Uncategorized | This Way Up, Seattle, Washington.

TABLE OF CONTENTS

Executive Summary……………………………………………………………………………….1

Methodology………………………………………………………………………………………2

The Violators

A. Members of the House…………………………………………………………………3

I. Charles Bass (R-NH)………………………………………………………….4

II. Vern Buchanan (R-FL)………………………………………………………..9

III. Stephen Fincher (R-TN)……………………………………………………..19

IV. Michael Grimm (R-NY)……………………………………………………..24

V. Frank Guinta (R-NH)…………………………………………………………28

VI. Gregory Meeks (D-NY)………………………………………………………33

VII. Nick Rahall (D-WV)…………………………………………………………46

VIII. Laura Richardson (D-CA)……………………………………………………53

IX. David Rivera (R-FL)…………………………………………………………60

X. Hal Rogers (R-KY)…………………………………………………………..69

XI. Jean Schmidt (R-OH)…………………………………………………………77

XII. Joe Walsh (R-IL)……………………………………………………………..86

XIII. Maxine Waters (D-CA)………………………………………………………92

B. Members of the Senate………………………………………………………………100

I. David Vitter (R-LA)……………..…………………………………………101

C. Dishonorable Mentions……………………………………………………………..108

I. Joe Barton (R-TX)………………………………………………………….109

II. Shelley Berkley (D-NV)……………………………………………………113

III. Sanford Bishop (D-GA)…………………………………………………….120

IV. Jeff Denham (R-CA)………………………………………………………..124

V. Eddie Bernice Johnson (D-TX)………..……………………………………128

EXECUTIVE SUMMARY

CREW’s seventh report on congressional corruption names 19 members of Congress – 14

members whose actions violated the law or who otherwise engaged in serious misconduct, and

five others whose lack of regard for the rules earned them a dishonorable mention. The 2010

midterm elections swept in a large freshman class, but certainly didn’t produce more ethical

conduct. A startling 14 of the 19 members on CREW’s list are new to it this year, and six of

those members are also new to Congress: Reps. Jeff Denham (R-CA), Stephen Fincher (R-TN),

Michael Grimm (R-NY), Frank Guinta (R-NH), David Rivera (R-FL) and Joe Walsh (R-IL).

CREW’s definition of corruption goes beyond assessing whether someone technically

violated a criminal law. It encompasses public officials who fail to act responsibly and ethically,

and who instead place personal or special interests before those of the public. As always,

members on this year’s list have abused their positions to benefit themselves, their families, and

other associates. Ten violated campaign finance or personal financial disclosure rules, failing to

reveal gifts, income, campaign contributions or debts. At least nine members are or have been

under investigation either by the House or Senate ethics committees, the Federal Election

Commission (FEC) or law enforcement agencies.

One member, Rep. Rivera, is under investigation by at least five different law

enforcement agencies for a range of violations, apparently including income tax evasion.

Another, Rep. Gregory Meeks (D-NY), got a loan on very sweet terms and failed to disclose or

repay it until the FBI started asking questions. In the latest revelation in Rep. Vern Buchanan’s

(R-FL) ongoing scandal, he attempted to bribe a witness to sign a false affidavit. The conduct

exhibited by each of the members on the list has contributed to the eroding public trust in

government.

The report, of course, doesn’t reflect the misdeeds of those who have left Congress. Sen.

John Ensign (R-NV), a Most Corrupt alumnus, resigned hastily this year. He left just before a

special counsel to the Senate Select Committee on Ethics issued a scathing report concluding the

evidence against him in connection with his attempted cover-up of an affair with a staffer “would

have been substantial and sufficient to warrant the consideration of the sanction of expulsion.”

Reps. Christopher Lee (R-NY), Anthony Weiner (D-NY), and David Wu (D-OR), meanwhile,

were quickly pushed out of Congress by House leadership after news broke of their salacious

conduct. There seems to be no particular standard, however, regarding the sort of misconduct

that induces party leaders to move decisively against unethical members given the relatively

more egregious actions of some members who have been permitted to retain their seats.

Some Most Corrupt veterans are missing this year either because no new action was

taken by any law enforcement agency or the House and Senate ethics committees, or because

CREW discovered no new information. These members include: Reps. Ken Calvert (R-CA),

Jesse Jackson Jr. (D-IL), Jerry Lewis (R-CA), Charles Rangel (D-NY), Pete Visclosky (D-IN),

and Don Young (R-AK) and Sen. Mitch McConnell (R-KY). Five members are making return

appearances: Reps. Buchanan, Laura Richardson (D-CA), Hal Rogers (R-KY), and Maxine

Waters (D-CA) and Sen. David Vitter (R-LA). Sen. Vitter and Rep. Richardson are included for

conduct unrelated to that which led to their inclusion in previous years.

Despite the number of high-profile scandals, there continues to be scant enforcement of

ethics rules. The Department of Justice (DOJ) has repeatedly refused to press charges against

crooked politicians, declining to pursue the case against Sen. Ensign, among others. The

feckless FEC boasts commissioners who openly declare their intent to ignore the law rather than

enforce it, emboldening candidates and members to cross the legal line without fear of

repercussions.

The House and Senate ethics committees are rarely stirred to action and even when they

are – as in the case of Sen. Ensign – investigations drag out for years. In addition, Rep. Waters’

case shows how ineffective Congress is at policing itself. The Waters investigation has been so

tainted by allegations of staff and member misconduct and evidence withheld that the committee

was forced to hire an outside counsel to investigate its own conduct as well as the Waters matter.

The public deserves better than this. The lack of enforcement of ethics laws and rules

fuels cynicism about government at a time when it is already rampant. An August 2011 poll of

likely voters by Rasmussen Reports found 43% of voters view most members of Congress as

corrupt – and that was the good news.1 The number was down slightly from the previous

month’s high of 46%.2 Congress and the president both bear responsibility for this sorry state of

affairs. Members of Congress should stop offering pious speeches about the importance of

ethics while failing to reform the toothless ethics process and rein in the influence of special

interests. The president should take the long-overdue step of naming new FEC commissioners to

replace those whose terms have expired and who should no longer be serving. Join CREW in

calling for change and together, we’ll build a better Washington.

METHODOLOGY

To create this report, CREW reviewed media articles, Federal Election Commission3

reports, court documents and members’ personal financial and travel disclosure forms. We then

analyzed that information in light of federal laws and regulations as well as congressional ethics

rules.

1 http://www.rasmussenreports.com/public_content/politics/mood_of_america/congressional_performance.

2 Id.

3 References to companies making campaign contributions are shorthand for campaign contributions by those

companies’ political action committees and employees and, in some cases, their immediate families. We are not

insinuating that any company named in the report has made contributions in violation of federal campaign finance

laws.

MEMBERS OF THE HOUSE

REPRESENTATIVE CHARLES BASS

Representative Charles “Charlie” Bass (R-NH) is a seven-term member of Congress,

representing New Hampshire’s 2nd congressional district. Rep. Bass represented the district

from 1995 to 2007, and was elected again in 2010. Rep. Bass’s ethics issues stem from misusing

his position to benefit himself and a company owned by a relative.

New England Wood Pellet

Rep. Bass’s nephew by marriage, Steven Walker, is president of New England Wood

Pellet (NEWP), a New Hampshire-based company that produces wood pellet fuel for use in

heating systems.1 Mr. Walker is also one of several investors with an ownership stake in

NEWP.2 In 2005, Rep. Bass sponsored NEWP-supported legislation to provide incentives for

renewable energy systems, including wood pellet systems.3 The Pellet Fuels Institute, an

industry trade group, described Rep. Bass as a “key supporter in Congress” and said his bill was

“ideally suited to help promote pellet fuel systems.”4 Rep. Bass’ spokesman said the wood pellet

rebates were a small part of his bill and the legislation was not designed to benefit his family.5

Mr. Walker, however, later said Rep. Bass lobbied for the provision at his urging.6 The bill

passed, but Congress didn’t appropriate money to pay for it and the Department of Energy didn’t

request funding as part of its FY 2007 budget.7

In February 2006, then-Secretary of Energy Samuel Bodman visited New Hampshire,

had a one-on-one meeting with Mr. Walker, and discussed the rebate program with him.8 The

Pellet Fuels Institute’s newsletter reported the meeting had been arranged by Rep. Bass.9

According to Secretary Bodman, Rep. Bass also discussed the rebate program with him during

the visit.10 The following month Rep. Bass brought up the rebate program with Secretary

Bodman again, this time during a congressional hearing.11 Shortly afterwards Rep. Bass emailed

his constituents, saying he urged Secretary Bodman to support the biomass industry “for

the second time in a month.”12

1 http://www.pelletheat.com/about-newp/team.html.

2 http://www.pelletheat.com/about-newp/about-us.html; Karen Langley, Bass Denies Energy Bill Was Conflict,

Concord Monitor, October 15, 2010.

3 Charlie Neibling, Pellet Fuel Industry Meets with Energy Secretary Bodman, Pellet Fuels Institute Newsletter,

January-March 2006.

4 Id.

5 John DiStaso, GRANITE STATUS: Bracing for the Worst, Hoping for the Best, Manchester Union Leader, May

12, 2005.

6 Kenneth J. Stier, Small Business: In an Oil Squeeze, Attention to the Alternatives, New York Times, September 22,

2005.

7 Langley, Concord Monitor, Oct. 15, 2010; Transcript, Federal News Service, Hearing of the House Energy and

Commerce Committee, Subject: Fiscal Year 2007 Budget Request for the Department of Energy, March 9, 2006;

Neibling, Pellet Fuels Institute Newsletter, Jan.-Mar. 2006.

8 Id.

9 Id.

10 Id.

11 Neibling, Pellet Fuels Institute Newsletter, Jan.-Mar. 2006; Transcript, Federal News Service, Mar. 9, 2006.

12 Kevin Landrigan, Dem Leaders: Bass Wrong on Meeting, Nashua Telegraph, October 19, 2010.

In March 2007, after leaving Congress, Rep. Bass filed his 2006 personal financial

disclosure forms, which for the first time showed Rep. Bass had acquired a $500,000 to $1

million share in NEWP.13 Unusually, Rep. Bass listed two dates, January 2006 and November

2006 as the dates of purchase.14 In addition, Rep. Bass joined NEWP’s board two weeks after

leaving Congress in 2007, and remained a member until after the 2010 election.15 Between 2007

and 2010, Rep. Bass earned between $1,201 and $3,500 in dividends from the company.16

Rep. Bass’s interest in NEWP drew little notice until the 2010 campaign, when he ran to

reclaim his old congressional seat and reporters raised questions about the conflict of interest.

Rep. Bass then denied setting up the 2006 meeting between Secretary Bodman and Mr.

Walker.17 He also claimed he had never spoken with Secretary Bodman about the biomass

industry – a statement contradicted by Secretary Bodman’s 2006 congressional testimony.18

Further, he said his 2006 financial disclosure forms were incorrect; he had not purchased the

NEWP stock until January 2007.19 As proof, Rep. Bass said he had stock certificates that carried

the January 2007 transaction date.20 In November 2010, Rep. Bass amended his 2006 financial

disclosure form, removing the two NEWP stock transactions.21

In June 2011, Roll Call obtained a 2006 letter from Rep. Bass inviting Secretary Bodman

to New Hampshire.22 The letter also promoted an itinerary for Secretary Bodman that would

“highlight the contributions” of alternative energy companies in New Hampshire.23 A

spokesman for Rep. Bass said the letter showed Rep. Bass’s attempts to promote the industry as

a whole, not NEWP in particular.24 Rep. Bass’ most recent personal financial disclosure form,

meanwhile, shows he continues to own between $500,000 and $1 million worth of stock in

NEWP.25

13 Rep. Charles F. Bass, Personal Financial Disclosure Statement for Calendar Year 2006 / Termination, Effective 1-

4-07, filed March 9, 2007.

14 Id.

15 http://bass.house.gov/index.php?option=com_content&view=article&id=2917&Itemid=400156; Kevin Landrigan,

Bass Stock-Buy Confusion May Lead to Inquiry, Nashua Telegraph, October 15, 2010.

16 Rep. Charles F. Bass, Candidate Personal Financial Disclosure Statement for 2008, filed November 23, 2009;

Rep. Charles F. Bass, Candidate Personal Financial Disclosure Statement for 2010 (Amended), filed August 13,

2010; Rep. Charles F. Bass, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011.

17 Langley, Concord Monitor, Oct. 15, 2010; Eliza Newlin Carney, Rep. Bass Faces New Energy Questions, Roll

Call, June 22, 2011.

18 Kevin Landrigan, House Candidate Admits Mistake on Financial Forms, Nashua Telegraph, October 14, 2010;

Karen Langley, Bass Did Ask for Funding, Concord Monitor, October 19, 2010.

19 Id.

20 Id.

21 Rep. Charles F. Bass, Personal Financial Disclosure Statement for Calendar Year 2006 / Termination (Amended),

November 18. 2010.

22 Carney, Roll Call, June 22, 2011; see also Letter from Rep. Charles F. Bass to Hon. Samuel Bodman, February 7,

2006 available at http://www.scribd.com/doc/63518872/CREW-Most-Corrupt-Sources-Bass-Letter-2006.

23 Id.

24 Id.

25 Rep. Charles F. Bass, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011.

In July 2011, Rep. Bass founded the Congressional Biomass Caucus with Rep. Peter

Welch (D-VT) and the two launched a membership drive.26 The Biomass Thermal Energy

Council, a group founded by NEWP and other companies, is lobbying other members of

Congress to join.27 On September 8, 2011, Rep. Bass was expected to give the keynote speech at

the North American Biomass Pellet Export Conference.28

Potential Violations

5 C.F.R. § 2635.702(a)

Members of the House are prohibited from “taking any official actions for the prospect of

personal gain for themselves or anyone else.”29 House members are directed to adhere to 5

C.F.R. § 2635.702(a), issued by the U.S. Office of Government Ethics for the Executive Branch,

which provides:

An employee shall not use or permit use of his Government

position or title or any authority associated with his public office in

a manner that is intended to coerce or induce another person . . . to

provide any benefit, financial or otherwise, to himself or to friends,

relatives, or persons with whom the employee is affiliated in a

nongovernmental capacity.

By sponsoring legislation beneficial to the wood pellet industry, in which at least a family

member and perhaps the congressman himself had a financial interest, Rep. Bass may have

violated 5 C.F.R. § 2635.702(a). Further, arranging a meeting between Secretary Bodman and

Mr. Walker, and discussing the legislation with the secretary both in New Hampshire and during

a congressional hearing – all without disclosing that financial interest – also appears to violate

the conflicts provision.

Code of Ethics for Government Service, Clause 5

The Code of Ethics for Government Service provides that government officials should

Never discriminate unfairly by the dispensing of special favors or

privileges to anyone, whether for remuneration or not; and never

accept for himself or his family, favors or benefits under

circumstances which might be construed by reasonable persons as

26 Kevin Landrigan, Pension Issues Move Forward In the Courts, Nashua Telegraph, July 17, 2011; Press Release,

Biomass Thermal Energy Council, Biomass Thermal Energy Council Praises Congressional Biomass Caucus

Formation, Calls for Additional House Members, July 14, 2011.

27 Press Release, Biomass Thermal Energy Council, July 14, 2011; http://www.biomassthermal.org/about/

foundingMembers.asp.

28 http://www.exportingpellets.com/agenda.html.

29 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Prohibition Against Linking Official Actions to Partisan or Political Considerations, or Personal Gain, May 11,

1999.

influencing the performance of his official duties.30

By sponsoring legislation, by helping arrange a meeting between Secretary Bodman and

his family member, Mr. Walker, and by lobbying the secretary for legislation benefitting Mr.

Walker’s company and perhaps the congressman’s own financial interest, Rep. Bass may have

violated the Code of Ethics for Government Service.

False Statement on Personal Financial Disclosure Forms

The Ethics in Government Act of 1967 requires all members of Congress to file financial

disclosure reports.31 Under the statute, the attorney general may seek a civil penalty of up to

$11,000 against any individual who knowingly and willfully falsifies or fails to file or report any

information required by the Act.32 House Rule 26 incorporates the financial disclosure

provisions of the Ethics in Government Act.33

Federal law further prohibits members of Congress from making “any materially false,

fictitious, or fraudulent statement or representation”34 on “a document required by law, rule, or

regulation to be submitted to the Congress or any office or officer within the legislative

branch.”35

It is unclear when Rep. Bass acquired his interest in NEWP, but if Rep. Bass amended his

2006 personal financial disclosure forms to incorrectly report the date of his acquisition of an

interest in NEWP, he likely made a false statement.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”36 This ethics standard is considered to be “the

most comprehensive provision” of the code.37 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.38 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,39 making false statements to the committee,40 criminal

30 72 Stat., Part 2, B12, H. Res. 175, 85th Cong. (adopted July 11, 1958); House Comm. on Standards of Official

Conduct, House Ethics Manual, p. 20 (110th Cong., 2d Sess., 2008 ed.).

31 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978).

32 5 U.S.C. app. 4, § 104.

33 House Ethics Manual, p. 248.

34 18 U.S.C. § 1001(a)(2).

35 18 U.S.C. § 1001(c)(2).

36 Rule 23, cl. 1.

37 House Ethics Manual, p. 12.

38 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

39 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

convictions for bribery,41 or accepting illegal gratuities,42 and accepting gifts from persons with

interest in legislation in violation of the gift rule.43

By failing to properly disclose his assets, by failing to disclose his family’s interest – and

perhaps his own – in NEWP while using his position to benefit the company, and by repeatedly

using his position for at least his family’s, if not his own, financial benefit, Rep. Bass engaged in

conduct that does not reflect creditably on the House.

40 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

41 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

42 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

43 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE VERN BUCHANAN

Representative Vern Buchanan (R-FL) is a three-term member of Congress, representing

Florida’s 13th district. His ethics issues stem from (1) pressuring partners and employees to

make contributions to his campaign committee; (2) reimbursing them from his corporate funds;

(3) trying to coerce a partner into signing a false affidavit; (4) improper use of corporate

resources for campaign purposes. Rep. Buchanan was included in CREW’s 2008 and 2009

congressional corruption reports for related matters.

Conduit Contributions

Rep. Buchanan owned several car dealerships in Florida when he began his congressional

campaign in 2005, including Venice Nissan Dodge, Sarasota Ford, and Hyundai of North

Jacksonville (HNJ).1 Rep. Buchanan’s former partner in HNJ, Sam Kazran, as well as several

other former employees of Rep. Buchanan’s dealerships, have since alleged Rep. Buchanan and

dealership managers pressured them to make contributions to his campaign committee that were

later reimbursed with corporate funds. Mr. Kazran claimed Rep. Buchanan personally instructed

him to engage in the reimbursement scheme at HNJ and another dealership.2

In a sworn deposition to the Federal Election Commission (FEC), Mr. Kazran explained

that in July 2005 – around the time Rep. Buchanan launched his campaign for Congress – Rep.

Buchanan asked him to contribute to the Buchanan campaign,3 and he contributed the maximum

permitted by law.4 Subsequently, Rep. Buchanan pressured Mr. Kazran to raise more money for

the campaign.5 When Mr. Kazran said he did not have the money to do so, Rep. Buchanan

responded: “Well, don’t you have somebody at the dealership you can trust? Just run it through

the corporation.”6 Mr. Kazran believed Rep. Buchanan was instructing him “to have someone

write the check personally and then give them back the money through the corporation.”7 Mr.

Kazran noted another HNJ executive, Josh Farid, was with him when Rep. Buchanan discussed

this reimbursement scheme.8 Mr. Farid has confirmed Mr. Kazran’s account, recounting that

Rep. Buchanan was “talking to [Mr. Kazran] about raising money and the campaign

1 Republican Seeks Seat, Bradenton Herald, June 29, 2005; Rep. Vernon G. Buchanan, Personal Financial

Disclosure Statement for January 1, 2004-April 30, 2006, filed May 12, 2006.

2 Federal Election Commission, Confidential Investigative Deposition of Sam Kazran, November 6, 2009 (Kazran

Deposition).

3 Id., pp. 7-8.

4 Id., pp. 11-12; see also Vern Buchanan for Congress, FEC Form 3, October Quarterly Report, October 14, 2005.

5 Kazran Deposition, p. 13.

6 Id. Mr. Kazran recounted Rep. Buchanan’s instructions to find people he could trust and run their reimbursements

through the corporation several times in his deposition. See id., p. 21 (“I instructed [employees] to write a check and

reimburse themselves for [it] – because Mr. Buchanan had asked me to get money. And he specifically told me get

someone you trust and run it though the corporation.”); id., p. 32 (“And he said to me, he says, Get somebody you

trust and get the money out of the corporation.”); id. (“He had asked me to get money, I told him, I said, I thought

you said I’m maxed out? I’ve already given you that money. And he said, Well, just get somebody you trust and

run it through the corporation.”); id., p. 36 (“And when I told him that I don’t have it, he says, Well, get somebody

you trust and run it through the corporation.”); id., p. 37 (“And I said, You already told me I can’t give any money.

He says, Don’t you have somebody, like your brother or someone you trust that you can get to write a check for me?

. . . Run it through the corporation.”).

7 Kazran Deposition, p. 14. See also id., p. 37.

8 Id., pp. 13, 32.

contributions,” and told him “‘You can get that money reimbursed through the dealership.’”9

Another HNJ employee similarly asserted Rep. Buchanan knew about the contribution

reimbursements.10

Mr. Kazran testified further he was “very confident” Rep. Buchanan also told his other

partners to engage in reimbursement schemes, and personally observed one conversation in

which Rep. Buchanan did so.11 According to Mr. Kazran, at one partnership meeting Rep.

Buchanan approached his company’s chief operating officer, Dennis Slater, and told him “I

haven’t gotten your check yet.”12 When Mr. Slater responded he was “hoping to take a pass,”

Rep. Buchanan said, “Don’t worry. You know you’re going to get it back.”13

According to the sworn affidavits of two former Venice Nissan Dodge employees,

employees of Rep. Buchanan’s Automobile Holdings, Inc. (BAH), including employees of

Venice Nissan Dodge and Sarasota Ford, were either reimbursed with corporate funds for

making $1,000 contributions to Rep. Buchanan’s 2006 congressional campaign, or were coerced

into making contributions.14 Carlo A. Bell, Venice Nissan Dodge’s former finance director, said

that on September 15, 2005, the dealership’s general manager, Don Caldwell, called him into a

meeting with Jack Prater, the Dodge sales manager, and Jason Martin, the Dodge finance

manager and Mr. Caldwell’s nephew.15 According to Mr. Bell,

Mr. Caldwell shut the door to the office and told the three of us

that we needed to contribute to the campaign of Vern Buchanan,

who was then running for Congress in Florida’s 13th congressional

district. Mr. Caldwell was holding cash in his hand at the time and

said that the company would reimburse us for our contributions.

He explained that the company would give us $1,000 cash in

exchange for our writing $1,000 checks to the campaign.16

Mr. Bell asked Mr. Caldwell if this was legal, but rather than answering, Mr. Caldwell

instead asked if Mr. Bell was on the team or not.17 Afraid he might lose his job, Mr. Bell replied

yes, he was a part of the team and agreed to write the check.18 Mr. Caldwell then handed $1,000

to Mr. Bell, Mr. Prater, and Mr. Martin.19 Mr. Bell later discussed the meeting with Mr.

9 Virginia Chamlee, More Former Buchanan Employees Speak Out About Pressure To Donate, Reimbursement

Scheme, Florida Independent, August 5, 2011.

10 Id.

11 Kazran Deposition, p. 14.

12 Id., pp. 14-15.

13 Id., p. 15. See also id., p. 31.

14 FEC Complaint filed by Citizens for Responsibility and Ethics in Washington, Carlo Bell and David Padilla,

Affidavit of Carlo A. Bell, filed August 19, 2008 (Bell Affidavit); FEC Complaint filed by Citizens for

Responsibility and Ethics in Washington, Carlo Bell and David Padilla, Affidavit of David Padilla, filed August 19,

2008 (Padilla Affidavit).

