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Alan Mollohan, Lead Ethics Democrat, Faces Ethics Charges

Susan Davis of Congress Daily reports:

House Speaker Hastert today said he believes Minority Leader Pelosi should ask Ethics ranking member Alan Mollohan, D-W.Va., to step aside — if only temporarily — in light of a report this morning that federal prosecutors are investigating Mollohan’s finances and whether they were properly disclosed. Hastert said he had asked former House Administration Chairman Ney to relinquish his chairmanship earlier this year when Ney was confronted with ethics questions. “I asked my chairman to step aside, that’s really up to Ms. Pelosi, that’s her choice. There’s a precedent for it,” Hastert said. Both the House Administration and Ethics committees are leader-appointed. “I was wondering why [Ethics Committee Democrats] were dragging their feet on this whole ethics thing,” Hastert said. “I don’t know if that has anything to do with it or not, we’ll see.”

National Republican Congressional Committee Chairman Thomas Reynolds of New York today also called on Mollohan to step down — and suggested Mollohan’s own issues could have contributed to the gridlock at the Ethics Committee. “It is no wonder that Mr. Mollohan and Democrat leaders have stalled for so long in getting the Ethics Committee up and running,” Reynolds said. “I believe it would be prudent at this point for Mr. Mollohan to resign from the Ethics Committee until this investigation is completed.” The Wall Street Journal reported today that an inquiry is being conducted into Mollohan’s personal financial disclosures, and raised questions about earmarks he has steered to nonprofits in West Virginia in the past five years. Mollohan has not been accused of any wrongdoing.

The report will likely ratchet up the already partisan nature of the Ethics Committee, which has been largely incapable of functioning over a number of disputes this session. Mollohan and Ethics Chairman Hastings are engaged in a public disagreement after the panel failed to agree last week to move forward with any investigations except one long-standing complaint against Rep. Jim McDermott, D-Wash. “If these serious allegations about a federal investigation are true, then Mr. Mollohan should consider stepping down from the Ethics Committee,” added a spokesman for Majority Leader Boehner. “Not doing so would jeopardize the work of the committee.” Calls to the offices of Mollohan and Pelosi were not returned at presstime.

I know very little about Mollohan and nothing about the charges beyond the report above, which is reprinted in its entirety. Both Congress Daily and WSJ are subscriber-only, unfortunately.

Stepping aside from his position on the Ethics Committee until he is either exhonorated or otherwise, though, strikes me as appropriate in light of the current climate in Congress. While one does not want to encourage a game of tit-for-tat on ethics issues, further undermining an already strained process, the Committee and its members obviously have to be above reproach.

via emailed tip from the House Republican Conference

Update: The National Legal and Policy Center has more details.

The National Legal and Policy Center (NLPC) today disclosed that it filed a 500-page Complaint on February 28 with the office of the U.S. Attorney for the District of Columbia detailing hundreds of ethics law violations by Rep. Alan Mollohan (D-W.V.).

Rep. Mollohan is the ranking member of the House ethics committee and a senior member of the House Appropriations Committee. The Wall Street Journal this morning carried a front- page story about the case.

The lengthy complaint followed a nine-month investigation by NLPC, the ethics group that also broke the Boeing procurement scandal in 2003. NLPC alleged financial conflicts of interest by former Air Force official Darleen Druyun in negotiating the lease of refueling tanker aircraft. Ms. Druyun and Boeing CFO Michael Sears eventually served prison terms, and Boeing CEO Phil Condit resigned.

NLPC’s investigation began when its review of the Financial Disclosure Reports of House Appropriations Committee members showed a sharp increase in Rep. Mollohan’s assets from 2000 to 2004. A closer examination revealed that Mollohan and his wife had more than $2,000,000 in real estate investments with a former staffer, Laura Kuhns, and her husband. Kuhns ran a nonprofit, Vandalia Heritage Foundation, which had received more than $28 million in appropriations earmarks with Mollohan’s help from 2000 through 2005. She was also on the board of other nonprofit groups which had received over $100 million in earmarks of federal funds during the same period with Mollohan’s help.

