, the criticism gets at an essential difference between buyout firms and companies rooted in their communities, says Ross Gittell, a professor at the University of New Hampshire's Whittemore School of Business and Economics.

Companies like Bain Capital typically cash out of their investments in three to five years, and "usually have less of a stake in the community, in terms of employment, service on nonprofit boards, your physical and environmental impact," Gittell says. "The objective is: make money for investors. It's not to maximize jobs."

Few Bain Capital deals exposed that objective more starkly than Ampad.

In 1992, Bain Capital acquired American Pad & Paper, or Ampad, from Mead Corp., embarking on a "roll-up strategy" in which a firm buys up similar companies in the same industry in order to expand revenues and cut costs.

Through Ampad, Bain bought several other office supply makers, borrowing heavily each time. By 1999, Ampad's debt reached nearly $400 million, up from $11 million in 1993, according to government filings.

Sales grew, too - for a while. But by the late 1990s, foreign competition and increased buying power by superstores like Bain-funded Staples sliced Ampad's revenues.