15 Bell Affidavit.

16 Id.

17 Id.

18 Id.

19 Bell Affidavit.

Prater and Mr. Martin and all agreed it seemed wrong to accept cash to write checks to the

Buchanan campaign, but they were “afraid that refusing to do so might endanger [their]

employment with Venice Nissan Dodge.”20 Mr. Bell subsequently learned two other Venice

Nissan Dodge employees, Marvin White and William Mullins, also received $1,000 cash

reimbursements when they agreed to write checks to the Buchanan campaign.21

On September 16, 2005, the day after he was given the $1,000 by Mr. Caldwell, Mr. Bell

deposited $960 in cash to his bank account, keeping the remaining $40 for spending money.22

On September 16, 2005, Mr. Bell wrote a check to the Buchanan campaign for $1,000.23

Mr. Bell’s account of the reimbursement scheme was confirmed by David J. Padilla, a

finance manager at Venice Nissan Dodge in 2005.24 In September 2005, Mr. Padilla was

approached by Brad Combs, another finance manager at Venice Nissan Dodge, who told him

“Mr. Buchanan needed campaign contributions and that anyone who made a contribution would

get his money back plus additional compensation.”25 When Mr. Padilla refused to participate in

the reimbursement scheme, Mr. Combs told him “that all of the managers were being asked to

contribute and that many were planning to accept reimbursements in exchange for

contributions.”26 Mr. Padilla later discovered several other Venice Nissan Dodge employees,

including Mr. Bell, Mr. Prater, and Mr. Martin, had been reimbursed for making contributions to

Mr. Buchanan’s congressional campaign.27

Separately, Joseph Kezer, the former finance director of Sarasota Ford, described the

reimbursement scheme at that dealership. Mr. Kezer said he personally observed campaign

finance violations before Rep. Buchanan’s 2006 general election and that some of the $8 million

spent by the Buchanan campaign in 2006 was “laundered corporate cash funneled through

higher-ups at Buchanan’s numerous dealerships.”28 Mr. Kezer “fielded phone calls from other

dealership executives wanting to know whether company reimbursement checks they had cashed

put them in legal peril.”29 He said, “After it happened, a couple of [managers] contacted me

because they were concerned . . . I didn’t know at the time . . . whether it was a good thing or a

bad thing.”30

Mr. Kezer also alleged he was pressured to make a contribution and that as a further

reward, Rep. Buchanan offered him the use of his vacation house in Vail, Colorado.31 Although

Mr. Kezer did not want to donate, Mr. Kezer made a contribution of $2,000 to Rep. Buchanan’s

20 Id.

21 Id.

22 Id.

23 Bell Affidavit; FEC Complaint filed by Citizens for Responsibility and Ethics in Washington, Carlo Bell and

David Padilla, Cancelled Check and Deposit Slip, filed August 19, 2008.

24 Padilla Affidavit.

25 Id.

26 Id.

27 Id.

28 Matthew Murray, Buchanan Faces Another Lawsuit, Roll Call, June 2, 2008.

29 Id.

30 Id.

31 Jeremy Wallace and Carol E. Lee, Official Denies Donation Pressure, Herald Tribune, July 29, 2008.

campaign committee because he feared for his job.32 Neither Mr. Kezer nor Mr. Bell ever

donated to a political campaign before or after donating to Rep. Buchanan.33

In 2009, another allegation of a conduit contribution to Rep. Buchanan’s campaign

committee surfaced.34 Terry Keith Howell, a registered Democrat, claimed he had been

reimbursed for donations he had made unwillingly to Rep. Buchanan’s campaign.35 According

to a deposition he gave in a lawsuit, Mr. Howell claimed the $8,800 contribution he made to

Rep. Buchanan and the $10,000 he gave to the Republican Party of Florida were paid by his

business partners, including Timothy Mobley, a Tampa developer and major contributor to Rep.

Buchanan.36 Mr. Mobley was Mr. Howell’s business partner in a trucking company. Mr.

Howell said, “Tim Mobley told me that Vern Buchanan is somebody good to have on your side,

because he was going to be in charge of overseeing the DOT transportation stuff, so the amount

of favors he could do for us was enormous.”37 Notably, Mr. Howell was in bankruptcy at the

time he made the contributions.38

On October 17, 2010, Rep. Buchanan’s campaign refunded $5,000 in contributions that

had been made by five former employees, including $1,000 from Mr. Bell.39 The refunds were

made to the Treasury Department rather than to the donors themselves, the usual protocol for

refunding illegal donations.40 The campaign committee publicly disclosed the refunds in a

March 2011 FEC filing.41

Pressure to Sign False Affidavit

Mr. Kazran testified he had a “great relationship” with Rep. Buchanan until June 2008,

when he discovered Rep. Buchanan “had taken some $800-or-so thousand out of the company

without my consent.”42 In September 2008, this and related disputes resulted in litigation

between Rep. Buchanan, Mr. Kazran, and their companies.43 According to Mr. Kazran, during

the course of this dispute Rep. Buchanan agreed to pay Mr. Kazran $2.9 million for the damage

to the company caused by the alleged embezzlement and to buy out Mr. Kazran’s share of a Kia

dealership they were in the process of buying.44 Rep. Buchanan sent Mr. Kazran a “Confidential

Settlement Communication,” signed by Rep. Buchanan and his company’s chief executive

officer, John Tosch, laying out the terms of the settlement.45 The exact date Rep. Buchanan sent

32 Id.; Vern Buchanan for Congress, FEC Form 3, October Quarterly Report 2005, October 14, 2005.

33 CQ MoneyLine, Donor Lookup, Carlo Bell, 1979-Present; CQ MoneyLine, Donor Lookup, Joseph Kezer, 1979-

Present.

34 Susan Taylor Martin, Hard Times, Large Checks, St. Petersburg Times, June 20, 2009.

35 Id.

36 Id.

37 Id.

38 Martin, St. Petersburg Times, June 20, 2009.

39 Matthew Doig and Jeremy Wallace, Buchanan Returns Questioned Donations, Sarasota Herald Tribune, June 3,

2011.

40 Id.

41 Id.

42 Kazran Deposition, p. 34.

43 Rep. Buchanan Sues Ex-Partner, Sarasota Herald-Tribune, September 26, 2008.

44 Kazran Deposition, p. 55.

45 Id., pp. 55-56.

the settlement communication to Mr. Kazran is unclear, but an exhibit attached to it was dated

October 2008.46

One term of the agreement was that Mr. Kazran would execute an attached affidavit

attesting – under penalty of perjury – that Rep. Buchanan had no involvement in or knowledge of

the contribution scheme.47 The affidavit provides that during “somewhat hostile” negotiations

between Mr. Kazran and Rep. Buchanan’s representatives, Mr. Kazran told one of Rep.

Buchanan’s representatives one or more of the dealerships of which Mr. Kazran had operational

control reimbursed individuals for contributions to the Buchanan campaign.48 The affidavit

states:

5. Before September, 2008 neither I, nor to my knowledge,

any other person who had ever advised Buchanan or any of

his representatives had any information that one or both of

the dealerships [of which Mr. Kazran was the person in

charge] reimbursed certain individuals for contributions

made to the Vernon G. Buchanan for Congress campaign.

6. Since my relationship with Buchanan first commenced, I

attended various meetings of other general managers or

“partners” of Buchanan who were involved in other

dealerships in which Buchanan, or companies controlled by

him, had a direct or indirect ownership interest. At no time

was there any statement or any form of encouragement to

make a campaign contribution based upon a threat of job

discrimination, financial reprisal, or other detriment for

failure to make a contribution discussed, disseminated or

suggested by Buchanan, a Buchanan representative or

anyone under his or their direction. Furthermore, there

never was a discussion, statement or other action which

would have implied that a person who made a contribution

to the Vernon G. Buchanan for Congress campaign would

be reimbursed by someone or would receive a special

benefit.

7. No one has advised me that Buchanan or any representative

of his knew of any intention, plan or arrangement by

anyone to make a reimbursement, directly or indirectly, to a

person in exchange for making a contribution to the

Buchanan for Congress campaign.49

46 FEC v. 11-2001 LLC and Sam Kazran, No. 3:10-CV-1155-G-99 TGC-JRK, Affidavit of Sam Kazran a/k/a Sam

Khazrwan, attached as Exhibit 2 to Defendants Response to Plaintiffs Complaint and Request for Leave to Join the

Proper Parties in this Action (M.D. Fla. 2010) (Unsigned Kazran Affidavit).

47 Id.; Kazran Deposition, p. 59.

48 Unsigned Kazran Affidavit ¶ 4.

49 Id. ¶¶ 5-7.

Finally, the affidavit provides that Mr. Kazran “consent[s] to Buchanan filing this

Affidavit with the Federal Election Commission and using information contained herein in

connection with campaign for re-election matters.”50

In his sworn deposition testimony, Mr. Kazran said the affidavit was “absolutely

incorrect” in stating Rep. Buchanan “had no idea about [the campaign contributions] and that

I’m the one who did all of it.”51 Mr. Kazran explained that paragraph 5, asserting none of Rep.

Buchanan’s advisors or representatives had any knowledge of the reimbursement scheme before

September 2008, was “an absolute lie.”52 Mr. Kazran added he was surprised Rep. Buchanan

included this statement in the affidavit because Mr. Farid and another HNJ employee heard Rep.

Buchanan discuss the scheme with Mr. Kazran, and “[a]ll these partners know.”53 Reminded

that he was under oath, Mr. Kazran confirmed Rep. Buchanan was aware of the reimbursed

contributions.54

Mr. Kazran testified further that after he received the settlement communication, Rep.

Buchanan asked him to come to Sarasota, Florida for a meeting.55 Rep. Buchanan told Mr.

Kazran in the meeting he wanted Mr. Kazran to sign the affidavit, and said it was a condition of

the agreement.56 Mr. Kazran refused, telling Rep. Buchanan he “couldn’t be lying.”57

According to Mr. Kazran, Rep. Buchanan initially said “okay, no problem,” but then asserted

Mr. Kazran did not want Rep. Buchanan to be against him because he was going to be

governor.58 In addition, Mr. Tosch called Mr. Kazran the following day and told Mr. Kazran he

had “five minutes to sign this document or the deal is off.”59 Mr. Kazran said he was “desperate”

to sign the agreement because he was “very, very much in the need of the money” and it “would

have saved my company.”60 Nevertheless, unwilling to lie, Mr. Kazran refused to sign the

affidavit.61

Misuse of Dealership Resources

Another former employee, Richard Thomas, who was the director of fixed operations for

one of Rep. Buchanan’s dealerships, alleged Rep. Buchanan repeatedly used dealership cars for

campaign purposes.62 Mr. Thomas alleged vehicles were taken out of inventory for use by the

campaign and, when returned, would frequently contain campaign materials such as literature

50 Id. ¶ 8.

51 Kazran Deposition, p. 60. See also id., p. 67 (“And he tried to make it sound like he had nothing to do with this.

This is far from the truth.”).

52 Id., p. 70.

53 Id.

54 Id., p. 71.

55 Kazran Deposition, pp. 60, 62.

56 Id.

57 Id., p. 62.

58 Id.; see also id., p. 65 (“He doesn’t come out and say, I’m going to get you, but he makes comments, Look I’m

going to be governor some day, You want me to be on your side.”).

59 Kazran Deposition, pp. 60, 62.

60 Id., pp. 57, 60.

61 Id., pp. 60-62.

62 Thomas v. Sarasota 500, 2008 CA 013014 NC, Complaint (12th Cir. Fla.), ¶¶ 141, 142.

and posters.63 These materials were cleaned out, and the cars were detailed by dealership staff

before they were made available to customers.64 The dealership may not have been paid fair

market value for the use of the vehicles.65 Rep. Buchanan also stored campaign materials at the

dealership.66

Status of Investigation

On February 7, 2011, the FEC sent a letter to Rep. Buchanan disclosing that on April 16,

2010 the commission found reason to believe he knowingly received conduit contributions and

excessive contributions in connection with the contributions reimbursed by Mr. Kazran.67

Despite the evidence Rep. Buchanan was involved directly in the scheme, the letter further

notified Rep. Buchanan it had decided on February 1, 2011 to take no further action in the case

against him.68 The letter did not explain the FEC’s decision, and noted the matter was still open

with respect to others.69 On March 1, 2011, the FEC sent a second letter to Rep. Buchanan,

adding that the decision to take no further action also applies to “those allegations in the

complaint about which the Commission made no findings as to him.”70 Rep. Buchanan’s

campaign claimed this letter related to the allegations of illegal reimbursements by Mr. Bell and

Mr. Padilla, but FEC officials would not confirm or deny that.71 The FEC has not explained the

reasons for its decisions. However, the FEC sued Mr. Kazran on December 17, 2010 for his role

in the reimbursement scheme.72

Business Holdings and Lawsuits

Rep. Buchanan has been a party to at least 13 different lawsuits since 2008. Most are

about his business dealings, though some yielded allegations of pressuring employees for

campaign donations.73 In November 2008, Rep. Buchanan announced he planned to sell more of

his business holdings to “reduce [his] exposure” to lawsuits and uncomfortable political

situations.74 He now owns three car dealerships, far fewer than the almost two dozen he owned

at one point.75 Since then, most of the suits have either been dismissed or have gone to

arbitration.76

63 Id., ¶¶ 142-143.

64 Id.

65 The FEC reports filed by Vern Buchanan for Congress in the 2006 election cycle show one payment made to

Sarasota Ford in the amount of $600 for “transportation.” Vern Buchanan for Congress, FEC Form 3, October

Quarterly Report 2005, October 14, 2005.

66 Thomas v. Sarasota 500, Complaint, ¶ 144.

67 Federal Election Commission, MUR No. 6054, Letter from FEC to Christopher DeLacy, February 7, 2011.

68 Id.; Becky Bowers, Rep. Vern Buchanan ‘Exonerated’ by FEC, his Spokeswoman Says, St. Petersburg Times,

June 24, 2011.

69 Federal Election Commission, MUR No. 6054, Letter from FEC to Christopher DeLacy, February 7, 2011.

70 Federal Election Commission, MUR No. 6054, Letter from FEC to Christopher DeLacy, March 1, 2011; Bowers,

St. Petersburg Times, June 24, 2011.

71 Jeremy Wallace, Rep. Buchanan was Target of Federal Investigation, Sarasota Herald-Tribune, June 13, 2011.

72 Federal Election Commission v. Kazran, No. 3:10-cv-1155-J-RBD-JRK (M.D. Fla.).

73 Jeremy Wallace, Buchanan’s Path Gets Smoother by the Day, Sarasota Herald-Tribune, July 7, 2010.

74 Jeremy Wallace, Less Business, More Politics for Buchanan, Sarasota Herald-Tribune, November 19, 2008.

75 Jeremy Wallace, Buchanan Has 3 Car Dealerships, Sarasota Herald-Tribune, July 3, 2010.

76 Wallace, Sarasota Herald-Tribune, July 7, 2010.

Legal Fees

Since May 2010, Rep. Buchanan’s campaign committee has spent more than $80,000 in

legal fees to resolve compliance issues with the FEC.77 Campaign records show the committee

hired Patton Boggs and paid the firm $50,000 in legal fees in January 2011 and another $21,000

in April 2011.78 In 2010, the campaign committee paid $9,024 to Ignited Discovery and Applied

Discovery, companies that specialize in litigation discovery.79 In December 2010, the committee

paid $492 to Esquire Deposition Solutions.80

Potential Violations

Coercing Contributions

The Federal Election Campaign Act (FECA) and FEC regulations specifically prohibit

corporations from using job discrimination, financial reprisals, or the threat of job discrimination

or financial reprisals to force employees to make political contributions.81 Corporations are also

prohibited from facilitating the making of contributions to federal candidates.82 FEC regulations

specifically cite as an example of illegal corporate facilitation “[u]sing coercion, such as the

threat of a detrimental job action, the threat of any other financial reprisal, or the threat of force,

to urge any individual to make a contribution or engage in fundraising activities on behalf of a

candidate or political committee.”83

Despite the FEC’s decision to take no action in the complaint against him, by using

coercion, including the implied threat of detrimental job action, to force employees of the

Buchanan automobile dealerships to make contributions to his 2006 campaign, Rep. Buchanan

appears to have violated 2 U.S.C. § 441b(b)(3)(A) and 11 C.F.R. § 114.2. BAH, Venice Nissan

Dodge, Sarasota Ford, Don Caldwell and Brad Combs, also appear to have violated 2 U.S.C.

§ 441b(b)(3)(A) and 11 C.F.R. § 114.2.

Conduit Contributions

FECA and FEC regulations both prohibit the making of a contribution in the name of a

person other than the true source of the contribution.84 Despite the FEC’s decision to take no

action in the complaint against him, by reimbursing employees for contributions made to his

77 Buchanan for Congress, FEC Form 3, April Quarterly Report 2011, filed June 20, 2011; Buchanan for Congress,

FEC Form 3, Year End Report 2010, filed February 25, 2011; Buchanan for Congress, FEC Form 3, Pre-General

Year 2010, filed October 21, 2010; Buchanan for Congress, FEC Form 3, July Quarterly Report 2010, filed August

11, 2010; Jeremy Wallace, Sarasota Herald-Tribune, June 13, 2011.

78 Buchanan for Congress, FEC Form 3, April Quarterly Report 2011, filed June 20, 2011; Buchanan for Congress,

FEC Form 3, July Quarterly Report 2011, filed July 15, 2011.

79 Buchanan for Congress, FEC Form 3, Year End Report 2010, filed February 25, 2011.

80 Buchanan for Congress, FEC Form 3, Year End Report 2010, filed February 25, 2011.

81 2 U.S.C. § 441b(b)(3)(A); 11 C.F.R. § 114.5(a)(1).

82 11 C.F.R. § 114.2(f)(1).

83 11 C.F.R. § 114.2(f)(2)(iv).

84 2 U.S.C. § 441f; 11 C.F.R. § 110.4(b)(1)(I).

2006 and 2008 campaigns, Rep. Buchanan appears to have violated 2 U.S.C. § 441f and 11

C.F.R. § 110.4(b)(1)(I). BAH, Venice Nissan Dodge, Sarasota Ford, Don Caldwell, Brad

Combs, and Rep. Buchanan’s contributor Timothy Mobley also appear to have violated 2 U.S.C.

§ 441f and 11 C.F.R. § 110.4(b)(1)(I).

Corporate Contributions

FECA and FEC regulations both prohibit corporations from making contributions in

connection with any federal election, including elections for the House of Representatives.85

Despite the FEC’s decision to take no action in the complaint against him, by reimbursing

employees with corporate funds for contributions made to his 2006 campaign, Rep. Buchanan

appears to have violated 2 U.S.C. § 441b(a) and 11 C.F.R. § 114.2(a). BAH, Venice Nissan

Dodge, Sarasota Ford, Don Caldwell, Brad Combs, and Timothy Mobley also appear to have

violated 2 U.S.C. § 441b(a) and 11 C.F.R. § 114.2(a).

In addition, by lending the Buchanan congressional committee vehicles for use in

connection with the campaign, and by allowing the campaign committee to store campaign

materials at the dealership, Rep. Buchanan’s dealership appears to have made illegal in-kind

corporate contributions in violation of 2 U.S.C. § 441b(a) and 11 C.F.R. § 114.2(a).

Witness Tampering

Federal law prohibits tampering with a witness in any official proceeding. The statute

prohibits attempting to intimidate, threaten, or corruptly persuade another person with the intent

of influencing their testimony in an official proceeding,86 as well as attempting to corruptly

obstruct, influence, or impede an official proceeding.87 An “official proceeding” includes a

proceeding before a federal government agency that is authorized by law, such as the FEC.88

By trying to use the leverage of the prospective $2.9 million settlement and future

retaliation with the intent of persuading Mr. Kazran to sign a false affidavit that would be used in

the FEC investigation, Rep. Buchanan appears to have illegally tampered with a witness.

Obstruction of Agency Proceedings

A separate federal law, 18 U.S.C. § 1505, prohibits obstruction of agency proceedings.

Anyone who “corruptly, or by threats or force, or by any threatening letter or communication

influences, obstructs, or impedes or endeavors to influence, obstruct, or impede the due and

proper administration of the law under which any pending proceeding is being had before any

department or agency of the United States,” violates this statute.89 “Corruptly” under this statute

means, among other things, “acting with an improper purpose, personally or by influencing

85 2 U.S.C. § 441b(a); 11 C.F.R. § 114.2(a).

86 18 U.S.C. § 1512(b)(1).

87 18 U.S.C. § 1512(c)(2).

88 18 U.S.C. § 1515(a)(1)(C).

89 18 U.S.C. § 1505.

another.”90 Endeavoring to suborn perjury or tamper with a witness is an obstruction under the

statute.91

By making the $2.9 million settlement contingent on Mr. Kazran signing a false affidavit

under penalty of perjury that would have been used in the pending FEC proceeding, Rep.

Buchanan appears to have obstructed an agency proceeding.

Bribery of a Witness

Federal law also prohibits anyone from directly or indirectly corruptly giving, offering, or

promising anything of value to any witness at any proceeding before an agency or commission

with the intent to influence the witness’s testimony.92

By making the $2.9 million settlement contingent on Mr. Kazran signing the affidavit

with the intent of influencing his sworn testimony in the FEC proceeding, Rep. Buchanan

appears to have attempted to bribe a witness.

90 18 U.S.C. § 1515(b).

91 United States v. Atlantic States Cast Iron Pipe Co., 2007 U.S. Dist. LEXIS 56562, at **251-292 (D.N.J. Aug. 2,

2007).

92 18 U.S.C. § 201(b)(3).

REPRESENTATIVE STEPHEN FINCHER

Representative Stephen Fincher (R-TN) is a first-term member of Congress, representing

Tennessee’s 8th congressional district. Rep. Fincher’s ethics issues stem from concealing the

source of a campaign loan and his failure to accurately disclose his income, assets, and liabilities

on his personal financial disclosure forms.

Concealing Source of Campaign Loan

On October 29, 2009, Rep. Fincher, then a candidate for Congress, filed a required

personal financial disclosure statement with the House Ethics Committee covering the period

from January 1, 2009 to September 29, 2009.1 On the form, Rep. Fincher reported his 2008

earned income from his family farm as $59,245.2 He also estimated his total earned income for

2009 would be $60,000.3 Rep. Fincher reported no liabilities and only one asset – his farm,

though he did not include a value for the property.4 Notably, he reported no other assets such as

savings accounts, money market accounts, stocks, or bonds.5 Rep. Fincher filed another required

personal financial disclosure statement on May 17, 2010, covering the period from January 1,

2009 to May 15, 2010.6 This time, he listed his 2009 earned income as $124,016 – more than

double his earlier estimate.7 Again, he reported the farm as his only asset.8

On July 8, 2010, Rep. Fincher’s campaign committee, Steve Fincher for Congress,

reported receiving a $250,000 loan from Rep. Fincher.9 The committee told the Federal Election

Commission (FEC) the loan from the candidate was unsecured, and carried no interest.10 Given

that Rep. Fincher’s financial disclosure forms reported few assets, reporters and Rep. Fincher’s

political opponents began questioning the source of the money.11 Rep. Fincher, through a

spokesman, insisted he had filled out all required forms honestly, and accused his opponent,

Democratic state Sen. Roy Herron, of trying to “gin up a sideshow.”12

On August 27, 2010, Warren Nunn, chairman of Gates Banking and Trust Company, said

the bank, not Rep. Fincher, was the actual source of the loan money.13 Mr. Nunn would not

1 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009;

FEC Complaint filed by Sandler, Reiff & Young against Steve Fincher for Congress, filed September 29, 2010.

