The Harry Reid Land Deal

Thursday, October 12. 2006

Here is an Associated Press report on the land deal that netted Sen. Harry Reid over $1 million ... note the part of the report that has audio of Sen. Reid hanging up on AP when asked a question about the deal. (via Flopping Aces)

Update: The video has been pulled by YouTube for "copyright infringement."

Now it's back up... and you can watch it here...

Now it's back down.... you can watch it here if the video on this page doesn't work.

As Curt over at Flopping Aces points out, this deal really isn't that hard to understand: In 1998, Reid bought the land, zoned for residential use, for $400,000.

In 2001, Reid sold the land for no profit to a friend, getting a share of the limited liability company that held the property.

The LLC tried to get the land rezoned for commercial use, but was rebuffed by the Clark County Zoning Commission.

The LLC then appealled the decision to the full Clark County Commission and lobbied the commission, going so far as invoking Reid's name to the commission in a public hearing on the matter.

The zoning commission's original decision was then vetoed, and they rezoned the property for commercial use.

In 2004, the property was sold for $1.6 million, netting the LLC $1.2 million profit.

Reid never reported the sale of the property to the LLC, as he is required by law to do.

Like I said, this isn't very hard to understand...

Update: Harry Reid's son, Rory Reid, was sworn in as a Clark County Commissioner in 2003, and has been County Commission Chairman since 2005.

His election to the commission and appointment to the position of chairman both happened after the land deal... (actually, he was elected after the land was rezoned ... the land was rezoned for commercial use in September 2001).

Posted by Tom Elia in Politics at 13:15 | Comments (16) | Trackbacks (5)

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And if it involved a Republican...bob woodward would write a new book on it.

#1 thom on 2006-10-12 14:10 (Reply)

http://www.sourcewatch.org/index.php?title=Harry_Reid#Senator.27s_Sons

You mean one of his lobbyist sons?

scroll down from the link and you can see how reid is also connected to Abramoff. It would suck if there was a pic of his sons(and son-in-law) with Jack.

The next majority leader is going to walk into office after taking 1.1 million of a 1.6 million dollar deal and failing to declare it? I want a partner like Reid's.

#2 paul on 2006-10-12 15:37 (Reply)

Paul,

In fairness to Reid, he did declare the profits on the deal; he just didn't declare the first property transfer in 2001.

The thing to focus on is the rezoning that occurred, which allowed the property to become okay for commercial development....

As for his conections to Abramoff, I agree.

His sons' (and son-in-law's) law firm also made some fairly substantial dough for lobbying efforts in Washington, DC, asthe Los Angeles Times reported a few years back...

#2.1 Tom Elia on 2006-10-12 15:48 (Reply)

As Curt over at Flopping Aces points out, this deal really isn't that hard to understand: In 1998, Reid bought the land, zoned for residential use, for $400,000.

In 2001, Reid sold the land for no profit to a friend, getting a share of the limited liability company that held the property.
That's not true. Ask your lawyer how this works.

The LLC tried to get the land rezoned for commercial use, but was rebuffed by the Clark County Zoning Commission.

The LLC then appealled the decision to the full Clark County Commission and lobbied the commission, going so far as invoking Reid's name to the commission in a public hearing on the matter.

I missed the evidence of Reid's exerting undue influence.

The zoning commission's original decision was then vetoed, and they rezoned the property for commercial use.

In 2004, the property was sold for $1.6 million, netting the LLC $1.2 million profit.

6 year hold in Vegas, rezoned, red hot market, sounds about right.

Reid never reported the sale of the property to the LLC, as he is required by law to do.
Again, people do not "sell" land to their LLC, ask your lawyer or accountant. This is a nonrecognition event for tax purposes, and understandably mistakenly not reported to the Senate.

Like I said, this isn't very hard to understand...
apparently, it is

#3 david on 2006-10-12 20:19 (Reply)

David,

Let me ask a couple of questions:

1) Reid's share of the $1.2 million profit was reported to be $1.1 million.

So, after buying the property in his own name, my understanding of the transaction is that he sold it to his friend for the same price he paid for it, and created a new partnership for the property. Yet, Reid kept a percentage ownership that resulted in his getting 11/12th's of the profit. (This would have been accomplished with no financial stake in the property.)

If my description is correct, how do you explain that?

2) More importantly, however is the issue of the rezoning, after the initial request was turned down.

Undue influence? He's one of the most powerful politicians in the state of Nevada; what could possibly be the purpose of bringing his name up at a zoning hearing?

(Must have simply been an effort to keep the Commission informed, huh?)

