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Mollohan says he's unaware of any errors in financial reporting
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By LARRY MARGASAK
Associated Press Writer
WASHINGTON (AP) -- The House ethics committee's top Democrat, under fire from Republicans, said Friday he's unaware of any errors in his financial disclosures the past nine years.
Rep. Alan Mollohan, D-W.Va., provided a detailed explanation of his investments a week after a conservative group questioned the accuracy of his annual financial reporting. Republican campaign officials called for his resignation from the ethics panel, but Mollohan refused to step down.
The allegations could have an impact on the ethics committee's ability to investigate wrongdoing and could be a factor in this year's congressional elections.
The committee has been unable to launch new investigations because its five Democrats and five Republicans have blocked each other from moving forward. The partisan split may become more bitter with GOP calls for Mollohan to leave the panel.
The allegations also allow Republicans to counter a major Democratic campaign theme: that majority Republicans have allowed a "culture of corruption'' in the House and Senate.
Congressional Democrats want the ethics panel to investigate lawmakers who had ties to convicted lobbyist Jack Abramoff, to determine whether the members broke the rules by providing legislative help in return for free trips, restaurant meals and seats in arena skyboxes.
Federal prosecutors are conducting criminal investigations into the same conduct.
Besides the allegations against Mollohan, the senior Democrat on the House Judiciary Committee -- John Conyers of Michigan -- stands accused by former staff members of misusing his office by turning them into baby sitters for his children. Conyers did not respond to the allegations.
The National Legal and Policy Center -- which describes itself as a nonprofit organization that promotes ethics in government through research, education and legal action -- said last week it had filed a complaint in February with federal prosecutors, alleging Mollohan consistently undervalued and omitted assets in his annual reporting. The U.S. attorney's office in Washington refused to confirm whether it is investigating Mollohan.
Mollohan said the value of his property investments -- owned by him and his wife -- increased sharply because of rising values in Washington, D.C., and the North Carolina shore since 2000. The lawmaker said the value was offset by large mortgages, and the couple borrowed against their existing holdings to acquire new property.
In 2001, Mollohan added, the couple increased their holdings after the lawmaker inherited a share of his father's real estate holdings in West Virginia.
Mollohan said the Legal and Policy Center appeared to assert that he should have valued his holdings without regard to his liabilities.
The lawmaker said he can't address allegations that he made 250 errors in his reporting since 1996, because the center has not provided him with details.
He added, "Any claim whatsoever that these investments are in any way related to my actions as a member of Congress is categorically false.''
Mollohan said his financial reports are prepared by a respected accounting firm.
"I would never be so bold as to say that there are no errors whatsoever in the 24 annual financial disclosure statements I have filed as a member of Congress,'' he said.
"What I will say, however, is that if there are any errors in those forms, they were inadvertent, and I am convinced that they are not material -- that is, those forms provide an accurate picture of the investments, income and liabilities of my wife and me....''
Mollohan's 2000 report indicated he had assets worth between $170,012 to $562,000 and liabilities between $170,000 and $465,000. The disclosure reports let congressmen report their finances within broad ranges.
His 2004 report indicated he had assets of $6.3 million to $24.9 million and liabilities of $3.66 million to $13.5 million.
AP-ES-04-14-06 1654EDT
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McCabe-Henley's ties to organization set up by Mollohan draw scrutinyJake Stump
Daily Mail Staff
Thursday April 13, 2006
The chairman of the National Legal and Policy Center is questioning a Charleston-based real estate firm's relationship with a controversial nonprofit organization set up by embattled Congressman Alan Mollohan.
Ken Boehm, who spent nine months investigating Mollohan and turned over a 500-page complaint to federal prosecutors, contends McCabe-Henley unfairly benefited from its ties to the Vandalia Heritage Foundation.
But Rudy Henley, co-founder and senior managing director of the commercial real estate company, dismissed Boehm's claims as unfounded and nothing more than fodder for "cocktail party gossip."
State Sen. Brooks McCabe, D-Kanawha, who helped to found the real estate firm in 1980, echoed Henley's sentiments. McCabe said Wednesday he is an independent contractor for McCabe-Henley but no longer is a co-owner.