Mollohan’s 2000 Financial Disclosure Report listed his income- producing assets as being worth from $179,012 to $562,000 with liabilities of $170,000 to $465,000. Among the liabilities was Visa credit card debt listed as $45,003 to $150,000.

Just four years later, Mollohan’s 2004 Financial Disclosure Report showed him with assets worth $6,313,025 to $24,947,000 offset by liabilities in the $3,665,011 to $13,500,000 range. It also showed him owning an oceanfront beach house on Bald Head Island, NC which was valued at $1,000,000 to $5,000,000. NLPC found that Mollohan was renting the beach house during the summer of 2005 for $11,975 a week.

[…]

NLPC Chairman Ken Boehm stated, “Our research was extremely specific. When Mollohan failed to disclose an asset we would document his ownership interest with a deed, Uniform Commercial Code filing or other public record. In all, we documented over 250 misrepresentations and omissions. Every Financial Disclosure Report filed by Mollohan from 1996 through 2004 had major errors. Most of the errors had the effect of understating the value of his holdings — sometimes the assets he did not disclose exceeded the ones he did.”

“The real issue here is not whether Mollohan systematically was hiding financial and real estate assets and grossly misrepresenting their value. He was. The real issue is why he was hiding those assets. Mollohan is the Ranking Member of the House Committee on Standards of Official Conduct – popularly known as the ethics committee. He has served on that committee, which has jurisdiction over the filing of Financial Disclosure Reports, for 9 years (1985 to 1991 and then 2003 to present). No one in the House has more familiarity with the disclosure laws than he does. Any kind of excuse that he did not know how to fill out his financial disclosure reports — for a 9 year period — does not pass the straight face test.”

“The bottom line is Mollohan got very wealthy in a four year period. His account of his finances during this period is demonstrably false. The fact that he earmarked well over $100 million in tax dollars to groups associated with his business partner is about as big a red flag as one can imagine.”

Human Events adds,

The Wall Street Journal leads today with a piece on Rep. Alan Mollohan (W.Va.), the Democratic ranking member on the House Ethics Committee. Mollohan, also a member of the Appropriations Committee, has earmarked millions in funds for non-profits run by his business partner and some campaign contributors.

Hotline:

If this story has legs, it could muddy the Dem narrative of the GOP culture of corruption. It’s possible Mollohan accrued a quick fortune from real estate acquisitions or by improperly reporting his finances.

But his seniority on the Appropriations and ethics cmtes raises larger and fundamental questions about the use and abuse of earmarks. The timing also couldn’t be worse for Dems — with Tom DeLay’s resignation, a budget stalemate and immigration exposing fissures in the GOP.

And locally, Mollohan has a legitimate GOP opponent with strong WH backing — state Del. Chris Wakim — for the first time in a while. Could the Dems’ ethics point-man derail his own party’s ethics edge?

Even if Mollohan boldly took bribes in exchange for these earmarks–the worst possible scenario from the Democrats’ standpoint–the case would not in and of itself innoculate the GOP, which has the Abramoff-DeLay scandals brewing in Congress and various scandals, notably the Plame matter, in the White House. Unless there is something systematic along the lines of the K Street Project, one corrupt politician (assuming the allegations are true on face value) is not enough to tar an entire party.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He earned a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. /snark on
    Perhaps he has been receiving investment advice from Hillary.
    /snark off

    You are right that one swallow does not foretell the spring. But there have been a number of indictments on vote buying (e.g. East St. Louis, Orlando), bribery, identity theft, etc on a wide range of democrats. The bottom line is both sides have dirty laundry. The question is 1) can the democrats convince enough people who wouldn’t have voted for them anyway that they would be less ethically challenged and 2) if they were able to do so, how long before their actions pushed the public perception pendulum back.

