    [House Prints, 111th Congress]
    [From the U.S. Government Publishing Office]

      111th Congress                                                Review No.
      1st  Session            HOUSE OF REPRESENTATIVES               09-9030
    _______________________________________________________________________

                         OFFICE OF CONGRESSIONAL ETHICS

                             UNITED STATES HOUSE OF

                                REPRESENTATIVES

                                   ----------

                              Report and Findings

                               Transmitted to the

                   Committee on Standards of Official Conduct

                               November 12, 2009

    and released publicly pursuant to H. Res. 895 of the 110th Congress as
                                    amended

    [GRAPHIC] [TIFF OMITTED]CONGRESS.#13

                                 November 2009
                                   OFFICE OF
                              CONGRESSIONAL ETHICS
                                     BOARD

                     United States House of Representatives
                         One Hundred Eleventh Congress
    DAVID SKAGGS, Chair
    PORTER GOSS, Co-Chair
    YVONNE BURKE
    KAREN ENGLISH
    ALLISON HAYWARD
    JAY EAGEN
    WILLIAM FRENZEL
    ABNER MIKVA

                                  ----------

    Leo J. Wise, Chief Counsel & Staff
        Director
    Omar Ashmawy, Investigation Counsel
                                     REPORT

                               Review No. 09-9030

        The Board of the Office of Congressional Ethics (hereafter
    ``the Board''), by a vote of no less than four members, on
    October 23, 2009, adopted the following report and ordered it
    to be transmitted to the Committee on Standards of Official
    Conduct of the United States House of Representatives.
        SUBJECT: Representative Fortney Pete Stark
        NATURE OF THE ALLEGED VIOLATION: Representative Fortney
    Pete Stark has listed a house he owns in Harwood, Maryland as
    his principal residence on Maryland tax forms. By doing so,
    Representative Stark received state and county homestead tax
    credits and any annual increases in his home assessments were
    capped at no more than 10 percent. In order to qualify for the
    Maryland Homestead Tax Credit, Maryland law requires the home
    to be used as the owner's ``principal residence''--where the
    homeowner regularly resides and is designated for voting,
    obtaining a driver's license, and filing income tax returns.
    Representative Stark pays California resident taxes, has a
    California driver's license and is registered to vote in
    California.
        Representative Stark's conduct may have violated Maryland
    law and the Code of Ethics for Government Service if he
    misrepresented information on the Application for Homestead Tax
    Credit Eligibility in order to prove eligibility.
        RECOMMENDATION: The Board of the Office of Congressional
    Ethics recommends that the Committee on Standards of Official
    Conduct further review the above allegations.
        VOTES IN THE AFFIRMATIVE: 6
        VOTES IN THE NEGATIVE: 0
        MEMBER OF THE BOARD OR STAFF DESIGNATED TO PRESENT THIS
    REPORT TO THE COMMITTEE ON STANDARDS OF OFFICIAL CONDUCT: Leo
    Wise, Staff Director & Chief Counsel.
                               TABLE OF CONTENTS

      I. INTRODUCTION.....................................................3
              A. Summary of Allegations..............................     3
              B. Jurisdictional Statement............................     4
              C. Procedural History..................................     4
              D. Summary of Investigative Activity...................     5
     II. THE MARYLAND HOMESTEAD TAX CREDIT PROGRAM AND REPRESENTATIVE
         STARK'S APPLICATION AND ELIGIBILITY..............................5
              A. Applicable Law, Rules and Standards of Conduct......     5
              B. Maryland Homestead Tax Credit.......................     6
              C. Representative Stark's Homestead Tax Credit
                  Application........................................     8
              D. Interview with Representative Stark.................    11
    III. CONCLUSION......................................................12
     IV. INFORMATION THE OCE WAS UNABLE TO OBTAIN AND RECOMMENDATIONS FOR
         THE ISSUANCE OF SUBPOENAS.......................................12
                     FINDINGS OF FACT AND CITATIONS TO LAW

                               Review No. 09-9030

        On October 23, 2009, the Board of the Office of
    Congressional Ethics (hereafter the ``Board'' and the ``OCE'')
    adopted the following findings of fact and accompanying
    citations to law, regulations, rules and standards of conduct
    (in italics). The Board notes that these findings do not
    constitute a determination that a violation actually occurred.

