Senate Democratic Leader Harry Reid...

Those horrible Republicans are at it again...

AP Exclusive: Reid Got $1M in Land Sale

AP Exclusive: Reid Got $1M in Land Sale
Oct 11 2:13 PM US/Eastern

By JOHN SOLOMON and KATHLEEN HENNESSEY
Associated Press Writers
WASHINGTON



Senate Democratic Leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show.
In the process, Reid did not disclose to Congress an earlier sale in which he transferred his land to a company created by a friend and took a financial stake in that company, according to records and interviews.

The Nevada Democrat's deal was engineered by Jay Brown, a longtime friend and former casino lawyer whose name surfaced in a major political bribery trial this summer and in other prior organized crime investigations. He's never been charged with wrongdoing _ except for a 1981 federal securities complaint that was settled out of court.

Land deeds obtained by The Associated Press during a review of Reid's business dealings show:

_The deal began in 1998 when Reid bought undeveloped residential property on Las Vegas' booming outskirts for about $400,000. Reid bought one lot outright, and a second parcel jointly with Brown. One of the sellers was a developer who was benefiting from a government land swap that Reid supported. The seller never talked to Reid.

_In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land.

_After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator's investment. Reid reported it to Congress as a personal land sale.

The complex dealings allowed Reid to transfer ownership, legal liability and some tax consequences to Brown's company without public knowledge, but still collect a seven-figure payoff nearly three years later.

Reid hung up the phone when questioned about the deal during an AP interview last week.

The senator's aides said no money changed hands in 2001 and that Reid instead got an ownership stake in Brown's company equal to the value of his land. Reid continued to pay taxes on the land and didn't disclose the deal because he considered it a "technical transfer," they said.

They also said they have no documents proving Reid's stake in the company because it was an informal understanding between friends.

The 1998 purchase "was a normal business transaction at market prices," Reid spokesman Jim Manley said. "There were several legal steps associated with the investment during those years that did not alter Senator Reid's actual ownership interest in the land."

Senate ethics rules require lawmakers to disclose on their annual ethics report all transactions involving investment properties _ regardless of profit or loss _ and to report any ownership stake in companies.

Kent Cooper, who oversaw government disclosure reports for federal candidates for two decades in the Federal Election Commission, said Reid's failure to report the 2001 sale and his ties to Brown's company violated Senate rules.

"This is very, very clear," Cooper said. "Whether you make a profit or a loss you've got to put that transaction down so the public, voters, can see exactly what kind of money is moving to or from a member of Congress."

"It is especially disconcerting when you have a member of the leadership, of either party, not putting in the effort to make sure this is a complete and accurate report," said Cooper. "That says something to other members. It says something to the Ethics Committee."

Other parts of the deal _ such as the informal handling of property taxes _ raise questions about possible gifts or income reportable to Congress and the IRS, ethics experts said.

Stanley Brand, former Democratic chief counsel of the House, said Reid should have disclosed the 2001 sale and that his omission fits a larger culture in Congress where lawmakers aren't following or enforcing their own rules.

"It's like everything else we've seen in last two years. If it is not enforced, people think it's not enforced and they get lax and sloppy," Brand said.

SALE HIDDEN FROM CONGRESS

Reid and his wife, Landra, personally signed the deeds selling their full interest in the property to Brown's company, Patrick Lane LLC, for the same $400,000 they paid in 1998, records show.

Despite the sale, Reid continued to report on his public ethics reports that he personally owned the land until it was sold again in His disclosure forms to Congress do not mention an interest in Patrick Lane or the company's role in the 2004 sale.

AP first learned of the transaction from a former Reid aide who expressed concern the deal hadn't been properly reported.

Reid isn't listed anywhere on Patrick Lane's corporate filings with Nevada, even though the land he sold accounted for three-quarters of the company's assets. Brown is listed as the company's manager. Reid's office said Nevada law didn't require Reid to be mentioned in the filings.

"We have been friends for over 35 years. We didn't need a written agreement between us," Brown said.

The informalities didn't stop there.

PROPERTY TAXES LOOSELY HANDLED

Brown sometimes paid a share of the local property taxes on the lot Reid owned outright between 1998 and 2001, while Reid sometimes paid more than his share of taxes on the second parcel they co-owned.

And the two men continued to pay the property taxes from their personal checking accounts even after the land was sold to Patrick Lane in 2001, records show.

Brown said Reid first approached him in 1997 about land purchases and the two men considered the two lots a single investment.