    Fortunately for the republicans, Delay threw himself off the train (okay there were more than a few boot prints but in the end he jumped). Unfortunately for the republicans, the MSM has got the democratic meme in their head and it is generally hard to get an idea out of their head once it gets lodged there.

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  2. RA says:

    The reason you haven’t heard about it is because the MSM ignores wrong doing by Democrats.

    I’m tired of hearing about the “Delay Scandal”. Ronnie Earle had to try 6 grand juries before he found one corrupt enough to idict Delay. The real Delay scandal is th abuse of power by Ronnie Earle and the slandering of this great American hero by the MSM.

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  3. RA says:

    Abromoff was doing as much business with Democrats as he was with Republicans. To say this is a Republican problem once again is buying into the MSM slander.

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  4. Aubrey says:

    Add this guy to William J. Jefferson (D-LA) and there might be a case for a culture of corruption in the Democrat ranks.

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  5. MrGone says:

    Keep on dreaming folks.

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  6. BWE says:

    Ever stopped to consider that the whole darn thing is corrupt? That perhaps our system itself is on the tail end of a cycle? Look at the presidents we have had since johnson. All of them corrupt to an alarming degree (except carter who was merely incompetent and couldn’t stop the corruption rampant in the congress).

    Reminds me of McKinley. Now we get a corrupt court comperable to the Taney court too.

    Not to be a doomsayer, but as a conservative, it’s pretty hard to be a republican these days and it’s also pretty hard I imagine to be a dem too. The lunatic fringe has the right and the unsellable bureaucrats have the left.

    Help! We are being attacked by the educated, intelligent class!
    http://answers.yahoo.com/question/index?qid=1006022511674

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  7. lajf says:

    Both Congress Daily and WSJ are subscriber-only, unfortunately.

    Here’s the WSJ piece:

    Helping Hands
    Appropriations, Local Ties
    And Now a Probe of a Legislator
    West Virginia Rep. Mollohan
    Has Real-Estate Holdings
    That Also Bring Scrutiny
    Growth of Budget ‘Earmarks’
    By JOHN R. WILKE
    April 7, 2006; Page A1

    FAIRMONT, W.Va. — On a mountaintop above old coal seams that once fueled West Virginia’s economy, a gleaming steel-and-glass research center is taking shape, its winged design and 120-foot data tower visible for miles.

    The $136 million building is being built with taxpayers’ money for the Institute for Scientific Research, a nonprofit group launched by the local congressman, Democrat Alan Mollohan, and funded almost entirely through provisions he put into annual spending bills.
    [Allan Mollohan]

    A 12-term congressman, Mr. Mollohan sits on the House Appropriations Committee, a panel that disgraced lobbyist Jack Abramoff dubbed the “favor factory.” Working with fellow West Virginian Sen. Robert Byrd, Mr. Mollohan has steered at least $178 million to nonprofit groups in his district over the past five years using “earmarks” — special-interest provisions that are slipped into spending bills to direct money to pet projects.

    The money has brought more than jobs and building projects to his district. It has formed and financed a tight-knit network of nonprofit institutions in West Virginia that are run by people who contribute regularly to Mr. Mollohan’s campaigns, political-action committee and a family foundation. One of these people also invests in real estate alongside Mr. Mollohan and his wife. The network of contributors also includes private companies that get contracts through these nonprofits.

    Such a pattern raises questions about whether the donations or deals might be a way beneficiaries of earmarks could influence the legislator’s actions. Now, federal prosecutors have opened an investigation of Mr. Mollohan’s finances and whether they were properly disclosed, according to people contacted in the inquiry. Mr. Mollohan hasn’t been accused of wrongdoing. A spokesman for the U.S. attorney’s office in Washington, whose public-corruption unit is conducting the inquiry, declined to comment.