                                I. INTRODUCTION

                           A. SUMMARY OF ALLEGATIONS

        1. There is substantial reason to believe that
    Representative Fortney Pete Stark may have violated House rules
    \1\ by misrepresenting information on the Maryland Application
    for Homestead Tax Credit Eligibility. Specifically, sometime
    between December 2008 and March 2009 Representative Stark
    certified a house he owns in Harwood, Maryland, was his
    ``principle residence'' under Maryland law. By doing so, he
    qualified for the Maryland Homestead Tax Credit. As a result,
    Representative Stark received state and county homestead tax
    credits and the increases in his home assessments were capped
    at no more than 10 percent per year. In order to qualify for
    the Maryland Homestead Tax Credit, Maryland law requires the
    home to be used as the owner's ``principal residence.''
    Maryland law defines ``principle residence'' as the one
    dwelling where the homeowner regularly resides and is
    designated for voting, obtaining a driver's license, and filing
    income tax returns.
    ---------------------------------------------------------------------------
        \1\  As per Rule 9 of the OFFICE OF CONGRESSIONAL ETHICS, RULES FOR
    THE CONDUCT OF INVESTIGATIONS 11 (2009), the Board shall refer a matter
    to the Standards Committee if it determines there is a substantial
    reason to believe the allegation.
    ---------------------------------------------------------------------------
        2. Sometime between December 2008 and March 2009,
    Representative Stark certified to Maryland that he is
    registered to vote in Maryland, while in fact he is registered
    to vote in California. Representative Stark later changed his
    certification.
        3. Representative Stark told the OCE he did not certify
    that he voted in Maryland nor did he later change his answer.

                          B. JURISDICTIONAL STATEMENT

        4. The allegations that were the subject of this review
    concern Representative Fortney Pete Stark, a Member of the
    United States House of Representatives from the 13th District
    of California. The Resolution the United States House of
    Representatives adopted creating the Office of Congressional
    Ethics (hereafter ``OCE'') directs that, ``[n]o review shall be
    undertaken . . .by the board of any alleged violation that
    occurred before the date of adoption of this resolution.'' \2\
    The House adopted this Resolution on March 11, 2008. Because
    the conduct under review occurred after March 11, 2008, review
    by the Board is in accordance with the Resolution.
    ---------------------------------------------------------------------------
        \2\  H. Res 895, 110th Cong. Sec. 1(e) (2008) (as amended)
    ---------------------------------------------------------------------------
        5. The Board notes that representations made by Members of
    Congress regarding their state residency implicates their
    official duties as a Member's state residency is a
    qualification for the office they hold.

                             C. PROCEDURAL HISTORY

        6. The OCE received a written request for a preliminary
    review in this matter signed by at least two members of the
    Board on June 5, 2009. The preliminary review commenced on that
    date.\3\
    ---------------------------------------------------------------------------
        \3\  A preliminary review is ``requested'' in writing by members of
    the Board of the OCE. The request for a preliminary review is
    ``received'' by the OCE on a date certain. According to H. Res. 895 of
    the 110th Congress (hereafter ``the Resolution'), the timeframe for
    conducting a preliminary review is 30 days from the date of receipt of
    the Board's request.
    ---------------------------------------------------------------------------
        7. At least three members of the Board voted to initiate a
    second-phase review in this matter on June 26, 2009. The second
    phase review commenced on June 29, 2009.\4\ The second-phase
    review was scheduled to end on August 13, 2009.
    ---------------------------------------------------------------------------
        \4\  According to the Resolution, the Board must vote (as opposed
    to make a written authorization) on whether to conduct a second-phase
    review in a matter before the expiration of the 30-day preliminary
    review. If the Board votes for a second-phase, the second-phase
    commences the day after the preliminary review ends.
    ---------------------------------------------------------------------------
        8. The Board voted to extend the 45-day second-phase review
    by an additional 14 days on August 5, 2009, as provided for
    under the Resolution. Following the extension, the second-phase
    review was scheduled to end on August 28, 2009.\5\
    ---------------------------------------------------------------------------
        \5\  The 14-day extension expires after the 45-day second-phase
    review ends. The 14-day extension does not begin on the date of the
    Board vote.
    ---------------------------------------------------------------------------
        9. The second-phase review ended on August 28, 2009.
        10. The Board voted to refer the matter to the Committee on
    Standards of Official Conduct for further review and adopted
    these findings on October 23, 2009.
        11. The report and findings in this matter were transmitted
    to the Committee on Standards of Official Conduct on November
    12, 2009.

