Rep. Richardson cleared by Ethics panel

The House ethics committee has cleared Rep. Laura Richardson (D-Calif.) of any wrongdoing in relation to a foreclosure dispute over a house she owns in Sacramento.

The panel has been investigating allegations surrounding the home, which Richardson lost to foreclosure, was sold to a third party, and later regained by the congresswoman.

The Office of Congressional Ethics (OCE), an independent body that makes recommendations to the full ethics committee, looked into whether the mortgage company provided an improper gift to Richardson and whether neighbors who cleaned Richardson’s yard did so as well. The OCE dismissed part of the case but forwarded other portions for the ethics committee to review.

The ethics committee on Wednesday voted unanimously to dismiss the case against Richardson after a seven-month investigation.

“Representative Richardson did not knowingly accept a gift from Washington Mutual Bank…or violate any applicable standard of conduct in connection with the purchase of, foreclose on, rescission of foreclosure sale for, or modification of loan terms for a residential property she owns in Sacramento, California,” Ethics Committee Chairwoman Zoe Lofgren (D-Calif.) and ranking member, Jo Bonner (R-Ala.), said in a statement.

They also said she did not violate any other federal ethics statutes when filling out information about her real-estate properties on her required financial disclosure statements.

During its investigation, the mortgage broker Richardson used when purchasing the Sacramento home admitted to “knowingly submitting fraudulent information” about Richardson’s application to Washington Mutual without Richardson’s knowledge, the ethics panel found. The committee forwarded that information to the Justice Department “for such action as the Department deems necessary and appropriate,” the panel said in its statement.

The panel also said Richardson did not “knowingly” make false statements on her mortgage application and was not aware that the broker and forged documents included in her application because her closing day was her first full day as a member of the California State Assembly so she was unable to attend. She admitted to investigators that she did not review the application “as closely as she should have,” according to the ethics committee’s report.

The forged documents included claims of rental income and rental agreements that were included in the application as supporting documents for a qualifying income. The report argues that Richardson was the victim of mortgage fraud.

In 2007 and 2008, Richardson had not leased homes she owns in San Pedro, Long Beach and Sacramento.

The panel also cleared Washington Mutual of any impropriety, saying it made a “commercial reasonable decision” when it placed a temporary hold on the foreclosure proceedings for Richardson’s Sacramento property because Richardson’s employment had changed when she won election to the State Assembly. The probe further found that the mortgage company mistakenly allowed the foreclosure sale of the Sacramento property after informing Richardson in writing they it had placed a 60-day hold on the proceedings.

“Washington Mutual made a commercially reasonable business decision to rescind the foreclosure sale of Richardson’s Sacramento home due to its mistake, and in doing so treated her the same way it would any other similarly situated customer,” the panel wrote in its report.

It also noted that Washington Mutual was forced to pay the buyer $100,000 – in addition to refunding the foreclosure sale amount -- to settle a lawsuit over the foreclosure. The panel then concluded that the company made another “reasonable business decision” when it decided to modify the terms of Richardson’s loan based on her change in employment.

The decision to exonerate Richardson comes amid increased hostility between the ethics panel and the OCE, which has been feuding with the ethics panel over a string of investigations since the office’s inception two years ago.

Prior to receiving the OCE referral, the panel said it already had begun looking into the allegations and has issued three subpoenas. The panel issued 14 more subpoenas, interviewed seven witnesses and reviewed approximately 7,000 pages of documents after it established an investigative subcommittee, the panel said. The committee also noted in its report on the probe that it hired an independent consultant with experience in the mortgage industry as an adviser.

Richardson responded to the news by issuing a statement thanking her family and church, staff, the constituents in her district, the state of California and the nation.

“After a long, deliberate and comprehensive review, the bi-partisan House Committee on Standards of Official Conduct has unanimously and unequivocally rejected all of the allegations against me and confirmed that I violated no law or standard of conduct,” she said.

“Today closes a chapter and opens a door,” she continued. “The Committee's bipartisan report confirms that I have at all times acted in accordance with my ethical duties as a Member of Congress. I am thankful this is over and behind me and I can continue to do what I enjoy, which is serving the people of California's 37th District.”

The investigative subcommittee that looked into the matter was composed of: Reps. Ben Chandler (D-Ky.), who served as chair, and Rep. Gregg Harper (R-Miss.), who served as ranking member. Reps. Emmanuel Cleaver (D-Mo.) and Sue Myrick (R-N.C.) also served on the panel.

This story was updated at 7:50 p.m.