Peter Schweizer - Throw Them All Out

Did I mention that Senator Gregg's brother, Cyrus, happened to be the developer of the air base? Or that Senator Gregg himself had invested between $450,000 and $1 million of his own money in what is now called the Pease International Tradeport? Along the way, the senator has collected between $240,000 and $650,000 on his investment. (Curiously, like Hastert, Gregg did not list all of the real estate addresses on his financial disclosure forms.) 11

Before he secured the earmarks, Gregg invested through several partnerships, including 222 International Drive, LLP, and Say Pease, LLC. The former, for the development of a commercial building, was valued at around $11 million. 12

When President Obama announced then-Senator Gregg as his choice for commerce secretary in 2009, Gregg was asked about the earmarks and how he profited from them. "I am absolutely sure that in every way I've complied with the ethics rules of the Senate both literally and in their spirit relative to any investment that I've made anywhere," he stated to the press. Unfortunately, he is correct—and that, of course, is the problem: this stuff is completely legal and, according to Senate rules, ethical. When he made that statement, he should have stopped right there. Instead, he continued: "These earmarks do not benefit me in any way, shape, or manner financially, personally or in any other manner other than the fact that I'm a citizen of New Hampshire." 13Yeah, sure.

Redeveloping a military base using taxpayer money to boost your investment is of course a benefit, personal and financial: Gregg was able to put his thumb on the scale of fair-market reward for his investment. The former senator now works for Goldman Sachs as a consultant, where he provides "strategic advice" and assists "in business development initiatives." 14

These kinds of deals are not at all uncommon. Congressman Ken Calvert of California is a Republican member of the powerful Appropriations Committee and was first elected to Congress in 1992. His background is in real estate, and through a real estate firm he partly owns, run by his brother Quint, he is still an active investor.

In 2005, Calvert and a partner paid $550,000 for a 4.3-acre parcel of land just south of March Air Reserve Base in Southern California. Shortly afterward, he secured $1.5 million in taxpayer money to support commercial development around the base. Less than a year after the earmark, Calvert and his partner sold the land (without having made any improvements) for $985,000—a 79% profit. Not bad!

In the early summer of 2005, Calvert's real estate firm brokered a sale involving a property at 20330 Temescal Canyon Road, in Corona, California, which was a few blocks from a proposed interchange for Interstate 15. Calvert then helped secure an earmark to build the interchange. Within six months, the property was sold at a nearly $500,000 profit. Calvert's firm received a commission on both transactions. Good work if you can get it.

Calvert was careful: he sent both of these earmarks to the House Ethics Committee for approval, because he stood to benefit personally from them. The committee, in a letter signed by Congresswoman Stephanie Tubbs Jones and Congressman Alcee Hastings, said the use of taxpayer money was fine because any profits "resulting from the earmark would be incremental and indirect and would be experienced as a member of a class of landholders." In other words, Calvert was not the sole beneficiary, and the earmarked funds were not paid directly to him. 15

Congressman David Hobson of Ohio helped obtain federal earmarks to build a freight transfer center at the Columbus airport to help ship goods to and from central Ohio. The trouble is that Hobson co-owned an office building near the project, and his tenants included freight companies such as FedEx that would use the freight center. He'd bought the building in 2001, and over the next seven years secured $30 million in federal transportation money to build the freight terminal, which was part of the conversion of old Rickenbacker Air Force Base outside Columbus. On another occasion, in 2004, Hobson worked to get nearly $2 million in taxpayer money to widen a road near Dayton, which happened to run right in front of a condominium development in which he was an investor. He had bought into the project only one year earlier.

Hobson retired from office in 2008. The House Ethics Committee, at the time chaired by Congresswoman Stephanie Tubbs Jones, again said that the earmarks were acceptable because they were only an indirect benefit to Hobson and the airport investment was "speculative."

Congressman Heath Shuler of North Carolina is relatively new to Congress, but he quickly demonstrated his understanding that the power of his position could be helpful in a real estate transaction—particularly if it involved a deal with a government agency that he helped oversee.

First elected in 2006 in a western North Carolina district, Shuler had been a star quarterback at the University of Tennessee who'd had a brief stint in the NFL before becoming a real estate investor. One of his largest holdings in 2007 was in a real estate entity called the Cove at Blackberry Ridge, whose investors owned a large plot of land. According to Shuler's financial disclosures, his stake in the Cove was worth between $5 million and $25 million at the time. The investors planned to turn their land into a residential development. But there was one problem: they didn't have water access rights.

That seemed to be fixed in August 2008 when the Tennessee Valley Authority (TVA) announced a new water access deal for the investment group, providing 145 feet of frontage along the shoreline of the Watts Bar Reservoir in exchange for water access rights the group held in a neighboring county. What makes this so interesting is that at the time Shuler sat on the congressional subcommittee that had oversight of the TVA. When the deal was announced, eyebrows were raised. TVA employees first claimed they did not know Congressman Shuler was involved in the project. For his part, Shuler denied having any contact with the government agency. But later, he admitted that he had indeed picked up the phone and called TVA President Tom Kilgore in 2007 about getting the land-swap deal done. A TVA inspector general's report noted that there was an "inherent conflict of interest" in the swap. The report also said that Shuler's deal "created the appearance of preferential treatment." However, the report was quick to beg off any condemnation. "We make no judgment as to whether Congressman Shuler's actions connected to the Blackberry Cove matter violate any ethical standard." For its part, the House Ethics Committee again found nothing wrong. 16

Congressman Bennie Thompson, when he is not inserting earmarks for Napa Valley, California, has done so for tiny Bolton, Mississippi, population 600. One earmark was for a museum project; another, for $500,000, was to help improve the infrastructure of the Bolton Industrial Park. What Thompson hopes we don't notice is that he owns commercial real estate in the town, including lots 1, 3, and 31 on L. C. Turner Circle and what he describes as "2 acres of unimproved land in Bolton, Mississippi." It so happens that the earmarked projects are very near his investment properties.

Representative Maurice Hinchey of New York has the honor of being one of the fastest climbers in Congress in terms of net worth. In 2004, his net assets, based on his personal financial disclosure forms, totaled around $74,000. In 2008, he reported an average net worth of $727,000. 17That's an 800% increase in just four years. How did he do it?

Much of it came through his sponsorship of an earmark for $800,000 to the Department of the Interior for water and wastewater infrastructure improvements in the Hudson Valley town of Saugerties. Specifically, it was for upgrades to Partition Street. In a press release, Hinchey took credit for bringing money to the town: "Congressman Used Position on House Appropriations Subcommittee on Interior to Obtain Funds, Which Will Help Promote Economic Growth in the Village," it read. In the release he boasted that "a second portion of the sanitary system on Route 9W or Partition Street is in the center of the business district of the Village of Saugerties."