Wednesday, June 14, 2006

Mollohan Explains 9,000 Percent Gain

Roll Call (subscription required) reports that Alan Mollohan had a good year in real estate in 2005, after a property he owned gained 9,000 percent in value in a 4-year span. Oh - and he didn't report it properly the first time around.

The article also notes that Mollohan secured an earmark for a bankrupt business partner, whose firm reportedly did little work for the money.

This explanation from Mollohan will not satisfy anyone, and will only send people scurrying to dig up more info on what other Mollohan friends and partners were recipients of earmarks. Indeed, even on the Left, this explanation is greeted with skepticism. Recall too, that the FBI is still investigating this. Mollohan is in serious trouble.

It's almost comical that Nancy Pelosi has only just announced an end to the Democratic focus on the 'Culture of Corruption.' The timing is fortuitous, since it could not survive in the face of the behavior of Bill Jefferson, Alan Mollohan, Cynthia McKinney, and a passel of others:

Mollohan Made $1M-Plus in Real Estate in 2005
June 14, 2006
By John Bresnahan,
Roll Call Staff

Rep. Alan Mollohan (D-W.Va.) made more than $1 million in 2005 alone from real estate investments, and the value of Mollohan’s stock in a Washington, D.C., condominium building that he, his wife and his cousin owned increased by more than 9,000 percent in value between 1999 and 2003, according to documents released by the West Virginia Democrat on Tuesday.

Mollohan also acknowledged that after a “comprehensive review” of his financial disclosure statements from 1996 to today, he would have to file amended reports covering the five-year period from 1999 to 2004 due to “a relative handful of unintentional and immaterial mistakes” included in those filings.

But Mollohan claimed that a lengthy examination of his financial dealings during the last decade exonerated him of charges made in February by the National Legal and Policy Center, a conservative watchdog group. The NLPC has alleged that Mollohan was trying to disguise the dramatic increase in his personal wealth during the last several years by failing to disclose or misrepresenting the true value of his assets.

...Mollohan released his 2005 financial disclosure report on Tuesday, a day before it was required to be publicly unveiled, along with an extensive analysis of his real-estate transactions from 1996 to 2005.

Mollohan said he would be filing amended financial disclosure statements for 1999 to 2004, due to small, “inadvertent errors” in the reports he submitted to the House ethics committee for that period.

Mollohan, however, rejected any suggestion that there were “sinister motives” behind those errors, and he blasted the NLPC for its attacks on him.

“The documents prove that the National Legal and Policy Center has wildly exaggerated the inadvertent errors on my past financial disclosure statements,” Mollohan said in a statement released by his office. “They also show that NLPC is dead wrong in implying that I improperly benefited from my office.”

...Ken Boehm, chairman of NLPC, said that Mollohan’s latest document release did not satisfy his group’s concerns. “It begins to show we were correct all along,” said Boehm of the fact that Mollohan had to file amended disclosure reports. “And the unanswered questions are the same as they have been all along — what is the relationship between his earmarks and his personal finances.”

Overall, Mollohan’s reported personal assets for 2005 were worth at least $8 million, and he reported liabilities in excess $3.43 million, according to his latest financial disclosure statement.

In 2000, Mollohan’s assets were worth a minimum of $179,000 and his liabilities totaled at least $170,000.

...Mollohan also released a “Chronology of Real Estate Transactions” from 1999 to 2005 that provides far more detail than was previously available.

In that document, Mollohan said he and his wife, Barbara, as well as his third cousin Joseph Jarvis and Jarvis’ wife, formed a company called Remington Group LLC in 1996. The four co-owners contributed a combined $50,000 to start the company.

Jarvis had previously worked in real estate, but he ended up filing for bankruptcy in 1994, according to the Knight/Ridder Tribune News Service. A company owned by Jarvis received a $1 million earmark in 1995 thanks to Mollohan to develop software to help decommission Energy Department nuclear sites, and subcontracted most of that work out since it lacked the technical expertise to execute the contract.

Remington Group was formed to buy 17 renal units in The Remington, an apartment building in downtown Washington, D.C. Instead, the Remington Group bought the stock of Remington Inc., the company that actually owned the units. The Remington Group secured a $1.5 million mortgage to cover the purchase.

Over the next several years, the Remington Group and Remington Inc. purchased seven more units in the same building, including three owned by the Mollohans. In 1999, Remington Group and Remington Inc., were merged into one company, named Remington, Inc. The company secured a $2.3 million bank loan, and then bought an additional unit.

In 2001, Mollohan inherited interest in a West Virginia company that owned hotel property and a farm from his father, the late Rep. Robert Mollohan (D-W.Va.). Alan Mollohan has stated the he received a “sizable inheritance” from his father’s estate.

Late in 2002, the Mollohans began investing in the North Carolina beachfront property with Laura and Donald Kuhns. Altogether, the Mollohans and Kuhns have jointly purchased five lots in Bald Head Island, N.C.

The Mollohan’s vacation home fetches nearly $9,000 per week in rental fees during peak summer season. The couple is now selling the home and asking for $3.7 million, according to recent media reports.

The Mollohans claim a minimum value on all five Bald Head Island properties of more than $3.1 million. They also have mortgages on the properties of at least $2.2 million.

By October 2003, the Mollohans were benefiting from a scorching real-estate market in Washington, D.C., and refinanced their half interest in Remington Inc., for $4.1 million, according to the West Virginia Democrat’s documents. The company had purchased more units in the downtown building, giving it 26 in total, and both the Mollohans and the Jarvises received nearly $762,000 from the company at that time.

In addition, throughout 2003 and 2004, the Mollohans bought additional properties in Canaan Valley, W.Va. Remington Inc., bought its 27th rental unit.

In 2004, with real estate markets still strong, the Mollohans were able to refinance some of their properties. They also “withdrew equity” in those properties worth more nearly $232,000.

In 2005, additional refinancings of the North Carolina and Washington properties allowed them to withdraw another $1.01 million in equity. The couple is carrying a $4.975 million mortgage on their half of Remington Inc.

According to an accountant retained by Mollohan, and whose report the Congressman released Tuesday, the average value of each unit owned by Remington increased from nearly $108,000 to $275,000 from 1999 to 2003.

This boosted the value of the Mollohan’s stake in the corporation worth from a negative $38,000 in 1999 to nearly $3.6 million in 2003 — an increase of 9,438 percent over a four-year period.

Overall, the Mollohans have been able to take nearly $2 million in equity from their real estate holding over the last decade while still seeing those assets increase in value.

In addition, a recent Wall Street Journal article also highlighted the relationship between Mollohan and the CEO of FMW, Dale McBride, whom Mollohan has described as a life-long friend.

Mollohan and McBride purchased a 300-acre farm together in West Virginia in May 2005. In December 2005, FMW won a $2.1 million NASA contract from a program funded through a Mollohan earmark.

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