2 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009.

3 Id.

4 Id.

5 Id.

6 Rep. Stephen Fincher, Personal Financial Disclosure Statement for January 1, 2009 to May 15, 2010, filed May 17,

2010.

7 Id.

8 Id.

9 Stephen Fincher for Congress, FEC Form 3, Pre-Primary Report, July 23, 2010.

10 Id.

11 Chas Sisk, Fincher Slammed Over Finance Disclosures, The Tennessean, October 20, 2010; Tom Humphrey,

Democratic Lawyer: Republican Fincher’s Disclosures Don’t Add Up, Knoxville News Sentinel, August 27, 2010.

12 Erik Schelzig and Ben Evans, Dem Lawyer Questions Fincher’s Disclosure to House, Associated Press, August

27, 2010.

13 Id.

disclose any more details about the transaction, including the loan’s terms or collateral.14

Notably, Jackie Fincher, Rep. Fincher’s father, is a member of the bank’s board of directors.15 In

addition, Mr. Nunn donated $4,800 to Rep. Fincher’s campaign during the 2010 election cycle.16

In October 2010, shortly before the election, Mr. Nunn wrote to the editor of The Commercial

Appeal newspaper, defending the loan and asserting Mr. Fincher had not received preferential

treatment, though he added “we have done business with the Fincher family for over 30 years,

and they have always done exactly what they said they would do.”17

On August 24, 2010, J. Houston Gordon, a prominent Tennessee Democrat and lawyer,

sent a letter to the U.S. Attorney’s Office in Memphis asking federal prosecutors to investigate

whether Rep. Fincher’s campaign had omitted debts and assets on his personal financial

disclosure forms.18 On September 29, 2010, Sen. Herron filed a complaint with the FEC,

asserting Rep. Fincher’s campaign committee had violated the Federal Election Campaign Act of

1971 by failing to report the bank loan.19 The complaint noted Rep. Fincher’s failure to

accurately disclose the source of the loan.20 Despite the outstanding complaint, the October 2010

quarterly report filed by Rep. Fincher’s campaign committee did not provide additional

information about the source of the loan, prompting Sen. Herron to file a supplemental complaint

on October 18, 2010.21 Sen. Herron argued that because the original complaint had provided

Rep. Fincher’s campaign committee with notice of the problem, the failure to provide correct

information about the loan in the October 2010 report represented a “knowing and willful

violation” of campaign finance law.22

Despite questions about the source of the loan, Rep. Fincher was elected to Congress on

November 2, 2010.23 On December 6, 2010, 34 days later, Rep. Fincher’s campaign finally

submitted new information about the loan to the FEC, reporting for the first time that Rep.

Fincher had borrowed the money from Gates Banking and Trust on July 7, 2010.24 The new

filing also reported the original loan’s interest rate, 6.5%, with a due date of November 30,

2010.25 Rep. Fincher secured the loan with collateral of $600,000 in crops, his home, and a noninterest-

bearing deposit account of undisclosed value.26 Supplemental information filed with the

FEC characterized the loan as a “business expense,” though the money seems to have been used

14 Id.

15 Alex Isenstadt, Fincher Under Fire for Campaign Loan, Politico, October 21, 2010; Richard Locker, Stephen

Fincher Received State Farm Grant in Addition to Federal Farm Subsidies, The Commercial Appeal (Memphis,

Tenn.), October 14, 2010.

16 http://www.opensecrets.org/indivs/search.php?name=Nunn%2C+Warren&state=&zip=&employ=&cand=

Fincher&c2010=Y&sort=N&capcode=hyybp&submit=Submit.

17 Warren Nunn, Letter: You Can Bank on Fincher, The Commercial Appeal (Memphis, Tenn.), October 23, 2010.

18 Schelzig and Evans, Associated Press, Aug. 27, 2010; Humphrey, Knoxville News Sentinel, Aug. 27, 2010.

19 FEC Complaint filed by Sandler, Reiff & Young against Steve Fincher for Congress, filed September 29, 2010.

20 Id.

21 Federal Election Commission, MUR No. 6386, First General Counsel’s Report, March 9, 2011.

22 Id.

23 Bartholomew Sullivan, Tennessee 8th Congressional: Fincher Rides GOP Juggernaut to Win, The Commercial

Appeal (Memphis, Tenn.), November 2, 2010.

24 http://query.nictusa.com/pdf/525/10030510525/10030510525.pdf#navpanes=0.

25 Id.

26 Id.

exclusively for Rep. Fincher’s campaign.27 Rep. Fincher’s campaign also amended an earlier

report to reflect the new information about the loan, and reported having paid back the bank on

November 30, 2010.28 Rep. Fincher’s lawyer, Elliot Berke, described the errors in the filing as

“honest technical reporting errors,” and said the lag time in amending the filings was due to the

need for an internal review.29

Incomplete Personal Financial Disclosures

On May 16, 2011, Rep. Fincher filed a personal financial disclosure with the House

Ethics Committee revealing assets and liabilities substantially different from those reported on

his previous disclosures.30 For instance, Rep. Fincher for the first time reported a value for his

farm: between $500,001 and $1,000,000.31

Additionally, Rep. Fincher reported liabilities that had not been included on his previous

disclosures: nine loans taken out in 2008, 2009, and 2010, worth altogether between $1.64

million and $6.47 million.32 The money was used to purchase trucks and farm equipment.33

Candidates and members of Congress do not have to report loans taken out by their businesses,

but personal loans such as these must be reported.34 Mr. Berke called the omissions from the

2009 report an “honest misunderstanding.”35

Status of Investigation

In July 2011, the FEC’s acting deputy associate general counsel for enforcement, Susan

L. Lebeaux, sent a letter to Mr. Berke, stating the commission would not take further action

against Rep. Fincher.36 The letter indicated the six-member bipartisan commission, equally

divided between Republicans and Democrats, needed a majority to vote to take action on the

matter, but the vote was tied.37 Subsequent documents released by the FEC showed all six

commissioners had found reason to believe the misreporting of campaign information to the FEC

by Rep. Fincher’s campaign committee had violated the law, but they split over whether to

assess a civil penalty,38 preventing the FEC from taking further action.39

27 Id.

28 Bartholomew Sullivan, Fincher’s Disputed Loan Detailed, The Commercial Appeal (Memphis, Tenn.), January 13,

2011.

29 Bill Theobald, Fincher Files Explanation of Controversial Loan, Gannett News Service, January 11, 2011.

30 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011.

31 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009;

Rep. Stephen Fincher, Personal Financial Disclosure Statement for January 1, 2009 to May 15, 2010, filed May 17,

2010; Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011.

32 Id.

33 Id.

34 House Comm. on Standards of Official Conduct, House Ethics Manual, p. 258 (110th Cong., 2d Sess., 2008 ed.);

Tennessee Department of State, UCC Debtor Lookup, Fincher, available at

http://state.tn.us/sos/bus_svc/UccSearch.htm.

35 Elizabeth Bewley, Fincher Clarifies Assets, Debts, The Tennessean, June 22, 2011.

36 Bartholomew Sullivan, Federal Election Commission Ends Investigation into Rep. Stephen Fincher’s Campaign

Loan, The Commercial Appeal (Memphis, Tenn.), July 7, 2011.

37 Elizabeth Bewley, Herron Criticizes FEC’s Decision on Fincher Loan, The Tennessean, July 10, 2011.

38 Federal Election Commission, MUR No. 6386, Statement of Reasons: Chair Cynthia L. Bauerly and

Commissioners Steven T. Walther and Ellen L. Weintraub, July 21, 2011.

Legal Fees

The April 2011 quarterly report for Rep. Fincher’s campaign committee showed the

committee paid $5,519 in legal fees to the Law Offices of Elliot S. Berke, PLLC and $2,000 to

McGuire Woods, LLP.40 The committee also reported paying $10,873 to Mr. Berke’s office for

legal fees in 2010.41

Potential Violations

Campaign Finance Law Violations

The Federal Election Campaign Act and FEC regulations require candidates for Congress

to disclose information about loans to their campaigns.42 A candidate’s campaign committee

must report the identity of any endorser or guarantor of a loan, the date of the loan, and its

amount.43 When a candidate obtains a bank loan for use in connection with his or her campaign,

the campaign committee must disclose the loan, its date, amount, and interest rate, the name and

address of the lending institution, and the types and value of collateral or other sources of

repayment that secure the loan.44

As all the members of the FEC concluded, by twice filing campaign finance disclosure

reports concealing the true source of the loan to his campaign, Rep. Fincher violated 2 U.S.C. §

434(b)(3)(E) and 11 C.F.R. § 104.3(d)(4).

False Statements on Personal Financial Disclosure Forms

The Ethics in Government Act of 1967 requires all members of Congress and candidates

for Congress to file financial disclosure reports.45 Under the statute, the attorney general may

seek a civil penalty of up to $11,000 against any individual who knowingly and willfully falsifies

or fails to file or report any information required by the Act.46

Federal law further prohibits anyone from making “any materially false, fictitious, or

fraudulent statement or representation”47 on “a document required by law, rule, or regulation to

be submitted to the Congress or any office or officer within the legislative branch.”48

39 2 U.S.C. § 437c(c). In August 2011, Sen. Herron’s campaign committee sued the FEC for failing to enforce the

law against Rep. Fincher. The suit is pending. See Herron for Congress v. Federal Election Commission, 1:11-cv-

01466 (D.D.C. 2011).

40 Stephen Fincher for Congress, FEC Form 3, April Quarterly Report, April 15, 2011.

41 Stephen Fincher for Congress, FEC Form 3, Year End Report, January 31, 2011.

42 2 U.S.C. § 434(b)(3)(E); 11 C.F.R. § 104.3(d).

43 2 U.S.C. § 434(b)(3)(E).

44 11 C.F.R. § 104.3(d)(4).

45 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978).

46 5 U.S.C. app. 4, § 104.

47 18 U.S.C. § 1001(a)(2).

48 18 U.S.C. § 1001(c)(1).

By submitting financial disclosure forms that misreported the value of his assets and

failed to disclose numerous personal loans, Rep. Fincher may have violated the Ethics in

Government Act and 18 U.S.C. § 1001.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”49 This ethics standard is considered to be “the

most comprehensive provision” of the code.50 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.51 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,52 making false statements to the committee,53 criminal

convictions for bribery,54 or accepting illegal gratuities,55 and accepting gifts from persons with

interest in legislation in violation of the gift rule.56

By filing campaign finance disclosure reports concealing the true source of the loan to his

campaign, and submitting financial disclosure forms that misreported the value of his assets and

failed to disclose numerous personal loans, Rep. Fincher acted in a manner that brings discredit

to the House.

49 Rule 23, cl. 1.

50 House Ethics Manual, p. 12.

51 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

52 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

53 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

54 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

55 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

56 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE MICHAEL GRIMM

Representative Michael Grimm (R-NY) is a first-term member of Congress, representing

New York’s 13th congressional district. Rep. Grimm’s ethics issues stem from his improper use

of U.S. Marine Corps and Federal Bureau of Investigation (FBI) insignia and imagery in

campaign materials and his improper endorsement of a private security firm.

Improper Use of Insignia and Imagery

In May 2010, Rep. Grimm, an ex-Marine and former FBI agent, was a candidate in the

Republican primary for the House of Representatives.1 Rep. Grimm’s campaign used the FBI’s

seal and the Marines’ official eagle, globe and anchor emblem on an invitation to a campaign

fundraiser featuring former New York Mayor Rudolph Giuliani.2 Both the Marines and the FBI

objected, and said Rep. Grimm had not obtained proper permission to use either image.3 Susan

Del Percio, Rep. Grimm’s campaign spokeswoman, described the use of the insignia as “an

unfortunate mistake.”4 “Clearly, this will not happen again,” Ms. Del Percio said.5

Despite Ms. Del Percio’s promise, Rep. Grimm’s campaign used imagery linked to both

the Marines and the FBI in campaign advertisements during the general election. In August

2010, Rep. Grimm aired television ads that showed him displaying his FBI badge.6 A

spokesman for the FBI said the agency “would definitely consider that an inappropriate use.”7

The Marines, meanwhile, objected to a web advertisement showing Rep. Grimm dressed in

Marine camouflage and carrying the text “Send a conservative warrior to Congress.”8 Rep.

Grimm’s campaign said viewers clicking on the ad would be taken to a page carrying a

disclaimer explicitly saying the Marines had not endorsed Rep. Grimm.9 Marine Corps Captain

Brian Block said the disclaimer must be included on the ad itself.10

Improper Endorsement of Private Company

Sometime after his election to Congress, Rep. Grimm recorded a one minute and fortythree

second testimonial for MG Security Services LLC, a New York City-based private security

company.11 The video endorsement was posted on the company’s website as recently as August

1 Richard Sisk and Michael McAuliff, That’s a Big No-No: Pol Uses Marines, FBI Logos, New York Daily News,

May 19, 2010.

2 Id.

3 Id.

4 Id.

5 Tom Wrobleski, GOP Hopeful to McMahon: Refuse the WFP Line, Staten Island (New York) Advance, May 20,

2010.

6 Michael McAuliff, Marines, FBI Take Aim at Ads, New York Daily News, August 7, 2010.

7 Id.

8 Id.

9 Id.

10 McAuliff, New York Daily News, Aug. 7, 2010.

11 http://www.youtube.com/watch?v=5coX9kHz2AY; MG Security Services LLC, Entity Information, Department

of State: Albany, New York, filed November 12, 2008; http://www.mgsecurityservices.com/about.asp.

22, 2011 (though it has since been removed) and on video-sharing sites such as YouTube.12 In it,

Rep. Grimm spoke about his close relationship with MG Services founder Manny Gomez,

formed, he said, when the two men worked as FBI agents together.13 Rep. Grimm also endorsed

Mr. Gomez’s services.14 “I would call him for advice or for help and I have and would continue

to do so,” he declared.15 Twice during the video, the words “Congressman Michael Grimm”

together with “13th District of New York City” appear on the screen for several seconds.16 Rep.

Grimm did not list income from MG Security Services on his personal financial disclosure forms

for 2009 or 2010.17

Potential Violations

Ban Against Using Official Insignia

Under federal law, it is a crime to use any official agency or department insignia without

authorization.18 Further, absent the written permission of the FBI director, it is also a crime to

use the words “Federal Bureau of Investigation,” or the initials “F.B.I.” in connection with any

advertisement, broadcast, or telecast in a manner reasonably calculated to convey the impression

of an FBI endorsement.19 While Rep. Grimm may have made an unintentional mistake the first

time he used the FBI’s seal and the Marine’s emblem during his congressional campaign,

continuing to do so after he was warned against it indicates a knowing and willful violation of

the law.

Code of Ethics for Government Service, Clause 5

The Code of Ethics for Government Service provides that government officials should

Never discriminate unfairly by the dispensing of special favors or

privileges to anyone, whether for remuneration or not; and never

accept for himself or his family, favors or benefits under

circumstances which might be construed by reasonable persons as

influencing the performance of his official duties.20

Based on this rule, members “should undertake for one individual or business no more

than they would be willing to do for others similarly situated.”21 The Ethics Manual advises

12 http://www.scribd.com/doc/64159186/CREW-Most-Corrupt-Sources-Mg-Security-Srvcs; http://www.youtube.

com/watch?v=5coX9kHz2AY.

13 http://www.youtube.com/watch?v=5coX9kHz2AY.

14 Id.

15 Id.

16 Id.

17 Rep. Michael Grimm, Personal Financial Disclosure Statement for January 1, 2009 through April 30, 2010, filed

May 12, 2010; Rep. Michael Grimm, Personal Financial Disclosure Statement for Calendar Year 2010, filed May

16, 2011.

18 18 U.S.C. § 701.

19 18 U.S.C. § 709.

20 72 Stat., Part 2, B12, H. Res. 175, 85th Cong. (adopted July 11, 1958); House Comm. on Standards of Official

Conduct, House Ethics Manual, p. 20 (110th Cong., 2d Sess., 2008 ed.).

21 House Ethics Manual, p. 350.

members to avoid becoming “too closely affiliated with any commercial entity in order to avoid

any appearance that they are accruing benefits by virtue of improper influence exerted from their

position in Congress, or are dispensing special favors.”22

By recording a nearly two minute video entitled “Client Testimonial for MG Services,”

endorsing MG Security Services and its founder Manny Gomez, which was featured on the

company’s website and YouTube, Rep. Grimm clearly violated the ban on dispensing special

favors.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”23 This ethics standard is considered to be “the

most comprehensive provision” of the code.24 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.25 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,26 making false statements to the committee,27 criminal

convictions for bribery,28 or accepting illegal gratuities,29 and accepting gifts from persons with

interest in legislation in violation of the gift rule.30

By using the FBI’s seal and Marine Corps’ emblem in the first place, but particularly for

continuing to do so after having been warned that such use was prohibited by law, Rep. Grimm

acted in a manner that does not reflect creditably on the House.

22 Id.

23 Rule 23, cl. 1.

24 House Ethics Manual, p. 12.

25 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

26 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

27 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

28 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

29 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

30 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

Further, by appearing in a promotional video, endorsing a private security firm, Rep.

Grimm acted in a manner that does not reflect creditably on the House.

REPRESENTATIVE FRANK GUINTA

Representative Frank Guinta (R-NH) is a first-term member of Congress, representing

New Hampshire’s 1st congressional district. Rep. Guinta’s ethics issues stem from his failure to

accurately disclose assets on his personal financial disclosure forms and possibly accepting

improper gifts or loans.

Failure to Disclose Bank Account

On June 30, 2009, Rep. Guinta’s campaign committee, Friends of Frank Guinta, reported

receiving a $20,000 loan from Rep. Guinta, then a candidate for Congress.1 The committee told

the Federal Election Commission (FEC) that the loan was from Rep. Guinta’s personal funds,

carried no interest or collateral, and repayment was due September 7, 2010.2 The campaign

committee reported a second loan from Rep. Guinta on March 28, 2010, this time for $100,000,

and a third loan on June 27, 2010, for $125,000.3 All three loans – together totaling $245,000 –

carried nearly identical terms, with slight differences in the due dates.4

On May 15, 2010, Rep. Guinta filed a required personal financial disclosure statement

with the House Ethics Committee covering his finances for calendar year 2009.5 He reported the

$72,000-a-year salary he earned as mayor of Manchester, N.H., and an undisclosed amount his

wife earned from the University of New Hampshire and Catholic Medical Center.6 He listed

several stocks and bonds worth between $89,012 and $335,000, as well as two properties owned

with his wife in Manchester.7 One of those properties had a mortgage of between $250,001 and

$500,000.8 Rep. Guinta also reported having three bank accounts collectively worth between

$17,003 and $80,000.9 One of those was a Bank of America account with a reported value of

$15,001 to $50,000.10 He did not report liquidating any assets.

In July 2010, the Nashua Telegraph ran a story questioning how Rep. Guinta, given his

disclosed assets, had been able to loan such large sums of money to his campaign.11 Rep.

Guinta’s campaign manager, Michael Biundo, said Rep. Guinta had liquidated his stock market

and mutual fund assets to amass the cash and those transactions would be detailed on a future

disclosure report.12 On July 23, 2010, however, Rep. Guinta filed an amended personal financial

1 Friends of Frank Guinta, FEC Form 3, July Quarterly Report 2009, July 15, 2009.

2 Id.

3 Friends of Frank Guinta, FEC Form 3, April Quarterly Report 2010, April 15, 2010; Friends of Frank Guinta, FEC

Form 3, July Quarterly Report 2010, July 15, 2010.

4 Friends of Frank Guinta, FEC Form 3, July Quarterly Report 2009, July 15, 2009; Friends of Frank Guinta, FEC

Form 3, April Quarterly Report 2010, April 15, 2010; Friends of Frank Guinta, FEC Form 3, July Quarterly Report

2010, July 15, 2010.

5 Rep. Frank Guinta, Personal Financial Disclosure Statement for Calendar Year 2009, filed May 15, 2010.

6 Id.

7 Id.

8 Id.

9 Rep. Frank Guinta, Personal Financial Disclosure Statement for Calendar Year 2009, filed May 15, 2010.

10 Id.

11 Kevin Landrigan, Hopeful’s Support of Gun Ownership is Targeted, Nashua Telegraph, July 11, 2010.

12 Id.

disclosure form, reporting for the first time a second Bank of America account valued at between

$250,001 and $500,000.13

The Republican primary was crowded – seven candidates eventually competed for the

nomination – and other candidates and their supporters quickly raised questions about how Rep.

Guinta could have neglected to disclose such a significant amount of cash, and where it had

come from.14 “How you forget something like that is just pretty hard to explain. The average

person wouldn’t forget,” former Rep. Jeb Bradley (R-NH) said, adding, “if you were Warren

Buffett, possibly.”15

In August 2010, Republican Christopher Wolfe, who supported one of Rep. Guinta’s

primary opponents, filed a complaint with the FEC, seeking an investigation.16 Mr. Wolfe

argued Rep. Guinta’s disclosed income and assets made it unlikely he could have saved so much

money and he must have received the cash from someone else and failed to properly disclose the

source.17 Others called on Rep. Guinta to provide detailed bank statements and document the

source of the money, but Rep. Guinta refused to do so.18

Rep. Guinta said he had saved the money by living frugally and saving proceeds from

successful investing and real estate transactions.19 He described forgetting to list the account on

his financial disclosure forms as “an inadvertent oversight.”20 Asked to explain Mr. Biundo’s

earlier assertion – that the money had come from liquidated assets – Rep. Guinta said Mr.

Biundo had been mistaken, and Rep. Guinta himself had been out of town on vacation at the time

and unavailable to provide the correct explanation.21 He also said he had chosen to keep the

money in a bank account rather than investing it or paying down mortgage debt because he was

more comfortable holding it as cash.22 His campaign said in a statement that the money for the

loans “came from a series of accounts Guinta has had since March of 1996. Amending

disclosure forms is a common occurrence.”23

Rep. Guinta loaned his campaign another $60,000 on September 3, 2010 and $50,000 on

September 10, 2010, bringing the total loan amount to $355,000.24 Despite the outstanding

questions about the loans, Rep. Guinta won the Republican primary in September 2010.25 Later

that month, the New Hampshire Democratic Party (NHDP) filed complaints with the FEC and

13 Rep. Frank Guinta, Amended Personal Financial Disclosure Statement for Calendar Year 2009, filed July 23,

2010.

14 Marc Fortier, Republican Guinta Wins 1st District Congressional Primary, The Eagle-Tribune (North Andover,

Mass.), September 15, 2010; Kasie Hunt, Bradley: Guinta Should Drop Out, Politico, August 13, 2010.

15 Id.

16 Fergus Cullen, Commentary: Questions Raised About Guinta’s Financial Disclosure, The Union Leader

(Manchester, N.H.), August 13, 2010.

17 Id.

18 Kevin Landrigan, Do As He Says, Not As He Does, Nashua Telegraph, August 24, 2010.

19 Id.; Cullen, The Union Leader (Manchester, N.H.), Aug. 13, 2010.

20 Hunt, Politico, Aug. 13, 2010.

21 Landrigan, Nashua Telegraph, Aug. 24, 2010.

22 Cullen, The Union Leader (Manchester, N.H.), Aug. 13, 2010.

23 Hunt, Politico, Aug. 13, 2010.

24 Friends of Frank Guinta, FEC Form 3, October Quarterly Report 2010, October 15, 2010.

25 Fortier, The Eagle-Tribune (North Andover, Mass.), Sept. 15, 2010.

the Clerk of the U.S. House of Representatives requesting investigations into Rep. Guinta’s

finances.26 On October 28, 2010, the NHDP wrote to the U.S. Attorney’s office in New

Hampshire, requesting a criminal investigation into the matter.27 Rep. Guinta’s general election

opponent, then-Rep. Carol Shea-Porter (D-NH), also pressed him to reveal the source of the loan

money.28

On October 12, 2010, a detailed analysis of Rep. Guinta’s finances by New Hampshire

Public Radio found the Guintas’ real estate transactions would likely have yielded roughly

$95,000, and his prior jobs in the insurance industry did not seem likely to have produced

enough income to allow him to save hundreds of thousands of dollars.29 The report noted Rep.