                      D. SUMMARY OF INVESTIGATIVE ACTIVITY

        12. The OCE requested documentary and in some cases
    testimonial information from the following sources:
              (1) Maryland State Department of Assessments and
            Taxation Taxpayer Services Division;
              (2) Witness A, Associate Director of the Maryland
            State Department of Assessments and Taxation Taxpayer
            Services Division; \6\
    ---------------------------------------------------------------------------
        \6\  The Resolution provides that the names of cooperating
    witnesses not be included in a referral to the Committee on Standards
    of Official Conduct. H. Res 895, 110th Cong. Sec. 1(c) (2008) (as
    amended). This provision applies to testimonial evidence and not to
    documentary evidence.
    ---------------------------------------------------------------------------
              (3) Witness B, Supervisor of the Homestead Tax Credit
            Application Program
              (4) Anne Arundel County; and
              (5) Representative Stark.

       II. THE MARYLAND HOMESTEAD TAX CREDIT PROGRAM AND REPRESENTATIVE
                      STARK'S APPLICATION AND ELIGIBILITY

               A. APPLICABLE LAW, RULES, AND STANDARDS OF CONDUCT

        13. Maryland law:
            Under the Maryland Code, Tax--Property Article Sec. 14-
            1004, ``A person who willfully or with the intent to
            evade payment of a tax under this article or to prevent
            the collection of a tax under this article provides
            false information or a false answer to a property tax
            interrogatory under this article is guilty of a
            misdemeanor and on conviction is subject to a fine not
            exceeding $5,000 or imprisonment not exceeding 18
            months or both.''
        14. Code of Ethics for Government Service:
            Under the Code of Ethics for Government Service \7\,
            ``all Government employees, including office holders .
            . . should uphold the Constitution, laws, and legal
            regulations of the United States and all governments
            therein and never be a party to their evasion.''
    ---------------------------------------------------------------------------
        \7\  72 Strat., Part 2, B12 (1958), H. Con. Res. 175, 85th Cong.
    ---------------------------------------------------------------------------
        15. If Representative Stark willfully misrepresented
    information on Maryland's Application for Homestead Tax Credit
    Eligibility in order to certify his Maryland house as his
    principle residence under Maryland law and thereby qualify for
    the corresponding tax credits, then he may have violated
    Maryland law and paragraph 2 of the Code of Ethics for
    Government Service.
        16. For the purposes of the Board's deliberations, the
    Board considered the Maryland tax code to be a ``legal
    regulation,'' as described in paragraph 2 of the Code of Ethics
    for Government Service, and the state of Maryland to be a
    ``government therein'' the United States.
        17. Based on the facts collected by the OCE, the Board
    concludes there is a substantial reason to believe the
    allegation that is the subject of this review.\8\
    ---------------------------------------------------------------------------
        \8\  Rule 9 of the OFFICE OF CONGRESSIONAL ETHICS, RULES FOR THE
    CONDUCT OF INVESTIGATIONS 11 (2009) provides that ``[t]he Board shall
    refer a matter to the Standards Committee for further review if it
    determines there is a substantial reason to believe the allegation
    based on all the information then known to the Board.''
    ---------------------------------------------------------------------------

