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Rangel Could Face $100K Tab

Audit Costlier Than Back Taxes

Rep. Charlie Rangel (D-N.Y.) is asking the House ethics committee to allow him to use campaign contributions to pay a forensic auditor to investigate his tax returns and personal financial disclosures, his lawyer said Tuesday.

Crisis management experts said Rangel’s legal expenses and a detailed audit could end up costing more than $100,000, which is likely to be far more than any tax penalty he is ultimately required to pay for failure to report income from his various properties.

With the support of Speaker Nancy Pelosi (D-Calif.), Rangel defied House Republicans on Tuesday, announcing that he would not step down from his post as chairman of the House Ways and Means Committee.

Rangel has been dogged by reports that he failed to properly disclose his assets on tax forms and Congressional financial disclosure forms. He estimated that he could owe $10,000 in back taxes and penalties.

In July, he asked the House Committee on Standards of Official Conduct to investigate his leasing arrangements on four apartments in a New York complex and his fundraising for a City College of New York program. Last week, Rangel asked the committee to look into his failure to report rental income from a villa he owns in the Dominican Republic.

On Sunday, Rangel announced that he will hire a forensic accounting firm to prepare a comprehensive review of his tax and financial disclosure forms for the past 20 years, which apparently have myriad errors. That report will be submitted to the ethics committee as well.

Last week, Rangel asked the committee for permission to use campaign funds to pay his legal expenses for the first two investigations.

His attorney, Lanny Davis, said Tuesday that Rangel’s legal team is preparing a follow-up letter asking for permission to also use his campaign treasury to pay for expenses related to the Dominican villa investigation and the forensic audit.

Eric Dezenhall, president of the crisis management firm Dezenhall Resources, said that between the legal assistance provided by Davis and his team and hiring a top-notch accounting firm, “you are dealing with [a bill] in the low six figures at least.”

Rangel’s decision to ask the ethics committee to investigate his compliance with House rules and to hire a third-party investigator to comb through his finances may push any result past the Nov. 4 election, but it is not clear that matters much to Rangel. He is in a rematch against a Republican opponent who has no campaign committee registered with the Federal Election Commission and an Independent who entered the race days ago.

“Mr. Rangel has instructed me to get this done as quickly as possible. … No delay is helpful to us,” Davis said.

Meanwhile, Rangel will not give up his gavel.

Davis told reporters in a conference call Tuesday that Rangel “has not considered, nor has it ever been on the table, that he would step aside from his current position as chairman of the House Ways and Means Committee.”

Pelosi later told reporters: “I see no reason why Mr. Rangel should step down. … [He] has called for the ethics committee to look into his disclosures, etc., and … I have supported his call for the ethics committee to look into that.”

Last week, Minority Leader John Boehner (R-Ohio) and other Republican leaders wrote to Pelosi: “Given Chairman Rangel’s continuing ethical lapses, he cannot effectively carry out his duties as Chairman of the Ways and Means Committee.” On Sunday the New York Times published an editorial calling for Rangel to step down as well.

Davis said Rangel decided not to step aside while the various investigations are pending because he “believes that facts should prevail, not innuendo or editorial opinion or the partisan actions of the House Republican leadership. And his colleagues agree with that judgment.”

Davis said the ethics committee has already contacted him about the New York apartment and the CCNY letters and is looking into them. But ethics committee rules prohibit the panel from investigating any complaint filed within 60 days of an election when the target of the complaint is a candidate. It is not clear whether that rule — which could delay an investigation into the Dominican matter — also applies when it is the candidate himself filing the complaint.

In a half-hour meeting in the Ways and Means offices Tuesday afternoon, Rangel assured members of the New York delegation he was moving to pay his back taxes and had no intention of giving up his gavel, participants said.

“Mistakes were obviously made, but he’s owned up to them and obviously he’ll set them right,” Rep. John Hall (D-N.Y.) said after exiting the meeting.

Rangel’s Democratic colleagues on the Ways and Means panel likewise said they are rallying around their chairman. Rep. Richard Neal (D-Mass.), considered a rising star on the committee who could be a possible replacement if Rangel stepped down, said, “There is no vacancy. And I don’t know of anyone who’s breaking ranks on the committee.”

Rep. Artur Davis (D-Ala.), another committee member, said support for Rangel on the panel has been unanimous. “There’s a very strong feeling among Democrats on the Ways and Means Committee that Charlie Rangel has not only been a superb chairman, but his 38 years in the House entitles him to better treatment than he’s getting from the press, frankly, and from Republicans,” Davis said.

Republicans have been trying to turn up the heat on the controversy by targeting vulnerable Democrats who have benefited from Rangel’s prolific fundraising help, calling on them to return the contributions and demand Rangel step aside from Ways and Means.

Mark Begich, the Democrat challenging Sen. Ted Stevens (R-Alaska) for his Senate seat, announced Tuesday that he would give to a local charity a $10,000 donation that he received from Rangel’s political action committee in June.

A spokesman for the National Republican Congressional Committee issued a statement on Tuesday afternoon that said: “In a time of financial crisis, Democrats are proudly standing by an individual who not only circumvented the very tax hikes he himself has authored, but then escaped responsibility by claiming he is incapable of keeping his own financial house in order.”

Jennifer Bendery and Shira Toeplitz contributed to this report.

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