Guinta’s parents had sold a second home on the New Jersey shore for $820,000 before he

announced his candidacy.30 Rep. Guinta initially refused to address whether his parents were the

source of the money, but later that week said they were not.31 “My wife and I have been in the

workforce for nearly 20 years,” he said.32 “I have been in the private sector. I’ve been fortunate

to make money also in the markets. Over years of time, we have been able to put this money

together.”33 Rep. Guinta won the general election on November 2, 2010.34 Rep. Guinta’s

campaign committee has so far paid back $19,500 of the outstanding $335,500 in loans.35

Status of Investigation

In December 2010, the FEC informed NHDP director Michael Brunelle that it had

assigned a case number to the party’s complaint against Rep. Guinta.36 The current status of the

case is unknown. In December 2010, the House Ethics Committee informed Rep. Guinta that the

committee had reviewed his candidate financial disclosure reports and amendments and

“determined that they are in substantial compliance.”37 The email Rep. Guinta received,

however, was not in response to the NHDP’s complaint, but was the result of a standard review

the committee does of all members.38 In May 2011, Rep. Guinta told attendees of a town hall

meeting that the ethics committee “cleared it up, they reviewed my reports and gave them a clear

26 James Pindell, Dems File FEC, Congressional Complaints Against Guinta, WMUR-TV, September 30, 2010; John

DiStaso, Democrats Seek Probe of Guinta’s Finances, The Union Leader (Manchester, N.H.), October 6, 2010;

Letter from NHDP Executive Director Michael Brunelle to FEC Acting General Counsel Christopher Hughey,

September 30, 2010; Letter from NHDP Executive Director Michael Brunelle to Clerk of the House of

Representatives Lorraine C. Miller, September 30, 2010.

27 Holly Ramer, Criminal Probe Into Guinta’s Money Sought, Associated Press, October 29, 2010.

28 John DiStaso, Questions About Money Continue, The Union Leader (Manchester, N.H.), October 20, 2010.

29 http://www.nhpr.org/assessing-frank-guintas-finances.

30 Id.; Richard and Virginia Guinta, Deed Transfer, Clerk of Ocean County, New Jersey, filed December 5, 2010.

31 http://www.nhpr.org/assessing-frank-guintas-finances; John DiStaso, Guinta Denies He Got Big Money From His

Parents, The Union Leader (Manchester, N.H.), Oct. 14, 2010.

32 Id.

33 Id.

34 Doug Ireland, Guinta Beats Shea-Porter Handily, The Eagle-Tribune (North Andover, Mass.), November 3, 2010.

35 Friends of Frank Guinta, FEC Form 3, July Quarterly Report 2011, July 15, 2011.

36 Holly Ramer, FEC Takes First Step in NH Rep.-Elect’s Case, Associated Press, December 16, 2010.

37 John DiStaso, GRANITE STATUS: Guinta Financial Disclosure Issue Resurfaces, The Union Leader

(Manchester, N.H.), December 16, 2010.

38 Id.

bill of health.”39 The U.S. Attorney’s office has not commented on any investigation into Rep.

Guinta.

Legal Fees

Rep. Guinta’s campaign committee reported paying $6,722.62 to Foley & Lardner LLP

for “legal consulting.”40

Potential Violations

False Statements on Personal Financial Disclosure Forms

The Ethics in Government Act of 1967 requires all members of Congress and candidates

for Congress to file financial disclosure reports.41 Under the statute, the attorney general may

seek a civil penalty of up to $11,000 against any individual who knowingly and willfully falsifies

or fails to file or report any information required by the Act.42

Federal law further prohibits anyone from making “any materially false, fictitious, or

fraudulent statement or representation”43 on “a document required by law, rule, or regulation to

be submitted to the Congress or any office or officer within the legislative branch.”44

By submitting a financial disclosure form that failed to disclose the second Bank of

America account, Rep. Guinta appears to have violated the Ethics in Government Act and 18

U.S.C. § 1001. Similarly, if Rep. Guinta had any other assets from which he was able to derive

$355,000 to loan his campaign, the failure to include these assets on his financial disclosure

forms violates these provisions. Finally, if Rep. Guinta accepted as gifts money he later loaned

to his campaign, the failure to include such gifts on his financial disclosure forms would violate

the Ethics in Government Act and 18 U.S.C. § 1001.

Conduit Contributions

The Federal Election Campaign Act (FECA) and FEC regulations allow candidates for

Congress to spend an unlimited amount of personal funds on their campaigns, including funds

received as gifts during the election cycle that had been customarily received by the candidate

prior to the beginning of the election cycle.45 A contribution is defined to include any gift given

for the purpose of influencing a federal election,46 and the law prohibits making a contribution in

the name of a person other than the true source of the contribution.47

39 Daymond Steer, Entitlements and War Are Top Concerns at Guinta Town Hall Meeting, Conway Daily Sun

(Conway, N.H.), May 23, 2011.

40 Friends of Frank Guinta, FEC Form 3, Amended July Quarterly Report 2011, July 15, 2011.

41 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978).

42 5 U.S.C. app. 4, § 104.

43 18 U.S.C. § 1001(a)(2).

44 18 U.S.C. § 1001(c)(1).

45 11 C.F.R. § 110.10.

46 2 U.S.C. § 434(8)(A)(i); 11 C.F.R. § 100.52(a).

47 2 U.S.C. § 441f; 11 C.F.R. § 110.4(b)(1)(i).

If Rep. Guinta received a contribution or gift intended to aid his campaign – from his

parents or anyone else – then used those funds to loan money to his campaign, he may have

violated campaign finance law. Further, if Rep. Guinta knowingly and willfully accepted a

conduit contribution, he likely violated criminal law.48

Excessive Contribution

The FECA limits the amount of contributions a candidate can accept from an

individual.49 The contribution limits in 2010 were $2,400 per election.50 Any contribution over

that limit is an illegal excessive contribution.51 If someone or several people gave Rep. Guinta

sums greater than that so that he could loan those funds to his campaign, he violated campaign

finance law by receiving an excessive campaign contribution. A knowing and willful violation

would be subject to criminal penalties.52

Campaign Finance Disclosures

The FECA and FEC regulations also require congressional candidates to disclose all

campaign contributions they receive.53 If Rep. Guinta received a gift or gifts intended to aid his

campaign, but did not disclose such gifts as campaign contributions, he violated campaign

finance law. Further, a knowing and willful failure to disclose such contributions is a criminal

offense.54

48 2 U.S.C. § 437g(d)(1)(A)(i).

49 2 U.S.C. §§ 441a(a)(1)(A), 441a(f).

50 Contribution Limitation Increases for Individuals, Nonmulticandidate Committees and for Certain Political Party

Committees Giving to U.S. Senate Candidates for 2009-2010 Election Cycle, 74 Fed. Reg. 7437 (Feb. 17, 2009).

51 2 U.S.C. § 441a(f).

52 2 U.S.C. § 437g(d)(1)(A)(i).

53 2 U.S.C. §§ 434(a)(2), (b); 11 C.F.R. §§ 104.3.

54 2 U.S.C. § 437g(d)(1)(A)(i).

REPRESENTATIVE GREGORY MEEKS

Representative Gregory Meeks (D-NY) is a seven-term member of Congress,

representing New York’s 6th congressional district. Rep. Meeks’ ethics issues stem from (1)

accepting improper gifts and loans; (2) failing to report income and loans on his personal

financial disclosure forms; (3) his involvement with charities under federal investigation; and (4)

his actions on behalf of indicted banker and campaign donor R. Allen Stanford.

Improper Gifts and Loans

In 2006, Rep. Meeks paid $830,000 for a two-story house in the St. Albans neighborhood

of Queens, New York.1 In January 2007, only a few months after the purchase, the city assessed

the market value of the house as $1,239,000.2 The home was built by Robert Gaskin, a

campaign contributor to the congressman, who has also worked on projects for which Rep.

Meeks has obtained federal funds.3 It was built on land owned by another Meeks contributor,

real estate developer Richard Dennis.4 Both Mr. Dennis and Rep. Meeks claimed Rep. Meeks

had not received a sweetheart deal on the house, but an independent appraisal done for The New

York Times found the value of the house to be more than $1 million at the time Rep. Meeks

bought it.5 “At $830,000, anyway you slice it, it was substantially below market,” the appraiser

said.6 “He appears to have gotten a very, very good deal.”7

In addition, on June 18, 2010, Rep. Meeks admitted that over three years he had obtained

two loans totaling $55,000 but had failed to report them on his personal financial disclosure

forms.8 Rep. Meeks said he obtained a $40,000 loan in 2007 that he had since repaid, and he

received a $15,000 loan in 2008 that he was still repaying.9 Notably, Rep. Meeks failed to

include information about any loans on his 2007 and 2008 personal financial disclosure reports,

but called the lapse an “oversight.”10

According to his 2009 personal financial disclosure forms, in 2008 Rep. Meeks took a

loan for $15,000 from the Congressional Federal Credit Union.11 On the same form, Rep. Meeks

also revealed a personal loan of $50,000 to $100,000 from Queens businessman Edul Ahmad,

1 Complaint filed with the House Committee on Standards of Official Conduct by the National Legal and Policy

Center, March 19, 2010 (National Legal and Policy Center Complaint); Eric Lipton and Raymond Hernandez,

Congressman Cries Poor, But He Lives the Good Life, New York Times, March 20, 2010.

2 National Legal and Policy Center Complaint.

3 Id.

4 Lipton and Hernandez, New York Times, Mar. 20, 2010.

5 Id.

6 Id.

7 Id.

8 Benjamin Lesser and Greg B. Smith, Congressman Meeks Failed to Disclose Hidden Loans; Queens Pol Borrowed

More than $50 G, New York Daily News, June 20, 2010.

9 Id.

10 Greg B. Smith, Queens Congressman Gregory Meeks: $55G in Undisclosed Loans An ‘Oversight’, New York

Daily News, June 21, 2010.

11 Rep. Gregory Meeks, Calendar Year 2009 Financial Disclosure Statement, filed June 16, 2010; Rep. Gregory

Meeks, Multi-Year Personal Financial Disclosure Amendment, filed November 17, 2010.

evidently the first disclosure of the 2007 $40,000 loan.12 Rep. Meeks admitted he had not sought

permission from the House Ethics Committee (then known as the Committee on Standards of

Official Conduct) before accepting the loan from Mr. Ahmad.13

Apparently, Rep. Meeks received a check for $40,000 from Mr. Ahmad in January 2007

to help with costs associated with his new $830,000 home.14 Rep. Meeks received the money

without any discussion of interest rates, due dates, or collateral requirements for the loan.15

Further, Rep. Meeks made no payments on the loan until June 2010, after the FBI questioned Mr.

Ahmad about the money.16 At that point, Rep. Meeks apparently took out a home equity loan for

$59,650.17 He then sent Mr. Ahmad a check for $59,684, representing the $40,000 plus interest

at an annual rate of 12.5%.18 In a July 2010 statement regarding the omission of the loans from

his personal financial disclosure forms, Rep. Meeks said that when he borrowed the money from

Mr. Ahmad in 2007, “interest rates were as high as they have been in nearly a decade. Today,

interest rates are as low as they have been since the 1950s. When I saw this, there was no

question that it made financial sense to pay back the loan from Ed Ahmad and replace it with a

lower interest rate secured by my home, which is exactly what I did during the same week that I

filed my current and amended financial disclosure statement.”19

Rep. Meeks admitted he had no documents to back up the loan from Mr. Ahmad, but said

it was due within 10 years.20 Rep. Meeks described the loan as necessary “for my family

obligations, etc. I was in a new house. It’s taking care of things for my family needs in the

house (sic).” Rep. Meeks continued, “You need to make sure the house is furnished. You need

things.”21

The $59,650 home equity loan Rep. Meeks took out to repay the $40,000 was borrowed

from Four Investments LLC, an investment firm owned by Dennis Mehiel, another New York

businessman and a longtime Democratic donor.22 Although Mr. Mehiel has not commented

publicly on the loan, in February 2010 he said, “I’m a longtime personal friend or acquaintance

of virtually every Democratic member of Congress from New York.”23 Mr. Mehiel and his wife,

12 Rep. Gregory Meeks, Calendar Year 2009 Financial Disclosure Statement, filed June 16, 2010; Greg B. Smith,

FBI Looks Into Secret $40,000 Personal Loan to Queens Pol Gregory Meeks, New York Daily News, July 8, 2010.

13 Smith, New York Daily News, July 8, 2010.

14 Id.

15 Benjamin Lesser and Robert Gearty, Queens Pol Gregory Meeks Taps Democratic Fundraiser to Help Pay Back

$40,000 Owed to Businessman, New York Daily News, July 9, 2010; Office of Congressional Ethics, 112th

Congress, Report and Findings Related to Rep. Gregory Meeks, Review No. 11-1048, April 29, 2011 (OCE Report

and Findings), Exhibit 11, Press Release from Representative Gregory Meeks, July 9, 2010.

16 Id. In July 2011, the FBI arrested Mr. Ahmad on apparently unrelated mortgage fraud charges. See United States

v. Edul Ahmad, 1:11-mj-00755-jo (E.D.N.Y. 2011).

17 Complaint filed with the Office of Congressional Ethics by Citizens for Responsibility and Ethics in Washington,

July 13, 2010, Exhibit F, Short Form Subordinated Third Mortgage, dated June 18, 2010, filed with the Office of the

City Register of the City of New York, June 22, 2010; OCE Report and Findings.

18 Smith, New York Daily News, July 8, 2010; OCE Report and Findings.

19 OCE Report and Findings, Exhibit 11, Press Release from Representative Gregory Meeks, July 9, 2010.

20 Smith, New York Daily News, July 8, 2010.

21 Id.

22 Lesser and Gearty, New York Daily News, July 9, 2010. Four Investments is also referred to in some documents

as Four M Investments.

23 Id.

Karen Mehiel, donated $9,600 to Rep. Meeks during the 2010 election cycle, the maximum

allowed.24

During an interview with the Office of Congressional Ethics (OCE), Mr. Mehiel said

Rep. Meeks had met with him in June 2010 and asked him for a loan in order to pay back an

existing $40,000 loan from another individual, whom Rep. Meeks did not identify.25 Rep.

Meeks also requested money to pay interest on the earlier loan.26 Mr. Mehiel spoke with Rep.

Meeks’ lawyers regarding loan terms, and told the OCE Rep. Meeks’ lawyers wanted to

complete the loan within a day or two because a House financial disclosure form was due.27 In

addition, Mr. Mehiel reported Rep. Meeks’ lawyers “felt compelled to pay the [original lender] a

high interest rate so that Rep. Meeks would not be seen as getting a benefit.”28 Four Investments

had never made any similar loans previously and Mr. Mehiel said the company would not make

any in the future, but he made an exception for Rep. Meeks, whom he described as a friend.29

Mr. Mehiel said he did not want to appear to be offering Rep. Meeks a special deal, so he

required Rep. Meeks to provide collateral and set a 7.3% interest rate payable quarterly after

seeing the rate listed in the newspaper as a standard rate for such loans.30

Improper Reporting on Personal Financial Disclosure Forms

In addition to failing to report the gifts and loans on his financial disclosure forms, Rep.

Meeks had several other notable omissions, including some of his wife’s sources of income.31

State records show that Simone-Marie Meeks earned $2,857 in 2008 as an adjunct professor at

Queens College, but Rep. Meeks did not include this information on his 2008 financial

disclosure forms.32 Neither did Rep. Meeks disclose his wife’s role as a principal at Lipscomb

Lord Group, which she created in 1999.33 The firm specialized in public relations, event

planning, and advocacy work.34

Further, on November 17, 2010, Rep. Meeks admitted he had failed to disclose gambling

winnings of approximately $3,500 on his 2008 financial disclosure forms.35 He told reporters he

won the money playing blackjack.36 He also acknowledged failing to disclose a Congressional

24 http://www.opensecrets.org/indivs/search.php?capcode=bqtgj&name=Mehiel&employ=&cand=&state=

NY&zip=&all=N&old=N&c2008=N&c2006=N&c2010=Y&sort=N&page=&page=1.

25 OCE Report and Findings, Exhibit 3, Memorandum of Interview, Managing Member, 4M Investments, LLC,

March 14, 2011. The OCE Report refers to Mr. Mehiel only as the “Chairman of U.S. Corrugated, Inc. and

Managing Member of 4M Investments, LLC,” and notes that the witness owns 80 percent of 4M Investments. Mr.

Mehiel is the owner of 4M Investments, and is also the chairman of U.S. Corrugated, Inc.:

http://www.uscorr.com/about-us/leadership-team/dennis-mehiel/.

26 OCE Report and Findings.

27 OCE Report and Findings, Exhibit 3.

28 Id.

29 Id.

30 Id.

31 Isabel Vincent and Melissa Klein, House Ethics Panel Probing Meeks’ Money, New York Post, January 30, 2011.

32 Id.

33 Id.

34 Id.

35 Rep. Gregory Meeks, Multi-Year Personal Financial Disclosure Amendment, filed November 17, 2010.

36 Benjamin Lesser, Rep. Reveals 3.5G Jackpot, New York Daily News, December 3, 2010.

Federal Credit Union savings account containing $25,965.35 in December 2005.37 He claimed

the account had dwindled to $8,926.20 by 2008.38 He has not included the account on any

subsequent personal financial disclosure forms.39

Federal Probe into Dealings with Nonprofit Groups

Rep. Meeks and some of his closest political allies in New York, including Democratic

state Sen. Malcolm Smith and former Rep. Floyd Flake (D-NY), his predecessor representing the

6th district, are the subject of a federal probe into their dealings with several nonprofit groups.40

According to press reports, investigators are looking into whether Rep. Meeks and the others

used the groups to benefit themselves, their families, and their friends.41

Hurricane Katrina Charity

In 2001, Rep. Meeks and Sen. Smith co-founded a New York nonprofit called New

Direction Local Development Corp.42 From 2002 to 2008, New Direction’s address was the

office of Joan Flowers, a former campaign treasurer for both Rep. Meeks and Sen. Smith. 43 Ms.

Flowers also worked as counsel to Sen. Smith, but was terminated in March 2010, as reports of

the federal probe surfaced.44 Sen. Smith helped direct state funding to the group, and Rep.

Meeks helped it secure other contributions, including a $250,000 contribution from International

Airport Centers, the developer of a cargo center near JFK Airport.45 New Direction prominently

displayed a picture of Rep. Meeks on its website.46

In 2005, in the wake of Hurricane Katrina, New Direction began collecting money for

New Yorkers Organized to Assist Hurricane Families, a special fund for Hurricane Katrina

victims.47 The New Direction website said it planned to raise $270,000 for hurricane evacuees,

and directed donations to the offices of Rep. Meeks, Sen. Smith, and Democratic New York

Assemblywoman Barbara Clark.48 Rep. Meeks said all money raised for the fund would go to

victims, and none would be used for administrative costs.49 Rep. Meeks’ congressional

37 Rep. Gregory Meeks, Multi-Year Personal Financial Disclosure Amendment, filed November 17, 2010.

38 Id.

39 Rep. Gregory Meeks, Personal Financial Statement for Calendar Year 2008, filed May 15, 2009; Rep. Gregory

Meeks, Personal Financial Statement for Calendar Year 2009, filed June 15, 2010; Rep. Gregory Meeks, Personal

Financial Statement for Calendar Year 2010, filed June 17, 2011.

40 Isabel Vincent and Melissa Klein, Feds’ Probe of Meeks Taking Sidetrack to Jamaica Biz Group, New York Post,

April 18, 2010; Isabel Vincent and Melissa Klein, Hide and Meeks – Shady Charities, Odd Financial Disclosures,

Love of Junkets Dog Queens Congressman, New York Post, March 21, 2010.

41 Kenneth Lovett, Barbara Ross and Greg B. Smith, Federal Grand Jury Probes Real Estate and Nonprofit Deals for

Malcolm Smith, Other Queens Pols, New York Daily News, April 2, 2010.

42 Ken Boehm, Rep. Gregory Meeks’ Charity Looks More Like Slush Fund, National Legal and Policy Center,

January 31, 2010.

43 Id.

44 Lovett, Ross and Smith, New York Daily News, Apr. 2, 2010.

45 Boehm, National Legal and Policy Center, Jan. 31, 2010.

46 Melissa Klein and Isabel Vincent, Queens Pols Stiffed Katrina Victims, New York Post, February 7, 2010.

47 Id.

48 Id.

49 Boehm, National Legal and Policy Center, Jan. 31, 2010; Congressman Defends Role in Hurricane Katrina

Charity, NY1 News, March 16, 2010.

campaign gave the fund $10,000 in 2005, though $5,000 appears to have been refunded to the

campaign in 2006.50 Additionally, Assemblywoman Clark said she helped set up a gospel

concert that raised $11,210, and that money was turned over to Rep. Meeks to benefit the fund.51

Nonetheless, according to New Direction’s tax returns, the only money spent on

Hurricane Katrina-related giving was $1,392 paid out in 2006 for hurricane victim expenses.52

According to press reports, the charity has not accounted for the rest of the money.53 The

group’s most recent tax filing, from 2008, reported assets of just $55,254 remaining at the end of

the year.54 Rep. Meeks initially issued a statement saying “the funds were utilized to help sustain

displaced evacuees,” but did not provide details.55 A month later, in February 2010, amid press

reports of an investigation into the charity by the U.S. Attorney’s office, Rep. Meeks said he was

not responsible for day-to-day operations at the charity and did not know what had become of the

money.56

Greater Jamaica Development Corp.

According to The New York Post, federal investigators have subpoenaed Rep. Meeks’

records for information about the Greater Jamaica Development Corp., a Queens nonprofit.57

Rep. Meeks has secured millions of dollars in public money for the charity, including $9.2

million from the Federal Transit Administration for rehabilitation of an underpass.58 The project

has been underway for almost a decade, but the work is roughly only 30 percent complete.59

Former Rep. Flake is a member of Greater Jamaica’s board.60

Ties to Indicted Financier Allen Stanford

Between 2003 and 2007, Rep. Meeks, a member of the Caribbean caucus, took at least

six trips to luxurious Caribbean resorts paid for by the Inter-American Economic Council, a

nonprofit heavily backed by banker R. Allen Stanford.61 In 2006, in response to questions from

the New York Daily News about the trips, Rep. Meeks said the trips were for business, though his

wife traveled with him.62 “It helps my marriage,” he said.63 Additionally, Stanford Financial

Group’s political action committee and employees donated $15,100 to Rep. Meeks during the

50 Boehm, National Legal and Policy Center, Jan. 31, 2010.

51 Klein and Vincent, New York Post, Feb. 7, 2010.

52 Id.

53 Id.

54 New Direction LDC, Inc., 2008 IRS Form 990-EZ, filed July 23, 2009.

55 Klein and Vincent, New York Post, Feb. 7, 2010.

56 Justin Elliott, U.S. Attorney Subpoenas NY Officials On Rep. Meeks’ Non-Profit, TPMMuckraker, February 12,

2010.

