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June 14, 2006
Another Confluence of Pork And Influence (Update With Hastert Response, And Reader Response)

Note: Be sure to read Dennis Hastert's response through his attorneys in the updates below, as well as more information on the transaction.

The Sunlight Foundation reports that another apparently clear linkage between pork and a politician's pocket exists in the business dealings of Speaker Dennis Hastert (R-IL). They report that Hastert has pushed through $207 million in earmarks for a business venture financed by a trust owned in part by Hastert himself:

House Speaker J. Dennis Hastert has used an Illinois trust to invest in real estate near the proposed route of the Prairie Parkway, a highway project for which he's secured $207 million in earmarked appropriations. The trust has already transferred 138 acres of land to a real estate development firm that has plans to build a 1,600-home community, located just a few miles from the north-south connector Hastert has championed in the House.

Hastert's 2005 financial disclosure form, released today, makes no mention of the trust. Hastert lists several real estate transactions in the disclosure, all of which were in fact done by the trust. Kendall County public records show no record of Hastert making the real estate sales he made public today; rather, they were all executed by the trust.

The trust, called the Little Rock Trust #225, transferred 138 acres of farmland in which Hastert had an interest to a company called RALC-Plano LLC on Dec. 7, 2005. (See Document 1, attached) Illinois Secretary of State records show that the company is a wholly owned subsidiary of the Robert Arthur Land Company. The company’s Web site lists plans for a Plano development called North County, with lots for 1,635 homes, 33 acres for commercial and retail businesses, and 18 acres set aside for a public school.

Peruse the documents that Sunlight posted at its website. They make a pretty good case for a direct correlation between earmarks and benefit to the politician who pushed them. Hastert owned land through this trust, and the federal projects he earmarked and inserted into the budget made that land a lot more valuable than it otherwise would be now. Hastert transferred the title to the land into the Little Rock Trust, where Dallas Ingemunson acted as trustee and handled the sales of these parcels for millions of dollars -- after Appropriations attached the earmarks to spending bills.

Ingemunson isn't just a local partner in investments in that part of Illinois. He chairs the Kendall County GOP and also serves as treasurer for Hastert's re-election campaign committee. Even if Hastert never owned a single portion of the Little Rock Trust, he still would have to answer why he felt it necessary to spend our tax dollars on projects that directly enriched his campaign staff.

We wondered what the dickens Hastert had in mind when he accused the FBI of un-Constitutional behavior when they executed a legal search warrant on William Jefferson's offices. Now we understand his reluctance to allow investigations into Congressional offices and insisted that only Congress can police Congress. He apparently had his own shenanigans in mind when he attempted to turn Capitol Hill into a sanctuary for wayward elected officials.

Hastert needs to have a response that answers these allegations in toto. As Sunlight tells the story, this looks more like embezzlement than simple corruption, and the documents seem to support these allegations. Legally, we presume Hastert innocent until proven guilty, but in the political realm, this stands to damage the GOP and Congress as a whole.

Mark Tapscott says that these revelations have made life more difficult for "politicos taking advantage of their positions". We need to make sure that discomfort level keeps increasing by aggressively searching out those who enrich themselves and their cronies by spending our money. If GOP leaders think that we will overlook corruption in our party for the sake of an election, they are very much mistaken. The American people have had enough of pork and the corruption it brings, and speaking for myself at least, I have no intention on ignoring it based on party affiliation.

My Congress is not for sale, and neither is my vote.

UPDATE: Is this disillusioning? I suppose it is; I like Hastert, who has done a good job as Speaker in holding the caucus to the party agenda and has delivered victories for conservatives. If -- and this is a big if -- Hastert has used taxpayer money to enrich himself and his cronies, then none of that matters. In my opinion, we can shrug our shoulders and accept that we elect people to Congress and pay them $165K per year (plus per diem while in session) to steal from us and enrich themselves, or we can insist on ending political careers for corruption. I never had any illusions that corruption limited itself to the Democrats, so my disillusionment is strictly personal regarding Hastert, again if this story proves true. I will be looking for Hastert's response to the Sunlight Foundation's allegations, and I will publish it here when it comes.

I still support the Republicans because they come closest to my political philosophy. Therefore, it is incumbent on me and others to ensure that we expose corruption and demand clean leadership in our party.

However, if others feel differently, Preston Taylor Holmes has a solution for you ... if you don't mind truth in advertising ...

UPDATE II: As promised, here is Hastert's response through his attorney, posted on Sunlight's original post:

Sent: Wednesday, June 14, 2006 4:10 PM To: Eric Schmeltzer; Bill Allison Cc: Passantino, Stefan Subject: Legal Demand for Immediate Action

Dear Mr. Schmeltzer and Mr. Allison:
The statements in your release below are untrue. Rather than simply disclose participation in a trust (without disclosing what the trust owns), Speaker Hastert disclosed the amount of his interest and the location of the property on the Financial Disclosure for the year in which the closing of the transaction occurred. This is confirmed by the entries on the Financial Disclosure forms themselves confirming the interest (including amount), the property, and the type of transaction (sale, purchase, or exchange). The statements and innuendo in your release are thus false and misleading.

