ADLF Calls On Congressional Ethics Authorities
to Investigate Discrepancies In Marsha Blackburn’s Financial Disclosures
Washington, DC — The American Democracy Legal Fund (ADLF) today called on the Office of Congressional Ethics, the U.S. House of Representatives Committee on Ethics, and the Clerk of the U.S. House of Representatives to investigate discrepancies in the personal financial disclosure of U.S. Representative Marsha Blackburn (R-TN), who is currently seeking a U.S. Senate seat.
This request comes after a public report detailed Blackburn’s failure to disclose an ownership stake in an LLC responsible for managing a real estate property in South Carolina. Blackburn also failed to disclose a $100,000 line of credit she co-signed to mortgage said property. Blackburn had previously disclosed her affiliation with both assets on past years’ required financial disclosure forms while omitting key details described in the below letter.
“Rep. Blackburn’s failure to disclose personal assets amounting to hundreds of thousands of dollars merits scrutiny by Congressional ethics authorities,” said ADLF‘s Brad Woodhouse. “Blackburn appears to have violated House ethics guidelines, and in doing so raised questions about other potential liabilities that may have been excluded from her disclosure.”
According to reporting by the Tennessean, a spokesperson for Blackburn’s office dismissed allegations of impropriety by claiming the South Carolina home serving as collateral for the loan went from being a rental property to a personal asset. ADLF’s complaint notes that members of the U.S. House of Representatives are required to disclose mortgages and home equity loans on personal residences, as well as on rental properties.
Below is the complaint sent by ADLF today to the Office of Congressional Ethics. Identical letters were also sent to the Chair and Ranking Member of the U.S. House of Representatives Committee on Ethics, and to the Clerk of the U.S. House of Representatives.
A PDF of the complaint is available here.
September 19, 2018
Omar Ashmawy
Chief Counsel and Staff Director
Office of Congressional Ethics
U.S. House of Representatives
P.O. Box 895
Washington, D.C. 20515
Re: Request for Investigation of Representative Marsha Blackburn (TN-07)
Dear Mr. Ashmawy:
I respectfully request that the Office of Congressional Ethics (“OCE”) investigate whether Representative Marsha Blackburn of Tennessee’s 7th Congressional District failed to provide a “full and complete statement” of her assets, liabilities, and positions on her 2014, 2015, 2016, and 2017 Financial Disclosure Reports (each a “PFD”) as required by the Ethics in Government Act of 1978, as amended (the “Act”). As detailed below, her PFDs indicate multiple omissions and discrepancies.
I. Background
Marsha Blackburn has represented Tennessee’s 7th Congressional District since 2003. Rep. Blackburn is also currently a candidate for United State Senate. As a sitting Member of Congress, Rep. Blackburn is required under the Ethics in Government Act to file an annual financial disclosure statement.
According to Rep. Blackburn’s 2014 PFD, Rep. Blackburn purchased a one-third interest in Down Yonder LLC (“LLC”) for $100,001 to $250,000 on February 23, 2014. Rep. Blackburn further reported that she held a one-third interest in the LLC’s real estate holdings, reported the value of her interest as the same range as the purchase range, listed real estate as a description of the asset, listed the location of the asset as Nashville, TN, and included a description of the income as rent. She also disclosed that she was a member of the LLC. She did not provide any additional detail on the LLC’s holdings.
In her 2015 PFD, filed on August 12, 2016, Rep. Blackburn again reported the same one-third interest in the LLC, the fact that the LLC was generating rental income, and added that the rental income yielded between $2,501 and $5,000 that year. She also reported that she was a member of the LLC, and for the first time, she disclosed a mortgage with Capital Bank of $100,001 to $250,000 on the property owned by the LLC, taken out in January 2014, the same month that the LLC was formed. The mortgage was listed for a rental property in Daufuskie Island, South Carolina.
In her 2016 PFD, filed on August 3, 2017, Rep. Blackburn did not disclose her interest in the LLC as an asset, as she had done in years past, nor did she disclose any sale of her interest as a transaction. Despite not disclosing her interest in any LLC, Rep. Blackburn still disclosed a $100,001 to $250,000 mortgage with Capital Bank “on property owned by LLC.” She also did not report her position as a member of the LLC.
Finally, in her 2017 PFD, filed on August 3, 2018, Rep. Blackburn did not disclose any of her involvement with the LLC. She did not disclose her one-third interest in the LLC as an asset, did not disclose a sale of her interest in the LLC, did not disclose being a member of the LLC, and did not disclose the $100,001 to $250,000 mortgage through Capital Bank that she disclosed on her 2016 PFD. Furthermore, although Rep. Blackburn appears to have co-signed on a $100,000 revolving line of credit secured by the South Carolina home owned by the LLC in August 2017, she did not disclose this line of credit on her 2017 PFD.
II. Law
The Ethics in Government Act requires Members of the U.S. House of Representatives to disclose, with limited exceptions, the following:
· Assets held for investment valued at more than $1,000 at the close of a reporting period, and any individual purchases or sales involving assets in which the transaction exceeded $1,000;
· Unearned income received during the preceding calendar year in excess of $200; and
· Liabilities owed that exceeded $10,000 during the preceding calendar year.
