Rep. Gary Ackerman (D-N.Y.) may have broken House ethics rules for taking a sweetheart loan from a defense contractor, according to the New York Daily News.
The veteran Queens, N.Y. lawmaker reportedly put no money down when he purchased private stock in Xenonics, Inc., instead using $14,000 borrowed from his friend, who was the company's leading shareholder.
The Daily News reported the allegations on Monday.
The loan had no payback date and no collateral, which may violate House ethics rules.
Here is more from the Daily News:
When the company went public, its stock soared. Ackerman says he repaid the loan at 6% interest and sold the stock for more than $100,000 in 2005 and 2006.
House ethics rules bar members of Congress from using Congressional resources to promote commercial enterprises, stating:"The prohibition against use of House resources to support unofficial undertakings clearly applies to support of business endeavors."
The rules also require written repayment plans for any loans Congress members take out. Ackerman confirmed he had no such written plan for the 2002 loan.
Ackerman also reportedly met with in the last few years Xenonics founder Alan Magerman and two Israeli officials. The congressman, who sits on the Foreign Affairs Committee, arranged the meeting during which Magerman tried to sell the Israeli a high-powered flashlight produced by the company.
The Israelis did not purchase the product, which is used by the U.S. military, and Magerman later told the Daily News that he did not know Ackerman invested in the company.
Ackerman released a statement to the Daily News saying that he never profited from Israeli business with Xenonics.
"Over a great number of years, my friend [former top shareholder] Selig Zises has made investment suggestions - winners and losers - and separately Seymour Zises has managed some of my portfolio, also with mixed results," Ackerman wrote in response to questions about the loan.
The National Republican Congressional Committee (NRCC) circulated the story later on Monday along with previous remarks given by House Speaker Nancy Pelosi (D-Calif.) promising to enforce tougher ethical standards in Congress.