Obama, Others Trip on Disclosures
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.
Obamas 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 Senators 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 Calls 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 Obamas 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, Obamas campaign acknowledged that he had lost about $13,000 through his investment in two small companies, AVI Biopharma and SkyTerra Communications.
But Obamas 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 Calls inquiries, Obamas office said he will file a third amendment.
Several House Members are also preparing amendments to address the same failure to report capital gains.
Several Texas Republicans failed to report income from stock sales, but on a much smaller scale than Hutchisons
Rep. John Carter (R-Texas) had only one transaction in 2007 the sale of $100,000 – $250,000 in Exxon Mobil stock and did not report capital gains on the sale. At the request of the House ethics committee, Carter had already filed one amendment to change the reporting of another holding, but the committee did not ask him to report the income from the Exxon Mobil sale, a staff member said. In response to Roll Calls inquiry, Carter filed an amendment to reflect the capital gains.
Rep. Michael Burgess (R-Texas) filed an amendment after a review of his form indicated that one of his stocks netted $286, just over the $200 threshold at which the reporting requirement kicks in.
Rep. Joe Barton (R-Texas) failed to report capital gains on one stock sale, which spokesman Sean Brown said was an oversight that the ethics committee had not pointed out.
We hadnt heard that we had done anything wrong, Brown said. After Roll Call asked about the report, Barton filed an amendment.
Rep. Diana DeGette (D-Colo.) listed several sales of stock on her financial disclosure form and no capital gains from any of those sales, but her office was unable to provide an explanation for the omission. DeGettes form also reports capital gains on a number of stocks that are listed as purchases, though it seems unusual that a purchase would result in a capital gain.
DeGette spokesman Kristofer Eisenla said, We are looking into it and will take any appropriate action after that process. Eisenla said the ethics committee had not raised any flags regarding DeGettes forms. This is the first weve heard of it, he said.
Rep. Eric Cantor (R-Va.) reported no capital gains on any of his stock sales; his office said he will file an amended form.
Rep. Mary Bono Mack (R-Calif.) reported about 75 sales of stock in 2007 but no capital gains on any of those transactions. Contacted by Roll Call, her spokeswoman said, This was an inadvertent omission, and an amendment is being prepared.
Since Roll Call began investigating financial disclosure forms in the spring, more than a dozen members have filed amendments to disclose previously unreported income from stock sales.
Most offices have had the same response to questions about their forms that the rules are confusing and that the ethics committee had already reviewed and approved the forms as filed.
The confusion on the forms stems from the fact that each sale has to be reported twice once as a transaction, where the total value of the sale is disclosed, and again as capital gains on the income portion of the form if the sale netted a gain of more than $200. In every case that Roll Call identified, the Member had disclosed the sale of the stock, which staffers say proves that the Members did not intend to hide any income.
One House GOP leadership aide said the root of the problem is that the ethics committee is unable to clearly explain the rules, and fails to catch errors that Members make on their forms. Clearly, common sense would dictate that if the committee of jurisdiction, specifically the ethics committee, cannot accurately advise Members of Congress as to what needs to be included in the financial disclosure or in this case deems the document accurate and complete when it may not be, the process of financial disclosures needs a serious and thorough reexamination.