A Member of Congress must further disclose whether he or she was the member of any limited liability companies, among other positions.
When disclosing unearned income and assets, a Member of the House of Representatives must disclose “an ownership interest in a privately-held company that was formed for the purpose of holding investments,” including “each asset held by the company in which the Member’s interest has a value of more than $1,000 or generated income of more than $200. When disclosing liabilities, a Member of the House of Representatives must disclose “liabilities of a business if [the Member] is personally liable for the debt.” “This includes mortgages on rental or investment property held in a . . . limited liability company.”
III. Analysis
Rep. Blackburn has repeatedly failed to meet these reporting requirements in several respects.
First, on Schedule A of her 2014 and 2015 PFDs, Rep. Blackburn reported a one-third interest in the Down Yonder LLC, which she had purchased in January 2014, and disclosed on Schedule B of her 2014 PFD. Rep. Blackburn further reported that her stake in the LLC generated rental income in both 2014 and 2015, but only listed the amount of income in her 2015 PFD. Her 2014 PFD fails to disclose the amount of rental income she received in 2014. Furthermore, her 2014 PFD contains no indication of where this property was located, and indeed implies that the property was located in Nashville, Tennessee. However, her 2015 PFD reveals, in Schedule D, that the property held by the LLC was actually located in South Carolina. Although Rep. Blackburn was not required to report the street address of the underlying property, she was required to itemize the assets held by the LLC and provide a description and location (city and state) of each. But she failed to do so in Schedule A of her 2014 and 2015 PFDs, when she disclosed that the LLC was generated rental income, but did not provide a description and accurate location of the underlying property. Thus, Rep. Blackburn filed an incomplete Schedule A on her 2014 and 2015 PFDs.
Second, Rep. Blackburn reported that she was a member of the LLC in her 2014 and 2015 reports, but did not report that position in her 2016 and 2017 reports, despite the fact that she reported being liable for a mortgage on the property in her 2016 PFD, and appears to have been liable for a different liability on the same property in 2017. If Rep. Blackburn was still a member of the LLC in 2016 and 2017, she was required to report that position in Schedule E of her 2016 and 2017 PFDs, even if the property was not generating rental income. Conversely, if she had sold her interest in the LLC prior to 2016 and therefore was no longer a member of the LLC, she would have been required to report that sale in her 2015 PFD. Members of the House are required to report “a brief description, the date, and category of value of any purchase, sale or exchange during the preceding calendar year which exceed[ed] $1,000 . . . in real property, other than property used solely as a personal residence of the reporting individual or his spouse.” In 2015, Rep. Blackburn disclosed that the real property owned by the LLC was being used to generate rental income, and therefore, it was not being used solely as a personal residence. Additionally, given the reported value of her interest in the LLC, it is highly unlikely that any sale of her interest in the LLC would have been less than $1,001. Therefore, had she sold her interest in the LLC, she still would have been required to disclose the sale in Schedule B in her 2015 PFD. Rep. Blackburn did not disclose a sale of her interest in the LLC in any of her PFDs. Given that it appears that Rep. Blackburn still held her one-third interest in the LLC in 2016 and 2017, she should have disclosed her position as a member of the LLC on Schedule E of her 2016 and 2017 PFDs.
Third, Rep. Blackburn’s 2015 and 2016 PFDs report that she was personally liable for a mortgage on the property owned by the LLC which was incurred in January 2014, when the LLC was created. However, this mortgage does not appear on her 2014 PFD despite the fact that it was incurred in that calendar year. If the LLC incurred the mortgage in 2014 as disclosed on her 2015 and 2016 PFDs, and had a value between $100,001 and $250,000 in 2015 and 2016, which appears to be the case, then Rep. Blackburn was required to report the mortgage on Schedule D of her 2014 PFD. She failed to do so.
Fourth, although Rep. Blackburn appears to have been a co-signer on a $100,000 revolving line of credit secured by the South Carolina home owned by the LLC in August 2017, she failed to report the line of credit in her 2017 PFD — even though the House Ethics Committee instructions specifically state that loans on which the filer is a co-signer must be disclosed. Additionally, based on the fact that Rep. Blackburn appears to have co-signed for this loan, it follows that she was likely still a member of the LLC in 2017, a position that, as explained above, she did not report in her 2016 and 2017 PFDs.
A spokeswoman for Rep. Blackburn’s senatorial campaign has claimed that Rep. Blackburn was not required to report the 2017 loan because the South Carolina home serving as collateral for the loan went from being a rental property to a personal asset. However, even if the South Carolina home was a personal residence or personal vacation home and generated no rental income in 2017, Members of the U.S. House of Representatives are required to disclose mortgages and home equity loans (including lines of credit) on personal residences.
IV. Request for Action
I respectfully urge OCE to commence an immediate investigation into these discrepancies and omissions. I understand that 18 U.S.C. § 1001 applies to the information I am providing. To the best of my knowledge and ability all evidence submitted was not obtained in violation of any law, rule or regulation.