57 Vincent and Klein, New York Post, Apr. 18, 2010.

58 Id.

59 Id.

60 Id.

61 Rob Barry, Michael Sallah and Gerardo Reyes, Gregory Meeks’ Trip to Venezuela On Behalf of Stanford’s Bank

Raises Ethics Questions, Miami Herald, December 27, 2009; Greg B. Smith, Meeks Not Shy About Gifts; Enjoyed

6 Caribbean Visits Thanks to An Accused Con Artist, New York Daily News, December 29, 2009.

62 Smith, New York Daily News, Dec. 29, 2009.

63 Id.

2008 election cycle, making the firm Rep. Meeks’ third largest contributor. 64 In 2009, Mr.

Stanford was indicted for running a Ponzi scheme and federal investigators reportedly began

examining his ties to lawmakers, including Rep. Meeks.65 The current status of the investigation

is unknown.

In March 2006, after the president of Mr. Stanford’s bank in Venezuela, Gonzalo Tirado,

filed a lawsuit and raised questions about whether Mr. Stanford was involved in fraud, Mr.

Stanford called Rep. Meeks, a member of the House Committee on Foreign Affairs, and asked

him to intervene by going directly to Venezuelan President Hugo Chavez and requesting a

criminal investigation of Mr. Tirado.66 Two former federal agents then working for Mr. Stanford

were listening to the call, and said Rep. Meeks agreed to pursue the matter with President

Chavez.67

Rep. Meeks traveled to Venezuela in 2006 on a taxpayer-funded trip, described as a

meeting to express gratitude for a program that provided heating oil to Americans.68 In 2007,

Mr. Tirado was indicted in Venezuela.69 Rep. Meeks has declined to answer questions about the

trip, about whether he intervened in the case of Mr. Tirado, and about his relationship with Mr.

Stanford.70

Status of Investigations

In April 2010, Rep. Meeks officially notified then-House Speaker Nancy Pelosi (D-CA)

that he had been served with a subpoena for documents issued by the U.S. District Court for the

Southern District of New York, and press reports said the subpoena was tied to the federal probe

into Rep. Meeks and other Queens politicians.71 The current status of the investigation is

unknown.

After conducting an investigation into Rep. Meeks’ loans, the OCE referred his case to

the House Ethics Committee on May 18, 2011.72 The OCE found substantial reason to believe

Rep. Meeks “failed to properly disclose the $40,000 as a gift on his 2007, 2008, and 2009

Financial Disclosure Statements in violation of House rules, standards of conduct and federal

law.”73 The OCE noted that Rep. Meeks and Mr. Ahmad both declined to cooperate with the

OCE’s investigation of the loan, and it “appeared to lack the normal indicia, including a set

interest rate or repayment terms, of a legitimate loan. Therefore, this $40,000 transferred to

64 http://www.opensecrets.org/politicians/contrib.php?cycle=2008&type=I&cid=N00001171&newMem

=N&recs=20.

65 Michael Sallah and Rob Barry, Feds Probe Banker Allen Stanford’s Ties to Congress, Miami Herald, December

29, 2009.

66 Barry, Sallah and Reyes, Miami Herald, Dec. 27, 2009.

67 Id.

68 Id.

69 Id.

70 Barry, Sallah and Reyes, Miami Herald, Dec. 27, 2009.

71 S.A. Miller and Murray Weiss, Subpoena Takes Meeks By Storm, New York Post, April 16, 2010.

72 Press Release, House Committee on Ethics, Statement of the Chairman and Ranking Member of the Committee

on Ethics Regarding Mr. Michael Collins, Mr. Greg Hill, Representative Gregory Meeks, and Representative Jean

Schmidt, July 1, 2011.

73 OCE Report and Findings.

Representative Meeks in 2007 appears to have been a gift.”74 The OCE recommended the House

Ethics Committee further review the matter and issue subpoenas to Rep. Meeks and Mr.

Ahmad.75

In contrast, the OCE found the loan from Four Investments contained an interest rate and

repayment schedule, and was recorded in a written agreement that was executed and filed with

the New York City Department of Finance.76 The OCE recommended dismissal of allegations

concerning the 2010 loan.77 On August 5, 2011, the House Ethics Committee said it would

dismiss the allegation that Rep. Meeks received an improper loan in 2010, but would continue to

review the allegations concerning the 2007 payment.78

Legal Fees

Rep. Meeks’ campaign committee reported paying law firms Dorsey & Whitney and

Perkins Coie $245,517 in 2010, and $11,000 so far in 2011.79

Potential Violations

False Statements on Personal Financial Disclosure Forms

The Ethics in Government Act of 1967 requires all members of Congress to file financial

disclosure reports.80 Under the statute, the attorney general may seek a civil penalty of up to

$11,000 against any individual who knowingly and willfully falsifies or fails to file or report any

information required by the Act.81 House Rule 26 incorporates the financial disclosure

provisions of the Ethics in Government Act.82

Federal law further prohibits members of Congress from making “any materially false,

fictitious, or fraudulent statement or representation”83 on “a document required by law, rule, or

regulation to be submitted to the Congress or any office or officer within the legislative

branch.”84 Personal obligations aggregating over $10,000 owed to one creditor at any time

74 Id.

75 Id.

76 Id.

77 OCE Report and Findings.

78 Press Release, House Committee on Ethics, 112th Congress, Statement of the Chair and Ranking Member of the

Committee on Ethics Regarding Representative Gregory W. Meeks, August 5, 2011.

79 Friends for Gregory Meeks, FEC Form 3, April Quarterly Report, April 15, 2010; Friends for Gregory Meeks,

FEC Form 3, July Quarterly Report, July 15, 2010; Friends for Gregory Meeks; FEC Form 3, Pre-Primary Report,

September 2, 2010; Friends for Gregory Meeks, FEC Form 3, October Quarterly Report, October 15, 2010; Friends

for Gregory Meeks, FEC Form 3, Pre-General Report, October 21, 2010; Friends for Gregory Meeks, FEC Form 3,

Post-General Report, December 2, 2010; Friends for Gregory Meeks, FEC Form 3, Year End Report, January 31,

2011; Friends for Gregory Meeks, FEC Form 3, April Quarterly Report, April 15, 2011.

80 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978).

81 5 U.S.C. app. 4, § 104.

82 House Comm. on Standards of Official Conduct, House Ethics Manual, p. 248 (110th Cong., 2d Sess., 2008 ed.).

83 18 U.S.C. § 1001(a)(2).

84 18 U.S.C. § 1001(c)(2).

during the calendar year, regardless of repayment terms or interest rates, must be included on

personal financial disclosure statements.85

By deliberately leaving the $40,000 gift/loan from Mr. Ahmad off of his 2007 and 2008

financial disclosure forms, Rep. Meeks made at least two prohibited false statements. In

addition, by mischaracterizing the $40,000 he received from Mr. Ahmad as a loan on his 2009

financial disclosure reports, when in fact the money was more likely a gift, Rep. Meeks appears

to have made another false statement.

In addition, given that Rep. Meeks appears to have received a discount of at least

$170,000 on the price of his home, the $170,000 constitutes a gift that should have been reported

on his personal financial disclosure form. The failure to include this gift is a false statement.

Given that Rep. Meeks seems to have a demonstrated pattern of failing to include

information on his personal financial disclosure reports, his failure to initially include his

blackjack winnings, funds in his credit union account, and some of his wife’s sources of income

also may constitute false statements.

Acceptance of a Bribe

Federal law prohibits public officials from directly or indirectly demanding, seeking,

receiving, accepting, or agreeing to receive or accept anything of value in return for being

influenced in the performance of an official act.86

It appears Rep. Meeks bought his house for at least $170,000 less than it was worth. If

the congressman took any official action in exchange for receiving that discount, he may have

accepted a bribe. Similarly, if Rep. Meeks exchanged any official action for the $40,000 he

received from Mr. Ahmad, that payment also may constitute a bribe.

Finally, if Rep. Meeks used his position in Congress for the benefit of Mr. Stanford in

exchange for campaign contributions or luxury trips, he may have accepted bribes.

Illegal Gratuity

The illegal gratuity statute prohibits a public official from directly or indirectly

demanding, seeking, receiving, accepting, or agreeing to accept anything of value personally for

or because of any official act performed or to be performed by such official.87 In considering

this statute, the Supreme Court has held that a link must be established between the gratuity and

a specific action taken by or to be taken by the government official.88

If Rep. Meeks took any official action in exchange for receiving the at least $170,000

discount on his house, he may have violated the illegal gratuity statute. Similarly, if Rep. Meeks

85 House Ethics Manual, p. 258 (citing 5 U.S.C. App. 4 § 102(a)(4)).

86 18 U.S.C. § 201(b)(2)(A).

87 18 U.S.C. § 201(c)(1)(B).

88 United States v. Sun-Diamond Growers of Cal., 526 U.S. 398 (1999).

exchanged any official action for the $40,000 he received from Mr. Ahmad, that payment also

may constitute an illegal gratuity. If Rep. Meeks used his position in Congress for the benefit of

Mr. Stanford in exchange for campaign contributions or luxury trips, he may have violated the

illegal gratuity statute.

In addition, the House Ethics Committee has used the acceptance of bribes and gratuities

under these statutes as a basis for disciplinary proceedings and punishment of members,

including expulsion.89

5 U.S.C. § 7353 and House Rules

A provision of the Ethics Reform Act of 1989, 5 U.S.C. § 7353, prohibits members of the

House, officers, and employees from asking for anything of value from a broad range of people,

including “anyone who seeks official action from the House, does business with the House, or

has interests which may be substantially affected by the performance of official duties.”90 House

Rule 23, clause 3, similarly provides:

A Member, Delegate, Resident Commissioner, or employee of the

House may not receive compensation and may not permit

compensation to accrue to his beneficial interest from any source,

the receipt of which would occur by virtue of influence improperly

exerted from his position in the Congress.

If Rep. Meeks took any official action in exchange for receiving at least a $170,000

discount on his house, he may have violated 5 U.S.C. § 7353 and House Rule 23. Similarly, if

Rep. Meeks exchanged any official action for the $40,000 he received from Mr. Ahmad, he may

have violated 5 U.S.C. § 7353 and House Rule 23. Similarly, if Rep. Meeks used his position in

Congress for the benefit of Mr. Stanford in exchange for campaign contributions or luxury trips,

he may have violated these provisions.

5 C.F.R. § 2635.702(a)

Members of the House are prohibited from “taking any official actions for the prospect of

personal gain for themselves or anyone else.”91 House members are directed to adhere to 5

C.F.R. § 2635.702(a), issued by the U.S. Office of Government Ethics for the Executive Branch,

which provides:

89 In the Matter of Representative Mario Biaggi, H.R. Rep. No. 100-506, 100th Cong., 2d Sess. (1988)

(recommending expulsion of the member from the House); In the Matter of Representative Daniel J. Flood, H.R.

Rep. No. 96-856, 96th Cong., 2d Sess. (1980).

90 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Rules Governing (1) Solicitation by Members, Officers and Employees in General, and (2) Political Fundraising

Activity in House Offices, April 25, 1997.

91 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Prohibition Against Linking Official Actions to Partisan or Political Considerations, or Personal Gain, May 11,

1999.

An employee shall not use or permit use of his Government

position or title or any authority associated with his public office in

a manner that is intended to coerce or induce another person . . . to

provide any benefit, financial or otherwise, to himself or to friends,

relatives, or persons with whom the employee is affiliated in a

nongovernmental capacity.

The Code of Ethics also provides that government officials should “[n]ever discriminate unfairly

by the dispensing of special favors or privileges to anyone whether for remuneration or not.”92

If Rep. Meeks took any official action in exchange for receiving at least a $170,000

discount on his house, he may violated of 5 C.F.R. § 2635.702(a). Similarly, if Rep. Meeks

exchanged any official action for the $40,000 he received from Mr. Ahmad, may violated 5

C.F.R. § 2635.702(a). Finally, if Rep. Meeks used his position in Congress for the benefit of Mr.

Stanford in exchange for campaign contributions or luxury trips, he may have violated this

provision.

Code of Ethics for Government Service, Clause 5

The Code of Ethics for Government Service provides that government officials should

Never discriminate unfairly by the dispensing of special favors or

privileges to anyone, whether for remuneration or not; and never

accept for himself or his family, favors or benefits under

circumstances which might be construed by reasonable persons as

influencing the performance of his official duties.93

If Rep. Meeks took any official action in exchange for receiving at least a $170,000

discount on his house, he may have dispensed special favors in violation the Code of Ethics for

Government Service. Similarly, if Rep. Meeks exchanged any official action for the $40,000 he

received from Mr. Ahmad, he may have dispensed special favors in violation of the Code of

Ethics. Finally, if Rep. Meeks used his position in Congress for the benefit of Mr. Stanford in

exchange for campaign contributions or luxury trips, he may have violated this provision.

Gift Rule Violations

Rule 25, clause 5(a)(1)(A)(i) of the House rules states that “a Member, Delegate,

Resident Commissioner, officer, or employee of the House may not knowingly accept a gift

except as provided in this clause.” The rules define “gift” to mean “a gratuity, favor, discount,

entertainment, hospitality, loan, forebearance, or other item having monetary value.”94

While members and staff may accept gifts on the basis of personal friendship, no gifts

valued at over $250 may be accepted on this basis absent a written determination by the Ethics

92 Id.

93 72 Stat., Part 2, B12, H. Res. 175, 85th Cong. (adopted July 11, 1958); House Ethics Manual, p. 20.

94 Rule 25, cl. 5(a)(2)(A).

Committee.95 Further, the donor, description and value of any gifts aggregating over $335 from

a single source must be disclosed on a member’s personal financial disclosure statement.96

Rule 25, clause 5(a)(3)(R)(v) allows members, officers, and employees to accept

opportunities and benefits that are available to a wide group, specifically providing that they may

accept “loans from banks and other financial institutions on terms generally available to the

public.” The Ethics Committee has interpreted this rule

to allow the acceptance of loans from persons other than financial

institutions, provided that they are on terms which satisfy the

requirements which the Committee had previously utilized in

evaluating loans: that is, the terms are commercially reasonable,

including requirements for repayment and a reasonable rate of

interest.97

The Committee cautioned, however, that to ensure a loan is on commercially reasonable

terms, before entering into any loan arrangement with someone other than a financial institution,

members and staff “should contact the Committee for a review of the proposed terms, and a

determination by the Committee on whether the loan is acceptable under the gift rule. Those

who accept such a loan without Committee consideration run a risk of being found in violation of

the gift rule, and possible other provisions of law as well.”98

Discounted House Price

It appears Rep. Meeks was permitted to purchase his house for a price one appraiser

estimates at least $170,000 less than the home’s value. Because discounts constitute gifts, Rep.

Meeks appears to have accepted an improper gift by paying less than the home’s true value.

Gift of $40,000

Given that Rep. Meeks failed to seek the Ethics Committee’s approval of the alleged loan

he received from Mr. Ahmad, and failed to repay any portion of the money until the FBI began

investigating the matter, this so-called loan was more likely an impermissible gift.

Loan of $40,000

Alternatively, although there is no indicia suggesting the $40,000 was a loan from Mr.

Ahmad – no loan agreement, no loan term, no payment schedule, and no cancelled checks – if

the money was a loan rather than a gift, Rep. Meeks still violated federal law and House rules.

95 Rule 25, cl. 5(a)(5).

96 5 U.S.C. app. 4 § 102(a)(2).

97 House Comm. on Standards of Official Conduct, “Memorandum from Committee on Standards of Official

Conduct,” Gift Rule Provisions Applicable to Loans to Members, Officers, and Employees, May 23, 1997 (found in

House Ethics Manual, pp. 381-384).

98 Id.

First, House rules require members and staff who wish to accept a personal loan from

someone other than a financial institution to seek permission from the Committee before

accepting the loan. Rep. Meeks has admitted he never put the matter to the Committee. As a

result, Rep. Meeks violated House rules by accepting the $40,000 from Mr. Ahmad.

Second, the terms for loans accepted from anyone other than a financial institution must

be commercially reasonable. Here, the absence of a loan term, payment schedule, and defined

interest rate demonstrate the loan was not made on commercially reasonable terms. As a result,

Rep. Meeks violated House rules by accepting the loan.

Third, as explained above, personal obligations aggregating over $10,000 owed to one

creditor at any time during the calendar year, regardless of repayment terms or interest rate, must

be included on personal financial disclosure statements,99 and failing to report them is a federal

crime. Here, by deliberately failing to include the loan on his 2007 and 2008 financial disclosure

forms, and by including it on his 2009 forms only after the FBI questioned the loan, Rep. Meeks

appears to have violated federal criminal law.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”100 This ethics standard is considered to be “the

most comprehensive provision” of the code.101 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.102 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,103 making false statements to the committee,104 criminal

99 House Ethics Manual, p. 258 (citing 5 U.S.C. App. 4 § 102(a)(4)).

100 Rule 23, cl. 1.

101 House Ethics Manual, p. 12.

102 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

103 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

104 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

convictions for bribery,105 or accepting illegal gratuities,106 and accepting gifts from persons with

interest in legislation in violation of the gift rule.107

By purchasing a house for at least $170,000 less than its value, Rep. Meeks acted in a

manner that brings discredit to the House.

By taking $40,000 from a New York businessman without any kind of loan agreement or

repayment schedule, and then – only after a newspaper discovered and questioned the transaction

– describing the money as a loan and suddenly repaying it, Rep. Meeks acted in a manner that

brings discredit to the House.

Finally, Rep. Meeks’ relationships with the New York charities that have been unable to

account for their funds, as well as the actions he took at Mr. Sanford’s behest may violate

various federal laws, but in any event, certainly do not reflect creditably upon the House.

105 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

106 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

107 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE NICK RAHALL

Representative Nick Rahall (D-WV) is an eighteen-term member of Congress,

representing West Virginia’s 3rd congressional district. He is the ranking member of the House

Transportation and Infrastructure Committee. Rep. Rahall’s ethics issues stem from misusing his

position to benefit family members.

Nick Joe Rahall III

On July 13, 2003, Rep. Rahall’s son, Nick Joe Rahall III, broke into a Virginia home with

another man, held the resident on the floor, and stole $5,000.1 Police later issued a warrant for

his arrest on felony breaking and entering charges.2 While the warrant was outstanding, Mr.

Rahall was arrested in West Virginia on drunk driving charges.3 Once those charges were

processed, he was sent to Virginia, arraigned in the robbery case, and released on $15,000 bail.4

He was arrested again a month later in West Virginia on drug charges, and subsequently pleaded

guilty to distribution of cocaine charges in that case.5 Following his plea to cocaine distribution,

Mr. Rahall pleaded guilty to conspiracy to commit robbery in the Virginia case.6 A sentencing

guideline report evaluating Mr. Rahall based on the Virginia crime and his criminal history

placed him just under the cutoff for mandatory incarceration.7

In February 2005, with Mr. Rahall’s sentencing in the Virginia case pending, Rep. Rahall

wrote to Fairfax County Circuit Court Judge David Stitt on congressional stationery, asking

Judge Stitt to be lenient.8 The judge gave Mr. Rahall a four-year suspended sentence.9

Rep. Rahall’s letter was first reported by Politico in August 2010.10 Rep. Rahall

acknowledged he should not have used congressional stationery for the letter.11 He insisted,

however, that it was different stationery from the paper he used for official or committee

business.12 Nonetheless, the paper included the congressional seal, the words “Congress of the

United States of America,” and referred to Rep. Rahall as “M.C., West Virginia.”13 It also listed

his committee assignments.14 In the wake of questions from Politico, Rep. Rahall said that he

would repay the Treasury for the cost of the stationery.15

1 John Bresnahan, Rahall Plea for Son Raises Questions, Politico, August 12, 2010.

2 Id.

3 Id.

4 Id.

5 Bresnahan, Politico, Aug. 12, 2010.

6 Id.

7 Id.

8 Id.

9 Bresnahan, Politico, Aug. 12, 2010.

10 Id.

11 Id.

12 Id.

13 Bresnahan, Politico, Aug. 12, 2010.

14 Id.

15 Id.

Tanya Rahall

Rep. Rahall’s sister, Tanya Rahall, is a registered lobbyist.16 She has repeatedly cited her

relationship with her brother as a key factor in her ability to serve lobbying clients. A

spokesman for the congressman has said Rep. Rahall does not allow family members to lobby

him directly. Ms. Rahall, however, has done so in the past, and court records show she continues

to lobby Rep. Rahall’s staff. Rep. Rahall has introduced legislation to benefit Ms. Rahall’s

clients in the past.

In 2003, disclosure records filed with the Department of Justice under the Foreign Agents

Registration Act (FARA) showed Ms. Rahall contacted the congressman on behalf of the

Embassy of Qatar.17 The FARA records report she spoke to him directly on seven separate

occasions about Qatar.18 On March 6, 2003 and March 26, 2003, she approached him about

traveling to Qatar for a conference.19 Rep. Rahall eventually accepted the invitation and traveled

to Qatar from April 11, 2003 to April 16, 2003 for the “American Conference for Free Markets

and Democracy.”20 FARA records also show Ms. Rahall met with Rep. Rahall on April 1, 2003

on behalf of the Qatari embassy, along with a representative of the Islamic Institute.21 In three

calls that took place in late 2003, Ms. Rahall lobbied Rep. Rahall to take another trip to Qatar,

though in February 2004, he told her he would not do so.22

At his sister’s urging, Rep. Rahall introduced specific legislation to benefit Qatar.23 In

April and May of 2003, Ms. Rahall lobbied for the House of Representatives to pass a resolution

thanking Qatar for its support of the Iraq war and welcoming the Emir of Qatar to the United

States.24 Rep. Rahall has since supported other legislation friendly to Qatar, including a 2007

resolution congratulating Qatar for the occasion of “Qatari-American Friendship Day.”25

16 RTK Consulting Group LLC, Second Quarter 2011 Lobbying Disclosure Report on behalf of DaVincci Horani,

Secretary of the Senate, Office of Public Records.

17 Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of Justice, filed on

June 17, 2003; Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of

Justice, filed on December 23, 2003.

18 Id.; Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of Justice, filed

on June 16, 2004.

19 Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of Justice, filed on

June 17, 2003.

20 Id.

21 Id.

22 Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of Justice, filed on

December 23, 2003; Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of

Justice, filed on June 16, 2004.

23 Rahall Consulting Group, Foreign Agents Registration Act Supplemental Form, Department of Justice, filed on

June 17, 2003.

24 Id.

25 Congratulating Qatar on the Occasion of Qatari-American Friendship Day, H. Res. 396, 110th Congress, May

10, 2007.

RJI Government Strategies

In August 2009, RJI Government Strategies, the lobbying firm Ms. Rahall had worked

for since 2008, fired her.26 One of her clients, Mountaineer LLC, immediately terminated its

contract with RJI and instead retained Ms. Rahall and her new business partner, Hilliard Zola.27

In October 2009, RJI sued Ms. Rahall and Mr. Zola, accusing them of conspiring to steal

Mountaineer’s business and inappropriately taking confidential information from RJI.28 The two

deny the allegations, and have countersued.29

Court documents filed as part of the lawsuit show Ms. Rahall referring to her relationship

with her congressman brother to justify her value to the firm and its clients. In an email

requesting higher compensation in exchange for bringing Mountaineer’s business to RJI, she

wrote “the typical pay to someone who has been in the business as long as I have been –

someone who brings experience, skills, reputation for integrity, name recognition, the sister of a

sitting Chairman, and a broad base of contacts is around $200,000/year.”30 RJI was paying her

$70,000 per year.31 Ms. Rahall said in another email that she brought “the WV delegation,

which is key.”32 At the time, Rep. Rahall was the chairman of the House Natural Resources

Committee, and Mountaineer was lobbying Congress for help in obtaining federal stimulus funds

to build a coal cleaning plant in his West Virginia district.33

An RJI principal testified in a sworn deposition that in 2008, Ms. Rahall said at one point

that the “doors on Capitol Hill would be closed” to RJI unless she was granted a more prominent

role on the lobbying team for a particular client.34 The firm also said in court filings that Ms.

