Ortiz Bet on China Deal

Lawmaker: Trips Unrelated to Investment

Posted February 26, 2008 at 6:47pm

Rep. Solomon Ortiz (D-Texas) and his chief of staff each invested thousands of dollars in a Chinese telecommunications project in 2005 with a Texas businessman whose company paid nearly $20,000 to fly them to China the year before and later became a donor to Ortiz’s campaigns.

Ortiz maintains that his investment was completely unrelated to the trips the company paid for, that he made no attempt to use his personal influence to advance his own investments, and that his travel was documented and in compliance with all House rules.

Ortiz’s financial disclosure form for 2005 indicates that on July 14 of that year, he bought shares in “China Optical LLC (A Delaware LLC)” worth $15,000 to $50,000.

Ortiz’s then-chief of staff, Florencio Rendon, filed the identical entry on his 2005 financial disclosure form, indicating that he also bought into China Optical on July 14 for between $15,000 and $50,000. Rendon resigned in 2006 and started his own consulting firm in Corpus Christi.

According to records on file in Delaware, the firm the two men invested in is actually called China Optical Communications LLC. It was established on May 19, 2005, listing Andy Browder of McAllen, Texas, as the “initial manager.”

Browder, who runs a telecommunications firm in McAllen, told Roll Call that China Optical “was formed as a joint business venture with some business partners here in Texas to go over and do a communications network with some business partners in China.”

Browder said the group intended to buy a 22,000-mile fiber optic network that already is in place in China but has never been powered up. The company is now defunct because the group could not get clearance from Chinese regulators, Browder said.

Browder said Ortiz was “one of the original shareholders in the thing” and that there were only “seven or eight partners” in the company. Ortiz came on board because “he was good friends with one of our other investors,” Bill Sugarek of Integrity Communications in Corpus Christi.

According to Congressional travel records, Integrity Communications paid for two trips to China in 2004 for Ortiz and Rendon. In February 2004, the firm paid $10,600 for transportation and lodging for the two men on a 10-day trip to Hong Kong and Beijing, though both reported on their travel disclosures that they paid for four days of the trip out of their own pockets. On official Congressional travel forms, Ortiz and Rendon listed the purpose of the trip as a “trade mission.”

At the end of July 2004, Integrity laid out another $8,600 to send the two men back to Hong Kong and Beijing, and both claimed to have paid for two days of the 10-day trip themselves. This time the purpose was listed as “fact finding.”

Ortiz has made dozens of trips to China and Taiwan during his tenure in Congress, and he has met frequently with government and industry leaders there. Earlier this year, Ortiz met with Taiwanese President Chen Shui-bian, who said Ortiz “has visited Taiwan over 40 times and in some respects one could say that Taiwan is his home away from home,” according to a statement released by the president’s office.

In June 2004, Ortiz joined a trade mission to China organized by the Port of Corpus Christi, less than a month before he returned to China with Integrity Communications. A release from Ortiz’s office quoted Ruben Bonilla, chairman of the port’s board of directors, as saying, “Congressman Ortiz has been instrumental in opening doors and trading opportunities. We are traveling through China to capitalize on the alliances he has built.”

In an e-mail response to Roll Call’s inquiries, Ortiz said, “The goal of the trips taken in February 2004 and July/August 2004 with Integrity Communications, which were appropriately paid for and documented under the rules set by the 108th Congress, was to facilitate telecommunications opportunities for businesses in my congressional district.

“In no way did I use my official capacities as a Member to pursue any personal investments during those trips. This particular investment, which was made more than a year later here in the U.S., was unrelated to the purposes of those trips.”

In 2007, the House significantly restricted privately funded travel for Members of Congress, and Ortiz’s China trips would no longer be allowed.

Neither Sugarek nor Rendon responded to requests for comment on this story.

Shortly after the Congressman became an investor in China Optical, Sugarek and his family became campaign contributors. According to Federal Election Commission records, on Nov. 3, 2005, the Ortiz campaign received a $2,000 donation from Bill Sugarek, as well as $2,000 donations from Heather Sugarek and Jason Sugarek, both listed as co-owners of Tiger Towing. There is no longer a telephone listing for that company. On the same day, Ortiz also received $2,000 from Sharon Sugarek, a housewife, and $1,000 from Kyle Sugarek, a student. None of the Sugareks had previously given to Ortiz.

A year later — on Oct. 31, 2006 — Ortiz received another $9,000 in five donations from employees of Integrity Communications, including $2,000 from a woman listed as a secretary at the company. None of the employees — with the exception of Kyle Sugarek — has ever given another campaign contribution, according to the FEC records.

In 2005, Integrity Communications received its first government contracts, according to federal financial records compiled by FedSpending.org. The three contracts from Army and Navy bases in Corpus Christi totalling $29,000 were for communications equipment, and Integrity was chosen over one other bidder for two of the contracts. In 2006, Integrity was awarded $33,000 worth of no-bid contacts from the same facilities.

Bill Allison, senior fellow at the Sunlight Foundation, a government transparency advocacy group, said the key issue is whether Ortiz was pursing private or public duties on the trips.

“If he had taken this trip with a Texas company and they want to open up and get China trade and he hasn’t invested a dime in the company, he comes back and he is hailed as a hero,” Allison said. “But if he is going to be profiting from those same acts himself, it raises the question of whether he is profiting from his public position.”