Laura Kuhns, former managing director of McCabe-Henley and now executive director of the Vandalia Heritage Foundation, said Boehm's report was politically motivated.
The Vandalia Heritage Foundation's mission is historic preservation and restoration of dilapidated buildings. It is one of five nonprofits established by Mollohan, a Fairmont Democrat who in 1982 succeeded his late father Robert as West Virginia's 1st District representative.
Boehm's report shows that Mollohan has quietly secured $250 million from Congress for his nonprofit groups through the earmark process. Officials with those groups have made substantial campaign contributions to Mollohan, according to the report.
Boehm has said no congressman past or present has come up with such an ingenious arrangement.
"The earmarks that go into the 1st Congressional District go to a small number of nonprofits," Boehm said. "In turn, they are so interlinked with each other that a small group of companies and individuals benefit from it.
"At the top is Laura Kuhns and McCabe-Henley."
Kuhns once served on Mollohan's staff in Washington. She then worked at McCabe-Henley from 1994 to 2000, serving as managing director and vice president of development for North Central West Virginia.
In addition to her role as leader of the Vandalia Heritage Foundation, Kuhns also serves on the boards of other nonprofits that depend on Mollohan-secured earmarks for their existence.
Among them is the MountainMade Foundation, which is based in Thomas. The foundation enables West Virginia artisans to sell their wares over the Internet and at a renovated building in Thomas.
More than $6 million in Mollohan earmarks have supported MountainMade over the years.
Kuhns serves on the board of the only out-of-state foundation that gets Mollohan's backing, the California-based National Housing Development Corp. It has received $31 million in earmarks in the last five years.
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http://www.dailymail.com/news/News/2006041330/
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Mollohan owns pricey rental
George Hohmann
Daily Mail business editor
Thursday April 13, 2006
Garnet Career Center
Congressman Alan Mollohan's North Carolina beach house rents for $8,555 a week during the peak summer season, according to a listing on the Internet.
According to the National Legal and Policy Center, the house was advertised for rent last summer for $11,975 a week.
The property has played a role in recent controversies involving Mollohan.
The congressman has been scrutinized for steering government funds to nonprofit organizations run by Laura Kurtz Kuhns, a former Mollohan staffer. Kuhns is a partner with Mollohan and his wife in five properties on Bald Head Island.
Ken Boehm, director of the Center of the National Legal and Policy Center, the organization that has spearheaded criticism of Mollohan, used the beach house at Bald Head Island as an example of the apparently dramatic improvement of Mollohan's financial situation.
"His beach house in the summer of 2005 was being rented for $11,975 a week," Boehm said. "Contrast that situation with his finances in 2000 when he reported Visa card debt of $45,000 to $150,000.
Boehm continued, "The average West Virginian probably doesn't vacation in a beach house that rents for $11,975 a week. And the average congressman doesn't either."
Mollohan and his wife, Barbara, recently bought The Peppervine House for $1.45 million, according to The Wall Street Journal.
The newspaper and the National Legal and Policy Center reported Friday that the Mollohans are partners with Kuhns and her husband, Donald, in five properties on Bald Head Island valued in local real-estate records at a total of $2 million.
Bald Head Island Rentals, which manages The Peppervine House on Bald Head Island for the Mollohans, describes it as a 6-bedroom, 6.5-bath oceanfront home that sleeps 14.
"This gorgeous home is over 4,500 square feet heated and has approximately 2,500 square feet of decking," according to the listing. "Custom hardwood floors and bead boarding throughout the home. Each bedroom has private bath. Kitchen has granite countertops. Den with fireplace. Media room. Fireplace for decorational purposes only, not for guests' use."
The listing goes on to say that renters receive a temporary membership to the Bald Head Island Club, which provides access to a golf course, croquet greenswards, tennis courts, swimming pool, fitness center, volleyball, children's play area, dining room and lounge.
Also, "Guests vacationing in this home may purchase temporary memberships to the Shoals Club," the listing says. "The Shoals Club has a pool, hot tub, children's pool, and a wooden boardwalk to the public access on East Beach." The 10,000-square-foot clubhouse has a dining room, a fitness room, locker rooms, and wraparound porches, the listing says.
