Is Gephardt selling out?

0 Comments | Insight on the News, April 15, 1996 | by Tiffany Danitz

House minority leader's woes over his million-dollar mansion could get worse if Republicans have their way.

In a 1987 presidential stump speech Rep. Richard A. Gephardt of Missouri claimed to be the only Democrat offering "real answers to real problems." Nine years later Gephardt, the House minority leader, has found himself the focus of one of those "real problems" as his integrity, is drawn into question by a complaint filed with the House ethics committee. The question of whether he failed to meet disclosure requirements on transactions surrounding his acquisition of a million-dollar beachfront mansion looms over his pending campaign to be reelected to Congress.

The complaint was filed Feb. 2 by Rep. Jennifer Dunn, a Washington Republican, following an Insight article on Gephardt's financial-disclosure reports, tax filings and bank loans.

The issues raised by the Dunn complaint spurred Georgia Republican Rep. Bob Barr to seek a formal criminal probe by the Justice Department. In a letter dated March 1, he asked John Keeney, acting assistant attorney general for the criminal division, to open an investigation of Gephardt. "It seems apparent that such an investigation is compelled in this case, especially in light of 18 U.S.C. [sections]1001, concerning false, fictitious or fraudulent statements;' Barr wrote. Justice offlcials had told Insight they already had "opened" a preliminary file on the Gephardt case but would wait to see what the ethics panel did before determining whether to move forward. (See "Justice Will Examine Charges Against Gephardt," March 11.)

After the Dunn complaint was filed with the ethics panel, formally called the Committee on Standards of Official Conduct, news broke that Gephardt had arranged for the house's co-owners, Jeffrey and Michelle Conley of Bethesda, Md., to buy him out. Gephardt's spokeswoman, Laura Nichols, tells Insight, "They have an agreement with the co-owners to buy it' " Nichols says she is unsure to which stage the sale has progressed, but she speculates, "It may be complete--they began the process last July."

Gephardt staff assistant Judith Corley confirmed Nichols' statement. In an interview with the Washington Times, Corley claimed the sale of the mansion "had nothing to do" with the ethics investigation. In a Feb. 9 reply to Dunn's ethics complaint, Robert R Bauer, the attorney for Gephardt and the congressman's former staff assistant, never mentioned any pending sale or transfer of the property. He also claimed that Gephardt broke no House rules or any other laws.

The ethics case against Gephardt may, however, grow to include inquiries into Bauer, a top federal-elections lawyer. Congressional officials tell Insight that Bauer's relationship with Gephardt is being questioned for possible violations of Title 18, sections 203 and 205 of the U.S.C., which has been incorporated into the House Ethics Manual. This section of law bars federal employees from representing any person or organization before a federal agency while on the public payroll. (See) A Matter of House Ethics," March 4.

Bauer, in a series of letters faxed to Insight, denied having been an "employee" of the House. Rather, he said, he worked for Gephardt as "a consultant and independent contractor."

House and Justice Department offlcials tell Insight they may investigate Bauer's possible violations which also could involve the congressman himself Bauer will be scrutinized for his work on behalf of various Gephardt political committees while at the same time receiving $1,200 to $5,000 a month as Gephardt's salaried staff assistant, based on figures provided by House officials. As Gephardt's private lawyer, Bauer represented the congressman's failed 1988 presidential campaign committee before the Federal Election Commission. The FEC investigated violations stemming from alleged improper financial transactions by the presidential committee.

In May 1992, the FEC slapped a $121,571.94 fine on Gephardt, who said he couldn't pay. The FEC reportedly had a difficult time believing his lawyer's argument that the man who topped the House in raising $2.9 million that year for reelection had "no prospect" of obtaining money to pay the fine because potential donors had been tapped out by other political committees. During the time in which Bauer was negotiating with the FEC about the fine, his congressional salary reached a peak of $5,000 a month.

Although the FEC's general counsel suggested that Gephardt use some of the $621,818 in the congressman's House campaign committee to pay the fine, Bauer argued that would be unfair to Gephardt's congressional donors. "They certainly did not give money to the congressional committee with the knowledge or intent that the funds might be diverted to repay the United States Treasury," Bauer wrote in one of several letters to the FEC.

While a fine was not considered a proper expense by Bauer, it appears that legal bills were a different matter. Based on a review of expenditures, on Sept. 27, 1991, the Gephardt in Congress Committee dispersed $112,000 to the Gephardt for President Committee, ostensibly for legal bills, since a similar amount was paid shortly thereafter to Bauer's law firm, Perkins Coie, "for legal services rendered."