Lawmakers Cashing In on Real Estate, Financial Reports Reveal
Friday, June 15, 2007
When Alan B. Mollohan (D-W.Va.) entered the House of Representatives in 1983, he was coming off a year in which his law firm income was $17,474, and he was losing money on two rental properties.
By the end of 2006, according to financial disclosure reports released yesterday, after dabbling in real estate, Mollohan's wealth had soared to between $6 million and $24 million.
J. Dennis Hastert, a former high school teacher and wrestling coach, was first elected to Congress as a Republican from rural Illinois in 1986, showing assets worth at most $270,000. At the end of last year, after his own real estate investments, Hastert had a net worth of $4 million to $17 million.
Open-government and ethics watchdogs say that Mollohan and Hastert are part of a growing circle on Capitol Hill that is engaging in land deals as a path to wealth, and they argue that such transactions have the potential to benefit from legislators' political connections and official actions.
"I think what you've seen in the last three or four cycles, is you've seen on both sides this new era of the businessman-lawmaker," said Keith Ashdown, the chief investigator for Taxpayers for Common Sense. "They're deal guys. They're always looking for the angles."
Lately, those "deal guys" have had a taste for real estate. Land deals have turned sizable profits for Senate Majority Leader Harry M. Reid (D-Nev.), Sen. Ted Stevens (R-Alaska), Rep. Ken Calvert (R-Calif.) and Rep. Gary G. Miller (R-Calif.), to name a few. The deals brought profits but also headaches, as questions arose about the way private investments intersected with the politicians' congressional activities.
Over Mollohan's first decade in Congress, his disclosure reports showed modest gains. Beginning in the 1990s, as he gained clout on the Appropriations Committee, he set up a network of nonprofit organizations in his district to help administer more than $150 million in federal funds secured for research ventures and preservation efforts.
In the same period, Mollohan partnered in real estate ventures with the head of one of these nonprofit groups and the owner of a local company that received substantial federal aid. Mollohan also bought $2 million worth of property on Bald Head Island, N.C., with a former staffer and close friend who ran one of the nonprofits.
From 2000 to 2004, Mollohan's assets grew from no more than $565,000 to at least $6 million.
Ken Boehm, chairman of the National Legal and Policy Center, a conservative watchdog group, spent nine months researching the transactions and last year handed his findings to the FBI, which he said launched an investigation into the matter.
"Here you had someone who was worth a couple hundred thousand dollars, who had $45,000 Visa debts, five kids and faced college costs," Boehm said. "A few years later you see, hey, the congressman bought a $3.7 million beach house. Sometimes things are what they look like."
Mollohan has defended the transactions, calling them "squeaky clean," though he did tell The Washington Post that given the chance, he may have done things differently to avoid being "in a position where people could say there's something untoward going on."