CREW SENDS HOUSE ETHICS COMPLAINT AGAINST REP. LAURA RICHARDSON

18 Jun 2008 // Washington, DC – This morning, Citizens for Responsibility and Ethics in Washington (CREW) sent a complaint to the House Committee on Standards of Official Conduct, better known as the ethics committee, against Rep. Laura Richardson (D-CA) asking for an immediate investigation into whether she has violated House rules. Specifically, CREW asked that the committee determine whether Rep. Richardson accepted a loan in violation of the House gift rule, failed to properly report a loan on her financial disclosure statements, and engaged in conduct that does not reflect creditably on the House by loaning her campaign money at a time when she was in default on her mortgage.

Last month, it was reported that Rep. Richardson’s Sacramento home had been sold into foreclosure. She claimed that this happened without her knowledge and contrary to an agreement with her lender. Rep. Richardson also failed to make mortgage payments on the property for nearly a year, and failed to pay approximately $9,000 in property taxes on that home. She has defaulted on other home loans as well. Her house was bought at a foreclosure auction by James York on May 7, 2008 for $388,000.

At the same time that Rep. Richardson was missing payments and failing to pay her taxes, in June and July 2007, she made three loans to her congressional campaign totaling $77,500.

On June 2, 2008, Washington Mutual Bank, Rep. Richardson’s lender, filed a notice of rescission of the foreclosure sale. By that time, Mr. York had already invested money cleaning up the house and preparing it for resale. As a result, Mr. York is suing Rep. Richardson and Washington Mutual, alleging that the bank is rescinding the sale because Rep. Richardson is a member of Congress.

Given that “loans” are included in the definition of “gifts,” if Washington Mutual Bank rescinded its foreclosure of Rep. Richardson’s house and renegotiated her mortgage on terms that differed from the terms the bank offered to any other similarly situated individual in default on their mortgage, Rep. Richardson may have received an improper gift in violation of House rules.

CREW also asked the ethics committee to investigate whether Rep. Richardson has received other favorable treatment from lenders in the past. According to news reports, Rep. Richardson has defaulted on loans at least eight times on properties she owns in Long Beach, San Pedro and Sacramento. It is unusual for someone with such a deplorable credit history to be approved for mortgages repeatedly, suggesting that Rep. Richardson may have traded on her other elected positions in order to receive those loans.

Rep. Richardson also failed to include the mortgage on her Sacramento home on her financial disclosure statements. Although mortgages secured by a personal residence need not generally be disclosed, there is an exception if the indebtedness exceeds the purchase price, which it did in this case, and may have on other homes she has owned.

In addition, the timing of Rep. Richardson’s most recent default and the $77,500 she loaned her congressional campaign committee should be examined. Richardson owed money to her lender and to the state of California, to which she owed property taxes at the time she lent her campaign the money. If Rep. Richardson wanted to take out a loan to finance her campaign, she could have attempted to apply for a bank loan for that purpose.

Melanie Sloan, executive director of CREW, said today, “By failing to pay her debts, filing incorrect financial disclosure forms and funneling money that should have gone to pay her mortgage and property taxes to her congressional campaign, Rep. Richardson has signaled that legal and financial obligations can be ignored in the pursuit of political power.” Sloan continued, “Richardson not only has shown exceedingly poor judgement, she has violated House ethics rules. She is unfit to be an elected official, at any level.”

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Citizens for Responsibility and Ethics in Washington (CREW) is a non-profit legal watchdog group dedicated to holding public officials accountable for their actions.

For more information, please visit www.citizensforethics.org or contact Naomi Seligman Steiner at 202.408.5565/nseligman@citizensforethics.org.

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