    Mr. Mollohan said in an interview he had no knowledge of any investigation. But he said, “I welcome any review of my efforts to diversify the economy of West Virginia, as well as any of our financial investments. All of them are aboveboard, and we operate transparently.” He added that “every one of the earmarks is held to the highest standards of accountability” and publicly disclosed. He said he was “extremely proud of what we’ve been able to do for my state.”

    For the first time in years, Mr. Mollohan is facing a serious Republican challenge for his seat, from a candidate with active backing of the White House. Mr. Mollohan said he didn’t want to suggest that scrutiny of his earmarks might be politically motivated. But he also said, “I’d rather have this explained and understood now rather than a week before the election.”

    Central to the Mollohan network is a former staffer, Laura Kuhns, who heads the nonprofit Vandalia Heritage Foundation. It is a historic-preservation group that is financed almost exclusively by earmarks backed by Mr. Mollohan. It paid her $102,000 in 2004. Vandalia is coordinating construction of the new building for the Institute for Scientific Research, or ISR, and Ms. Kuhns sits on its board and those of three other nonprofits that get funds via earmarks.

    She and her husband also are partners with Mr. Mollohan and his wife in five properties in Bald Head Island, N.C., valued in local real-estate records at a total of $2 million. The Mollohans recently bought a $1.45 million oceanfront home on the island, called the Peppervine House, which they rent out for $8,555 a week, next to the Kuhns’ house, known as Cape Fearless. These and other investments, including a stake in a nine-story luxury condominium complex in Washington, appear to have made the Mollohans wealthy.

    Mr. Mollohan’s government financial disclosure form, which shows only broad ranges of debts and assets, showed household assets of up to $565,000 in 2000, offset by debt of up to $465,000, including $100,000 in credit-card bills. Four years later, the couple’s reported assets had soared to between $6.3 million and $24.9 million, with liabilities of $3.7 million to $13.5 million, mostly mortgages. Mr. Mollohan said his true assets are at the low end of those ranges.

    He and Ms. Kuhns say there is no link between the earmark appropriations Mr. Mollohan pushed through Congress and their real-estate investments, and they deny any improprieties. Mr. Mollohan said that any time he invests with others in real estate, he puts in half the money to avoid the appearance of a conflict. “I wish you were correct that I’m worth millions, but in fact it’s borrowed money,” he said.

    Casting a Shadow

    The previously undisclosed investigation of Mr. Mollohan, 62 years old, comes amid a still-continuing Abramoff probe that has cast a shadow over two top Republicans, Bob Ney of Ohio and former House Majority Leader Tom DeLay, who is giving up his seat from Texas. Another Republican, former Rep. Randall “Duke” Cunningham of California, who had also served on the Appropriations Committee, left Congress and was sentenced to prison last month after pleading guilty to accepting $2.4 million in bribes from defense firms in exchange for earmarks and other favors. A criminal bribery investigation is under way into a Louisiana Democrat, Rep. William Jefferson, who has denied wrongdoing.

    The cases are part of a widening attack on public corruption, with some 200 Federal Bureau of Investigation agents working on such cases nationwide, according to the chief of the Justice Department’s criminal division, Alice Fisher. “We are seeing a surge in these cases and we’re adopting aggressive tactics, including undercover operations,” she said.

    The House Ethics Committee, on which Mr. Mollohan is the senior Democrat, cautions lawmakers about ties to private entities because of the risk of actions inconsistent with their obligation to the public. The ethics panel has been unable to function — despite the Abramoff corruption scandal, Washington’s biggest in years — because of a partisan squabble over staffing in which Mr. Mollohan has led his party’s forces.

    Mr. Mollohan was among House members embarrassed by having received campaign donations from MZM Inc., one of the contractors from which Mr. Cunningham admitted taking bribes. MZM and its executives gave $23,000 to a political-action committee affiliated with Mr. Mollohan. A spokesman for Mr. Mollohan said that in December, he gave the MZM gifts to charity.

