Rangel Didn’t List Profit

But Omission May Not Have Violated Rules

Posted September 15, 2008 at 6:43pm

House Ways and Means Chairman Charlie Rangel (D-N.Y.) appears to have made a $70,000 profit from the 2006 sale of a Florida condominium he had purchased two years earlier, but he never reported the profit on his Congressional financial disclosure forms.

However, Rangel’s failure to disclose may not be a violation of House rules, because he never reported any income from the condo, despite listing it as a rental property. In fact, he might not have had to report the purchase or sale of the condo at all.

House rules — which are based on a federal disclosure law — require Members to report their assets and income every year.

But personal residences are exempt from reporting requirements, and even second or third residences can be exempt as long as they do not generate income.

Rangel’s chief of staff, George Dalley, acknowledged Monday that there have been myriad errors on Rangel’s disclosure forms. But he said these errors were “not an attempt at evasion or hiding income … or any slick operation. It was a clumsy operation. We made mistakes, and we will live with them.”

Roll Call sent Rangel’s attorney, Lanny Davis, a detailed list of questions Friday about errors on the Congressman’s financial disclosure forms, particularly the fact that Rangel had never reported income from the sale of stocks and other investments.

Dalley said Monday that he and Rangel simply did not take sufficient care in filling out the disclosure forms and understanding the complexity of the rules.

On his financial disclosure form for calendar year 2004, Rangel reported that he bought a condo in the Miami Beach area town of Sunny Isles, Fla., for between $100,000 and $250,000. He also listed the condo among his personal assets, noting the value of the condo that year at $50,000 to $100,000.

But according to Florida land records and local real estate listings, Rangel and his wife purchased the condo for $335,000.

On his 2006 disclosure form, Rangel reported selling the place for between $250,000 and $500,000, but the following year he amended that report, setting the sale price at $100,000 to $250,000.

Florida land records place the actual July 2006 sale price at $405,000, meaning the Rangels made a $70,000 profit on the deal, which was never reported on Rangel’s financial disclosure forms.

The ethics committee manual for filling out disclosure forms points out clearly that “practically any security or real property that you purchased, sold or exchanged during the year will have to be reported on both” the transactions list and the income tables.

But personal residences are exempt, and second homes that are really investment properties are a gray area. Rangel’s disclosure forms indicate that he held the Florida condo for rental purposes, but he never reported any income. Dalley said it was never rented, which means Rangel may not have been required to report the purchase, the sale or the profit. Apparently, neither Rangel nor Dalley knew about this loophole.

Dalley said it was Alma Rangel, the Congressman’s wife, who purchased the condo, as part of a plan she had that the couple would retire to Florida. “He decided he wasn’t really ready for retirement,” Dalley said, and his wife “saw it his way and the condo was ultimately sold.”

But Dalley said the Congressman’s reporting of the prices of the condo was clearly in error. “There was lack of communication” between husband and wife, he said, and “a lack of information available” when he was filling out the disclosure forms.

Dalley said he generally would fill out the forms at the last minute and provide them to Rangel for his review and signature, but they both saw the reporting requirement as a nuisance.

“A long time ago we should have had professional help in getting this done,” Dalley said. “Now we are seeing that there is a consequence to it.”

In some cases, Rangel actually reported more than the rules require. For instance, on his disclosure form for 2007, the Congressman reported that he had exchanged seven investment funds for other investments during the year. Since he no longer held those funds at the end of the year, the “year end value” of those funds should have been reported as “zero.” Instead, Rangel has listed a value of between $15,000 and $50,000, for most of these funds, meaning that his disclosure form for that year seems to overestimate his assets by more than $100,000. In essence, Rangel was reporting that he still owned stock he had already sold.

Rangel issued a statement Sunday evening in which he essentially admitted that there were likely numerous errors in his forms. “While over the years, I delegated to my staff the completion of my annual House financial disclosure statements, I had the ultimate responsibility,” Rangel said. “I owed my colleagues and the public adherence to a higher standard of care.”

Rangel said he would hire a “forensic accountant” to review all of his disclosure forms going back 20 years, and to provide a report to the House Committee on Standards of Official Conduct, which Rangel said he will then make public.

Davis said Rangel’s decision “shows that he has nothing to hide, and does not believe he has done anything intentionally wrong.”

Dalley said the primary thing Rangel is guilty of is “a misplaced reliance on staff — me, specifically. … Of all of the things that I’ve worked with him on, this is the thing I am the least proud of.”

Rangel has also asked the House ethics committee to investigate his failure to properly report income from a villa he owns in the Dominican Republic, as well as his rental of several apartments in New York and his use of Congressional letterhead for fundraising efforts for a City College of New York center bearing his name.