Obama, Others Trip on Disclosures

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Presumptive Democratic presidential nominee Sen. Barack Obama (Ill.) failed to report about $2,000 in capital gains from a stock sale in 2005, and he will join a parade of other Members by filing an amendment to his financial disclosure form to correct it, his office said Wednesday.

The error is one of dozens that Roll Call discovered in a review of the annual financial disclosure forms filed by Members of Congress. The most common error is the one Obama made — Members have reported that they sold stock or other assets, and reported the total value of the sale, but did not report the net profit from the sale as required under federal disclosure rules.

Obama’s office pointed out that his error was minor, and that since he has also publicly released his tax returns for that year, he has already disclosed the profit from the sale, and in much greater detail than the Congressional reporting forms require.

“The Senator’s 2005 tax returns, which were made public in March, provide detailed information about these transactions,” spokesman Michael Ortiz said. “ We will update our Senate disclosure form to reflect the information contained in the tax return.”

Several other Members appear to have made the same error much more frequently than Obama.

Every year since 1994, Sen. Kay Bailey Hutchison (R-Texas) has reported sales of stock, land and other holdings, but she has never reported capital gains for any transaction. While it is impossible to know how much money she may have earned from these sales, some of the transactions suggest she has recouped significant unreported gains.

For example, her 1995 financial report indicated that she held $1,000 to $15,000 worth of stock in the retail craft chain Michaels. On Nov. 1, 2001, she purchased another $1,000 to $15,000 worth of the stock, meaning the most she could have held at that point was $30,000. Her later financial disclosures indicate no additional purchases of Michaels stock. When the company was bought by a venture capital firm in October 2006, Hutchison reported selling her shares for between $50,000 and $100,000, which would suggest that at a minimum she made a $20,000 profit in the transaction. But she reported no capital gain for this sale in 2006, nor for any others.

In an e-mail response to Roll Call’s inquiries, Hutchison press secretary Matt Mackowiak said, “For 15 years Sen. Hutchison has disclosed all of her assets and transactions and is in full compliance with current Senate ethics requirements.” Mackowiak declined to respond to additional questions from Roll Call and would not provide an explanation of why the Senator believes her reports comply with Ethics Committee guidelines requiring the disclosure of capital gains.

Several media outlets have already explored Obama’s two stock deals from 2005, the only private stock holdings he has reported since joining the Senate in 2004. At the time of those stories, Obama’s campaign acknowledged that he had lost about $13,000 through his investment in two small companies, AVI Biopharma and SkyTerra Communications.

But Obama’s 2005 tax return reports that he bought 3,400 shares of AVI Biopharma in February 2005 for $8,843, and sold it in October for $10,915, a net gain of $2,072. His 2005 Congressional disclosure form did not report the income from that sale as a capital gain.

The loss came in the sale of SkyTerra, which Obama bought for $91,130 in February and sold for $75,922 in November, for a net loss of $15,208. On his Congressional financial disclosure form for that year, he incorrectly reported that the SkyTerra transactions were both in the range of $15,000 to $50,000.

Obama has already amended his 2005 disclosure form twice previously; in the wake of Roll Call’s inquiries, Obama’s office said he will file a third amendment.

Several House Members are also preparing amendments to address the same failure to report capital gains.