Wednesday, October 11, 2006

3:58 p.m.

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, Mr. 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. He’s never been charged with wrongdoing — except for a 1981 federal securities complaint that was settled out of court.

Land deeds obtained by The Associated Press during a review of Mr. Reid’s business dealings show:

—The deal began in 1998 when Mr. Reid bought undeveloped residential property on Las Vegas’ booming outskirts for about $400,000. Mr. Reid bought one lot outright, and a second parcel jointly with Mr. Brown. One of the sellers was a developer who was benefiting from a government land swap that Mr. Reid supported. The seller never talked to Mr. Reid.

—In 2001, Mr. Reid sold the land for the same price to a limited liability corporation created by Mr. Brown. The senator didn’t disclose the sale on his annual public ethics report or tell Congress he had any stake in Mr. 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, Mr. Brown’s company sold the land in 2004 to other developers and Mr. Reid took $1.1 million of the proceeds, nearly tripling the senator’s investment. Mr. Reid reported it to Congress as a personal land sale.

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

Mr. Reid hung up the phone when questioned about the deal during an AP interview last week.

The senator’s aides said no money changed hands in 2001 and that Mr. Reid instead got an ownership stake in Mr. Brown’s company equal to the value of his land. Mr. Reid continued to pay taxes on the land and didn’t disclose the deal because he considered it a “technical transfer,” they said.

They also said they have no documents proving Mr. 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. “There were several legal steps associated with the investment during those years that did not alter Senator Reid’s actual ownership interest in the land.”

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.

Kent Cooper, who oversaw government disclosure reports for federal candidates for two decades in the Federal Election Commission, said Mr. Reid’s failure to report the 2001 sale and his ties to Mr. Brown’s company violated Senate rules.

“This is very, very clear,” Mr. 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.”

“It is especially disconcerting when you have a member of the leadership, of either party, not putting in the effort to make sure this is a complete and accurate report,” said Mr. Cooper. “That says something to other members. It says something to the Ethics Committee.”

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.

Stanley Brand, former Democratic chief counsel of the House, said Mr. Reid should have disclosed the 2001 sale and that his omission fits a larger culture in Congress where lawmakers aren’t following or enforcing their own rules.

“It’s like everything else we’ve seen in last two years. If it is not enforced, people think it’s not enforced and they get lax and sloppy,” Mr. Brand said.

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