                        B. MARYLAND HOMESTEAD TAX CREDIT

        18. Representative Pete Stark represents the 13th
    Congressional District of California.
        19. Representative Stark and his wife have had an ownership
    interest in a home in Harwood, Maryland, since at least 2000.
        20. Based on information available on the Anne Arundel
    County Maryland Real Estate Charges, Credits and Exemptions'
    website, the Starks' Harwood home has been listed as their
    principal residence since 2007 and Representative Stark has
    been receiving the Homestead Tax Credit since at least 2007.\9\
    From 2000 to 2007 Representative Stark received tax bills for
    the Harwood residence that did not show the Homestead Tax
    Credit.\10\ In calendar year 2009, the year directly affected
    by his answers on the 2008 application, Representative Stark
    received $3,769.79 in state and county tax credits.\11\
    ---------------------------------------------------------------------------
        \9\  Id.
        \10\  Anne Arundel County Maryland Website, Real Estate Charges,
    Credits and Exemptions tax records (Exhibit 1 at 09-9030--0002--09-
    9030--0005).
        \11\  Id.
    ---------------------------------------------------------------------------
        21. The Maryland Homestead Tax Credit limits the increase
    in taxable assessments each year to 10 percent for the
    homeowner's ``principal residence.'' Maryland state law defines
    ``principal residence'' as the one dwelling where the homeowner
    regularly resides and is the location designated by the owner
    for the legal purposes of voting, obtaining a driver's license,
    and filing income tax returns.\12\ In an interview with Witness
    A, Associate Director of the Maryland State Department of
    Assessments and Taxation (SDAT), the witness indicated that an
    individual must vote in Maryland, possess a Maryland driver's
    license, and file a Maryland resident income tax return in
    order to be eligible for the tax credit.\13\ For married
    couples, at least one spouse must meet all residency
    requirements.\14\ The applicant must also have a ``legal
    interest'' in the property, which is defined as ``an interest
    in a dwelling: as a sole owner; as a joint tenant; as a tenant
    in common; as a tenant by the entireties; through membership in
    a cooperative; under a land installment contract, or as a
    holder of a life estate.\15\
    ---------------------------------------------------------------------------
        \12\  COMAR 18.07.03.01 (B)(3). See also Maryland Assessment
    Procedures Manual (COMAR 18.07.03.01(B)(3)) at 1.
        \13\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0007).
        \14\  Maryland Assessment Procedures Manual (COMAR
    18.07.03.01(B)(3)) at 1.
        \15\  COMAR Tax-Property, Title 9, Subtitle 1, Sec. 9-105 (a)(4).
    ---------------------------------------------------------------------------
        22. In October 2007, the Maryland General Assembly passed a
    law that codified the requirement to receive the Homestead Tax
    Credit and instructed SDAT to establish a procedure for
    Maryland homeowners to certify their eligibility to receive the
    Homestead Tax Credit.\16\
    ---------------------------------------------------------------------------
        \16\  COMAR 18.07.03.01(B)(3).
    ---------------------------------------------------------------------------
        23. Prior to October 2007, the requirements for eligibility
    for the Homestead Tax Credit were the same.\17\
    ---------------------------------------------------------------------------
        \17\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0007).
    ---------------------------------------------------------------------------
        24. In order to prevent the improper granting of the
    Homestead Tax Credit to rented properties or multiple
    properties of a single owner SDAT began mailing a one-time
    application to homeowners to establish eligibility for the tax
    credit.\18\ The application was included in the assessment
    notice mailed to one-third of Maryland homeowners at the end of
    each calendar year, for a period of three years beginning
    December 2008.\19\
    ---------------------------------------------------------------------------
        \18\  Maryland Department of Assessments and Taxation Homestead Tax
    Credit Application (Exhibit 3 at 09-9030--0011--09-9030--0012).
        \19\  ``The Homestead Tax Credit,'' Maryland Department of
    Assessments and Taxations, www.md.dat.md.us/sdatweb/homestead.html last
    viewed by staff on May 26, 2009.
    ---------------------------------------------------------------------------