"During the years of ownership, there may have been occasions that he advanced the property taxes, or that I advanced the property taxes," Brown said. "The bottom line is that between ourselves we always settled up and each of us paid our respective percentages."

Ultimately, Reid paid about 74 percent of the property taxes, slightly less than his actual 75.1 ownership stake, according to canceled checks kept at the local assessor's office. One year, the property tax payments were delinquent and resulted in a small penalty, the records show.

Ethics experts said such informality raises questions about whether any of Brown's tax payments amounted to a benefit for Reid. "It might be a gift," Cooper said.

Brand said the IRS might view the handling of the land taxes as undisclosed income to Reid but it was unlikely to prompt an investigation. "If someone is paying a liability you owe, there may be some income imputed. But at that level, it's pretty small dollars," he said.

FEDERAL LAND SWAPS

Nevada land deeds show Reid and his wife first bought the property in January 1998 in a proposed subdivision created partly with federal lands transferred by the Interior Department to private developers.

Reid's two lots were never owned by the government, but the piece of land joining Reid's property to the street corner _ a key to the shopping center deal _ came from the government in 1994.

One of the sellers was Fred Lessman, a vice president of land acquisition at Perma-Bilt Homes.

Around the time of the 1998 sale, Lessman and his company were completing a complicated federal land transfer that also involved an Arizona-based developer named Del Webb Corp.

In the deal, Del Webb and Perma-Bilt purchased environmentally sensitive lands in the Lake Tahoe area, transferred them to the government and then got in exchange several pieces of valuable Las Vegas land.

Lessman was personally involved, writing a March 1997 letter to Interior lobbying for the deal. "This exchange has been through many trials and tribulations ... we do not need to create any more stumbling blocks," Lessman wrote.

For years, Reid also had been encouraging Interior to make land swaps on behalf of Del Webb, where one of his former aides worked.

In 1994, Reid wrote a letter with other Nevada lawmakers on behalf of Del Webb, and then met personally with a top federal land official in Nevada. That official claimed in media reports he felt pressured by the senator. Reid denied any pressure.

The next year, Reid collected $18,000 in political donations from Del Webb's political action committee and employees. Del Webb's efforts to get federal land dragged on.

In December 1996, Reid wrote a second letter on behalf of Del Webb, urging Interior to answer the company's concerns. The deal came together in summer and fall 1997, with Perma-Bilt joining in.

In January 1998 _ just days before he bought his land _ Reid applauded the Lake Tahoe land transfers, saying they would create the "gateway to paradise."

None of Reid's letters mentioned Perma-Bilt. Reid's office said the senator never met Lessman nor discussed the Lake Tahoe land transfer or his personal land purchase. A real estate attorney handled the 1998 sale at arms-length, aides said.

"This land investment was completely unrelated to federal land swaps that took place in the mid-1990's," Manley said.

Lessman said he never talked to Reid or asked for his help before the 1998 land sale, and only met the senator years later at a public event. "Any suggestion that the land sale between Senator Reid and myself is somehow tied in with the Perma-Bilt exchange is completely absurd," Lessman said.

THE REZONING

Clark County intended for the property Reid owned to be used solely for new housing, records show. Just days before Reid sold the parcels to Brown's company, Brown sought permission in May 2001 to rezone the properties so a shopping center could be built.

Career zoning officials objected, saying the request was "inconsistent" with Clark County's master development plan. The town board in Spring Valley, where Reid's property was located, also voted 4-1 to reject the rezoning.

Brown persisted. The Clark County zoning board followed by the Clark County Commission voted to overrule the recommendation and approve commercial zoning. Such votes were common at the time.

Before the approval in September 2001, Brown's consultant told commissioners that Reid was involved. "Mr. Brown's partner is Harry Reid, so I think we have people in this community who you can trust to go forward and put a quality project before you," the consultant testified.

With the rezoning granted, Patrick Lane pursued the shopping center deal. On Jan. 20, 2004, the company sold the property to developers for $1.6 million. Today, a multimillion dollar retail complex sits on the land.

On Jan. 21, 2004, Reid received more than $1.1 million of the sale proceeds. Reid disclosed the money the following year on his Senate ethics report as a personal sale of land, not mentioning Patrick Lane.

A BUSINESS PARTNER'S PAST

Brown has been a behind-the-scenes power broker in Nevada for years, donating to Democrats, Republicans and charities. He represented a major casino in legal cases and dabbled in Nevada's booming real estate market.

Brown befriended Reid four decades ago, even before Reid served as chairman of the Nevada gaming commission and decided cases involving Brown's clients.

