Rep. Rick Renzi (R-Ariz.) took out a $500,000 second mortgage on his Flagstaff home in January after paying more than $300,000 in tax arrears discovered by a Federal Election Commission (FEC) investigation.
The mortgage loan, revealed by Renzi in a document filed with Coconino County, Ariz., is worth the highest possible listed value of his house, and suggests the embattled lawmaker may have faced a substantial cash squeeze at the end of the last Congress.
It may also cast light on $200,000 that came to Renzi two years ago from a business partner. The money exchange has raised eyebrows and suggestions of impropriety.
Around the time Renzi accepted the payment, the FEC launched an investigation of his campaign finances, forcing the lawmaker and his wife to pay an extra $324,000 in federal and state taxes.
The FEC launched its investigation in May 2005 and informed two businesses linked to Renzi of the probe later that month. That same month, James Sandlin, a former business partner, gave Renzi $200,000, a payment now being investigated by the FBI, according to The Wall Street Journal.
Renzi’s lawyer has said Sandlin gave Renzi the money to settle a business debt. But ethics experts interviewed by The Hill last week said the lawmaker should have disclosed it on forms filed with the Clerk of the House. The fact that Renzi did not report the payment could be cited as evidence that he intended to conceal it, said one expert.
The half-million dollar loan on the Renzi residence at 2063 Raintree Road came on top of a $100,000-$250,000 mortgage he took out on the same property in 2005.
In his most recent finacial disclosure report, Renzi reported assets worth between $250,000 and $550,000. His spouse reported owning an insurance company, Patriot Insurance, worth between $1 million and $5 million. Most of Renzi’s wealth is tied up in real estate: He reported owning assets in three funds worth between $3,000 and $45,000.
During 2004 Renzi also reported owning a residence in Elgin, Ariz., worth between $500,000 and $1 million. By all indications, Renzi still owns the property.
In 2005, Renzi earned $500,000-$1 million from selling his stake in his wine company, Renzi Vino, to his father. The proceeds may have helped pay off three mortgages worth a total of $165,000-$400,000 on property belonging to Renzi Vino.
Renzi declined to comment on the $500,000 he borrowed in January, but issued a statement on a conciliation agreement he reached with the FEC early this year, ending its investigation of his campaign finances.
“I take responsibility for the inaccuracy of our first FEC report,” he said. “In an effort to clear it up, we hired a new CPA, and all our reports are now correct and complete. I am pleased this matter has finally been resolved.”
The FEC fined Renzi’s campaign $25,000 for reporting violations stemming from his failure to file proper tax returns for money he made from Fountain Hills Realty & Development, a company he once owned, and Patriot Insurance, the company owned by his wife. The FEC revealed the results of its investigation in documents recently made available to the public.
PoliticalMoneyLine.com, a website that tracks campaign fundraising, first reported the FEC’s disclosure yesterday.
he FEC initiated its investigation on the basis of evidence that Renzi’s campaign had accepted $369,000 in loans from the two companies, which would have been illegal.
Renzi rectified the situation by showing FEC investigators amended tax returns indicating that the loans did not come from the companies but instead from Renzi’s and his wife’s personal funds. But by amending his tax returns, something that saved Renzi from facing a stiffer penalty from the election commission, the lawmaker and his wife paid an additional $324,000 in taxes.
Renzi paid additional taxes to the IRS during the FEC investigation.
In a report on his investigation, then-FEC General Counsel Lawrence Norton wrote that his agency sought a description of all transactions between Renzi and the two companies, Fountain Hills Realty & Development and Patriot Insurance. In response, the companies hired a new accountant to reconstruct their financial dealings with Renzi.
“This process resulted in significant amendments to Representative and Mrs. Renzi’s personal tax returns and the tax returns of the corporate respondents,” Norton wrote.
The FEC fined Renzi’s campaign for several reporting infractions. It found that in 2002 Renzi understated his receipts by $38,000 and his disbursements by $101,000. As a result his campaign overstated its cash on hand by $64,000.
The campaign also improperly reported transfers totaling $134,000 from a joint fundraising committee.
Glenn Willard, an attorney with Patton Boggs who was listed as Renzi’s representative in correspondence with the FEC, did not return a call for comment.