The listing and numerous photos of the house are online at www.baldheadislandrentals.com.
Earmarking
Laura Kuhns is a former Mollohan staffer who now runs the Vandalia Heritage Foundation, a nonprofit financed mostly with federal money obtained by Mollohan through an appropriation process called earmarking. She also sits on the boards of several other nonprofits that receive federal money obtained by Mollohan.
Mollohan and Kuhns have said there is no link between the earmark appropriations Mollohan got through Congress and their real-estate investment. They have denied any improprieties.
Boehm and the National Legal and Policy Center criticize the arrangement.
"It's a one-of-a-kind situation in respect to earmarks for the nonprofits," Boehm said. "I would say that no congressman, living or dead, has ever earmarked any tax money, let alone tens of millions of dollars in tax money, to groups run by people with whom he has a personal financial relationship."
In response to queries about the beach properties, Kuhns issued a written statement Wednesday. "Let me state unequivocally and emphatically: I have never personally profited from ‘earmarks' in any way, nor have ‘earmarks' funded my real estate investments or other personal purchases," Kuhns said.
"In the United States of America, we are free to spend the money that we earn, and I can assure everyone, I earn every bit of my salary and more."
Ron Hudok, Mollohan's press secretary, did not respond Wednesday to queries about the Congressman's beach property. Last Friday The Wall Street Journal quoted Mollohan as saying that any time he invests with others in real estate, he puts in half the money to avoid the appearance of a conflict.
"I wish you were correct that I'm worth millions, but in fact it's borrowed money," he told the Journal.
According to the National Legal and Policy Center, Mollohan's 2000 financial disclosure report listed his income-producing assets as being worth from $179,012 to $562,000 with liabilities of $170,000 to $465,000.
"Just four years later, Mollohan's 2004 financial disclosure report showed him with assets worth $6.3 million to $24.9 million offset by liabilities in the $3.7 million to $13.5 million range," the center said.
The National Legal and Policy Center disclosed last week that it had filed a complaint with the U.S. Attorney for the District of Columbia what it alleges are "hundreds of ethics law violations" by Mollohan.
"The bottom line is Mollohan got very wealthy in a four-year period," the center said Friday.
The Wall Street Journal reported that federal prosecutors are investigating Mollohan's finances but the New York Times said Saturday federal authorities are reviewing the complaint filed by the National Legal and Policy Center.
Mollohan told The Associated Press that the timing of the National Legal and Policy Center's announcement and National Republican Congressional Committee Chairman Tom Reynolds' call for him to resign from the House Committee on Standards of Official Conduct on the same day as the Journal article proves he is in the "crosshairs of the national Republican Party as well as their kind of fellow traveling organizations, of which the National Legal and Policy Center is one.
"They are putting together an association of events and trying to draw sinister conclusions," Mollohan told the wire service. "I think it's my ranking membership on the ethics committee that really sticks in their craw."
Beach property
The beach house owned by Don and Laura Kuhns, known as Cape Fearless, is next to the Mollohan house. The Kuhns' house is described by Bald Head Island Rentals as a 5-bedroom, 4.5-bath oceanfront home that sleeps 10. It rents for $6,555 a week during the peak summer season.
"It is a spacious oceanfront home with lovely views," the listing says. "Large covered deck. Sitting area in master bedroom overlooks ocean. Master suite has king and spacious bath. Home also has two queens, one double and two twins. Breakfast area with spectacular views. Beautiful Florida room downstairs with comfortable living area and sitting area in loft."
In her Wednesday written statement, Kuhns said she was introduced to Bald Head Island in 1997. "Since then, my husband and I have enjoyed the island as a get-away from our hectic work lives, and we have watched the real estate values grow.
"Eventually, we decided that rather than renting our vacation getaway each year, we would try to acquire property on Bald Head for the following reasons: 1) values were starting to increase greatly and we wanted to buy while we could still afford it; 2) my family enjoyed Bald Head Island as much as we did and we wanted to provide a place for the entire family to vacation; 3) Bald Head Island enjoys a great seasonal rental business, and we could rent the property out, thereby offsetting our mortgage; 4) this would, hopefully, eventually provide us with a retirement; 5) this would provide a better investment than the stock market; and 6) the tax benefits due to the interest deduction; 7) real estate was Don's employment and business."