In addition, the property purchased is adjacent to his home and is more than 5.5 miles from the Pairie Parkway Corridor. This would be like complaining about a purchase in Alexandria, Virgina based on rennovations at the Capitol.

Demand is hereby made that the false, libelous and defamatory matter be immediately withdrawn and corrected. The failure to do so will confirm intentional and wilful conduct by you designed to injure the reputation of Speaker Hastert after becoming actually aware that the published statements were false. All available remedies will be pursued for such conduct.

Randy Evans
Counsel to Speaker J. Dennis Hastert

That answers some of the disclosure questions, although as SF states, it also appears to confirm that he never disclosed his interest in the trust to which he transferred the property. It still leaves open the question as to why he pushed for federal money for a major connector less than six miles from his own property. Looking at the proposed corridor, it runs within a few miles of an already-extant county road 47, which runs parallel to most of the new road. It looks at least as long of a connector between I-88 and I-80 as the 47 does. Further west, Interstate 39 connects the two interstates, and State Route 59 connects them in the most direct manner. It would make a lot more sense (and probably cost a lot less) to upgrade 59 to an interstate connector road rather than have this meandering route that just happens to go past Little Rock.

Why does the federal government need to spend $207 million to build this corridor? Why would Denny Hastert push so hard for what looks like a superflous project? The people who stand to gain from this odd path that runs through barely-developed land are those prescient enough to have bought property in the area.

Right now, residents in Little Rock have to travel 27 miles to get to the 39, or 35 miles to get to Minooka. With that much space between Little Rock and major highway traffic, few investors would have ever thought to build 1600 houses and 33 acres of commercial and retail development.

UPDATE III: Little Rock presently has a population of 7,662 and 2,683 housing units. Now they will add 1600 more houses and 33 acres of commercial and retail development, and just coincidentally the entire reason for this expansion is a federal highway creating a traffic corridor 20 miles closer than any major road, also coincidentally pushed through Congress by the man who had an ownership stake in the property on which all of this will be built.

Sorry, but if that's politics as usual, then we need a much bigger housecleaning than we imagined.

UPDATE IV: The readers disagree, and I would say that Bill R (in a nearby area to the proposed road) gives a typical reaction:

In the scheme of things in Illinois, this is small potatoes to be honest. Basically, he's gone out to get a public works project for his district. His property is likely to be *in* his district (that's where he lives when not in DC) and there's no sign that he used insider information to acquire property right *on* the corridor at bargain rates, which *would* strike me as improper.

His property will no doubt increase in value, but it doesn't seem like it will be any more valuable than any of the other property in his district. As long as that's true, it seems like no harm, no foul. He's gotten a relatively "good" pork project for his district.

The opposition to this expressway, BTW, is pretty much the same as the opposition to the other proposed expressways in the Chicago area -- we mustn't encourage suburban sprawl, etc. It's *not* that this would be a
useless road or a Highway to Nowhere.

Fair enough. However, the fact is that Hasert did tranafer property to a trust in that area a couple of years before its value increased substantially, and that rapid increase came from Hastert's earmarks, and he didn't identify the his ownership in the trust in his disclosure -- although, oddly, he did identify the land the trust received as a personal purchase when it was not, and gave a vague description which revealed almost nothing about its proximity to the project.

I wouldn't put this in the same class as William Jefferson; Hastert hasn't taken kickbacks. However, he manged to profit a great deal from pressing for pork which he knew would benefit his trust. That may not be "corruption" in the legal sense, I grant you, but it smells pretty bad. And it's a great example of why earmarks have to be eliminated from the budgeting process.

UPDATE V: The Chicago Sun-Times has more on this issue, including the profit made by Hastert on the property:

House Speaker J. Dennis Hastert pocketed almost $2 million from real estate deals adjacent to his Plano home in booming Kendall County, one of the fastest growing areas in the nation.

The transactions prompted questions Wednesday from the Sunlight Foundation, a new watchdog group, about whether Hastert, who earmarked $207 million in federal dollars for the proposed Prairie Parkway, had his profits swollen because of the highway. ...

Hastert and his wife bought a 195-acre farm in Plano in 2002, of which 69.5 acres had no access to roads.

In 2004, Hastert formed a partnership with two friends, GOP power broker Dallas Ingemunson and Tom Klatt. The partners purchased 68.9 acres, with Hastert owning one quarter of the parcel, which fronts a road. This land is adjacent to the other Hastert property.

In December 2005, the 68.9-acre parcel and the 69.5-acre parcel were sold to a developer, which wants to build at least 1,700 residential units plus commercial space there.

Hastert's share of the profits from the sale is close to $2 million.

The Sun-Times reports that Hastert paid $11000 per acre for his 195-acre purchase, or about $2.2 million. If his profit came to $2 million, that doubled his investment in three years. That's not quite the same rate as Hillary Clinton and the cattle futures, but it's still troubling. He also has been pressing this project since March 2002, coinciding with at least they year in which Hastert acquired the property. The Sun-Times also reports that Hastert's property falls within three miles of the corridor, not 5.5.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at June 14, 2006 7:50 PM

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