           C. REPRESENTATIVE STARK'S HOMESTEAD TAX CREDIT APPLICATION

        25. The OCE requested a copy of the application
    Representative Stark submitted to Maryland from the
    Congressman. Representative Stark indicated that he did not
    have a copy of the application because he submitted it online.
    He then, without any prompting by the OCE, provided the OCE a
    hand-done version of the application he submitted online.\20\
    On that document he indicated:
    ---------------------------------------------------------------------------
        \20\  Recreated Maryland Homestead Tax Credit application (Exhibit
    4 at 09-9030--0014--09-9030--0015).
    [GRAPHIC] [TIFF OMITTED] T4540.001

        26. The OCE later obtained a copy of the application
    Representative Stark submitted on line from SDAT.\21\ The
    information Congressman Stark originally submitted on-line
    (recorded by the State of Maryland) shows the following \22\ :
    ---------------------------------------------------------------------------
        \21\  The OCE sought and received Representative Stark's permission
    to request a copy of his Homestead Tax Credit application from
    Maryland.
        \22\  Maryland Department of Assessments and Taxation Homestead Tax
    Credit online application for Representative Stark (Exhibit 5 at 09-
    9030--0017). The date displayed on the upper right corner of the
    document represents the day the documented was printed in response to
    an OCE Request for Information.
    [GRAPHIC] [TIFF OMITTED] T4540.002

        27. The Board takes note of question 4 where Congressman
    Stark indicated that his home in Harwood, Maryland, was the
    property from which he was registered to vote. When the OCE
    inquired further, SDAT explained that when Congressman Stark
    initially filed his application he did in fact answer question
    4 in the affirmative.\23\
    ---------------------------------------------------------------------------
        \23\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0009).
    ---------------------------------------------------------------------------
        28. However, on or about March 16, 2009, according to SDAT
    records, Congressman Stark called the SDAT office and asked
    that his answer to question 4 be changed from the affirmative
    to the negative.\24\
    ---------------------------------------------------------------------------
        \24\  Maryland Department of Assessments and Taxation internal
    electronic note attached to Representative Stark's Homestead Tax Credit
    file (Exhibit 6 at 09-9030--0019).
    [GRAPHIC] [TIFF OMITTED] T4540.003

        29. The Board notes that the first press report on a Member
    of Congress improperly receiving the Homestead Tax Credit
    appeared on March 14, 2009, two days before Representative
    Stark called to change his answer, in the New York Times and
    concerned another Member of Congress.\25\
    ---------------------------------------------------------------------------
        \25\  Bronx Representative Loses a Tax Break'' The New York Times,
    March 14, 2009 (Exhibit 7 at 09-9030--0021--09-9030--0022).
    ---------------------------------------------------------------------------
        30. Representative Stark told the OCE that both he and his
    wife are registered to vote in Alameda County, California.\26\
    ---------------------------------------------------------------------------
        \26\  Memorandum of Interview Representative Stark (Exhibit 10 at
    09-9030--0028)
    ---------------------------------------------------------------------------
        31. Congressman Stark and his wife maintain California
    automobile licenses. Congressman Stark accurately answered this
    question on the Maryland application, however, based on SDAT
    procedures this did not disqualify him for the credit.\27\
    ---------------------------------------------------------------------------
        \27\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0008).
    ---------------------------------------------------------------------------
        32. Representative Stark and his wife filed a 2008
    California resident income tax return.\28\ Furthermore, it
    appears Representative Stark and his wife also filed a Maryland
    Non-Resident Income Tax Return for calendar year 2008.\29\ Both
    returns were filed from the Harwood, Maryland, address.
    According to Witness A, had SDAT been aware that Representative
    Stark filed a Maryland Non-Resident return, that fact alone
    would have been grounds to disallow the credit.\30\ However,
    given the vagueness of question 2, the Board notes that,
    despite SDAT's intentions, the question appears to allow an
    applicant to answer the question in the affirmative if the
    applicant files either a Maryland resident or non-resident
    return from their Maryland address.
    ---------------------------------------------------------------------------
        \28\  California Form 540-ES for Representative Stark and Mrs.
    Deborah Stark (Exhibit 8 at 09-9030--00024).
        \29\  Letter from William G. Robinson to Representative and Mrs.
    Stark regarding their 2008 Maryland Non-resident Income Tax Return
    (Exhibit 9 at 09-9030--0026).
        \30\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0009).
    ---------------------------------------------------------------------------
        33. The Board notes that Representative Stark correctly
    answered question 3 of the application, relating to his
    driver's license. According to Maryland law the fact that
    Representative Stark possessed a California driver's license
    made him ineligible to receive the Homestead Tax Credit.\31\
    However, SDAT's internal policy is to not reject an application
    for the credit solely because the address is not the one from
    which the property owner receives a driver's license.\32\
    However, if this fact is brought to the attention of SDAT, then
    the credit may be revoked.\33\
    ---------------------------------------------------------------------------
        \31\  COMAR 18.07.03.01 (B)(3). See also Maryland Assessment
    Procedures Manual (COMAR 18.07.03.01(B)(3)) at 1.
        \32\  Memorandum of Interview of Witness A and Witness B (Exhibit 2
    at 09-9030--0008).
        \33\  Id.
    ---------------------------------------------------------------------------