Rahall and Mr. Zola sought to use Ms. Rahall’s relationship with her brother “to intimidate and

threaten RJI.”35 RJI also cited an email in which a former RJI employee, Bart Marcois, wrote to

26 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Amended Complaint

and Jury Demand; RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.),

Affidavit of Tanya Rahall, attached as Exhibit 1 to Defendants’ Motion for Summary Judgment.

27 Id.

28 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Complaint and Jury

Demand.

29 John Bresnahan, Suit: Rahall Sis Made Payback Threat, Politico, October 7, 2010.

30 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Email from Tanya

Rahall to Cliff Madison, attached as Exhibit 21 to Memorandum of Points and Authorities in Support of Plaintiffs

RJI Government Strategies, Inc. and RJI Capital Corporation’s Motion for Summary Judgment.

31 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Amended Complaint

and Jury Demand.

32 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Email from Tanya

Rahall to Ron Wahid and Calvin Humphrey, attached as Exhibit 20 to Memorandum of Points and Authorities in

Support of Plaintiffs RJI Government Strategies, Inc. and RJI Capital Corporation’s Motion for Summary Judgment.

33 http://www.rahall.house.gov/index.cfm?sectionid=44&sectiontree=2,44; RJI Government Strategies, Inc., et al. v.

Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Emails from Tanya Rahall to Hilliard Zola, attached as Exhibit 28

to Memorandum of Points and Authorities in Support of Plaintiffs RJI Government Strategies, Inc. and RJI Capital

Corporation’s Motion for Summary Judgment; Bresnahan, Politico, Oct. 7, 2010.

34 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Deposition of Calvin

Humphrey, attached as Exhibit 23 to Memorandum of Points and Authorities in Support of Plaintiffs RJI

Government Strategies, Inc. and RJI Capital Corporation’s Motion for Summary Judgment; RJI Government

Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Amended Complaint and Jury Demand.

35 Id.; RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Affidavit of Bart

Marcois, attached as Exhibit 8 to Defendants’ Motion for Summary Judgment.

Mr. Zola after hearing of Ms. Rahall’s split with the firm, “too bad about tanya, but I think her

brother will know how to make things difficult by making things hard on cal.”36 “Cal” is a

reference to Calvin Humphrey, one of the principals of RJI.37 Mr. Marcois later said in a

deposition he had been joking.38

Ms. Rahall denied using her relationship with her brother to threaten RJI, and accused the

firm of dragging Rep. Rahall into the lawsuit and of “shamelessly” impugning him.39 A

spokeswoman for Rep. Rahall said, “Congressman Rahall’s family does not lobby him.

Congressman Rahall does not allow any member of his family to lobby him.”40 Nonetheless,

Mr. Zola, Ms. Rahall’s business partner, testified that while Ms. Rahall told him she would not

approach her brother directly, “I think she spoke to the staff.”41 Rep. Rahall’s spokeswoman,

Diane Luensmann, did not address whether or not Rep. Rahall allowed his sister to lobby his

staff.42 In addition, Politico reported that Ms. Rahall has an inbox for mail at Rep. Rahall’s

congressional office.43 When asked about the mailbox, Ms. Luensmann said she had “no

information.”44

Rakhat Aliyev

While at RJI, Ms. Rahall lobbied for Rakhat Aliyev, a former son-in-law of Kazakhstan’s

president, Nursultan Nazarbayev.45 Mr. Aliyev and his former father-in-law were publicly

feuding, and Mr. Aliyev sought to gain leverage in the dispute by hiring Washington lobbyists to

press his case.46 The issue was a politically sensitive one involving a strategic ally, since

Kazakhstan both supplies oil to the United States and offers a route for supplies to American

troops in Afghanistan.47 RJI and Ms. Rahall reported their lobbying work on Mr. Aliyev’s behalf

through reports filed under the Lobbying Disclosure Act, which requires less detail about

lobbying contacts than reports filed under the FARA.48

36 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Email from Bart

Marcois to Hilliard Zola, attached as Exhibit 7 to Defendants’ Motion for Summary Judgment.

37 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Affidavit of Bart

Marcois, attached as Exhibit 8 to Defendants’ Motion for Summary Judgment.

38 Id.

39 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Defendants’ Motion

for Summary Judgment; RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.),

Answer, Affirmative Defenses and Counterclaims of Defendant Tanya Rahall to Plaintiffs’ Amended Complaint.

40 Bresnahan, Politico, Oct. 7, 2010.

41 RJI Government Strategies, Inc., et al. v. Rahall, et al., 2009 CA 007515 B (D.C. Sup. Ct.), Deposition of Hilliard

Zola, attached as Exhibit 16 to Defendants Rahall and Zola’s Response to Plaintiffs’ Statement of Undisputed

Material Facts and Identification of Material Facts as to which There are Genuine Issues of Dispute.

42 Bresnahan, Politico, Oct. 7, 2010.

43 Id.

44 Id.

45 RJI Government Strategies, Inc., Second Quarter 2008 Lobbying Disclosure Report on behalf of Speedy Funk

Film UND, Secretary of the Senate, Office of Public Records; Eric Lipton, Feud in Kazakh President’s Family Spills

Into U.S., New York Times, May 29, 2011.

46 Lipton, New York Times, May 29, 2011.

47 Id.

48 RJI Government Strategies, Inc., Second Quarter 2008 Lobbying Disclosure Report on behalf of Speedy Funk

Film UND, Secretary of the Senate, Office of Public Records.

Soon after Ms. Rahall signed on as a lobbyist for Mr. Aliyev, Rep. Rahall, along with

Rep. Darrell Issa (R-CA), traveled to Kazakhstan to meet with the country’s president.49 RJI

lobbyists asked Rep. Issa to take up the cause of one of Mr. Aliyev’s relatives, according to a

letter obtained by the New York Times.50 According to the Times, Rep. Issa agreed to RJI’s

request.51 It is unknown whether RJI or Ms. Rahall directly lobbied Rep. Rahall to travel to

Kazakhstan, or whether he advocated for Mr. Aliyev’s interests while there.

Potential Violations

Unauthorized Use of Congressional Stationary

Official stationary, like other official resources, may be used only for official purposes.52

While members of Congress may use congressional stationary for letters of recommendation in

certain circumstances, such as on behalf of applicant’s seeking admission to a military academy

or to a prospective employer on behalf of a current or former employee who has worked for that

member in an official capacity, in most other instances, letters of recommendation must be

prepared on a member’s personal stationary.53 Under these guidelines, a letter to a judge

requesting leniency may not be written on official congressional stationary.

Moreover, although Rep. Rahall has claimed he did not use his official stationary to write

the letter to the judge requesting leniency for his son, the stationary included a facsimile of the

congressional seal as well as the words “Congress of the United States.” The federal criminal

code prohibits the use of the congressional seal on stationary for conveying “a false impression

of sponsorship or approval” by the U.S. government, including Congress.54

By using a facsimile of official stationary, if not official stationary, Rep. Rahall engaged

in the unauthorized use of congressional stationary.

5 C.F.R. § 2635.702(a)

Members of the House are prohibited from “taking any official actions for the prospect of

personal gain for themselves or anyone else.”55 House members are directed to adhere to 5

C.F.R. § 2635.702(a), issued by the U.S. Office of Government Ethics for the Executive Branch,

which provides:

An employee shall not use or permit use of his Government

position or title or any authority associated with his public office in

a manner that is intended to coerce or induce another person . . . to

49 Lipton, New York Times, May 29, 2011.

50 Id.

51 Id.

52 House Comm. on Standards of Official Conduct, House Ethics Manual, p. 320 (110th Cong. 2d Sess., 2008 ed.).

53 Id., pp. 320-321.

54 18 U.S.C. § 713; see also House Ethics Manual, p. 180.

55 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Prohibition Against Linking Official Actions to Partisan or Political Considerations, or Personal Gain, May 11,

1999.

provide any benefit, financial or otherwise, to himself or to friends,

relatives, or persons with whom the employee is affiliated in a

nongovernmental capacity.

By allowing his sister, Tanya Rahall, to lobby him, by introducing legislation at his

sister’s urging to benefit one of her clients, by allowing her to trade on his position for her own

business purposes, and by allowing Ms. Rahall to maintain a mailbox in his congressional office,

Rep. Rahall likely has used his position for his sister’s personal gain.

Code of Ethics for Government Service, Clause 5

The Code of Ethics for Government Service provides that government officials should

Never discriminate unfairly by the dispensing of special favors or

privileges to anyone, whether for remuneration or not; and never

accept for himself or his family, favors or benefits under

circumstances which might be construed by reasonable persons as

influencing the performance of his official duties.56

By assisting his sister Ms. Rahall on behalf of her lobbying clients, and by allowing her

to maintain a mailbox in his congressional office, Rep. Rahall likely has violated the Code of

Ethics for Government Service.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”57 This ethics standard is considered to be “the

most comprehensive provision” of the code.58 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.59 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,60 making false statements to the committee,61 criminal

convictions for bribery,62 or accepting illegal gratuities,63 and accepting gifts from persons with

interest in legislation in violation of the gift rule.64

56 72 Stat., Part 2, B12, H. Res. 175, 85th Cong. (adopted July 11, 1958); House Ethics Manual, p. 20.

57 Rule 23, cl. 1.

58 House Ethics Manual, p. 12.

59 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

60 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

61 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

62 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

By using congressional letterhead to ask a judge for leniency for his son, and by allowing

his sister to lobby him and trade on his official position for her personal financial benefit and the

benefit of her clients, Rep. Rahall has engaged in conduct that does not reflect creditably on the

House.

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

63 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

64 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE LAURA RICHARDSON

Representative Laura Richardson (D-CA) is a three-term member of Congress,

representing California’s 37th congressional district. Rep. Richardson’s ethics issues stem from

misusing official resources for campaign activity and personal benefit. Rep. Richardson was

included in CREW’s 2008 and 2009 congressional corruption reports for unrelated matters.1

Misuse of Congressional Staff and Resources for Campaign Activity

In a press interview published in March 2011, Maria Angel Macias, Rep. Richardson’s

former district scheduler, alleged that Rep. Richardson had required members of her staff to

volunteer time on her 2010 re-election campaign.2 Ms. Macias said she often scheduled

campaign events “while on the taxpayer dime,” and that Rep. Richardson regularly directed her

to call staff members outside of office hours “to make them work at campaign events.”3

According to Ms. Macias, Rep. Richardson frequently “would just ask me to call [staff members]

and tell them to come to the campaign office. She would ask me to schedule people (staff

members and drivers to accompany Richardson) for campaign fundraisers for other elected

officials.”4 Ms. Macias also said Rep. Richardson’s staff members often had little time for their

families because they “had to attend campaign functions.”5 In her resignation letter, Ms. Macias

added that “on more than one occasion [she] was asked to do a task or coordinate an event that

was on the ethical borderline and not in [her] job description.”6

Although Rep. Richardson claimed she has never forced employees to volunteer, Ms.

Macias’ allegations match statements made by members of Rep. Richardson’s congressional

staff in other news reports.7 According to a press report published in April 2010, Rep.

Richardson’s former employees and other elected officials complained that “she forces her staff

to work on her political campaigns under threat of dismissal.”8 Some of her staff further

reported that prior to the 2010 election, the congresswoman forced them “under threat of

termination” to work on her re-election campaign each weekday evening from 6:00 to 9:00 p.m.

and on weekends from 9:00 a.m. to 8:00 p.m.9 For example, Rep. Richardson reportedly forced

her staff to act as servers at a campaign event, which allegedly led the staffers to complain to the

House Committee on Ethics.10

1 Rep. Richardson’s 2008 and 2009 ethics issues stemmed from accepting favorable loans, and failing to properly

report a loan on her financial disclosure statements. For more information, see CREW’s Most Corrupt: The 15 Most

Corrupt Members of Congress 2009, available at http://www.crewsmostcorrupt.org/files/laura_richardson

_most_corrupt.pdf.

2 Paul Eakins, Former Staffer: Interviewed by Feds While Working for Rep. Richardson, Contra Costa Times,

March 14, 2011.

3 Id.

4 Id.

5 Id.

6 Letter from CREW Executive Director Melanie Sloan to FBI Assistant Director in Charge James W. McJunkin,

June 28, 2011 (CREW Letter), Exhibit B, Letter from Maria Angel Macias to Congresswoman Laura Richardson,

March 3, 2011.

7 Eakins, Contra Costa Times, Mar. 14, 2011.

8 Betty Pleasant, The Soulvine: Calling All Cars, Los Angeles Wave, April 7, 2010.

9 Betty Pleasant, The Soulvine: Harsh Taskmistress?, Los Angeles Wave, November 10, 2010.

10 Id.

On September 29, 2010, Rep. Richardson held a fundraiser called “Democratic Idol.”11

On September 27, 2010, using her official House email account, Rep. Richardson’s chief of staff,

Shirley Cooks, sent a message stating, “All staff are required to attend Ms. Richardson’s event.

Bring spouses and tell interns they have to be there as well. Thanks.”12

The next day, another of Rep. Richardson’s staff members, Daysha Austin, used a

personal email address to send an email to the House email accounts of a number of other Rep.

Richardson staffers stating, “The Congresswoman is asking all staff that has one to wear their

staff shirt to tomorrow’s event so we can be visible and easily identified.”13 Notably, the “staff

shirts” employees were required to wear are white button-down shirts embroidered with the

words “37th Congressional District.”14

Also on September 28, Ms. Cooks, again using her official email account, sent an email

at 11:30 p.m. to the House account of a House staff member asking if he was “available

tomorrow at 5:30 to 7:30ish to cover an event at jones day that includes Pelosi, Clyburn and ten

more members in a talent show.”15 The next morning (and day of the event), the staff member

explained he was not available, which led another staff member to send the following email to

Ms. Cooks:

Daysha just told me I’ll be taking photos at the event tonight. I

explained to her I would be leaving early and she ignored me. If

this is not somehow rectified I am prepared to render my

resignation effective immediately. I am completely serious about

this. In addition, for your information, I will be taking action

against this office through House leadership if I am forced to go

this route.16

Soon thereafter, Ms. Cooks responded, “Calm down. Who do you know up there who

could substitute? Someone in another office maybe who would do it as a favor?”17 The staff

member replied, “I don’t know of anyone who would do it as a favor, only those that do it for

money, especially at this late of notice.”18 Ms. Cooks agreed, “Ok. The campaign will pay.

Rush to get someone please.”19

In addition to requiring staff members to participate in the “Democratic Idol” event, Rep.

Richardson also used employees to prepare materials for other campaign-related events. Using

11 CREW Letter, Exhibit E, Flyer for “Congresswoman Laura Richardson’s (D-CA 37th) 1st Ever Democratic Idol

Fundraiser” at the Old Jones Day Building – Rooftop Meeting Room, September 29, 2010.

12 CREW Letter, Exhibit F, Email from official House account of Shirley Cooks to CA37-dc, Subject: Wednesday at

5:00 pm, September 27, 2010. The CA37-dc is a group list of all staff members of Rep. Richardson’s Capitol Hill

office.

13 CREW Letter, Exhibit G, Email from Yahoo account of Daysha Austin to Shirley Cooks, et al., Subject: Rep.

Richardson’s Democratic Idol, September 28, 2010.

14 CREW Letter, Exhibit H, Photograph of staff shirt.

15 CREW Letter, Exhibit I, Email chain beginning with email from Shirley Cooks to Richardson staff member,

Subject: Question, September 28, 2010.

16 Id.

17 Id.

18 Id.

19 CREW Letter, Exhibit I.

official office accounts, a legislative assistant sent an email to two other staff members stating

Rep. Richardson asked staff to prepare a binder for her for an endorsement event.20 The staff

member wrote that Rep. Richardson “needs a lot of the same information that she needed for her

last endorsement event,” implying Rep. Richardson previously had used staff members to

prepare campaign material.21

Rep. Richardson also attempted to dictate whether and for which political campaigns her

congressional staff were permitted to volunteer. Following a staff meeting in which Rep.

Richardson apparently encouraged staff to volunteer on campaigns through the Democratic

Congressional Campaign Committee (DCCC), Ms. Cooks forwarded a staff member’s request to

volunteer for a race in Tennessee.22 In response, Rep. Richardson angrily wrote:

I am disturbed by this. I never authorized any staff to

communicate to the dccc. I certainly never authorized staff to

consider a specific seat. Those are my decisions. The direction

was if someone was interested to see me NOT to go and do what

he has done.23

Using Staff for Personal Errands

Rep. Richardson also appears to routinely have sent staff on personal errands. A typical

email, sent by Ms. Cooks to the entire office on September 30, 2009, reads “On an errand for

CLR. Will arrive shortly.”24 In eight emails dated September 24, 2009 through December 1,

2009, staff members reported leaving the office to go to the dry cleaner for Rep. Richardson.25

In 13 additional emails dated October 20, 2009 through April 29, 2010, Staff Assistant Seng

Peng indicated she would be out of the office on errands for the congresswoman.26

House Ethics Investigation

Rep. Richardson repeatedly has denied reports that an ethics investigation into her misuse

of staff for campaign activity is underway, though she acknowledges that ethics investigators

have interviewed her staff.27 Nonetheless, several of the congresswoman’s staff members

received an email from the ethics committee captioned “Investigation of Certain Allegations

Related to Campaign Activities.”28 The email further states “Pursuant to rule 18(a), the

committee has authorized counsel to conduct interviews, collect records and other

documentation.”29 In addition, Ms. Macias stated in her resignation letter she was “deposed by

20 CREW Letter, Exhibit J, Email from Lucinda Richard to Henry Rogers and Eric Boyd, Subject: CA State

Democratic Party Endorsement on 3/20, March 17, 2010.

21 Id.

22 CREW Letter, Exhibit K, Email from Shirley Cooks to Laura Richardson, Subject: FW: Memo: Campaign Leave

Request, October 1, 2010.

23 Id.

24 CREW Letter, Exhibit L, Email from Shirley Cook to CA37-dc, September 30, 2009.

25 CREW Letter, Exhibit M, Eight emails from Staff Assistant Seng H. Peng and Legislative Correspondent Lucinda

Richard to CA37-dc, with dry cleaner included in subject line.

26 CREW Letter, Exhibit N, Emails from Seng H. Peng to CA37-dc, with errand included in the subject line.

27 Eakins, Contra Costa Times, Mar. 14, 2011; Pleasant, Los Angeles Wave, Nov. 10, 2010.

28 Id.

29 Id.

an ethics investigator with a lawyer present.”30 According to press reports, Ms. Macias said the

investigation seemed to center on whether Ms. Austin “was being paid from her government job

while doing campaign stuff.”31

Legal Fees

Rep. Richardson’s campaign committee’s April 2011 quarterly report showed the

committee owed $129,280.38 in legal fees to three firms: Perkins Coie, Reich Adell and Cvitan,

and Kaufman Legal Group.32

Potential Violations

Intimidation to Secure Political Contributions

Federal law prohibits members of Congress from threatening to fire, demote, or in any

way change the official rank or compensation of their staff members for withholding or

neglecting to make a political contribution.33 This law “protect[s] all federal officials . . . from

being forced by job-related threats or reprisals to donate to political candidates or causes,” and

should be used “whenever a federal employee is actively threatened with an adverse change to

his or her conditions of employment to induce a political contribution.”34 Coerced donations of

anything of value, including services, are prohibited by this section.35

House ethics rules also make clear “in no event may a Member or office compel a House

employee to do campaign work.”36 This broad prohibition forbids members of Congress “from

not only threatening or attempting to intimidate employees regarding doing campaign work, but

also from directing or otherwise pressuring them to do such work.”37

By forcing her employees to work on her re-election campaign on weeknights and

weekends under threat of termination or other job-related reprisals, Rep. Richardson likely

violated 18 U.S.C. § 606 and House ethics rules.

In addition, by implicitly threatening reprisals for staff members who sought to volunteer

on campaigns without her permission, Rep. Richardson likely violated 18 U.S.C. § 606 and

House ethics rules.

30 CREW Letter, Exhibit B.

31 Eakins, Contra Costa Times, Mar. 14, 2011.

32 Richardson for Congress Committee, FEC Form 3, April Quarterly Report 2011, April 15, 2011.

33 18 U.S.C. § 606.

34 United States Department of Justice, Federal Prosecution of Election Offenses, p. 112 (7th ed. 2007).

35 Id.

36 House Comm. on Standards of Official Conduct, House Ethics Manual, pp. 135-36 (110th Cong., 2d Sess., 2008

ed.).

37 Id., p. 136.

Solicitation on Federal Property

Federal law prohibits any person, including members of Congress, from soliciting

political donations, including money “or other thing of value,” from anyone in a federal

building.38 Violations of this statute “may arise from solicitations that can be characterized as

‘shakedowns’ of federal personnel. . . . [including] shakedowns of congressional employees.”39

To the extent Rep. Richardson was on federal property while conducting any coerced

solicitation of “volunteer” service from her staff members, Rep. Richardson likely violated 18

U.S.C. § 607.

Improper Use of Appropriated Funds

Pursuant to 31 U.S.C. § 1301(a), “[a]ppropriations shall be applied only to the objects for

which the appropriations were made.” Corresponding regulations of the Committee on House

Administration provide that “[e]mployees may not be compensated from public funds to perform

non-official, personal, political, or campaign activities on behalf of the Member, the employee,

or anyone else.”40

House ethics rules also make clear that “[e]mployees of the House are paid from funds of

the United States Treasury to perform public duties” that expressly “do not include performing

nonofficial, personal, or campaign duties.”41 In addition, Rule 23, clause 8 provides:

A Member, Delegate, Resident Commissioner, or officer of the

House may not retain an employee who does not perform duties

for the offices of the employing authority commensurate with

the compensation he receives.

According to the Campaign Booklet published by the House Ethics Committee, there is a

“basic principle that government funds should not be spent to help incumbents gain reelection.”

42 The official allowance of House offices, and the goods and services acquired with

those allowances, are to be used for House business and are not to be used for campaign or

political purposes.43 The Campaign Booklet clearly states that House offices, including district

offices, are supported with official funds and, therefore, are considered official resources.44 As a

result, they may not be used to conduct campaign or political activities.45

38 18 U.S.C. § 607.

39 United States Department of Justice, Federal Prosecution of Election Offenses, pp. 114-15.

40 Committee on House Administration, Members’ Handbook, Staff.

41 House Ethics Manual, pp. 267-268 (citing United States v. Rostenkowski, 59 F.3d 1291, 1307-11 (D.C. Cir. 1995),

reh’g denied, 68 F.3d 489 (D.C. Cir. 1995); United States v. Diggs, 613 F.2d 988, 994-997, 1002 (D.C. Cir. 1979),

cert. denied, 446 U.S. 982 (1980)).

42 House Comm. on Standards of Official Conduct, General Prohibition Against Using Official Resources for

Campaign or Political Purposes, Campaign Booklet (citing Common Cause v. Bolger, 574 F. Supp. 672, 683

(D.D.C. 1982), aff’d, 461 U.S. 911 (1983)).

43 Campaign Booklet.

44 Id.

45 Id.

The Campaign Booklet provides two cases, one in which a member was criminally

prosecuted and another in which a staffer was criminally prosecuted, for misusing official

resources. In 1993, a former House employee pleaded guilty to a charge of theft of government

property after he was found doing campaign work at a time that he claimed he was conducting

official business.46 In 1979, a former member pleaded guilty to charges of mail fraud and

income tax evasion in a case centering on claims that individuals on the congressional payroll

were paid not for the performance of official duties, but instead for staffing and operating various

campaign headquarters in the member’s re-election campaign.47

By using her congressional staff members to conduct campaign business during regular

business hours, including preparing binders for campaign events, coordinating a photographer

for the “Democratic Idol” fundraiser, and directing her district scheduler to schedule staff

members for campaign activity, Rep. Richardson likely violated 31 U.S.C. § 1301(a), House

ethics rules, and the regulations of the Committee on House Administration.

