The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Democrat Congressman Caught in Get Rich Quick Ripoff Loophole

Posted by iusbvision on February 15, 2009

How to get rich off loaning your campaign money and take political payoffs perfectly laundered to avoid the ethics laws. Ed Morrissey from Hotair.com explains:

Here’s how it’s done:

  1. Withdraw money from a pension or tax-protected savings account to justify charging yourself an interest rate that would make most credit-card companies blush.
  2. Pay only the interest as long as possible on the loan.
  3. Hold fundraisers specifically to retire the debt you owe to yourself, and make sure donors understand exactly where that money goes.
  4. Give yourself all the donations from those fundraisers.

Once you have that system established, it allows contributors to stuff money into your pockets as long as the loan remains outstanding. At 18% interest, that could go on for decades, and in Napolitano’s case, she already has one decade on the books.  Napolitano has managed to keep more than half of the debt alive as principal while earning almost 150% just on interest payments — and at this rate, she could do this for another twenty years.

And she’s done it while giving contributors a direct line to her checking accounts — and it’s all legal.

Bloomberg News:

Feb. 13 (Bloomberg) — During a decade in Congress, California Representative Grace Napolitano has pocketed more than $200,000 of political contributions by charging as much as 18 percent interest on money she loaned to her own campaign.

The suburban Los Angeles Democrat made the $150,000 loan in 1998, when she was first elected to the U.S. House of Representatives. Through Dec. 31, her campaign committee has used donations to pay Napolitano $221,780 of interest while reducing the principal by just $64,727, a review of her Federal Election Commission filings shows.

As recently as June 2008, Napolitano held a fundraiser asking supporters and political action committees for money to pay down the 1998 debt. Napolitano, her spokesman and her campaign’s lawyers didn’t respond to requests for comment.

“I find this practice quite reprehensible,” said Craig Holman, government affairs lobbyist for Public Citizen, a Washington advocacy group. Interest payments from Napolitano’s campaign treasury have “proven exorbitantly profitable,” he said. “Candidates are not supposed to personally benefit from these campaign funds.”

 Check This out:

Former FEC Chairman Scott Thomas, a Democrat, said that while interest charges are legal he’s never seen another case “where someone has basically continued to generate interest income off a campaign loan this long.” Most candidates only seek repayment of the initial loan amount, Thomas said.

“This is unbelievable — it really is extraordinary,” said Michael Toner, a former Republican member of the FEC who was general counsel for George W. Bush’s 2000 presidential campaign. Toner said he “cannot recall a situation” where a candidate collected interest in sums that “actually exceeded the original loan balance.”

In the first five months of 2008, Napolitano’s campaign paid her almost $68,000 of interest, according to FEC records. An additional $15,227 of principal was paid last May.

One Response to “Democrat Congressman Caught in Get Rich Quick Ripoff Loophole”

  1. Andrew Roman said

    Excellent information.

    Blog bookmarked.

    Keep up the great work.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: