Charles B. Rangel
2008?2010: Ethics issues and censure
[edit] Letterhead use and Rangel Center fundraising
In July 2008, The Washington Post reported that Rangel was soliciting donations to the Charles B. Rangel Center for Public Service at City College of New York from corporations with business interests before his Ways and Means Committee, and was doing so using Congressional letterhead.[111] Such companies and individuals included AIG, Donald Trump, and Nabors Industries, and by this time Rangel's efforts had helped raise $12 million of the $30 million goal for the center.[111] Government watchdog groups and ethics experts criticized Rangel's actions, with the dean of the George Washington University Graduate School of Political Management saying Rangel "has crossed the line".[111]
Rangel denied any wrongdoing and asked the U.S. House Committee on Standards of Official Conduct, commonly known as the House Ethics Committee, to determine if his use of Congressional letterhead while arranging meetings to solicit contributions for the Center had violated any House rules.[101] House Speaker Nancy Pelosi agreed to Rangel's request.[101]
[edit] Renting Harlem apartments at below-market rates
The New York Times reported in July 2008 that Rangel rents four apartments at below-market rates in the Lenox Terrace complex in Harlem. It reported that Rangel paid $3,894 monthly for all four apartments in 2007. In contrast, the landlord's going rate for similar apartments in the building was as high as $8,125 monthly. Three adjacent apartments were combined to create his 2,500-square-foot (230 m2) home. A fourth unit is used as a campaign office, which violates city and state regulations that require rent-stabilized apartments to be used as a primary residence. Rangel received thousands of dollars in campaign contributions from one of the landlord?s, according to the paper. Rangel said his rent does not affect his representation of his constituents.[63]
Congressional ethics experts said the difference in rent between what Rangel was paying and market rates, an estimated $30,000 per year, could be construed as a gift, exceeding the $100 House of Representatives gift limit.[63] In late July, the House voted 254?138 to table a resolution by Republican Minority Leader John Boehner that would have censured Rangel for having "dishonored himself and brought discredit to the House", by occupying the four apartments.[112]
[edit] House parking garage
A September 2008 New York Post article reported that Rangel had been using a House parking garage as free storage space for his Mercedes-Benz for years, in apparent violation of Congressional rules. Under IRS regulations, free parking (here, worth $290 a month) is considered imputed income, and must be declared on tax returns.[113] In July 2010 the House Ethics Committee ruled that Rangel had committed no violation, since in practice the parking policy was only applied to Congressional staff and not to members themselves.[114]
[edit] Taxes on Dominican villa rental income
Rangel was accused of failing to report income from his rental of a beachside villa he owns in Punta Cana in the Dominican Republic. A three-bedroom, three-bath unit, it has rented out for as much as $1,100 per night in the busiest tourist season.[115]
Labor lawyer Theodore Kheel, a principal investor in the resort development company and frequent campaign contributor to Rangel, had encouraged him to purchase the villa. Rangel purchased it in 1988 for $82,750. He financed $53,737.50 of the purchase price for seven years at an interest rate of 10.5%, but was one of several early investors whose interest payments were waived in 1990.[116]
In September 2008, Rangel's attorney, Lanny Davis, disclosed that Rangel had failed to report on his tax returns or in congressional disclosure forms $75,000 in income he had received for renting his Dominican villa. That month, Rangel paid $10,800 to cover his liability for the related back taxes.[117][118] He had owed back taxes for at least three years. The Ways and Means Committee writes the U.S. tax code, and as such his failure to pay taxes himself led to heavy criticism.[118]
A September 14, 2008, New York Times editorial called for Rangel to step down temporarily from his chairmanship of the Ways and Means Committee while his ethical problems were investigated.[119]
On September 24, 2008, the House Ethics Committee announced that it would investigate whether Rangel had violated its code of conduct or any law or other regulation related to his performance of his duties.[120] On November 23, 2008, The New York Post reported that Rangel took a "homestead" tax break on his Washington, DC, house for years, while simultaneously occupying multiple New York City rent-stabilized apartments, "possibly violating laws and regulations in both cases."[121] In January 2009, Republican Representative John R. Carter introduced the Rangel Rule Act of 2009 (H.R. 735), a tongue-in-cheek proposal that would have allowed all taxpayers to not pay penalties and interest on back taxes, in reference to Rangel not yet having paid his.[122]
[edit] Defense of tax shelter
Rangel receives book written by US Consul General Gregory Slayton, in Bermuda in 2009
In November 2008, following reports by The New York Times, Republican Congressmen asked the House Ethics Committee to look into Rangel's defense of a tax shelter approved by his Ways and Means Committee. One of the four companies that benefited from the loophole was Nabors Industries, which opened headquarters in Bermuda as a foreign corporation.[123] Under the loophole, Nabors receives tens of millions of dollars in tax breaks. In 2004, Rangel had led opposition to the tax breaks.[123] Nabors donated $1 million in 2006, and $100,000 later, to the City College of New York school named after Rangel.
