[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. [GRAPHIC(S) OMITTED IN TIFF FORMAT]