                     D. INTERVIEW WITH REPRESENTATIVE STARK

        34. The OCE interviewed Representative Stark on May 29,
    2009. Representative Stark voluntarily agreed to an interview.
    At the beginning of the interview Representative Stark refused
    to discuss what he knew about the Maryland Homestead Tax Credit
    program and his eligibility.\34\ Eventually, he spoke in some
    detail about his application for the credit. Initially he
    indicated that he did not recall completing the
    application.\35\ However, later during the interview he stated
    that he personally completed the application online.
    Representative Stark also said that that he was aware that the
    application for the tax credit had eligibility requirements.
    Representative Stark specifically expressed his knowledge that
    a person must be registered to vote in Maryland.\36\ After
    completing the form, Representative Stark recalled that the
    credit was denied.\37\
    ---------------------------------------------------------------------------
        \34\  Memorandum of Interview Rep. Stark (Exhibit 10 at 09-9030--
    0028).
        \35\  Id.
        \36\  Id.
        \37\  Id.
    ---------------------------------------------------------------------------
        35. When specifically asked, Representative Stark also
    stated that he did not call the Maryland State Department of
    Assessments and Taxation to change his answer to the tax credit
    application.\38\ The Congressman also said he could not think
    of anyone who would have called SDAT on his behalf.\39\ He
    reviewed a copy of the online application he actually
    submitted, shown above in paragraph 20, and admitted that his
    answers to the voting question was incorrect. He could not
    explain why the answers were incorrect.\40\
    ---------------------------------------------------------------------------
        \38\  Id. at 09-9030--0029.
        \39\  Id.
        \40\  Id.
    ---------------------------------------------------------------------------
        36. Approximately 15 minutes into the interview it became
    apparent to the OCE staff that the Congressman was video
    recording the interview.\41\ A Request for Information was
    submitted to Representative Stark asking for a copy of the
    recording on July 31, 2009.\42\ Congressman Stark denied the
    request.\43\
    ---------------------------------------------------------------------------
        \41\  Id.
        \42\  Request for Information to Representative Stark dated July
    31, 2009 (Exhibit 11 at 09-9030--0031--09-9030--0033).
        \43\  Email from Representative Stark's Chief of Staff dated
    September 22, 2009 (Exhibit 12 at 09-9030--0035).
    ---------------------------------------------------------------------------

                                III. CONCLUSION

        37. For these reasons, the Board recommends that the
    Standards Committee further review of the above described
    allegations concerning Representative Stark.

     IV. INFORMATION THE OCE WAS UNABLE TO OBTAIN AND RECOMMENDATIONS FOR
                           THE ISSUANCE OF SUBPOENAS

        38. There was no information relevant to this review that
    the Board was unable to obtain.

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