The tempest that’s been created over Sen. Harry Reid’s Las Vegas real-estate transaction puts me in mind of the famous poet’s famous line “There is no there, there.”
In Reid’s case, the line could be adapted to say: There was no sale there.
For those who haven’t been following this tale, it all stems from a recent Associated Press story. The article reported that Reid, the Senate’s top Democrat as minority leader, may have run afoul of Senate ethics rules by failing to disclose on his ethics forms the 2001 “sale” of Las Vegas real estate he owned with a friend.
There’s only one problem.
Reid of Nevada didn’t actually sell the real estate in 2001. What he did was transfer it to—get this—himself and the same friend he bought it with in 1998, a former casino lawyer named Jay Brown.
The men transferred the real estate to a limited liability company, or LLC, they controlled called Patrick Lane LLC.
Such tranfers are very common and exceedingly legal. Indeed, many lawyers recommend the step to investors and small business people as a way to shield their personal wealth from liability, as in the event someone is injured or killed on the real estate.
So it’s credible when Reid says that he didn’t disclose a “sale” on his 2001 disclosure form because there was no sale.
When the men sold the real-estate in 2004 for $1.6 million, Reid received about 75 percent of that, between $1.1 million and $1.2. million, according to a Reid aide. His profit, based on his original investment of $400,000 amounted to about $700,000. His 2004 disclosure form doesn’t have the precise figure, saying only that it fell within a certain range. The reporting rules permit such ballparking.
Senate ethics requirements also didn’t require Reid to report on his disclosure form who his real-estate partner was.
But the Washington Post, in an editorial today, took the Nevada senator to task for not making such disclosures. It also, mistakenly, said he no longer owned the land after 2001.
“… That Mr. Reid no longer owned the land, but instead had sold it for an interest in the Patrick Lane Corp, was not some mere ‘technical change,’ as the senator would like to brush it off. It’s an essential element of financial disclosure rules, the purpose of which is to know how and with whom public officials are financially entwined.”
The problem with the Post’s position is, once again, there was no sale. The two men still owned the property though in 2001 it wasn't owned in their names per se but in the name of a legal en y they controlled.
They were even paying property taxes on the real estate in rough proportion to their ownership stakes. The AP story says as much. Not even Democrats are willing to pay real-estate taxes on property they no longer own.
Another problem:
there weren’t any ethics rules that required Reid to disclose who his partner was. So he’s being pilloried for not following a regulation that didn’t exist.
It's not typical for lawmakers to go beyond what's required when they file their financial disclosures. For instance, House Speaker Rep. Dennis Hastert (R-Ill.) didn't reveal on his 2005 disclosure his use of a trust to acquire and sell acreage--his own and other land owned by a partnership he belonged to--to a developer for $4.9 million.
He didn't have to. His lawyer said that instead of disclosing the trust without telling exactly what the trust owned, "Speaker Hastert disclosed the amount of his interest and the location of the property on the Financial Disclosure for the year in which the closing of the transaction occurred."
Getting back to Reid, the Posts suggests that Reid might have wanted to hide his business dealings with Brown, whose name has come up in federal probes as the Washington Post points out, though he has never been charged with wrongdoing.
But Reid and Brown's names could easily be found on real-estate do ents on file with Clark County where Las Vegas resides, records accessible to the public, including Republican opposition researchers and investigative journalists. Not exactly the way one would operate if covering one's tracks was the goal.
"Obviously, Republicans are in danger of losing the House and the Senate and are desperate to push out any story that takes their troubles off the front page," said Jim Manley, Reid's spokesman. "The fact is Senator Reid owned the land from 1998 to 2004 and he fully disclosed that fact. If the ethics committee requests a technical correction to Senator Reid's disclosure forms we are happy to provide one."
The Republican National Committee picked up the Post editorial and other unfavorable Reid news coverage, wrapped it up in a press release and sent it out today, hoping to give this story more legs.
But the legs on this story seem very wobbly.
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