Unbridled Corruption and A Mockery of Congressional LeadershipBy Dennis Jones Friday, November 20, 2009
Charlie Rangel was first elected to the US House of Representatives in 1970 and is now serving his 20th term. He was appointed Chairman of the House Ways and Means Committee in January 2007, elevating him to be one of the most powerful men in politics. It is incomprehensible, given Rep. Rangel’s widely reported tax problems, that he could chair the House Ways and Means Committee that is responsible for corporate income taxes, excise taxes, estate taxes, gift taxes and other miscellaneous taxes. There has been a pattern of unethical behavior, flaunting of House rules, improper use of his position and self-serving decisions that span his entire career.
Over the past 30 years there have been 28 instances in which he failed to report acquiring, owning or disposing of assets on required disclosure forms. The House Ethics Committee has been working on its investigation of Rangel for over a year and has expanded its investigation on three separate occasions. The Ethics Committee has reviewed and analyzed over 12,000 pages of documents and issued nearly 150 subpoenas on the taxpayers dime. Representative Rangel has even asked the committee to investigate himself and hired forensic accountants to investigate his own books and records in some sort of warped and detached rationalization that he is investigating someone else.
Here are some of the most prominent highlights of Mr. Rangel’s ethical, moral and legal lapses under investigation:
Mr. Rangel’s ethical, moral and legal lapses under investigation
Mr. Rangel rented four rent-stabilized apartments, 16M, 16N, 16P, and 10U, in one of the most prestigious neighborhoods in Harlem, Lenox Terrace. He claimed three of the four as personal residences and used the fourth, 10U as a campaign office profiting from the combined total of under-market rent of approximately $30,000 per year. While it is not unlawful for tenants to have more than one rent-stabilized apartment it is extremely rare and, using one as a campaign and political action committee raises federal election law issues because the committee did not pay fair market rent. Also, since lodging falls under the House’s definition of “gifts” by failing to pay market rent on his apartments, Mr. Rangel may have violated House gift rules. The National Legal and Policy Center filed a complaint with the Federal Election Committee regarding the rent subsidies and Mr. Rangel himself asked the FEC to render an opinion on its legality.
Rep. Rangel pushed through $1.9 million of public funds for the Charles B. Rangel Center for Public Service at City College of New York which includes an office for him and a presidential-style library for his official papers. He violated House rules by soliciting funds for this project on congressional stationery. Mr. Rangel sought contributions from businesses that have interests before the committee that he leads in a clear conflict of interest. He has also faced criticism for the project since naming a facility after an incumbent politician might tempt that politician to funnel public money to it rather than more worthy causes. In another incident also involving his pet project, Mr. Rangel reversed his former political stance of taxing the wealthy and closing tax loopholes for businesses to receive personal gain. Instead of pushing to eliminate the loopholes as was customary for him, he fought to preserve a tax loophole that benefited an oil-drilling company whose CEO was pledging $1 million for his project. Mr. Rangel prevailed and the tax shelter was preserved saving the company, Nabors industries an estimated tens of millions of dollars annually and depriving the federal treasury of over a billion dollars in revenues over a ten year period. Federal law prohibits public officials from directly or indirectly demanding, seeking, receiving, accepting or agreeing to accept anything of value in return for being influenced in the performance of an official act. In addition to the million dollar pledge from Nabors CEO Eugene M. Isenberg for his Center for Public Service at City College, Mr. Isenberg wrote a $100,000 check to City College during the same time period that Mr. Rangel was working to leave Nabors’ tax shelter intact.
For 20 years Mr. Rangel has owned a 3 bedroom, 3 bath beachfront villa in the Dominican Republic located on the Caribbean Sea at the Punta Cana Hotel. Boasting a panoramic ocean view and reportedly one of the most popular casitas in one of the island’s best resorts, it commonly rents for between $500 a night in the low season and $1,100 a night between November and April. However, Mr. Rangel failed to report any rental income for 2006, 2007 and from 1996 to 2000 on his personal financial disclosure statements. The disclosure is a sworn statement and intentionally filing a false report is a felony that carries a possible five-year prison sentence. After first denying receiving any rental income in 2006 & 2007, Rangel’s lawyer reported that the property had earned over $75,000 in rental income that he failed to report on his federal or state tax returns. New York state law classifies filing a false return a felony punishable by up to four years in prison but typically prosecutions are rare and instead the taxpayer is fined 20% of the back taxes owed. Under federal law it also a felony to willfully evade payment of taxes or file a false return with possible prison sentences and fines of up to $100,000. Rep. Rangel used an interest-free mortgage to purchase the property granted to him by the resort development company whose principal happened to have also contributed tens of thousands of dollars to Mr. Rangel’s campaigns. Rangel did not report the forgiven interest as required by House rules, nor did he report it to the IRS and State of New York on his tax returns. He has subsequently filed amended returns and paid $10,800 in back taxes.
Mr. Rangel traveled to the island of St. Maarten in the Caribbean in November 2008 with four other members to attend a conference sponsored by the Carib News Foundation. There is evidence that the trip was paid for by major US corporations led by Citigroup, yet another violation of House Rules.
Rep. Rangel’s financial disclosure forms failed to disclose all of his assets and unearned income at least 28 times in clear violation of House rules. He accumulated from $239,026 to $831,000 in assets that were not listed in disclosure forms despite House rules that require members to list the purchase or sale of any assets. In some instances, Mr. Rangel listed assets without acquisition dates. His 2006 disclosure form notes 13 mutual funds with values from $54,013 to $286,000 without any acquisition date. Other problems Mr. Rangel has had with the disclosure form include detailing dispositions of assets; investments valued in 2004 at $95,004 to $250,000 were later omitted in future filings with no record of their sale or disposition. Moreover, no royalties or advances from Mr. Rangel’s 2007 book, “And I Haven’t Had a Bad Day Since” have been reported on his filings.
Mr. Rangel stored his 1972 Mercedes in a House parking space valued at $290 per month for several years and never reported the imputed income to the IRS. Also, since the vehicle was unlicensed and without a valid parking permit, its storage was a violation of House rules.
Gross negligence, incompetence, breach of fiduciary duty, and terrible judgment
If Mr. Rangel were the CEO of any public company in America, he would have been summarily fired for gross negligence, incompetence, breach of fiduciary duty, and terrible judgment. And, given the nature of the violations, had his severance agreement revoked and possibly faced criminal prosecution. But, as is obvious by now, Congress has a much lower ethical standard than private enterprise and the rules and laws that apply to us don’t seem to apply to the public servants in Congress. Madame Pelosi and Rep. Rangel continue to brush aside calls from both the left and the right for his resignation allowing self serving interests to take priority over integrity, honor and ethical conduct.