Its CEO said the donations were unrelated to Rangel's February 2007 promise to oppose closing the loophole.[123] He denied there was any quid pro quo, and called the article about it "malarkey".[124] Rangel said The New York Times had ignored facts and explanations, and denied the charges.[123][125][126] The House Ethics Committee voted in December 2008, to expand its investigation of Rangel to the matter.[127] Eventually the Ethics Committee would not make a specific charge over this matter but did include it in the supporting documentation for the overall charge that Rangel had solicited Rangel Center donations from those with business before his committee.[128]
[edit] Unreported assets and income
On September 15, 2008, it was disclosed that: a) Rangel had omitted from his financial reports details regarding his sale of a Washington, DC home; b) discrepancies existed in the values he listed for a property he owns in Sunny Isles, Florida (varying from $50,000 to $500,000); and c) inconsistencies appeared in his investment fund reporting. He apologized, saying "I owed my colleagues and the public adherence to a higher standard of care, not only as a member of Congress, but even more as the chair of the House Ways and Means Committee." Republicans called for his removal as chair. Rangel said there was no justification for that, as the mistakes were errors of omission, that would not justify loss of his position.[129]
In August 2009, Rangel amended his 2007 financial disclosure form to report more than $500,000 in previously unreported assets and income. That doubled his reported net worth. Unreported assets included a federal credit union checking account of between $250,000 and $500,000, several investment accounts, stock in Yum! Brands and PepsiCo, and property in Glassboro, New Jersey. Rangel also had not paid property taxes on two of his New Jersey properties, which he was required by law to do.
The ethics issues led by December 2008 to some loss of standing for Rangel, to Republicans trying to tie him to all Democrats, and to some Democrats privately saying it would be best if Rangel stepped down from his Ways and Means post.[130] In late 2008 and again in September 2009, the government watchdog group Citizens for Responsibility and Ethics in Washington named Rangel one of the 15 most corrupt members of Congress.[131] Media pieces compared Rangel's woes with those of ethically challenged past Ways and Means chairs Wilbur Mills and Dan Rostenkowski.[77] Pelosi, a long-time friend of Rangel's, withheld any possible action against Rangel pending the House Ethics Committee report.[75] Rangel evinced impatience with that body, saying "I don't have a complaint now, except that it's taking too goddamn long to review this thing and report back."[77] On September 3, 2009, The Washington Post called on Rangel to resign his chairmanship of the House Ways and Means Committee, given the ethical issues that had surfaced. Another Republican resolution was put forth to force him out of his chairmanship. However, Rangel stayed in place and mostly maintained his role in House leadership and policy discussions,[75] including the Obama health care reform plan[77] (opposition to which, he suggested, was partly due to racial prejudice against President Obama).[132] Nevertheless, his influence was diminished by the questions surrounding him.[77]
[edit] Caribbean trips
In May 2009, the non-profit National Legal and Policy Center filed an ethics complaint against Rangel and other members of Congress for trips, taken in 2007 and 2008 to Caribbean islands. The trips had been sponsored by Carib News Foundation, a New York non-profit funded by corporations with interests before Congress and the Ways and Means Committee.[133] This, combined with the duration of the trips, seemed to violate House rules. The Ethics Committee agreed the following month to investigate the matter.[134]
On February 26, 2010, the Ethics Committee issued its report.[135] It determined that Rangel had violated House gift rules, by accepting reimbursement for his travel to the conferences.[136] It found that he had not known of the contributions, but concluded that he was still responsible for them and was required to repay their cost.[136] Five other members were cleared of having violated rules, but were also required to repay their trips.[136] Rangel disagreed with the committee's finding, saying:
Because they were my staff members who knew, one of whom has been discharged, [the committee has decided] that I should have known. Common sense dictates that members of Congress should not be held responsible for what could be the wrongdoing, or mistakes, or errors of staff.[133]
Pelosi said she would not take any action against Rangel pending further committee findings, as his staff had been more at fault and he had not broken any law.[133] The Ethics Committee continued to investigate the charges against Rangel relating to obtaining rent-stabilized apartments, fundraising, and failure to disclose rental income from his Dominican villa.[133
