Saturday, September 06, 2008

It Just Gets Better and Better

I think we're seeing the undoing of Rep. Charles Rangel (D-NY).

Where could I get a mortgage like this where I'm supposed to pay one interest rate (a high one of 10.5%, but don't have to pay anything because the lender decides to waive it).
Representative Charles B. Rangel paid no interest for more than a decade on a mortgage extended to him to buy a villa at a beachfront resort in the Dominican Republic, according to Mr. Rangel’s lawyer and records from the resort.

The loan was given to him by the resort development company, in which Theodore Kheel, a prominent New York labor lawyer, was a principal investor. Mr. Kheel, who has given tens of thousands of dollars to Mr. Rangel’s campaigns over the past decade, had encouraged the congressman to be one of the initial investors in the project.

The loan, which was extended to Mr. Rangel in 1988, was originally to be paid back over seven years at a rate of 10.5 percent. But within two years, interest on the loan was waived for Mr. Rangel and six other early investors because the resort was generating less income than projected, according to a statement released on Friday by Jose Oliva, director of the resort.

The loan remained interest-free and Mr. Rangel eventually paid it off in 2003.

As details about the financing of the villa emerged on Friday, House Speaker Nancy Pelosi, through her spokesman, expressed support for an ethics investigation into Mr. Rangel’s failure to report rental income from the vacation home on his federal and state income taxes and financial disclosure forms. On Friday, The New York Times reported that Mr. Rangel, chairman of the House Ways and Means Committee, had earned more than $75,000 in rent on the vacation home since 1988, and according to his lawyers probably owed back taxes to New York State and New York City.

The Daily News also reports that other investors in the Punta Cana resort include Oscar de la Renta and Julio Iglesias, but that isn't entirely clear whether they're Pioneer investors alongside Rangel.

Meanwhile, Speaker Pelosi has no choice now but to express support for an ethics investigation because Republicans would be able to use that as a talking point for the Democrats covering for their own indiscretions. Republicans are also mulling the possibility of calling for his removal as Chair of Ways and Means. However, will Congress take action, let alone find Rangel guilty of wrongdoing? I don't see one happening anytime soon.

It's far more likely that the IRS and NYS Department of Taxation and Finance will open their own investigations.

As the media continues investigation Rangel, they keep turning up financial inconsistencies, including that they failed to report income on a property in Manhattan that the Rangels own. 74 West 132nd Street has been "occasionally" omitted from his income statements.
But a review of Mr. Rangel’s filings since the House began requiring financial disclosures in 1978 indicated a number of inconsistencies.

In some years, Mr. Rangel and his wife reported rental income from a six-unit building at 74 West 132nd St. that they had owned for decades. But between 1978 and 1987, and between 1993 and 2000, he listed no income from the building.
Those are some pretty big gaps in the record, and yet Rangel's attorney claims that the property was a loser. Are there really losses there, or did Rangel engage in yet more tax avoidance? I suspect that we're going to learn that Rangel engaged in tax avoidance on a far larger scale.

And once again, we get insight into the Rangel household and his capacity to represent his constituents. We further learn that Rangel had no clue that he was paying no interest on this mortgage. That's after we learned yesterday that he didn't have a clue that he was supposed to claim the income from that property. And that's after we learned that Rangel didn't know that rent stabilization guidelines prohibited him from using such apartments as offices. He's the Chairman of the Ways and Means Committee in the House, and yet he doesn't know tax laws or care to follow them.

It's also interesting that Rangel claims that his wife was responsible for taking care of the family finances and tax records. I think we just saw Charlie attempt throw his wife under the bus, but if Charlie signed those tax records, he's just as liable as she is.

What we do see here is a pattern of impropriety, where Rangel not only takes advantage of the system (as per the apartments), but clearly abuses the system and avoids paying taxes on income.

Memeorandum links! Thanks!

Instapundit links. Thanks!

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