    Mr. Mollohan attributes his success in real estate to the hard work of his wife, Barbara, who manages rentals at a 52-unit condo called The Remington. It offers one-bedroom suites on a weekly and monthly basis, advertising as “Washington’s Best-Kept Secret.” City records show its units are valued at between $220,000 and $275,000 each. The Mollohans have a half interest in 27 of them.

    They co-own them with a relative, Joseph L. Jarvis, a retired businessman who received subcontracts from an Energy Department facility in Mr. Mollohan’s district. Mr. Jarvis’s business address at the time was a building constructed with money approved as a result of federal earmarks provided by Mr. Mollohan. Mr. Jarvis said his going into business with Mr. Mollohan had nothing to do with his prior work on the federal contracts.

    The jump in Mr. Mollohan’s wealth attracted the attention of the National Legal and Policy Center, a self-styled ethics-in-government nonprofit in Falls Church, Va. Funded by donations averaging $100 to $200, the conservative group helped ignite a procurement scandal a couple of years ago that brought down an Air Force contracting official and a chief financial officer of Boeing Co. The group said it found at least 200 misrepresentations or omissions in Mr. Mollohan’s disclosure forms over the years that had the effect of grossly undervaluing his assets. It said it forwarded a list to prosecutors.

    One focus of their probe is whether Mr. Mollohan’s prior disclosure forms properly valued his interest in The Remington and fully disclosed income from it, said people close to the inquiry. Mr. Mollohan’s accountant, Blair Eiler, said in an interview that the building’s full value “may not have been properly reported in the early years” on the disclosure forms. He added that its value had risen sharply in recent years in the hot real-estate market.

    More Scrutiny

    The probe could bring more scrutiny to earmarks. Attached to appropriations bills, they are usually intended to benefit a specific project in a congressman’s district and often escape the scrutiny that is supposed to accompany public expenditures. The number of earmarks has risen sharply in the past decade, to 14,211 in fiscal 2004 from 4,155 10 years earlier, says the nonpartisan Congressional Research Service. The fiscal 2004 earmarks caused $53 billion of federal spending.

    Mr. Mollohan is well-positioned to press for earmarks. He has sat on the Appropriations Committee since 1986 and is the senior Democrat on a subcommittee handling appropriations for science projects and the departments of State, Justice and Commerce.

    Mr. Mollohan acknowledges having steered federal-agency funds and tenants to a sprawling technology park where the mountaintop ISR building is under construction, even though in some instances the agencies didn’t ask for these facilities. The park’s anchor is named for him: the Alan B. Mollohan Center for Innovation. A bronze bust of the congressman surveys the lobby.

    Government contractors and executives of the nonprofit groups in his network regularly give to his campaign and to an affiliated political-action committee, Summit PAC. A third conduit for funds is the Robert H. Mollohan Family Charitable Foundation, named for the congressman’s father. It holds an annual charity golf tournament at the Pete Dye Golf Club in Bridgeport, W.Va., named a top-100 course by Golf Magazine. The tournament has been very successful. It received $455,000 in contributions in 2003 — the latest available figures — from government contractors and other firms. The donors included at least two of the federally funded nonprofits, ISR and Vandalia, the group Ms. Kuhns runs.

    A spokesman for Mr. Mollohan said the foundation’s board wouldn’t release a list of sponsors or their gifts “to respect their privacy.” The family foundation gets staff and office services from the West Virginia High Technology Consortium, another Mollohan-backed nonprofit. Its executives are unpaid, however, according to federal tax filings.

    The congressman rejects any link between campaign contributions and his efforts on behalf of his district. “I know where the lines are,” he said. “Is it credible to say I encouraged the growth of these nonprofits to get fund-raising? That’s ludicrous. These nonprofits should be judged on what they have done for the state.” Every one of them has created jobs, boosted the economy or rescued natural resources, he said. And Mr. Mollohan said he has earned the political gifts that have come from government contractors and others “by being an effective and hard-working representative.”