#3.1 Tom Elia on 2006-10-12 20:37 (Reply)

"This is a nonrecognition event for tax purposes"

So what? The issue is disclosure. Anyone who's a US Senator knows that all real estate assets of any kind must be disclosed, whether they're owned personally, jointly, by LLc, or trust or whatever other creative ownership method you could come up with.

Like any other wealthy pol, Reid has trusts set up to manage his assets, and sometimes transfers personal assets to them. So why set up an LLc in someone else's name?

He didn't do it that way in this case:

http://sandgate.co.clark.nv.us/servlet/Assessor?instance=pcl2&parcel=24322301001

And a tranfer of a property asset from a person to a trust, or to an LLC, is viewed by Nevada as tantamount to a quitclaim sale, like the one below.

http://gisgate.co.clark.nv.us/assessor/webimages/default.asp?appID=1&txtdocNum=20011231:02070

But of course the issue is Senate rules, with which I'm guessing Reid is somewhat familiar.

#4 Paul Geary (Homepage) on 2006-10-12 22:40 (Reply)

So what? The issue is disclosure. Anyone who's a US Senator knows that all real estate assets of any kind must be disclosed, whether they're owned personally, jointly, by LLc, or trust or whatever other creative ownership method you could come up with.
He did disclose. In fact he erred on the side of more direct ownership
Like any other wealthy pol, Reid has trusts set up to manage his assets, and sometimes transfers personal assets to them. So why set up an LLc in someone else's name?
Ask your accountant why he did this. It is not only typical, it is the standard (even for the not so wealthy)

Listen, this is what I do. I'm telling you there is no "there" there. If you know someone you can trust who is a tax lawyer or accountant, you should ask him or her about it before you crawl out on this limb. I'm just saying.

#4.1 david on 2006-10-12 22:57 (Reply)

1) Listen, man. Hold off until tomorrow. Ask your accountant how this works. You are misunderstanding. If you go on like this you're going to embarrass yourself. Look, no offense, but this is obviously not your area of expertise.
2)I have heard no evidence of Reid exerting influence. If you are saying his existence is an exertion of influence, then I guess you are of the opinion no powerful public official may own real estate, for fear a local zoning board will feel compelled to accomodate them. I'm afraid you set an impossible standard.

#5 david on 2006-10-12 22:44 (Reply)

You're right, this isn't my area of expertise.

That said, however, the only reason I can think of for Reid to transfer or sell his ownership of the land in question to the LLC was to hide his ownership interest in the land.

If it wasn't about disguising his interest in the property, why, then, no federal disclosure of the transaction?

And the notion that the mention of Reid's name to the commission means nothing is, frankly, naive.

Here's what we have:

1) A property transfer out of Reid's name effectively disguising his ownership;

2) A failure to disclose the transfer in accordance with federal regs;

3) A reversal of a previous zoning decision, where the name of one of the most powerful men in Nevada just happens to be dropped.

4) His strange reaction to an AP reporter questioning him about the deal.

Put these things together with previous disclosures in the LA Times about lobbying contracts worth about $2 million awarded to legal firms his relatives worked for; his Abramoff connections, whether careless or otherwise; and his use of the "culture of corruption" rhetoric against his opponents ... yeah I want to know what happened here.

#5.1 Tom Elia on 2006-10-12 23:04 (Reply)

Here's what we have:

1) A property transfer out of Reid's name effectively disguising his ownership;

I'm telling you, this is not what you think.

2) A failure to disclose the transfer in accordance with federal regs;

True, but perfectly understandable, and immaterial. He did disclose the asset, just mistook the form of ownership. Again ask your CPA about the significance of his contributing land to an LLC

3) A reversal of a previous zoning decision, where the name of one of the most powerful men in Nevada just happens to be dropped.

If you were the partner, wouldn't you have dropped the name? What did Reid do?

4) His strange reaction to an AP reporter questioning him about the deal.

This is the same reporter that tried to stir up the boxing tickets story a while back. Like I'm telling you, this is a perfectly common and standard entity organization for land transactions, and this guy calls implying Reid is crooked. I can see Reid thinking this guy is not legit.

Why not wait until tomorrow, call a CPA, and understand this before you get all accusatory?

#5.1.1 Anonymous on 2006-10-12 23:55 (Reply)

It probably is a standard legal entity, and it could be an innocent mistake that he did not disclose it in his fed financial disclosures.

Fine, I could understand that explanation -- if it ended there.

But it doesn't.

Throw in the veto of the zoning decision, and the inability of someone to follow the zoning changes using Reid's financial disclosure forms, and it looks bad.

Couple it with his previously questionable activities, and it casts enough doubt to be investigated.