Kuhns said that in March 2003, she and her husband acquired an existing oceanfront house and began renting it out. They subsequently renovated it.
"Before actually closing on the property, we invited our good friends, Alan and Barbara Mollohan, to visit on a fall getaway weekend," she said. "After the initial visit, the Mollohans were clearly as infatuated as we were with the island, and they returned and acquired the lot next to our house, on which they constructed a new home."
She wrote that both families have enjoyed vacations at the island and started talking about what they felt were reasonable property values. They learned of opportunities to acquire lots and decided to invest jointly, particularly because spouses Barbara Mollohan and Don Kuhns are real estate professionals.
"Since these five lots were jointly acquired a couple of years ago, we recently sold the first one in January," Kuhns said. "It was always our intent - speaking for Don and myself - to sell the lots and defray more of our cost of holding the beach house, which we only enjoy out of season due to the rentals."
Bald Head Island is 70 miles northeast of Myrtle Beach, S.C. The island is two miles off the North Carolina coast, at the mouth of the Cape Fear River.
According to the real estate company, the island is accessible only by passenger ferry or private boat. The Bald Head Island Marina has 153 slips and accommodates vessels up to 95 feet in length.
A brief history of the island posted on the real estate company's Web site says Native Americans first inhabited the island. "Later on, between the 17th and 18th centuries, Bald Head Island became an important stopping point for various pirates to replenish their provisions and bury their booty while sailing from New England to the Bahamas.
"Bald Head Island also became a preferred hideout for the notorious pirate of pirates, Edward Teach -- also known as Blackbeard -- and Stede Bonnet, the intellectual-turned-pirate," the Web site says. "Today, streets on the island are named after these infamous men."
The site says 1,000 Confederate soldiers were stationed at the island's Fort Holmes during the Civil War and that North Carolina's oldest lighthouse is on the island.
Kuhns also is a member of the Glenville State College Board of Directors. The college has received more than $6 million in Mollohan earmarks in recent years, according to Boehm's report.
"She'd hold a national record in the Guinness Book of Records for most boards having served on," Boehm said.
Kuhns responded: "I have never personally profited from earmarks in any way, nor have earmarks funded my real estate investments or other personal purchases. In the United States of America, we are free to spend the money that we earn, and I can assure everyone, I earn every bit of my salary and more."
As Vandalia executive director, Kuhns earned $102,000 in 2004, according to the latest IRS tax returns on file.
Boehm said Kuhns and McCabe-Henley have both profited from Mollohan's ability to wring money out of the budget.
"When you're working nine months on filing a complaint, you've got to connect the dots," Boehm said. "But it's not hard when there's thousands of dots."
McCabe-Henley manages several properties in the Fairmont area for Mollohan-backed nonprofits.
McCabe Land Co., a separate entity from McCabe-Henley, purchased the 63,000-square-foot former G.C. Murphy Co. building in downtown Fairmont.
Together, McCabe-Henley and McCabe Land Co. renovated the building and turned it into the Veterans Square project, which currently houses the Mollohan-created Institute for Scientific Research.
Veterans Square includes green space, a community amphitheater, parking garage and office space.
Senator McCabe and some of his relatives own McCabe Land Co.
Kuhns said McCabe mentored her on projects like Veterans Square.
"I owe Brooks and Rudy a great debt for taking a chance and allowing me the opportunity to learn on the job," Kuhns said.
Henley said he met Kuhns when he was helping develop the West Virginia High Technology Consortium project in the early 1990s. Kuhns served as executive director of the consortium, another one of Mollohan's earmark-funded nonprofit groups, from 1991 to 1994.
Henley said he was never contacted by Boehm during the course of Boehm's investigation.
"They don't seem to be interested in any fact," Henley said. "They're just spreading a lot of innuendo and assuming guilt by association. There's nothing hidden here. Our stuff checks out."