Brown's name has surfaced in federal investigations involving organized crime, casinos and political bribery since the 1980s.

This past summer, federal prosecutors introduced testimony at the bribery trial of former Clark County Commission chairman Dario Herrara that Brown had taken money from a Las Vegas strip club owner to influence the commission. Herrara was convicted of taking kickbacks. Brown was never called as a witness.

Brown declined to discuss past cases where his name surfaced, including Herrara. "The federal government investigated this whole matter thoroughly, and there was never any implication of impropriety on my part," he said.

http://apnews.myway.com/article/20061011/D8KMO6NG0.html

AP Exclusive: Reid Got $1M in Land Sale

WASHINGTON (AP) - Senate Democratic leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show.

AP's Reid Story Doesn't Add Up
By Paul Kiel - October 11, 2006, 11:10 PM

Sen. Harry Reid (D-NV) "collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years," the AP reports.

Except that's wrong. Reid made a $700,000 profit on the sale, not $1.1 million. Also, the story, by the AP’s John Solomon, makes it sound as if Reid got money for land he didn't own. But that's not the case.

It’s not the first time that Solomon has published a misleading story about Reid. This is the third such story by Solomon over the past six months. Each time, Solomon has hit Reid for taking actions which might create the appearance of ethical impropriety. But because Solomon writes for the most powerful news organization in the land, these very gray-shaded stories pack a wallop. It doesn’t help that on numerous occasions, he has missed or distorted key details – missteps that help blow up his stories.

This story is no different. It purports to show that Reid collected $1.1 million on the sale of land he didn’t own.
Yet, as Solomon obliquely acknowledges, Reid, who had bought the land along with a friend in 1998, transferred his ownership in the land to a limited liability company in 2001. The company, which was composed solely of this land owned by Reid and his friend, in turn sold the land in 2004. That's when Reid collected his $1.1 million share of the sale. Since Reid had originally put down $400,000 on the sale, his profit was $700,000, not the full $1.1 million, as Solomon states in his lead.

Solomon persists in straightforwardly describing the 2001 land transfer as a sale, even though no money changed hands; Reid's share of the land after the transfer was the same as before. In his financial disclosure forms, Reid did not disclose his transfer of the land to the LLC, although he did continue to disclose his ownership of the land through 2004, when it was sold.

So what's the story here? Well, it's not clear that Reid broke any ethical rules -- let alone any laws. Solomon cites one expert as saying that Reid should have disclosed the transfer to the LLC, because "hether you make a profit or a loss you've got to put that transaction down so the public, voters, can see exactly what kind of money is moving to or from a member of Congress." The thing is, of course, that no money moved in the LLC transaction. Reid still owned the same amount of land - it was just under the cover of the LLC.

Now, members of Congress should go out of their way to avoid the appearance of impropriety. The purpose of financial disclosure is for the public to gauge whether lawmakers might run into a conflict of interest. By that higher standard, Reid should have disclosed his involvement in the LLC. And although Solomon is unable to make any specific allegations of wrongdoing, the informality of the LLC arrangement is potentially open to abuse. Reid's office, in a statement on the matter, says they're willing to go back and make such "a technical correction" to the financial disclosures if the Ethics Committee sees fit. One wonders why they don't go ahead and make the correction anyway so as to be above reproach.

That said, let's put this in context.

On two earlier occasions, Solomon has over-inflated his stories on Reid. TPM readers might remember his expose on Reid's involvement with Jack Abramoff (which, after exhaustively detailing an Abramoff’s associate’s contacts with Reid’s office, failed to mention that Reid didn't vote the way Abramoff wanted him to) and his stories on Reid's acceptance of passes to a boxing match from the Nevada Gaming Commission (which managed to expunge a host of mitigating details too plentiful to name here).

There's an old saying in journalism that three examples make a trend. I think we have a trend here. Solomon’s apparent weakness for detail is one issue. But most curious is the fact that we live in the muckiest times in recent memory, and yet Solomon, at the helm of the most powerful news agency in the country, persists in roaming the wide ocean of Congressional corruption in a Captain Ahab-like hunt for Reid's ethical missteps.

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The latest Reid hit piece

by kos

Wed Oct 11, 2006 at 02:58:29 PM PDT

The AP's John Solomon, the go-to guy at the Associated Press for any anti-Democratic efforts, and this piece is absolute crap. The crux of the claim:

Senate Democratic Leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show.

Actually, he did own that land. It just so happened that three years ago, he transfered the property from his own personal name to that of an LLC.

