While Roll Call’s annual evaluation of the wealthiest Members of Congress revealed a general dip in prosperity, a few Members fell off the list with a thump.
These displacements aren’t necessarily reversals of fortune, as Members report their assets and liabilities in broad ranges, making it at times impossible to determine exactly how much an asset declined in value. But the departures demonstrate notable shifts in the bottom lines of a few lawmakers.
Among those who decamped from the annual 50 richest Members of Congress list this year are Rep. Heath Shuler (D-N.C.) and Sen. Richard Shelby (R-Ala.), both of whom reported net worths millions of dollars below their previous levels.
According to his latest financial disclosure, which covers calendar year 2008, Shuler reports a minimum net worth of $2.28 million, a sharp decline from the $7.95 million claimed in 2007.
That gap results from the North Carolina lawmaker eliminating several major assets from his most recent report, including three real estate development companies previously valued at a combined minimum of $7 million.
In his report, Shuler includes a brief note stating that each of the three companies is now devoid of assets.
“River Crest Development, LLC (Real estate development company — interest is no longer included ... due to the fact that valuation no longer exceeds $1,000 — the company no longer has any assets. However, no money was paid or [received] by Shuler,— the report states. Listings for the other real estate companies refer to the same statement.
Shuler had valued that holding, River Crest Development LLC based in Del Rio, Tenn., at $1 million to $5 million in 2007, although he reported no income. He also reported an investment valued from $1 million to $5 million in the River at Shining Rock LLC, based in Haywood County, N.C., that generated no income.
Shuler’s largest asset, an investment in the Cove at Blackberry Ridge LLC in Loudon, Tenn., valued from $5 million to $25 million produced $15,000 to $50,000 in income in 2007.
Shuler spokesman Doug Abrams said Friday that the LLCs were consolidated into a single entity, the Highlands Property Group LLC, which the House lawmaker had listed in 2007 at a minimum value of $1,000. In his most recent report, that asset jumped to a value of at least $1 million, but reported no income.
According to a Knoxville News Sentinel report in August 2008, one of Shuler’s investment partners reported the lawmaker owned 80 percent of the Highlands Property Group, which in turn owns one-half of the Highlands Development Group, which owns the Loudon property.
The Cove at Blackberry Ridge LLC has also faced scrutiny in recent months from the Tennessee Valley Authority, after the TVA’s inspector general initiated an investigation into a land-swap program operated by the agency.
According to the News Sentinel, the real estate company applied to the TVA land-swap program in mid-2007 — seeking waterfront access in exchange for waterfront property at a different location and a payment to a shoreline bank stabilization project — at the same time Shuler served on the House Transportation and Infrastructure Subcommittee on Water Resources and Environment, which has oversight of the TVA.
In a report issued in May, the IG inspector determined that Shuler did not use his status on the committee to pressure the TVA for the land swap but concluded that Shuler’s role in the real estate project did contribute to the appearance of preferential treatment.
“The appearance of preferential treatment was exacerbated by Shuler’s representatives dropping Shuler’s name with TVA employees,— the report stated.
A supplemental IG report obtained by the News Sentinel last week through a Freedom of Information Act request indicated, however, that a then-TVA employee provided false information during the investigation about whether he knew of Shuler’s involvement in the real estate company.
“Rep. Shuler stands by his previous position that he has never used or intended to use his position in the U.S. House of Representatives to improperly influence anyone for personal gain,— Abrams said in a statement. “He has cooperated fully with the Office of Inspector General during its thorough investigation. ... If any future investigations arise on this matter, Rep. Shuler will continue to cooperate fully.—
According to the IG’s initial report, the investigation also referred an unspecified matter to the House ethics committee.
“The TVA OIG has no jurisdiction over the conduct of a United States Congressman and we make no judgment as to whether Congressman Shuler’s actions connected to the Blackberry Cove matter violate any existing ethical standard,— the report states.
Abrams said Shuler’s office has not been contacted by the Committee on Standards of Official Conduct, as the ethics committee is commonly known.
The ethics committee rarely comments publicly on its activities and does not confirm or deny potential investigations.
In addition to the consolidation of his real estate holdings, Abrams noted that Shuler sold another asset, the Fountain Square Shopping Center, in a transaction valued at $1 million to $5 million and “used the proceeds to pay down debt.— The property had previously been listed in two parts — including a trust owned by a dependent child — with a combined minimum value of $1.5 million.
Shuler reported $1.55 million in debts in 2007, including a mortgage of at least $1 million. In 2008, he reported two commercial lines of credit, valued at a combined minimum of $150,000.
In Shelby’s case, the Senator listed assets worth a minimum of $9.89 million in 2007, the largest portion being an apartment complex worth $5 million to $25 million. But in 2008, that asset is listed as being worth $100,000 to $500,000.
Shelby’s office explained that the Senator transferred 49 percent of his shares in the building to a family trust benefiting his children in 2007 and 2008, leaving the Senator with only a 2 percent stake in the building. The value he has listed for the asset is based on the assumption that the building has a total value of $5 million to $25 million. Shelby’s original financial disclosure report for 2008 — filed in May — did not mention the apartment building at all; he filed an amendment in August to reflect his remaining shares.
With the apartment building gone, the minimum net worth of the Senator’s assets drops to $4.5 million, and he drops from the top 50 in Congressional wealth.
The disclosure form freshman Rep. John Fleming (R-La.) filed as a candidate indicated assets worth a minimum of $8.1 million and liabilities worth a minimum of $705,000, leaving his minimum net assets at about $7.4 million. His largest single asset was JCF Properties, which he listed as being worth $5 million to $25 million.
Those figures suggested Fleming should have easily won a spot among the 50 richest lawmakers, but his first disclosure form as a Member of Congress reduced the value of JCF Properties to the $1 million to $5 million range. A spokeswoman explained that Fleming had originally over-reported the value of JCF because he was including the shares owned by his grown children and two other shareholders. The new estimate includes only the 39.9 percent held by Fleming, his wife and his dependent child.
As a result, Fleming’s minimum net worth appears to drop to about $3.2 million.
But the freshman Congressman is probably worth significantly more than that figure would suggest. While the reported value of his assets appears to drop from 2007 to 2008, Fleming still reported income of more than $6.3 million last year.
Fleming was a doctor before coming to the House and also owns 30 Subway sandwich shops and a variety of other real estate investments and business ventures. Louisiana corporate records indicate that at various times over the past decade, Fleming has created a payday loan company, a mini-storage company, a firm called Fleming World Headquarters and a dozen other limited liability companies and partnerships.
His disclosure forms list a complex and interlocking set of family business ventures.
For instance, Fleming lists among his assets a company called Fleming Franchise Development Inc., worth $1 million to $5 million, and another called JCF Management LLC, worth $100,000 to $250,000. According to his candidate disclosure form, both of those companies own portions of JCF Properties.
Roll Call determines minimum net worth by adding the lowest value for all assets and subtracting the lowest value for all liabilities listed; an asset valued at $1 million to $5 million, for example, is calculated at $1 million. If a lawmaker provides exact dollar figures, those valuations are used instead.