Identity of Edwards Home's Buyers Veiled

Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry.
Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry. (By James A. Parcell -- The Washington Post)
By John Solomon and Lois Romano
Washington Post Staff Writers
Friday, January 19, 2007

When former North Carolina senator and Democratic presidential candidate John Edwards finally succeeded last month in selling his imposing Georgetown mansion for $5.2 million after it had languished on the market, the names of the buyers were not publicly disclosed.

At the time, Edwards's spokeswoman told reporters that the house had been sold to an unidentified corporation. In reality, the buyers were Paul and Terry Klaassen, according to several sources and confirmed by Edwards's spokeswoman yesterday.

The wealthy founders of the nation's largest assisted-living housing chain for seniors, the Klaassens are currently cooperating with a government inquiry in connection with accounting practices and stock options exercised by them and other company insiders. They are also the focus of legal complaints by some of the same labor unions whose support Edwards has been assiduously courting for his presidential bid.

The grand 18th-century house had lingered on Washington's slowing real estate market for more than 18 months. The Edwardses paid $3.8 million in 2002 for the six-bedroom Federal-style house once owned by socialite Polly Fritchey, and they did substantial renovations. The final sale price was half a million dollars below the asking price but still $1.4 million more than the Edwardses paid four years earlier.

Edwards closed the deal in late December -- the night before he announced his presidential candidacy. Edwards aide Jennifer Palmieri said he left the details to real estate agent W. Ted Gossett. Gossett declined to reveal the Klaassens' identity but said the buyer decided to purchase the mansion as a "surprise Christmas gift" for his wife.

Edwards was told the Klaassens' name "in passing" around the time the offer came in on Dec. 18, Palmieri said last night, but he did not investigate further and had no knowledge of their business until a reporter's inquiry Wednesday. Palmieri said Edwards had not delved into the Klaassens' background: "They left it to be done at arm's length, real estate agent to real estate agent."

Asked about the allegations lodged against the Klaassens by their union stockholders, she added, "He believes all CEOs should follow the law, should protect their shareholders and should protect their workers, and he expects that will happen in this case as well."

The Klaassens declined to comment on the sale.

The paperwork for the sale was handled in such a way that it kept the Klaassens' names off the public deed documents, which show that the buyer was P Street LLC. That limited-liability corporation was created Dec. 22, public records show. Palmieri said the Klaassens used it to purchase the house. Such corporations are frequently created by large real estate buyers to protect themselves from lawsuits by shielding buyers' other personal assets.

Ellen S. Miller, head of the nonpartisan Sunlight Foundation, which studies public officials' real estate deals, said presidential candidates should go the extra mile by determining who they are doing business with, especially when "a substantial amount of cash is changing hands on the eve of his campaign."

The house sale comes at a time when the Securities and Exchange Commission has opened an inquiry into allegations that the Klaassens, founders of Sunrise Senior Living, and other company insiders cashed $32 million in stock options before Sunrise announced in May an accounting problem that caused its stock to dip.

SEC insider-trading notifications show that the Klaassens withdrew $20 million from their company in the year before they bought the house. Some of that money was taken out the week before the company announced an accounting review in May.

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