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Politics

Reid land deal raises questions

The top Democrat got $1.1-million for land he hadn't owned for 3 years, and he didn't disclose some aspects of the deal.

By ASSOCIATED PRESS
Published October 12, 2006

WASHINGTON - Senate Democratic leader Harry Reid collected a $1.1-million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show.

In the process, Reid did not disclose to Congress an earlier sale in which he transferred his land to a company created by a friend and took a financial stake in that company, according to records and interviews.

The Nevada Democrat's deal was engineered by Jay Brown, a longtime friend and former casino lawyer whose name surfaced in a major political bribery trial this summer and in other prior organized crime investigations.

Land deeds obtained by the Associated Press during a review of Reid's business dealings show:

- The deal began in 1998 when Reid bought undeveloped residential property on Las Vegas' booming outskirts for about $400,000. Reid bought one lot outright, and a second parcel jointly with Brown.

- In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land.

- After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004, and Reid took $1.1-million of the proceeds, nearly tripling Reid's investment. Reid reported it to Congress as a personal land sale.

The complex dealings allowed Reid to transfer ownership, legal liability and some tax consequences to Brown's company without public knowledge, but still collect a seven-figure payoff nearly three years later.

Reid hung up the phone when questioned about the deal last week by the Associated Press.

At a news conference Wednesday in Las Vegas, Reid contended he did nothing wrong but said he was willing to change his ethics report's account of the sale if the Senate Ethics Committee ordered him to do so.

"Everything I did was transparent," Reid said. "I paid all the taxes. Everything is fully disclosed to the ethics committee and everyone else. As I said, if there is some technical change that the ethics committee wants, I'll be happy to do that."

However, Kent Cooper, a former Federal Election Commission official who oversaw government disclosure reports for federal candidates for two decades, said Reid's failure to report the 2001 sale and his ties to Brown's company clearly violated Senate rules.

"This is very, very clear," Cooper said. "Whether you make a profit or a loss you've got to put that transaction down so the public, voters, can see exactly what kind of money is moving to or from a member of Congress."

Reid's aides said no money changed hands in 2001 and that Reid got an ownership stake in Brown's company equal to the value of his land. Reid didn't disclose the deal because he considered it a "technical transfer," they said.

They also said they have no documents proving Reid's stake in the company because it was an informal understanding between friends.

The 1998 purchase "was a normal business transaction at market prices," Reid spokesman Jim Manley said.

However, Senate ethics rules require lawmakers to disclose on their annual ethics report all transactions involving investment properties - regardless of profit or loss - and to report any ownership stake in companies.

Other parts of the deal - such as the informal handling of property taxes - raise questions about possible gifts or income reportable to Congress and the IRS, ethics experts said.

The Associated Press first learned of the land deal from a former Reid aide who expressed concern the deal hadn't been properly reported.

Reid isn't listed anywhere on Patrick Lane's corporate filings with Nevada, even though the land he sold accounted for three-quarters of the company's assets. Reid's office said Nevada law didn't require Reid to be in the filings.

[Last modified October 12, 2006, 01:19:28]