Gary Miller (CA-42) is the latest Republican Congressman to come under investigation for criminal charges. This one, in addition to having provoked the investigatory interest of the FBI, has also raised the ire of the IRS. That being about a little matter of a $10 million dollar profit on a land sale - that he did not pay capital gains tax on. Maybe he was dreaming that the Republican Party had succeeded in its goal of eliminating capital gains taxes entirely? On top of that, this was land purchased for park/open space - and he may have sought an earmark to purchase it (that's not entirely clear). And then there’s the usual: political favors for a donor who wanted an airport closed down. The story’s too complicated to fit in the intro, so I’ll have to carry on below the fold.
MEET HOUSE REP. GARY MILLER
Gary Miller (not to be confused with George Miller, D, CA-7) was first elected to the House in 1998. In 2006, he ran for election unopposed. His growing seniority has garnered him an appointment as Ranking Member of the Subcommittee on Investigations on the House Financial Services Committee. (And under investigation as a tax cheat! Yikes!!)
Here, we see Congressman Miller dressed up as a Confederate soldier. But we can’t hold that against him, as it was an acutal side job, appearing as an actor in the Warner Brothers film, Gods and Generals in 2001. Yet another one of those so-called Hollywood liberals then? Hardly. Miller’s a member of the ultra-conservative Republican Study Committee, chaired by Mike Pence of Indiana.
Map of CA-42:
CLOSING AN AIRPORT FOR A DONOR
Keeping in mind that Miller ran unopposed, it’s not like he was in need of oodles of campaign cash. But that didn’t stop him from doing a political favor for a friend who gave money to his campaign. From today's San Gabriel Tribune, a newspaper from the district:
Miller came under scrutiny in a 2005 San Gabriel Valley Tribune article when he earmarked $1.28 million for street improvements in Diamond Bar near a planned commercial and residential development he co- owned with Lewis Operating Co., his largest campaign contributor. Other news articles have also detailed Miller's 2005 use of a highway bill to allow Rialto to close down its airport, a move that allowed Lewis Operating to develop the airport land.
LUCRATIVE LAND DEAL
Dennis Hastert cleared a cool million for land he sold for a highway development he slipped into an earmark. And the Pombo family in California apparently benefitted from a similar highway related deal. So this kind of thing is not unheard of. But Miller’s real estate windfall was an order of magnitude greater than Hastert’s. A cool ten million! CREW filed a IRS complaint against the Congressman last summer:
In 2002, Rep. Miller sold 165 acres to the city of Monrovia, California, making a profit of approximately $10 million. In 2004, Rep. Miller reinvested the proceeds of the sale in land and building purchases in Fontana, California, and Rancho Cucamonga, California. Rep. Miller again claimed IRC 1033 exemption when he sold some of his Fontana land and building acquisitions in April and June of 2005. He used proceeds from this sale to purchase additional land in Fontana, which he subsequently sold to the city in 2006 for $50,000 more than his original purchase price.
So, ten million profit in a land deal. And federal earmarks for improvements that increased the property value. This has been business-as-usual for entirely too many Republicans in Tom Delay's short-lived "Permanenet Majority." Sigh.
THE IRS IS INTERESTED
Hastert apparently declared his ill-gotten gains on his taxes (I’m assuming we’d have heard it by now if he didn’t). And Pombo’s gains are buried in one of the family holding companies. But Miller? He made ten million, and didn’t pay taxes on it! Why not? He says he was forced to sell under eminent domain. I’m not tax lawyer or accountant, but last time I checked, capital gains aren’t exempt from taxes if they’re associated with eminent domain. But there is a loophole. From today’s LA Times:
After a land sale in Monrovia in 2002 and two subsequent sales in Fontana in 2005 and 2006, Miller claimed an exemption under Internal Revenue Code Section 1033, which grants those forced to sell property through eminent domain at least two years to reinvest the profits without paying capital gains taxes. Miller's repeated use of the forced-sale exemption has enabled deferment of capital gains taxes through at least 2009.
As it happens, the local authorities dispute that he was forced to sell, and there’s enough evidence to get the FBI involved. And, apparently, the IRS isn’t pleased either.
Dick Singer, a spokesman for Monrovia, said federal agents had interviewed city officials and requested a videotape from a City Council meeting in 2000 cited by The Times in which Miller asked city officials four times to buy his land.
In fact, there's a video from a City Council meeting showing Miller requesting them to purchase the land, which rather undermines the "eminent domain" defense. It's now been turned over to the FBI. (Apparently not released on the web yet. At least I couldn't find it. But sooner or later, it's bound to turn up, so keep an eye out.) So much for that argument. This one might be serious enough for Miller to lose his pension under the new House ethics provisions.
COUNTDOWN TO SPECIAL ELECTION?
Even in the Minority, the Republicans don’t yet seem to get what this "Culture of Corruption" slogan was about. From The Hill, also today:
After months of GOP ethics scandals, House Republicans chose Rep. Gary Miller (R-Calif.) as the ranking member of a panel charged with investigating financial institutions — even as the FBI was looking into his land deals.
Representative Spencer Bachus (R-Ala.), ranking member of the Financial Services Committee, named Miller to the top GOP spot on the oversight and investigative subcommittee Jan. 9, according to a committee release. Watchdog groups have been raising red flags on several of Miller’s land deals since The Hill and other media outlets first scrutinized them early last year. Yesterday, a spokesman for the southern California city of Monrovia confirmed that agency officials had contacted the city about Miller’s land deals in the last two months.
Brian Kennedy, who used to be Richard Pombo’s spokesman for the House Resources Committee, has landed on his feet with a similar position for Minority Leader Boehner:
"Mr. Boehner has made it abundantly clear that he and the new Republican leadership team in the House intend to hold members to the highest possible ethical standards," Kennedy said. "If any Republican member is found to have violated ethics rules or broken laws, this leadership team and the Steering Committee will act accordingly and decisively."
Mama mia! Talk about shooting yourself in the foot! Furthermore, there was an effort to get an earmark for purchase of the land. It is not entirely clear whether Rep. Miller played any role in seeking this earmark. Predictably, Miller is lashing out at a smear campaign by the press.
According to The Hill, DCCC has already designated Miller as a target for 2008. But perhaps it won’t take that long. Presumably, Chris Van Hollen (D-MD), the new head of the DCCC, is on the ball, scouting new talent to run in a potential upcoming special election.
Daily Kos has some diary history on the background for this story. Follow the link and read up if you want more detail.