Harry Reid cleaning up - And no one CARES

I suppose that there are many officials, then - including mr. Hastert - who you would think have had land deals that need looking into?

Cycloptichorn wrote:

I suppose that there are many officials, then - including mr. Hastert - who you would think have had land deals that need looking into?

Didn't you chastise woiyo for talking about Reid on the Foley thread? Why don't you hold yourself to the same standards?

But for the record, yes, I think anyone using their power for personal profit should be investigated.

Not to change the subject of the thread.

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 "[w]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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Cycloptichorn wrote:
Now that I think about it, I know that quote 1 is inaccurate, because Reid didn't 'sell' the land to anyone. Entering into an LLC is not the same thing as selling land, at all.

By your definition, Google didn't buy YouTube a couple of days ago. Your definition is wrong: Just because no money crosses hands, that doesn't mean it's not a sale. But regardless of this point, Reid was obliged to report any stake he had in any companies -- and he didn't report his stake in this company.

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Cycloptichorn wrote:
Brown had a lot to gain from the land as well as Reid.

What did he have to gain? Reid's stake in the company equaled the value of his land. Brown's stake in the company excluded the land formerly owned by Reid. What did Brown have to gain from re-zoning Reid's land?

Well, for a sale to take place, something has to change hands. In this case, nothing changed hands. So how is this a sale?

They both owned land as part of the LLC; the zoning affected both of their pieces of land. Brown was working on his own behalf as well as Reid's behalf. Hardly a 'favor' when you and your fellow investor both make money on a deal in which you threw in together.

Well, for a sale to take place, something has to change hands. In this case, nothing changed hands. So how is this a sale?

Except that's wrong. Reid made a $700,000 profit on the sale, not $1.1 million.

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.

Ownership of (part of) Brown's firm for Reid for ownership of Reid's land for Brown's firm.

So what if Brown did Reid a favor and did himself a favor too? He still did Reid a favor.

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Except that's wrong. Reid made a $700,000 profit on the sale, not $1.1 million.

Well that certainly doesn't make any potential wrongdoing any better.

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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.

This is what I agree with. I think Reid should have disclosed his involvment and it should be looked into whether or not he applied pressure on people for the re-zoning deal to go through. If he used his federal power to get the deal done, and then profited $700,000 from it, there is a very clear conflict of interest.

You don't 'give' property to an LLC, you enter into an LLC with someone. Reid never gave up ownership of the property at all. That's why it wasn't a sale.

Thomas,

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Ownership of (part of) Brown's firm for Reid for ownership of Reid's land for Brown's firm.

Except that there wasn't some pre-existing firm in which shares were transferred to Reid. He entered the LLC with Brown, which was (I believe by definition) nonexistent before he and Brown created it. Reid didn't recieve any compensation at all for entering the LLC.Cycloptichorn

Except that there wasn't some pre-existing firm in which shares were transferred to Reid. He entered the LLC with Brown, which was (I believe by definition) nonexistent before he and Brown created it. Reid didn't recieve any compensation at all for entering the LLC.

Hmm, maybe, but as far as I can tell, there isn't anything exactly illegal, unethical, or immoral about having someone do a favor for you. The ethics violations come into question when there is evidence of quid pro quo, which has not currently been alledged by anyone, as far as I can tell.

Cycloptichorn wrote:

Except that there wasn't some pre-existing firm in which shares were transferred to Reid. He entered the LLC with Brown, which was (I believe by definition) nonexistent before he and Brown created it. Reid didn't recieve any compensation at all for entering the LLC.

That's not what AP reported. AP reported, and to my knowledge nobody refuted, "that the senator didn't disclose to Congress that he first sold the land to a friend's company back in 2001 and took an ownership stake in the company." Note: "sold the land to a friend's company", not "started up a company with a friend and transferred ownership of the land to it." What source told you that the friend's company didn't exist before Reid sold his land?

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.

cycloptichorn wrote:

Hmm, maybe, but as far as I can tell, there isn't anything exactly illegal, unethical, or immoral about having someone do a favor for you. The ethics violations come into question when there is evidence of quid pro quo, which has not currently been alledged by anyone, as far as I can tell.

Federal law disagrees with you. To prove bribery, for example, you have to prove only the "quid", not the "quid for pro". If Brown gave anything of value to Reid, and Reid accepts, that's akin to bribery, so it's certainly unethical and immoral. Undoubtedly a multiple hundred kilobuck favor is "something of value". So the only reason I'm not calling it bribery, just "akin to" it, is because I don't know if Congressmen are "public officials" for purposes of this statute.

Smells like FRAUD to me. Amazing how HE got OFFICIALS to rezone the property.

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Smells like FRAUD to me. Amazing how HE got OFFICIALS to rezone the property.

Oh, c'mon. Is there an allegation that Reid was involved with this?

Cycloptichorn

Anybody else think that the shadiness of the deal starts here?

"One of the sellers was a developer who was benefiting from a government land swap that Reid supported."