    Ms. Kuhns has long been a central figure in the congressman’s efforts to earmark spending for West Virginia. After leaving his staff, where she handled appropriations projects, 16 years ago, she went to work for a local real-estate developer that now does work for many of the Mollohan-funded nonprofits and employs her husband.

    Since 2000, she has run Vandalia, which has won $28 million in the past five years in federal funding to rehabilitate historic buildings and invest in depressed real estate in the district, largely through Mollohan-backed earmarks. Besides ISR, she serves on the board of MountainMade Foundation, a small federally funded nonprofit dedicated to promoting West Virginia crafts. She’s also on the board of the only out-of-state foundation to get Mr. Mollohan’s backing, the National Housing Development Corp. It is a California group that has won $31 million in earmarks over five years.

    Ms. Kuhns said she and her husband have done nothing wrong and have worked hard for West Virginia. “There’s no smoking gun here,” she said. “All of these entities are rigorously audited. There is a misperception that there is no accountability in earmarks. Nothing could be further from the truth.”

    ISR is the largest nonprofit funded by Mr. Mollohan’s efforts, winning at least $76 million of federal spending through his earmarks in the past five years. It paid its top three executives a total of $777,000 in 2004, the latest available figures. The president of ISR, James Estep, said in an interview that it has created hundreds of West Virginia jobs and nurtured dozens of high-tech companies. From his office overlooking the I-79 Technology Park — on 500 acres largely purchased with federal funds — Mr. Estep pointed to bulldozers at a building site. “This was cow pasture in 1995. Now there are 1,000 people working here,” he said.

    The research center will offer laboratory and office space and huge manufacturing bays built into the mountain. Mr. Estep said he won’t have trouble drawing tenants. Until then, he said he would fill part of the new building with a small robot-manufacturing firm spun off from the West Virginia High Technology Consortium — another group funded by Mollohan-backed earmarks. The robot firm, known as Innovative Response Technologies and now a for-profit, recently won a $10 million Navy contract for 3,500 mobile “BomBots” for remotely inspecting possible roadside bombs.

    Mr. Mollohan earmarked $3.75 million in the 2004 and 2005 Defense Department spending bills to develop the robots, funneling the money to the nonprofit consortium. The new Navy contract will be shared with another defense firm in Mr. Mollohan’s district that has also been a contributor to his campaign, called Azimuth Corp.

    Mr. Mollohan said he had no role in getting the Navy contract and applauded the work. But he acknowledged he sometimes has pressed federal agencies to spend money for projects they didn’t want. The FBI and National Aeronautics and Space Administration didn’t seek to move operations into the I-79 Technology Park in West Virginia, he said, but they’re now part of a thriving federal-services sector in the state. “I’m sure that NASA didn’t want to build the space center in Houston, either, when Lyndon Johnson sent them out there,” he said.

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  8. Roger says:

    Hold your horses, neocons. The following was posted on Talking Points today:

    Which is it on Rep. Mollohan (D-WV)?

    On Friday, the Wall Street Journal reported that “federal prosecutors have opened an investigation of Mr. Mollohan’s finances and whether they were properly disclosed” in response to a complaint filed by the right-wing National Legal and Policy Center.

    …But an article in Saturday’s Times says simply that the US Attorney’s office is ” reviewing the [NLPC] complaint.” The AP says that the US Attorney’s office refused all comment.

    Given the politics involved, the difference between reviewing a complaint and launching an investigation based on a complaint is a big one.

    Which is it?

    — Josh Marshall

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  9. Senior Democrat Under Investigation…

    Almost sounds, to a lesser extent, like Money Laundering the way this is put.
    The Senator gives to ‘non-profit’ funds that are closely associated with him, or have people who are closely associated with him running them, and they in turn raise money…

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