#5.1.1.1 Tom Elia on 2006-10-13 00:23 (Reply)

So, your answer is, "F it, I just know he did something wrong because I want that to be the case?" Really, be a man.

#5.1.1.1.1 david on 2006-10-13 08:00 (Reply)

Do you work for Reid?

#5.1.1.1.1.1 Tom Elia on 2006-10-13 10:46 (Reply)

No. I'm a CPA in NC. I'm telling you the truth, I see this stuff every day, only usually much messier and more complicated.

#5.1.1.1.1.1.1 david on 2006-10-13 11:53 (Reply)

I'll tell you how I feel. It's like if you were an electrician, and there was a big scandal with reporters crowing about some complicated, crooked wiring scam perpetrated by a senator. With one glance at the schematics you notice the reporters are clueless and wrong. Wouldn't you speak up?

#5.1.1.1.1.1.2 david on 2006-10-13 11:57 (Reply)

(I inadvertently erased this comment ... here it is again)

I'll acknowledge your expertise in tax matters, but this is about more than that.

Sen. Reid is a powerful man who has railed against the opposition regarding the "culture of corruption" and advocated more transparent disclosure.

Here, in this instance, he falls short. Perhaps he was just sloppy, and that's all. Perhaps not. The deal by itself doesn't indicate any wrong-doing

But he's danced on the line before, and has been far less than truthful about other matters relating to finance (see his blatantly misleading arguments on Social Security, for example).

I'll say it again: he didn't disclose a transaction; zoning rulings were overturned in his favor; and when questioned about it by a reporter for a major news syndicate, he hung up.

If it was simply a mistake in disclosure, why not just say to the reporter what you have said here?

This isn't just about a real estate investment; it's about a powerful politician who has advocated for more disclosure not doing so and who is himself investing in real estate.

Believe me, this is not the first time that Reid has pushed the envelope in his personal financial dealings.

See the editorials in the Washington Post and the Philadelphia Inquirer today...

#5.1.1.1.1.1.2.1 Tom Elia on 2006-10-13 12:28 (Reply)

The editorials you mentioned are clearly based on reading that AP article. I don't know what to say about that article. It's just weird. This is such a run of the mill thing, all the numbers look normal, and all the quotes from Reid's office are such normal reactions, I just don't understand the tone of that article. I mean just imagine that practically every day you set up and do tax compliance for these transactions, everyone does them, and suddenly everyone's running around "Oh my god, he set up an LLC!" Believe me, it's just weird. That reporter has got some sort of issue with Reid. Do me a favor, call a random CPA out of the yellow pages, or yours, and tell him about this case and ask him if it sounds at all unusual. You may have other issues with Reid, but this situation shouldn't add to them.

#5.1.1.1.1.1.2.1.1 david on 2006-10-13 12:46 (Reply)

I'm telling you, it's not just about this particular deal, or just this particular reporter.

The Los Angeles Times did a big story on Reid's real estate transactions back in 2003.

Here's a link to the LA Times article:

http://72.14.203.104/search?q=cache:nCzx1IrH4DYJ:www.westlx.org/HarryReid.pdf+%22Rory+Reid%22+zoning+commission+Las+Vegas+Whittemore&hl=en&gl=us&ct=clnk&cd=1&client=firefox-a

Seriously, read the article.

Reid has duty to report this stuff, and he didn't. Like I said, maybe it's just an oversight, but there have been plenty of questions regarding Reid in the past, and his failure to properly disclose this is not something to take lightly (he was the former chair and vice chair of the Senate Ethics Committee, for goodness sakes)...

#5.1.1.1.1.1.2.1.1.1 Tom Elia on 2006-10-13 13:06 (Reply)

Damn! And I so wanted you to think I'm smart.

Regardless of your expertise at real estate or tax law, every Member of Congress knows that asset disclosure must err on the side of accuracy, for both legal and political reasons.

I've had to hand-lead more than one candidate for Congress through the asset disclosure form required by the FEC, which is much less strict than that for officeholders.

Reid knows all of this, unless you think he hung up on the AP reporter out of embarassment.

#5.2 Paul Geary (Homepage) on 2006-10-12 23:46 (Reply)

Are you saying you think he intended to deceive? About what? Why?

#5.2.1 david on 2006-10-13 00:01 (Reply)

And, by the way, it has nothing to do with smart. There's a reason people hire CPA's and tax attorneys. This is a specialized area of knowledge that just happens to be my business. Don't be so hard on yourself. If everyone understood this, how would I make a living?

#5.2.2 david on 2006-10-13 08:32 (Reply)

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