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Pearce Made Millions on Sale

In early 2003, Pearce — already a member of the House Natural Resources Subcommittee on Energy and Mineral Resources — was tapped by then-Speaker Dennis Hastert (R-Ill.) to join a new Republican Task Force For Affordable Natural Gas, along with Wilson and 16 other Members. On Aug. 12, Wilson and Pearce announced the agenda for a field hearing of the task force in Hobbs.

Key Energy Services was not listed among the witnesses, but at the hearing six days later, the company’s vice president for strategic planning testified, telling Pearce and Wilson that volatility in natural gas prices creates nearly unmanageable boom and bust cycles for companies that support the oil and gas industry.

In October, Key announced that it had purchased the assets of a New Mexico fishing company for about $12 million. The company reported to the SEC that it had transferred $5.2 million of its stock to Lea Fishing as part of the sale, suggesting that the remainder of the purchase would have been cash. Lea Fishing was one of many smaller energy services companies that Key purchased in the first half of this decade.

Pearce never reported the proceeds from the sale, because under House rules, he didn’t have to. After the liberal group Citizens for Responsibility and Ethics in Washington attacked Pearce for not reporting the income from the sale, Pearce asked the House Committee on Standards of Official Conduct whether he was required to report the sale on his personal financial disclosure forms.

The committee responded in October, explaining that House rules do not require disclosure of “transactions that involve the assets of a business that is actively involved in a trade or business.” Following the sale of its assets, Lea Fishing Tools changed its name to Trinity Industries Inc., which remained in the hands of Pearce and his wife.

Pearce’s Congressional Web site says he and his wife “sold their business in order to focus on their family and pursuing their interest in public service to the people of New Mexico.” In 2004, Pearce’s office told Roll Call that Trinity “is a personally held company that deals with the personal funds of the Representative and his wife.”

But Phillips explained last week that Trinity is also an active business. “The cash and stock proceeds from this sale [of Lea Fishing Tools] were then used by Trinity to reinvest in other rental equipment and investments,” Phillips wrote. Because Trinity, like Lea Fishing, is organized as a “C Corporation” under Internal Revenue Service rules, the assets belong to the company and not to Pearce, and Pearce is not required to disclose its holdings, Phillips said.

Phillips said that Trinity is now in the party- supplies-rental business. On his financial disclosure forms, Pearce lists its value at $5 million to $25 million. Pearce also lists his ownership of three other rental firms — Gree Ltd., LFT Ltd., and Exedra Ltd. — which collectively increased in value from a range of $200,000-$450,000 in 2001 to $800,000-$1.6 million in 2006.

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