Kuhns managed development efforts at McCabe-Henley's first satellite office in Fairmont. In 2000, she also served as project director for Vandalia. In December of that year, she left McCabe-Henley to take the executive director's job at Vandalia.
In April 2000, McCabe Land bought the historic but dilapidated Waldo Hotel in downtown Clarksburg for $150,000. Seven months later, McCabe Land sold the hotel to Vandalia for $197,000.
Boehm said McCabe Land gained a quick $47,000 profit, but McCabe rejects that notion.
After slight renovations and upkeep of the property, McCabe Land may have earned $20,000 from the sale, McCabe said.
"We didn't make much, given the significant amount of work involved in the property," said McCabe.
McCabe defended the hotel transaction. He said Mollohan staffers asked him to buy and hold the property for him until the congressman could garner enough funds so that Vandalia could purchase it.
Mollohan worried someone would buy the 100,000-square-foot hotel and raze it, McCabe said.
"We did it as an accommodation to the congressman in helping him save a historic building," said McCabe. "Some may view it as if we're friends of the local congressman. Rather, I see it as an example of the trust the business community has in the congressman in preserving historic properties."
The transaction is just one of several examples of ties between McCabe-Henley employees and Vandalia.
Donald Kuhns, the husband of Laura Kuhns, works as a sales associate at McCabe-Henley.
He serves as the project manager for the Morgantown Industrial and Research Park, a 700-acre property managed by McCabe-Henley. He started working for McCabe-Henley in 1996.
"That employment preceded Vandalia's creation and had nothing to do with Vandalia," Laura Kuhns said. "However, Don does, in fact, provide support to Vandalia when needed, often donating his time to assist our staff and showing property on his own time.
"Does he earn brokerage commissions through his work with McCabe-Henley? Yes, possibly, when the seller of the property has listed the property or when the seller is willing to pay a commission, but by West Virginia brokerage regulations this is paid to the brokerage firm, or McCabe-Henley."
The financial relationship between McCabe-Henley and Vandalia began in 1999 when the nonprofit group hired the firm for "comprehensive real estate services."
Vandalia paid McCabe-Henley $69,300 for real estate consulting in 2004, according to the latest IRS filings.
Tax reports also show that Vandalia received $8.17 million in government grants that year. Revenue from other sources was only $7,000.
Henley said Vandalia approached McCabe-Henley in 1999 to help further the group's mission of preserving and restoring historic properties. McCabe-Henley remains under contract with Vandalia for real estate consulting.
The $69,300 figure for 2004 includes hourly fees and property feasibility assessments that may have emerged from business talks, Henley said. The money also can include time and labor for acquiring and managing properties or offering the group expertise.
Laura Kuhns explained how the business relationship works.
"McCabe-Henley currently provides Vandalia with services under a monthly retainer that may be offset by commissions, if there are commissions," she said. "Vandalia sometimes acquires properties that have no listing and no commission, such as parcels as tax sales. Occasionally we do acquire listed property and the commission may be split between brokerages, as is customary."
Henley believes critics don't fully understand how the system works.
"It's more than just going out and submitting a contract," said Henley.
Henley has been the project leader for some of McCabe-Henley's development projects, including the $12 million Alan B. Mollohan Innovation and Incubation Center, built with $3.5 million in earmarks.
Boehm believes federal investigators should look into business dealings between Vandalia and McCabe-Henley, but Henley balks at any presumptions of wrongdoing.
"You could draw whatever conclusion you want," Henley said. "If you're in D.C. or New York, it may seem conspiratorial, but this is a small state where you run into the same names again and again.
"We do work for them under contract, and we've done so before Laura became director. If the (Vandalia) board feels uncomfortable with that, they can fire us at any time."
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If there was ever a situation that perfectly backed up the assertion that the national media is liberal, this is it.
Duke Cunningham was front-page news. Mollohan makes him look like a piker (and a relatively HONEST one, at that), and you can barely find a hint of it in the media. And to make it better, Mollohan is the guy who's supposed to deal with Abramoff and DeLay!
Of course, any errors in Mollohan's reports were "inadvertent." I'll try that on my next tax return.
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