It'd be kind of like me selling Daily Kos, and someone claiming I reaped a windfall from it because I "sold it three years ago". I didn't. Daily Kos became an LLC. As did Reid's piece of land.

And btw, this was all disclosed to the ethics committee. The place were things got sloppy is that Reid continued to disclose ownership of the land as a personal asset rather than ownership in the LLC which owned the land. But that's it. Fact is, the LLC had no other assets other than this piece of land, and Reid disclosed ownership of the piece of land.

Solomon is either being dishonest or an idiot. But watch the wingers and GOP try to gain traction off this story to divert from their coddling of a sexual predator.

Update: Note that there is no charge or evidence or anything that would suggest that Reid used his position of authority to boost the value of the land. That would be troublesome. As it is in NC-11 where Rep. Charles Taylor (R) used earmarks to line his pockets:

New Report Shows Taylor's Earmarks Benefit Land he Owns. According to a new report by the Wall Street Journal, Charles Taylor, a wealthy businessman and banker, was able to get millions of dollars in earmarks for his district to improve land where Taylor owns thousands of acres and where he has even developed. The report shows that Taylor owns at least 14,000 acres of prime land in his district, some of which is near the main highway in Maggie Valley which, last year, received $11.4 million in federal dollars. Taylor's companies own thousands of acres near the highway and had already developed a subdivision called Maggie Valley Leisure Estates. Another earmark last year sent $4.8 million to widen a highway through timber tracts that Taylor's companies own. He also got millions for a loan for long-time contributors and millions more for improvements to a park that sits directly in front of his flagship bank in the district.

Or, let's shoot even higher:

House Speaker Dennis Hastert denied Thursday that he pushed for federal funding for a proposed highway in northeastern Illinois so he and his wife could reap about $1.8 million from land deals near their home in Kendall County.

The Sunlight Foundation, a newly created group whose declared aim is to inform the public about what members of Congress do, has accused Hastert of not divulging connections between the $207 million earmark he won for a highway, the Prairie Parkway, and an investment he and his wife made in nearby land.

There are others -- Reps. Jerry Lewis, Richard Pombo, and Gary Miller for starters. This isn't a case of "everyone does it". It's a case of projection -- accusing Reid of doing something Republicans have made a habit of doing.

That they got the gullible or ideologically compromised Solomon to bite on the non-story was a nice touch, but has no bearing on the reality of the matter.

Update II: To refresh your memories, Solomon is this guy:

Associated Press writer John Solomon reported that Senate Democratic Leader Harry Reid (NV) had attended three Las Vegas boxing matches as the guest of the Nevada Athletic Commission while the agency "was trying to influence him on federal regulation of boxing." But Solomon failed to inform readers that, rather than taking any actions favorable to the NAC, Reid allowed the specific legislation that the agency had opposed to pass.*

Subsequent info made Solomon's story even more ridiculous:

The Las Vegas Journal-Review and TPM Muckraker reported several facts that appear to undermine the thrust of John Solomon's Associated Press article suggesting that Senate Democratic Leader Harry Reid (D-NV) acted improperly by accepting free tickets from the Nevada Athletic Commission to, as Solomon claimed, three boxing matches at a time when the agency "was trying to influence him on federal regulation of boxing."

Some of those facts? The fact that state law prohibited Reid from reimbursing the commission for those fight tickets.

And that's not all. There's much more.

Update III: A tax lawyer reader writes:

FYI, I am a tax attorney. A single member LLC (i.e. an LLC owned 100% by a single person) is treated by the IRS as non-existent for tax purposes. The LLC owner continues to treat himself as the direct owner of the property for tax purposes as if the property were never transferred to the LLC. That could explain why someone might continue to consider himself the owner of property which he has transferred to a single member LLC.

A multiple member LLC is treated as a partnership for tax purposes. Again, if an existing partnership transfers property to an LLC owned by the same partners in the same percentages, the LLC will usually be treated as the same entity as the orignal partnership, and again an individual might reasonably believe that no transfer has taken place.

The latter paragraph is relevant to this discussion. Reid owned a 75 percent interest in two plots of land, his partner 25 percent. They created the LLC in the same exact percentages.

Ultimately, there might be a technical violation of Senate rules -- Reid has asked for clarification from the ethics committee. But bottom line is that Reid followed the spirit of the law. He disclosed his ownership of the land -- down to the exact plots -- which would allow for watchdogs to monitor any potential conflicts of interest. That is better than disclosing ownership in a shadowy private LLC, with no public access to its assets. (Which is, btw, essentially what Hastert did.)

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