Ethics to investigate Reps. Richardson, Waters; Graves criticizes the OCE

The House ethics committee voted Thursday to launch investigative subcommittees into separate charges against California Democratic Reps. Maxine Waters and Laura Richardson.

The move indicates that the panel believes there is enough evidence to warrant further serious inquiry.

Separately, the ethics committee dismissed allegations against Rep. Sam Graves (R-Mo.) and released a 500-plus-page investigative report from the Office of Congressional Ethics (OCE), as required under transparency rules governing interaction between the OCE and the ethics panel.

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Waters has been under media scrutiny for her role in directing up to $50 million in bailout money to a bank where her husband had served on the board of directors until early last year. Waters’s husband has owned at least $250,000 in stock in the institution.

The Waters investigation will look into communications between Waters and the National Bankers Association or OneUnited Bank and whether Waters or her husband received any benefit as a result.

In a statement, Waters acknowledged that the investigation would focus on her role in arranging a meeting with the Treasury Department on behalf of the National Bankers Association, which represents minority banks.

“My longtime advocacy on behalf of women- and minority-owned institutions is well known and appreciated by these institutions, which have been historically denied access to government regulators to address their concerns,” she said. “I am confident that as the investigation moves forward the panel will discover that there are no facts to support allegations that I have acted improperly or violated the Code of Official Conduct or any law, rule, regulation or other standard of conduct in performing my duties and discharging my responsibilities as a United States Representative.”

The probe of Richardson centers on a controversy surrounding home mortgages.

After Richardson won a special election in 2007, she defaulted on three separate mortgages for homes in San Pedro, Long Beach and Sacramento, Calif. She lost one to foreclosure, and it was sold to a third party before she regained it.

Ethics watchdogs questioned how she managed to loan her campaign a total of $77,500 between June and July of 2007 while failing to make payments on her mortgage. Neighbors also paid private companies and children to clean up Richardson’s blighted Sacramento yard, which may be a violation of the House gift rules.

The committee said its investigation into Richardson would focus on whether she violated any rules or laws by failing to disclose “certain real property, income and liabilities on her finance disclosure forms (and amendments thereto)” and whether she received an impermissible gift or received preferential treatment from her lender relating to the “foreclosure, rescission of the foreclosure sale or loan modification agreement for or relating to her property in Sacramento.”

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Richardson denied any wrongdoing in a Thursday statement, saying she had worked to resolve “a personal financial situation” like millions of others suffering through the housing crisis.

“But unlike other Americans, I have been subjected to premature judgments, speculation and baseless distractions that will finally be addressed in a fair, unbiased, bipartisan evaluation of the facts,” Richardson said.

The ethics panel found that Graves did nothing wrong when he invited a friend and neighbor, Brooks Hurst, to testify at a hearing on renewable fuels without disclosing that his wife and Hurst are investors in renewable fuels plants in Missouri.

The committee also took issue with the OCE’s procedures and said there was no relevant House rules or other standards of conduct prohibiting the creation of an appearance of conflict of interest when selecting witnesses for a committee hearing. It also noted that Graves received no financial benefit from the hearing.

“The Graves investigation is one of the first matters to be referred by OCE and resolved by the Standards Committee,” the report said. “The Standards Committee regrets that it finds deficiencies in OCE’s handling of this case, including procedural problems that are outlined in detail in this report.”

OCE Chairman David Skaggs and Co-Chair Porter Goss, both former members of the ethics panel, said the ethics committee had once again “mischaracterized” the OCE report.

“There were no procedural problems with OCE’s handling of the matter involving Sam Graves,” they said. “In every matter, including the review concerning Representative Graves, the OCE has followed its rules and the letter and spirit of the resolution that created the OCE. We regret the Standards Committee’s misunderstanding of our rules and our process.”

Graves thanked the committee for dismissing the charges against him. He simultaneously criticized work of the OCE, which had investigated charges against all three lawmakers and forwarded reports to the ethics panel.
 
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Because it decided to continue the investigation, ethics does not have to release the OCE’s reports on Waters and Richardson.

The OCE dismissed part of the Richardson case and forwarded parts of it to the ethics committee, sources said.

In his statement, Graves criticized the OCE’s work, accusing it of investigating an anonymous complaint and looking into a matter that, even if true, did not violate House ethics rules.
 
“I appreciate the committee’s work and its prompt dismissal of this matter,” Graves said in the release. “In dismissing this matter, the committee found that not only was there no violation of any rule, but that even if the allegation were true, there would have been no violation of any rule.”
 
Graves said the “anonymous accusation amounted to nothing more than a political smear.”
 
The OCE insisted in its third-quarter report that it has never acted on an anonymous complaint or on the mere basis of allegations raised in newspaper reports.
 
In its report to the ethics committee, the OCE said there is “substantial reason” to believe that “an appearance of conflict of interest” and recommended that the ethics committee review the matter further.
 
Though Graves has argued that House ethics rules don’t address perception issues, an overarching ethics rule bars any member activity that reflects negatively on the House as an institution. In addition, the House ethics manual warns members against the “appearance of impropriety that could arise from championing the causes of contributors,” and the ethics committee has a history of taking action against members based on appearance problems.

In October 2004, the ethics committee admonished then-Majority Leader Tom DeLay (R-Texas) three times. In a letter to DeLay, the committee explained that at the very least, DeLay’s attendance at an energy company golf fundraiser for his political action committees created an appearance problem.
 
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The ethics committee shots at OCE procedure comes as the new entity is locked in an intense dispute with the ethics committee over how the OCE conducts its work and what information the ethics panel must make public about the ethics office’s investigations.
 
The rules governing the creation of the OCE force the ethics committee to release the office’s investigative reports on members that are forwarded to the panel for further review unless it launches an investigative subcommittee, a sign the committee is seriously digging into the allegations.
 
Some of the ethics committee said the Graves statement is intended to intimidate OCE staff and board members, most of whom are ex-members of Congress, and stir up opposition to the office. Graves and others are trying to discredit the OCE among other lawmakers, many of whom already fear the new investigative body.
 
Speaker Nancy Pelosi (D-Calif.) pushed for the outside ethics office as part of her pledge to “drain the swamp” in Washington and establish the most ethical Congress in history. Still, legislation creating the OCE barely passed the House.
 
OCE board members have threatened to resign this week as tensions flared with the ethics committee about how the OCE conducts investigations and what the ethics committee must make public about probes that result in a dismissal.
 
Graves said he cooperated “in good faith and in full candor” with the inquiry, and that he complied with every request in the process, which he believed was a pro forma inquiry.
 
“I understand that the nature of politics sometimes involves fending off frivolous, anonymous allegations,” he continued. “But our ethics process, like our system of justice, must be built upon bedrock principles of due process and fundamental fairness. I am glad the committee and its membership evaluated these allegations for what they were — baseless and completely unfounded attacks on my character.”

This story was updated at 9:16 a.m.

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