‘Nothing new here’
For James Moran, the markets have played a background role throughout his political career. Moran worked as a stockbroker while cutting his political teeth on the Alexandria City Council in the early 1980s. He continued working as a broker after he became mayor in 1985, until he was elected to represent Virginia’s 8th Congressional District in 1990.
By the late 1990s, Moran had secured a coveted seat on the House Appropriations Committee. But he had suffered losses from his trading that compounded debts he accumulated after his daughter’s successful battle against cancer in 1994.
In 1995 and 1996, Moran lost about $120,000 in investments on risky stock options and futures contracts, according to subsequent news accounts. In dozens of instances, the profits essentially depended on whether the S&P 500 and 100 stock indices rose or fell.
Some experts consider such investments akin to betting, because the outcome is linked to the future price of a commodity, stock or group of stocks.
When Moran’s second marriage faltered, both sides in the divorce proceedings accused the other of misspending. A lawyer for Mary Moran said in court filings in 1999 that her husband had a history of “wasting the family assets on his stock market gambling.”
In a statement at the time, James Moran’s attorney said: “The Morans, like millions of Americans, made investments. Mr. Moran used the knowledge he acquired as a stockbroker during the 1980s. Unfortunately it didn’t work out. All the information about the Morans’ investments has been fully and completely disclosed in his annual financial disclosure statement. . . . There’s nothing new here.”
In 2000, Moran acknowledged borrowing $25,000 from a pharmaceutical lobbyist. The next year, he took a $50,000 loan from an America Online executive. He continued to make options bets, documents show.
“The other issues you’ve raised regarding the congressman’s personal finances have been covered by The Post in depth in the past,” said Durrer, his chief of staff. “Nothing new there.”
By 2003, Moran’s stock trading had waned. He disclosed prior losses and few investments that year. But his fortunes changed in 2004, when he married Bennett, the owner of a real estate and sports-management company. Moran’s disclosure statements became among the most detailed in Congress.
In the first three months of 2005, Moran again became personally active as a trader when he bought or sold 30 “puts” and “calls,” in transactions potentially worth as much as $1 million. Puts and calls are risky bets that a stock or asset will either rise or fall in value at some point in the future. They usually are highly leveraged, meaning an investor places his bet by putting down a small amount of an asset’s value and can reap huge profits or losses.
That kind of investing, though, was a relatively small part of the couple’s holdings in recent years. Their portfolio, including private equity funds and other investments, was worth between $3 million and $12 million as of the start of 2009.
There’s no way to know with precision how much those holdings are worth because congressional rules allow lawmakers to report assets in broad ranges.
The holdings disclosed by Moran in 2008 included stock in General Dynamics and BAE Systems, which both received earmarks requested by Moran that year, according to financial and earmark disclosure records. The earmarks were for $1.6 million each.
Moran submitted letters to Congress certifying that neither he nor his wife had any “financial interest” at stake.
When asked about the earmark letters, Durrer said Moran did not believe that the holdings counted as a financial interest under the House conflict-of-interest rules because they were modest -- Durrer estimated them at less than $4,200 -- and they were in a diversified portfolio, and decisions about them were made by Bennett’s brokers without her input.
In a March 2007 memo, the House ethics committee offered guidance about how to comply with new rules that leave it largely up to the lawmaker to decide if there is a conflict or seek guidance.
“A financial interest would exist in an earmark when it would be reasonable to conclude that the provision would have a direct and foreseeable effect on the pecuniary interests of the Member or the Member’s spouse,” the memo states. “Such interests may relate to one’s financial assets, liabilities, or other interests of the Member and spouse, such as ownership of certain financial instruments or investments in stocks, bonds, mutual funds, or real estate.”
The memo also said: “A financial interest would not include remote, inconsequential, or speculative interests,” which it generally defined as “shares in a diversified mutual fund, employee benefit plan . . . or pension plan that, in turn, holds stock in the company.”
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