In addition, by repeatedly using her congressional employees to run personal errands for

her, Rep. Richardson likely violated 31 U.S.C. § 1301(a), House ethics rules, and the regulations

of the Committee on House Administration.

False Statements to Congress

Federal law prohibits members of Congress from making “any materially false, fictitious,

or fraudulent statement or representation”48 on “a document required by law, rule, or regulation

to be submitted to the Congress or any office or officer within the legislative branch.”49 If Rep.

Richardson certified on payroll forms she spent official funds only for official expenses despite

frequently requiring her congressional staff to perform campaign and personal work, she likely

violated 18 U.S.C. § 1001.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”50 This ethics standard is considered to be “the

most comprehensive provision” of the code.51 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.52 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,53 making false statements to the committee,54 criminal

46 Campaign Booklet (citing United States v. Bresnahan, Criminal No. 93-0409 (D.D.C. 1993)).

47 Campaign Booklet (citing United States v. Clark, Criminal No. 78-207 (W.D. Pa. 1978)).

48 18 U.S.C. § 1001(a)(2).

49 18 U.S.C. § 1001(c)(2).

50 Rule 23, cl. 1.

51 House Ethics Manual, p. 12.

52 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

53 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

convictions for bribery,55 or accepting illegal gratuities,56 and accepting gifts from persons with

interest in legislation in violation of the gift rule.57

By forcing her employees to work on her re-election campaign on weeknights and

weekends under threat of termination or other job-related reprisals, threatening reprisals for staff

members who sought to volunteer on campaigns without her permission, soliciting donations on

federal property, and using her congressional staff members to conduct campaign business

during regular business hours and run personal errands for her, Rep. Richardson acted in a

manner that brings discredit to the House.

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

54 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

55 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

56 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

57 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE DAVID RIVERA

Representative David Rivera (R-FL) is a first term member of Congress, representing

Florida’s 25th congressional district. He was a Florida state representative from 2002 until his

election to Congress in 2010. His ethics issues stem from what appear to be multiple money

laundering and tax evasion schemes involving: (1) his role in a pro-slots campaign; (2)

repeatedly misreporting his income and liabilities on personal financial disclosure forms; (3)

using campaign funds for personal benefit and to steer money to family and friends; and (4) his

personal and professional ties to an ex-lobbyist and her consulting company.

Rep. Rivera is under criminal investigation by the Federal Bureau of Investigation (FBI),

the Internal Revenue Service (IRS), the Florida Department of Law Enforcement, the Miami-

Dade Police public corruption unit, and the Miami-Dade State Attorney’s office.1 It is unclear

which entity has jurisdiction over specific pieces of the larger criminal probe, and the status of

each investigation is unknown.2

Millennium Marketing

Millennium Marketing, Inc. is a consulting firm that sits at the center of the investigations

into Rep. Rivera’s personal and campaign finances. The company was founded as Millennium

Marketing Strategies, Inc. in 2000 by Rep. Rivera’s mother, Daisy Magarino, but according to

state incorporation records it dissolved the following year.3 Nevertheless, Rep. Rivera included

income from Millennium Marketing on his state financial disclosure forms between 2002 and

2005.4 In 2006, records show Rep. Rivera’s godmother, Ileana Medina, created Millennium

Marketing, Inc. and Ms. Magarino has been listed on state records as a company vice president

since 2008.5

Flagler Dog Track Deal and Payments

Both state and federal officials are investigating more than $500,000 in payments made

by the Flagler Dog Track, now known as Magic City Casino, to Millennium Marketing.6 In

1 Michael Putney, Murky Finances Limit Rivera’s Effectiveness, Miami Herald, May 3, 2011; Scott Hiaasen and

Marc Caputo, Feds Investigate Congressman David Rivera on Casino Contract, Miami Herald, July 21, 2011.

2 Id.

3 Millennium Marketing Strategies, Inc., Articles of Incorporation, Secretary of State: Tallahassee, Florida, filed

October 31, 2000, available at http://www.sunbiz.org; Scott Hiaasen and Patricia Mazzei, A $500,000 Question Over

Track’s Payments, Miami Herald, December 16, 2010; Millennium Marketing Strategies, Inc., Detail By Entity

Name, Secretary of State: Tallahassee, Florida, filed September 21, 2001, available at http://www.sunbiz.org.

4 State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2002, filed September

4, 2002; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2003, filed

July 12, 2004; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2004,

filed July 1, 2005; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year

2005, filed July 17, 2006.

5 Millennium Marketing Inc., Articles of Incorporation, Secretary of State: Tallahassee, Florida, filed September 25,

2006, available at http://www.sunbiz.org; Millennium Marketing Inc., Annual Report for Calendar Year 2008, Secretary

of State: Tallahassee, Florida, filed April 4, 2008, available at http://www.sunbiz.org; Hiaasen and Mazzei, Miami Herald,

Dec. 16, 2010.

6 Hiaasen and Caputo, Miami Herald, July 21, 2011.

addition, the FBI and the IRS are looking into a previously undisclosed $1 million consulting

deal between the track and Millennium Marketing.7 It appears the IRS is considering whether

Rep. Rivera has engaged in income tax evasion.8

In October 2006, one month after Millennium Marketing was reincorporated, the firm

was hired by Flagler Dog Track to run a campaign aimed at winning approval for Las Vegas

style slot machines via a voter referendum.9 At the time, slot machines were a delicate political

issue.10 Outgoing Gov. Jeb Bush (R) and then-state House Speaker Marco Rubio (R), who went

on to win a U.S. Senate seat in 2010, both opposed allowing slot machines.11 Nevertheless,

voters approved the measure in January 2008.12

Rep. Rivera initially denied working for the dog track, but later released a statement

acknowledging his role.13 A lawyer for the dog track said it was Rep. Rivera who had first

approached the track and asked to manage the campaign.14 Rep. Rivera also requested any

payments be made through Millennium Marketing instead of directly to him.15

According to a contract signed by both Ms. Medina and Rep. Rivera, Rep. Rivera was the

“strategic director” of the pro-slots campaign and its “Top Leader of Chain of Command of All

Campaign Consultants and Campaign Activities,” despite not being listed as an officer with

Millennium Marketing.16 He promised to spend 75% of his time managing the campaign.17 Rep.

Rivera’s duties included not only garnering support for the bill with unions and city leaders, but

also “identification and neutralization of opposition,” including animal rights groups, competing

gambling operations, and the Latino community.18

Flagler Dog Track initially paid Millennium Marketing $50,000 in 2006, and then

another $460,000 after the initiative passed in January 2008.19 Millennium Marketing’s contract

also called for a $500,000 “success fee,” which the firm reportedly has requested.20 Rep. Rivera

did not report any income from the campaign on his state financial disclosure forms.21

7 Id.

8 Id.

9 Hiaasen and Mazzei, Miami Herald, Dec. 16, 2010; Millennium Marketing Inc., Articles of Incorporation,

Secretary of State: Tallahassee, Florida, filed September 25, 2006, available at http://www.sunbiz.org.

10 Id.

11 Id.

12 Hiaasen and Caputo, Miami Herald, July 21, 2011.

13 Id.

14 Id.

15 Hiaasen and Mazzei, Miami Herald, Dec. 16, 2010.

16 Id.; Millennium Marketing Inc., Articles of Incorporation, Secretary of State: Tallahassee, Florida, filed

September 25, 2006, available at http://www.sunbiz.org.

17 Id.

18 Id.

19 Hiaasen and Mazzei, Miami Herald, Dec. 16, 2010; Amy Driscoll, New Miami-Dade Slots Still Months Away,

Miami Herald, February 10, 2008.

20 Hiaasen and Caputo, Miami Herald, July 21, 2011.

21 State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2006, filed August

20, 2007; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2007, filed

June 17, 2008; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2008,

filed July 8, 2009.

Millennium Marketing Loans

Rep. Rivera failed to disclose $132,000 in loans from Millennium Marketing on state and

federal financial disclosure forms covering the period from 2007 to 2010,22 although he admitted

to the Associated Press he had received four loan payments totaling that amount.23 Following

press reports, Rep. Rivera amended his federal and state financial disclosure forms to reflect the

loans.24 The amended forms indicate the loans were made during the period Rep. Rivera worked

on the pro-slots campaign.25

U.S. Agency for International Development Consulting and Income

During his tenure as a state representative, Rep. Rivera repeatedly claimed his main

source of income outside his work for the legislature came from consulting for the U.S. Agency

for International Development (USAID).26 Although required by state law to include payments

he received from outside employers on his personal financial disclosure forms, Rep. Rivera

routinely listed the agency as a source of income without revealing how much money he had

been paid.27 Checking with USAID, the Miami Herald discovered the agency had no record of

Rep. Rivera or his consulting company, InterAmerican Government Relations, ever working for

22 State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2007, filed June 17,

2008; State Rep. David Rivera, Amendment to Full and Public Disclosure of Financial Interests for Calendar Year

2007, filed January 4, 2011; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar

Year 2008, filed July 8, 2009; State Rep. David Rivera, Amendment to Full and Public Disclosure of Financial

Interests for Calendar Year 2008, filed January 4, 2011; State Rep. David Rivera, Full and Public Disclosure of

Financial Interests for Calendar Year 2009, filed June 18, 2010; State Rep. David Rivera, Amendment to Full and

Public Disclosure of Financial Interests for Calendar Year 2009, filed January 4, 2011; State Rep. David Rivera, Full

and Public Disclosure of Financial Interests for Calendar Year 2010, filed March 25, 2011.

23 Scott Hiaasen, U.S. Rep.-elect David Rivera Discloses $137,000 Loan He Received From Mother’s Company,

Miami Herald, January 3, 2011. While it was originally reported that Rep. Rivera had failed to disclose $137,000 in

loans, Rep. Rivera later corrected the figure, without explanation, to $132,000. See Curt Anderson, New Fla.

Congressman Quietly Reported Loans in Dec., Associated Press, January 4, 2011.

24 Anderson, Associated Press, Jan. 4, 2011; Rep. David Rivera, Amendment to Candidate Personal Financial

Disclosure Statement for 2009-2010, filed December 16, 2010; State Rep. David Rivera, Amendment to Personal

Financial Disclosure Statement for Calendar Year 2009, filed January 4, 2011; State Rep. David Rivera,

Amendment to Full and Public Disclosure of Financial Interests for Calendar Year 2008, filed January 4, 2011; State

Rep. David Rivera, Amendment to Full and Public Disclosure of Financial Interests for Calendar Year 2007, filed

January 4, 2011.

25 Hiaasen, Miami Herald, Jan. 3, 2011.

26 Scott Hiaasen and Patricia Mazzei, Source of Rivera’s Income Unclear, Miami Herald, October 13, 2010.

27 Scott Hiaasen and Patricia Mazzei, Agency Disappears from David Rivera’s Forms, Miami Herald, October 19,

2010; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2007, filed June

17, 2008; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2008, filed

July 8, 2009; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year 2009,

filed June 18, 2010; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar Year

2006, filed August 20, 2007; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for Calendar

Year 2005, filed July 17, 2006; State Rep. David Rivera, Full and Public Disclosure of Financial Interests for

Calendar Year 2004, filed July 1, 2005; State Rep. David Rivera, Full and Public Disclosure of Financial Interests

for Calendar Year 2003, filed July 12, 2004.

the agency.28 Rep. Rivera then claimed he worked as a subcontractor, something not generally

tracked by USAID,29 but declined to provide details about his work for the agency.30

Nevertheless, Rep. Rivera provided the Herald with records of three trips during which

he claimed he did development work in Mexico and Chile in 2005 and 2008.31 The Herald

found that in fact, Rep. Rivera had traveled to Mexico and Chile as a guest of the U.S. State

Department under its International Information Program, which sends American politicians and

academics overseas to give speeches and attend conferences.32 A State Department

spokesperson said Rep. Rivera had traveled as a private citizen, not as a contractor or consultant

to the U.S. government.33 Confronted with this evidence, Rep. Rivera’s spokesperson claimed

the travel records illustrated the type of work he had performed, not proof of his work on behalf

of USAID.34 Soon thereafter, Rep. Rivera amended his state financial disclosure forms to

remove any references to income other than his state legislative salary.35

Campaign Spending and Reimbursements

Investigators are also looking into Rep. Rivera’s campaigns’ payments to Millennium

Marketing and ACH Fundraising Strategies, as well as payments the campaigns made to

reimburse the candidate.36

On September 27, 2006, two days after the company was reincorporated, Rep. Rivera’s

campaign for state representative paid Millennium Marketing $15,000 for campaign consulting.37

Once Rep. Rivera won re-election, his campaign paid Millennium Marketing an additional

$15,000 for coordinating a “thank you campaign.”38

28 Laura Wides-Munoz, Republican Candidate David Rivera Questioned Over Income, Associated Press, October

27, 2010; Hiaasen and Mazzei, Miami Herald, Oct. 13, 2010.

29 Hiaasen and Mazzei, Miami Herald, Oct. 19, 2010.

30 Wides-Munoz, Associated Press, Oct. 27, 2010.

31 Hiaasen and Mazzei, Miami Herald, Oct. 13, 2010.

32 Id.

33 Id.

34 Id.

35 Hiaasen and Mazzei, Miami Herald, Oct. 13, 2010; State Rep. David Rivera, Amendment to Full and Public

Disclosure of Financial Interests for Calendar Year 2003, filed October 15, 2010; State Rep. David Rivera,

Amendment to Full and Public Disclosure of Financial Interests for Calendar Year 2004, filed October 15, 2010;

State Rep. David Rivera, Amendment to Full and Public Disclosure of Financial Interests for Calendar Year 2005,

filed October 15, 2010; State Rep. David Rivera, Amendment to Full and Public Disclosure of Financial Interests for

Calendar Year 2006, filed October 15, 2010; State Rep. David Rivera, Amendment to Full and Public Disclosure of

Financial Interests for Calendar Year 2007, filed October 15, 2010; State Rep. David Rivera, Amendment to Full

and Public Disclosure of Financial Interests for Calendar Year 2008, filed October 15, 2010; State Rep. David

Rivera, Amendment to Full and Public Disclosure of Financial Interests for Calendar Year 2009, filed October 15,

2010.

36 Hiaasen and Mazzei, Miami Herald, Dec. 16, 2010; Scott Hiaasen and Patricia Mazzei, Investigators Look into

Rep. Rivera’s ‘Thank You’ Spending, Miami Herald, January 15, 2011; Kyle Munzenrieder, Rep. David Rivera

Paid Himself $60,000 in Unexplained Campaign Reimbursements, Miami New Times, January 28, 2011.

37 Florida Department of State Division of Elections, Candidate Search: “Rivera, David,” List of Expenditures, 2006

General Election, available at http://doe.dos.state.fl.us/campaign-finance/expend.asp; Hiaasen and Mazzei, Miami

Herald, Dec. 16, 2010.

38 Florida Department of State Division of Elections, Candidate Search: “Rivera, David,” List of Expenditures, 2006

General Election, available at http://doe.dos.state.fl.us/campaign-finance/expend.asp.

Furthermore, a few months after dropping out of a state Senate race in early 2010, but

once he had started his congressional campaign, Rep. Rivera’s state campaign paid the now

defunct ACH Fundraising Strategies $75,000 categorized as “thank you” expenses: $50,000 on

July 15, 2010, a day before the company was officially incorporated, and $25,000 on August 30,

2010.39 ACH, which dissolved a few months later, on December 23, 2010, was owned by Alyn

Cruz Higgins, the daughter of Rep. Rivera’s congressional aide and former state legislative aide,

Alina Garcia.40 Ms. Higgins’ lawyer said her company had provided consulting services to Rep.

Rivera’s campaign.41

The Associated Press reported that over the eight years Rep. Rivera was a state legislator,

acting as his own campaign treasurer, he reimbursed himself over $160,000 – more than any

other Florida representative.42 Furthermore, he failed to provide explanations, as required by

state law, for about $60,000 of those payments.43

Relationship with Esther Nuhfer and Communication Solutions

State investigators are looking into a potential kickback scheme Rep. Rivera may have

had with former Tallahassee lobbyist Esther Nuhfer,44 whom Rep. Rivera has described as a

fundraising consultant and a close friend.45 Ms. Nuhfer lobbied the state House of

Representatives while Rep. Rivera was a member, and according to newspaper reports, she

frequently worked from Rep. Rivera’s office.46 Ms. Nuhfer is no longer a registered lobbyist in

Florida and has been seen in Rep. Rivera’s Washington office.47

Political campaigns and committees tied to Rep. Rivera have paid Ms. Nuhfer’s

consulting firm, Communication Solutions, at least $817,000 since 2006.48 The total includes

$196,483 in payments from Rep. Rivera’s 2010 congressional campaign and a $150,000 bonus

for work on his abandoned state Senate campaign.49

Rep. Rivera chaired the Miami-Dade GOP from December 2008 to December 2010.50 In

October and November 2010, the Miami-Dade GOP paid Ms. Nuhfer’s firm $150,000, for radio

39 Hiaasen and Mazzei, Miami Herald, Jan. 15, 2011.

40 Id.

41 Id.

42 Munzenrieder, Miami New Times, Jan. 28, 2011.

43 Id.

44 Scott Hiaasen and Patricia Mazzei, Miami-Dade Republican Party Can’t Show What it got for $150,000 Paid to

David Rivera’s Close Ally, Miami Herald, February 5, 2011.

45 Scott Hiaasen, Patricia Mazzei and Scott Caputo, Rep. Rivera’s Fundraising Consultant Collected $817,000 in

Fees Since 2006, Miami Herald, February 19, 2011.

46 Id.

47 Id.

48 Id.

49 Hiaasen and Mazzei, Miami Herald, Feb. 19, 2011;

http://www.opensecrets.org/politicians/expendetail.php?cid=N00031887&cycle=2010&name=

Communication%20Solutions.

50 Patricia Mazzei, Dade GOP to Select New Leader, Miami Herald, December 16, 2010.

advertising and get-out-the-vote efforts.51 Though Rep. Rivera was chairman when the payments

were made, his campaign claimed he had recused himself from day-to-day business and decision

making after winning the Republican primary for his House seat in August 2010 and that the

party’s board chose Communication Solutions after his recusal.52 In reality, board minutes

reveal Rep. Rivera did not recuse himself until September 4, 2010, and that the board agreed to

select vendors before that at its August 21, 2010 meeting, without selecting a specific firm.53

Therefore, it appears Rep. Rivera was involved in the decision, but exactly how Ms. Nuhfer’s

firm was chosen remains unknown.

The Communication Solutions payments were the Miami-Dade GOP’s largest expense to

a consultant in at least six years.54 The party was unable to account for how much of the money

was spent.55 The Miami-Dade GOP did not have a written contract with Communication

Solutions, and officials said they did not receive detailed invoices or records from the firm.56

In addition, the FBI has interviewed Ms. Nuhfer as part of its probe into the Flagler Dog

Track contract.57

Potential Violations

Money Laundering and Tax Evasion

Federal law prohibits anyone from engaging in financial transactions that involve the

proceeds of unlawful activity with the intent to avoid paying taxes, to conceal or disguise the

nature, source or location of those proceeds, or to avoid a federal or state transaction reporting

requirement.58 Similarly, it is a crime to attempt to avoid or defeat paying taxes.59

If Rep. Rivera engaged in any financial transactions involving the Flagler Dog Track or

Millennium Marketing with the goal of concealing money he received illegally, or if he

concealed payments he received in an effort to avoid paying taxes, he may have engaged in

money laundering and tax evasion.

False Statements on Personal Financial Disclosure Forms

The Ethics in Government Act of 1967 requires all members of Congress to file financial

disclosure reports.60 Under the statute, the attorney general may seek a civil penalty of up to

$11,000 against any individual who knowingly and willfully falsifies or fails to file or report any

51 Hiaasen and Mazzei, Miami Herald, Feb. 5, 2011.

52 Id.

53 Id.

54 Id.

55 Hiaasen and Mazzei, Miami Herald, Feb. 5, 2011.

56 Id.

57 Hiaasen and Caputo, Miami Herald, July 21, 2011.

58 18 U.S.C. § 1956(a)(1).

59 26 U.S.C. § 7201.

60 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978).

information required by the Act.61 House Rule 26 incorporates the financial disclosure

provisions of the Ethics in Government Act.62

Federal law further prohibits members of Congress from making “any materially false,

fictitious, or fraudulent statement or representation”63 on “a document required by law, rule, or

regulation to be submitted to the Congress or any office or officer within the legislative

branch.”64

If Rep. Rivera failed to disclose or misrepresented his income or the true value of his

personal assets on his federal financial disclosure forms, he may have violated the Ethics in

Government Act and 18 U.S.C. § 1001.

Similarly, if Rep. Rivera failed to disclose or misrepresented his income on his state

financial disclosure forms while he was a member of the Florida legislature, he may be subject to

public censure, reprimand, and civil penalties.65

Misuse of Campaign Funds

State and federal authorities appear to be investigating whether Rep. Rivera converted

state and federal campaign contributions to his personal use.

Under Florida law, reimbursements to a candidate or any other individual for expenses

incurred in connection with the campaign by a check drawn upon the campaign account must be

reported.66 The full name and address of each person to whom the candidate or other individual

made payment for which reimbursement was made by check drawn upon the campaign account

must be reported, together with the purpose of such payment.67

As the treasurer of his own state campaign committee, Rep. Rivera signed his campaign

finance reports, which failed to include explanations for $60,000 in reimbursements. By

willfully certifying the correctness of reports he knew to be incorrect, false, or incomplete, Rep.

Rivera appears to have violated Florida criminal law.68

Campaign Expenditures

Under Florida law, campaign reports must list the full name and address of each person to

whom an expenditure for personal services, salary or reimbursed authorized expenses was made

along with the amount, date, and clear purpose of the expenditure.69

61 5 U.S.C. app. 4, § 104.

62 House Comm. on Standards of Official Conduct, House Ethics Manual, p. 248 (110th Cong., 2d Sess., 2008 ed.).

63 18 U.S.C. § 1001(a)(2).

64 18 U.S.C. § 1001(c)(2).

65 Fla. Stat. § 112.317 (2011).

66 Fla. Stat. § 106.07(4) (2011).

67 Id.

68 Fla. Stat. §§ 106.07(5), 106.19 (2011).

69 Fla. Stat. § 106.07 (2011).

Rep. Rivera’s campaign’s check to Millennium Marketing for $15,000 and two checks to

ACH Fundraising totaling $75,000, categorized as “thank you” expenses do not appear to clearly

state the purposes of those expenditures. By willfully certifying the correctness of reports he

knew to be incomplete, Rep. Rivera appears to have violated Florida criminal law.70

Conversion, False Statements on Financial Disclosure Forms, and Tax Evasion

Federal law prohibits federal candidates from using campaign funds for personal use.71 If

Rep. Rivera received any of the $196,483 his campaign committee paid to Ms. Nuhfer’s

consulting firm, Communication Solutions, he may have illegally converted his campaign funds

to his personal use.

If Rep. Rivera received any of the $196,483 his federal campaign committee paid to

Communication Solutions, because he failed to include that income on his personal financial

disclosure forms, he may have violated 18 U.S.C. § 1001.

Finally, if Rep. Rivera received any of the $196,483 his federal campaign committee

paid to Communication Solutions, or if he received any of the money his state campaign

committees paid the firm, but failed to include those payments on his U.S. Individual Tax

Return, Form 1040s, he may have violated 26 U.S.C. § 7201.

Conduct Not Reflecting Creditably on the House

House Rule 23 requires all members of the House to conduct themselves “at all times in a

manner that reflects creditably on the House.”72 This ethics standard is considered to be “the

most comprehensive provision” of the code.73 When this section was first adopted, the Select

Committee on Standards of Official Conduct of the 90th Congress noted it was included within

the Code to deal with “flagrant” violations of the law that reflect on “Congress as a whole,” and

that might otherwise go unpunished.74 This rule has been relied on by the committee in

numerous prior cases in which the committee found unethical conduct including: the failure to

report campaign contributions,75 making false statements to the committee,76 criminal

convictions for bribery,77 or accepting illegal gratuities,78 and accepting gifts from persons with

interest in legislation in violation of the gift rule.79

70 Fla. Stat. §§ 106.07(5), 106.19 (2011).

71 2 U.S.C. §§ 439a(b), 437g(d)(1)(A)(i).

72 Rule 23, cl. 1.

73 House Ethics Manual, p. 12.

74 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176,

90th Cong., 2d Sess. 17 (1968).

75 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 95-

1742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No.

95-1743, 95th Cong., 2d Sess. 2-3 (1978).

76 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).

77 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No.

96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of

expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4

(1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong.,

If Rep. Rivera converted campaign funds to his personal use, committed tax evasion, or

lied on his personal financial disclosure forms, he acted in a manner that brings discredit to the

House.

1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the

Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when

the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 4-

16, 125-126 (1980)).

78 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100-

506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending).

79 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of

California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980)

(debate and vote of censure).

REPRESENTATIVE HAROLD ROGERS

Representative Harold “Hal” Rogers (R-KY) is a sixteen-term member of Congress,

representing Kentucky’s 5th congressional district. Rep. Rogers chairs the House

Appropriations Committee. His ethics issues stem from misusing his position to steer hundreds

of millions of taxpayer dollars to a network of pet recipients, including former staffers, campaign

contributors, business associates, and a company that employed his son. Rep. Rogers was

included in CREW’s 2007 and 2008 reports on congressional corruption for directing millions of

federal dollars to campaign contributors.

Rep. Rogers’ Empire

Rep. Rogers sits at the center of an interconnected web that includes several Kentucky

nonprofit groups, a bank he partially owns, and several companies he has supported with federal

money.1 These entities have strong ties to Rep. Rogers and to each other, and work together to

extend his influence.

Private companies in this network received $227 million in federal loans, grants,

earmarks, and contracts since 2000.2 During the same period, Rep. Rogers helped steer more

than $236 million in taxpayer funds to seven nonprofits he helped create, including $174 million

in earmarks.3 The remaining $63 million resulted from federal grants, at least some of which

Rep. Rogers personally sought from federal agencies.4

The money has flowed through the network of entities in opaque ways, making it hard to

trace, but it has frequently landed in the hands of Rep. Rogers’ family members, business

associates, and campaign contributors.

1 Rep. Hal Rogers, Personal Financial Disclosure for Calendar Year 2009, filed May 14, 2010; Deborah Yetter,

Rogers’ Role in Tourism Contract Draws Scrutiny, The Courier-Journal, October 20, 2006; Scott Higham and

Robert O’Harrow Jr., The Quest for Hometown Security, Washington Post, December 25, 2005; R.G. Dunlop,

Bringing Home Dollars Wins Praise, Jeers, The Courier-Journal, December 15, 2007;

http://www.opensecrets.org/politicians/earmarks.php?cid=N00003473&cycle=2010.

2 http://www.opensecrets.org/politicians/earmarks.php?cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY09&cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY08&cid=N00003473&cycle=2008; USA Spending,

Recipient Lookup, Outdoor Venture Corp., 2000-2010; USA Spending, Recipient Lookup, Phoenix Products, 2000-

2010; USA Spending, Recipient Lookup, Senture, LLC, 2000-2010; USA Spending, Recipient Lookup, Boneal,

Inc., 2000-2010; USA Spending, Recipient Lookup, Lee’s Ford Dock, Inc., 2000-2010.

3 http://halrogers.house.gov/Initiatives/; https://app.sos.ky.gov/ftshow/(S(m3ee3x20fjtad2addz0iy145))/default.aspx?

path=ftsearch&id=0213127&ct=09&cs=99998; USA Spending, Recipient Lookup, Center for Rural Development,

2000-2010; USA Spending, Recipient Lookup, Eastern Kentucky PRIDE, 2000-2010; USA Spending, Recipient

Lookup, Forward in the Fifth, 2000-2010; USA Spending, Recipient Lookup, Operation UNITE, 2000-2010; USA

Spending, Recipient Lookup, National Institute for Hometown Security, 2000-2010; USA Spending, Recipient

Lookup, Southern and Eastern Kentucky Tourism, 2000-2010; USA Spending, Recipient Lookup, Southeast

Kentucky Economic Development Corp., 2000-2010;

http://www.opensecrets.org/politicians/earmarks.php?cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY09&cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY08&cid=N00003473&cycle=2008.

4 Id.; Higham and O’Harrow Jr., Washington Post, Dec. 25, 2005; Yetter, The Courier-Journal, Oct. 20, 2006;

Dunlop, The Courier-Journal, Dec. 15, 2007.

Outdoor Venture Corporation (OVC)

OVC is a Stearns, Kentucky-based tent manufacturer.5 Since 1991, OVC’s president,

J.C. Egnew, and his wife, Azalie, have contributed nearly $25,000 to Rep. Rogers’ campaigns.6

Rep. Rogers earmarked $21.4 million to OVC from 2008 to 2010, a period when Mr. Egnew

served as board chair of one of the nonprofits, the National Institute for Hometown Security, Inc.

(NIHS), and as a county representative for another, the Center for Rural Development, Inc.

(CRD).7 OVC also has received $149 million worth of federal contracts since 2000.8

Mid-South Electronics

Rep. Rogers helped Mid-South Electronics obtain a federal contract shortly after the

company began heavily donating to his congressional campaigns. Before 2004, none of Mid-

South’s employees had donated to Rep. Rogers.9 Between September 30, 2004, and March 18,

2005, however, Mid-South employees donated $11,000 to Rep. Rogers’ campaign and PAC.10

In April 2005, Rep. Rogers helped the company land a $15 million federal contract to assemble

baggage screening systems for airports.11

Lee’s Ford Dock, Inc.

Lee’s Ford Dock is a Nancy, Kentucky marina and resort that Rep. Rogers repeatedly has

helped to obtain federal funds.12 Between 2004 and 2005, the marina’s owner and president, J.D.

Hamilton, donated $5,200 to Rep. Rogers’ campaign.13

5 http://www.outdoorventure.com/.

6 CQ MoneyLine, Donor Lookup, J.C. Egnew, 1991-2010; CQ MoneyLine, Donor Lookup, Azalie Egnew, 1991-

2010; John Cheves, Kentucky Congressman Hal Rogers Delivers for his District, Lexington Herald Leader,

February 6, 2005.

7 http://www.opensecrets.org/politicians/earmarks.php?cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY09&cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY08&cid=N00003473&cycle=2008;

http://www.outdoorventure.com/about_leadership_team.php;

https://app.sos.ky.gov/ftshow/(S(sflmy355sdffoz55kypdy445))/default.aspx?path=ftsearch&id=0585139&ct=09&cs

=99999; http://www.thenihs.org/about/board; http://centertech.com/about/board-of-directors/.

8 USA Spending, Recipient Lookup, Outdoor Venture Corp., 2000-2010;

http://www.opensecrets.org/politicians/earmarks.php?cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY09&cid=N00003473&cycle=2010;

http://www.opensecrets.org/politicians/earmarks.php?fy=FY08&cid=N00003473&cycle=2008.

9 CQ MoneyLine, Employer Search, Mid-South Electronics, 1979-2010; CQ MoneyLine, Employer Search, Mid-

South Industries, 1979-2010.

10 Id.

11 John Stamper and Bill Estep, First Fire, Now Global Pressure; Annville’s Mid-South Electronics to Send Most of

540 Jobs to Mexico, Lexington Herald Leader, February 18, 2006.

12 http://www.leesfordmarina.com/; https://app.sos.ky.gov/ftshow/(S(fjqszces4yu3zc55o3moax55))/default.aspx?

path=ftsearch&id=0030515&ct=09&cs=99998.

13 https://app.sos.ky.gov/ftshow/(S(fjqszces4yu3zc55o3moax55))/default.aspx?path=ftsearch&id=0030515&ct=

09&cs=99998; https://app.sos.ky.gov/ftshow/(S(mox0df45qenz5t55av342f55))/default.aspx?path=ftsearch&id=

0542958&ct=06&cs=99999; John Cheves, Hal Rogers Helps Backer to Pay For a Parking Lot, Lexington Herald

Leader, January 19, 2005;

On July 13, 2010, Rep. Rogers wrote to the Small Business Administration (SBA) in an

effort to help Lee’s Ford Dock win an increase in its SBA disaster loan after the agency had

twice denied the increase.14 The SBA reversed course and granted the increase after an agency

official attended a meeting with Mr. Hamilton in the congressman’s office.15 The congressman

also earmarked $500,000 in the fiscal year 2005 budget for an expansion of Lee’s Ford Dock’s

parking lot.16

Unlawful Narcotics Investigations, Treatment and Education, Inc. (UNITE)

UNITE is an anti-drug nonprofit Rep. Rogers helped create in 2003.17 Bob Mitchell,

Rep. Rogers’ district administrator, was UNITE’s incorporator and still sits on the board.18

Karen Kelly, a former staffer for Rep. Rogers, is now UNITE’s president and chief executive

officer, and makes $110,250 a year running the organization.19 Rep. Rogers has earmarked

nearly $34 million for UNITE since 2000, and the federal government has given UNITE nearly

$15 million in grants. 20

Kentucky Highlands Investment Corp. (KHIC)

KHIC is a nonprofit venture capital firm based in London, Kentucky.21 Between 1998

and 2000, KHIC received $2.5 million in earmarks, almost certainly thanks to support from Rep.

Rogers.22 Since 2000, KHIC has received $16.9 million in contracts and $500,000 in earmarks

from the federal government with the support of Rep. Rogers.23 L. Ray Moncrief, KHIC’s vice

president, donated $8,000 to Rep. Rogers’ congressional campaigns during the 2008 and 2010

election cycles.24

KHIC has connections to almost every other entity in Rep. Rogers’ web,25 including

private companies that have received earmarks and contracts through Rep. Rogers and the

http://www.opensecrets.org/indivs/search.php?name=hamilton&state=KY&zip=&employ=&cand=Rogers%2C+Hal

&c2012=Y&all=Y&sort=N&capcode=8y5yh&submit=Submit.

14 http://www.scribd.com/doc/51750174/CREW-SBA-Regarding-Rogers-Related-Non-Profits-3-15-11-SBA-Hal-

Rogers-Disbursement.

15 Id.

16 Cheves, Lexington Herald Leader, Jan. 19, 2005.

17 http://operationunite.org/about/overview/.

18 Id.; http://www.legistorm.com/person/Robert_Luster_Mitchell/16711.html;

https://app.sos.ky.gov/ftshow/(S(crhef055einue055knjmxoae))/default.aspx?id=0559186&ct=09&cs=99999.

19 Ms. Kelly was previously known as Karen Engle; http://www.scribd.com/doc/62094550/CREW-Most-Corrupt-

Sources-Karen-Engle-Bio-PRIDE; http://operationunite.org/contact/; Unlawful Narcotics Investigations, Treatment

and Education, Inc., 2009 IRS Form 990, Response to Part VII, Section A, February 15, 2011; Eastern Kentucky

PRIDE, Inc., 2008 IRS Form 990, Response to Part VII, Section A, May 3, 2010.

20 USA Spending, Recipient Lookup, Operation UNITE, 2000-2010.

21 http://www.khic.org/; http://www.khic.org/biographies.html?catID=1.

22 Citizens Against Government Waste, Congressional Pig Book, 1998; Citizens Against Government Waste,

Congressional Pig Book, 2000.

23 USA Spending, Recipient Lookup, Kentucky Highlands Investment, 2000-2010; Press Release, Representative

Hal Rogers, Kentucky Highlands Awarded $1 million to Continue Investment in Appalachia, October 5, 2009.

24 CQ MoneyLine, Donor Lookup, Ray Moncrief, 2007-2010.

25 http://www.khic.org/; http://www.khic.org/biographies.html?catID=1.

nonprofits he helped establish. For example, KHIC provided the startup money for OVC in

1972,26 and has continued to provide the company support, including a $3.15 million line of

credit in 1993 and several other loans.27 Mr. Moncrief is a member of OVC’s board, and was the

company’s chief financial officer from 1978 to 1983.28 KHIC also invested in the

telecommunications company Senture, which employed Rep. Rogers’ son and has received

federal contracts.29 KHIC’s president, Jerry Rickett, has sat on the boards of at least three of the

nonprofits, and three of KHIC’s other employees have sat on the boards of other Rep. Rogers

nonprofits.30 In 2008, Mr. Rickett set up a for-profit real estate holding company for CRD worth

more than $400,000, and in 2003 KHIC lent $250,000 to another of the nonprofits, Southern &

Eastern Kentucky Tourism Development Association, Inc. (TOUR SEKY).31

Senture, LLC

Senture is a telecommunications company that employed Rep. Rogers’ son, John, from

2004 until at least 2006.32 Senture’s main lobbyist is Jeffrey Speaks, a former aide to Rep.

Rogers who later worked as the executive director of Eastern Kentucky Personal Responsibility

in a Desirable Environment, Inc. (PRIDE), Rep. Rogers’ environmental nonprofit.33 Mr. Speaks

now earns tens of thousands of dollars a year lobbying for Senture as the president of lobbying

firm JBS Communications, LLC.34 Senture officials have donated $4,200 to Rep. Rogers’

campaigns since 2000.35

26 Thomas P. Murphy, The Right Way To Do It?, Forbes, March 20, 1978;

https://app.sos.ky.gov/ftshow/(S(wjqiv155vortkgucddsm1z45))/default.aspx?path=ftsearch&id=0039094&ct=09&cs

=99999.

27 Kentucky Highlands Investment Corp., 2007 IRS Form 990, Statement C, pp. 31, 41, 47, February 13, 2009.

28 http://www.outdoorventure.com/about_leadership_team.php; Mariam Williams, Others’ Success Is the Payoff,

The Lane Report, February 2011.

29 Nita Johnson, Kentucky Highlands Funds Will Help Appalachian Businesses, Sentinel Echo, October 7, 2010.

30 http://www.khic.org/biographies/5;

https://app.sos.ky.gov/ftshow/(S(k34t3cauvt00rierubkeobqg))/default.aspx?path=ftsearch&id=0585139&ct=09&cs=

99999; https://app.sos.ky.gov/corpscans/89/0346689-09-99998-20070226-ARP-2344876-PU.pdf;

https://app.sos.ky.gov/corpscans/43/0235243-09-99999-19950701-ARP-3659880-PU.pdf;

http://www.khic.org/biographies.html?catID=1; http://www.khic.org/biographies.html?catID=2;

https://app.sos.ky.gov/corpscans/43/0235243-09-99998-20100624-ARP-4435571-PU.pdf;

https://app.sos.ky.gov/ftshow/(S(yxfk5r45gd00j2qjthazf445))/default.aspx?path=ftsearch&id=0213127&ct=09&cs=

99998.

31 Kentucky Highlands Investment Corp., 2004 IRS Form 990, Statement C, p. 37, February 8, 2006; The Center for

Rural Development, 2007 IRS Form 990, Statement 7, Part IX, June 10, 2010;

https://app.sos.ky.gov/ftshow/(S(xw31op55x5iwbxfa2ko2ri45))/default.aspx?path=ftsearch&id=0668422&ct=06&c

s=99999; The Center for Rural Development, 2007 IRS Form 990, Statement 7, Response to Part IX, June 22, 2010.

32 Eric Lipton, In Kentucky Hills, a Homeland Security Bonanza, New York Times, May 14, 2006.

33 JBS Communications, LLC, Fourth Quarter 2010 Lobbying Disclosure Report on behalf of Senture LLC,

Secretary of the Senate, Office of Public Records; Jack O’Dwyer, Jack O’Dwyer’s Newsletter, November 26, 1997;

Kimberly Hefling, Kentucky Seeks to Clean Up Image – and Trash – With Tough Campaign, Chicago Tribune,

April 30, 2000.

34 JBS Communications, LLC, Fourth Quarter 2010 Lobbying Disclosure Report on behalf of Senture LLC,

Secretary of the Senate, Office of Public Records; JBS Communications, LLC, Third Quarter 2010 Lobbying

Disclosure Report on behalf of Senture LLC, Secretary of the Senate, Office of Public Records; JBS

Communications, LLC, Second Quarter 2010 Lobbying Disclosure Report on behalf of Senture LLC, Secretary of

the Senate, Office of Public Records; JBS Communications, LLC, First Quarter 2010 Lobbying Disclosure Report

on behalf of Senture LLC, Secretary of the Senate, Office of Public Records.

35 CQ MoneyLine, Employer Search, Senture, 2001-2010.

Rep. Rogers repeatedly has helped Senture obtain federal contracts.36 In 2007 and 2008,

for example, Senture announced receiving contracts supporting the implementation and testing of

the Transportation Worker Identification Credential program.37 In 2010, Senture announced

upcoming federal contracts with the Veterans Administration, the Department of Education and

the Transportation Administration.38 In addition, TOUR SEKY was Senture’s first client,39 and

reported paying Senture to operate its tourism information hotline for at least seven years,

including a payment of more than $1 million in 2008.40

Citizens National Bank

The nonprofits started by Rep. Rogers have collectively kept millions of dollars at

Citizens National Bank, a Kentucky bank partially owned by Rep. Rogers.41 In addition, three of

the bank’s board members either helped incorporate or served as board members at the

nonprofits: Clay Parker Davis currently chairs the board of CRD, Robert Harris previously was

on the CRD board, and Cy Waddle helped incorporate SKED.42

Potential Violations

Illegal Gratuity

The illegal gratuity statute prohibits a public official from directly or indirectly

demanding, seeking, receiving, accepting, or agreeing to accept anything of value personally for

or because of any official act performed or to be performed by such official.43 In considering

36 Lipton, New York Times, May 14, 2005; Yetter, The Courier-Journal, Oct. 20, 2006.

37 Press Release, Senture, LLC, Senture Awarded Subcontract to Support TWIC Implementation, Business Wire,

November 26, 2007; Press Release, Senture, LLC, Senture Awarded Subcontract to Support Transportation Worker

Identification Credential (TWIC) Card Reader Field Test, Business Wire, April 29, 2008.

38 Melodie Phelps, Senture Announces 222 Jobs, The Wayne County Outlook (Monticello, Ky.), September 14, 2010.

39 http://www.senture.com/pub/senturepressrelease.pdf.

40 Southern and Eastern Kentucky Tourism Development Association, Inc., 2008 IRS Form 990, Response to Part

VII, Section B, October 30, 2009; Southern and Eastern Kentucky Tourism Development Association, Inc., 2007

IRS Form 990, Response to Part VII, Section B, October 8, 2008; Southern and Eastern Kentucky Tourism

Development Association, Inc., 2006 IRS Form 990, Response to Part VII, Section B, July 6, 2007; Southern and

Eastern Kentucky Tourism Development Association, Inc., 2005 IRS Form 990, Response to Part VII, Section B,

August 18, 2006; Southern and Eastern Kentucky Tourism Development Association, Inc., 2004 IRS Form 990,

Response to Part VII, Section B, November 23, 2005; Southern and Eastern Kentucky Tourism Development

Association, Inc., 2003 IRS Form 990, Response to Part VII, Section B, August 23, 2004; Southern and Eastern

Kentucky Tourism Development Association, Inc., 2002 IRS Form 990, Response to Part VII, Section B, November

26, 2003.

41 Rep. Hal Rogers, Personal Financial Disclosure for Calendar Year 2009, filed May 14, 2010; Higham and

O’Harrow Jr., Washington Post, Dec. 25, 2005.

42 http://centertech.com/about/board-of-directors/; http://www.cnbsomerset.com/board-of-directors/; Higham and

O’Harrow Jr., Washington Post, Dec. 25, 2005; The Center for Rural Development, Inc., 2008 IRS Form 990,

Response to Part VII, February 22, 2010;

https://app.sos.ky.gov/ftshow/(S(noxwmcrqloowuh45yue5mpqy))/default.aspx?path=ftsearch&id=0213127&ct=09

&cs=99998.

43 18 U.S.C. § 201(c)(1)(B).

this statute, the Supreme Court has held that a link must be established between the gratuity and

a specific action taken by or to be taken by the government official.44

If a link is established between Rep. Rogers’ earmarking funds or obtaining federal

contracts or loans for OVC, KHIC, Mid-South Electronics, Lee’s Ford Dock, or Senture and the

campaign donations he received from executives and employees of these companies, he may be

in violation of the illegal gratuity statute.

In addition, the House Ethics Committee has used the acceptance of gratuities under this

statute as a basis for disciplinary proceedings and punishment of members, including

expulsion.45

5 U.S.C. § 7353 and House Rules

A provision of the Ethics Reform Act of 1989, 5 U.S.C. § 7353, prohibits members of the

House, officers, and employees from asking for anything of value from a broad range of people,

including “anyone who seeks official action from the House, does business with the House, or

has interests which may be substantially affected by the performance of official duties.”46 House

Rule 23, clause 3, similarly provides:

A Member, Delegate, Resident Commissioner, or employee of the

House may not receive compensation and may not permit

compensation to accrue to his beneficial interest from any source,

the receipt of which would occur by virtue of influence improperly

exerted from his position in the Congress.

If Rep. Rogers accepted campaign contributions in return for legislative assistance by

way of earmarking federal funds or obtaining federal contracts or loans, he may have violated 5

U.S.C. § 7353 and House Rule 23.

5 C.F.R. § 2635.702(a)

Members of the House are prohibited from “taking any official actions for the prospect of

personal gain for themselves or anyone else.”47 House members are directed to adhere to 5

C.F.R. § 2635.702(a), issued by the U.S. Office of Government Ethics for the Executive Branch,

which provides:

44 United States v. Sun-Diamond Growers of Cal., 526 U.S. 398 (1999).

45 In the Matter of Representative Mario Biaggi, H.R. Rep. No. 100-506, 100th Cong., 2d Sess. (1988)

(recommending expulsion of the member from the House); In the Matter of Representative Daniel J. Flood, H.R.

Rep. No. 96-856, 96th Cong., 2d Sess. (1980).

46 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Rules Governing (1) Solicitation by Members, Officers and Employees in General, and (2) Political Fundraising

Activity in House Offices, April 25, 1997.

47 House Comm. on Standards of Official Conduct, “Memorandum For All Members, Officers and Employees,”

Prohibition Against Linking Official Actions to Partisan or Political Considerations, or Personal Gain, May 11,

1999.

An employee shall not use or permit use of his Government

position or title or any authority associated with his public office in

a manner that is intended to coerce or induce another person . . . to

provide any benefit, financial or otherwise, to himself or to friends,

relatives, or persons with whom the employee is affiliated in a

nongovernmental capacity.

The Code of Ethics for Government Service also provides that government officials should

“[n]ever discriminate unfairly by the dispensing of special favors or privileges to anyone whether

for remuneration or not.”48

If Rep. Rogers accepted campaign contributions in return for funneling earmarks and

federal contracts to OVC, KHIC, Mid-South Electronics, Lee’s Ford Dock, or Senture, he may

have dispensed special favors in violation of 5 C.F.R. § 2635.702(a) and the Code of Ethics. In

addition, Rep. Rogers may have violated these provisions by earmarking funds or obtaining

federal contracts for Senture, which employed his son and former congressional aide, or UNITE,

at which his former aide is president and on whose board his former district director serves. Rep.

Rogers also may have benefitted himself improperly by steering earmarks and federal contracts

to nonprofits that kept millions of dollars at Citizens National Bank, the bank he partially owns.