[House Report 112-709]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-709
_______________________________________________________________________
House Calendar No. 171
IN THE MATTER OF ALLEGATIONS RELATING TO REPRESENTATIVE GREGORY MEEKS
__________
R E P O R T
of the
COMMITTEE ON ETHICS
December 20, 2012.--Referred to the House Calendar and ordered to be
printed
----------
U.S. GOVERNMENT PRINTING OFFICE
29-006 WASHINGTON : 2012
COMMITTEE ON ETHICS
JO BONNER, Alabama LINDA T. SANCHEZ, California
Chairman Ranking Member
MICHAEL T. McCAUL, Texas JOHN A. YARMUTH, Kentucky
K. MICHAEL CONAWAY, Texas DONNA F. EDWARDS, Maryland
CHARLES W. DENT, Pennsylvania PEDRO R. PIERLUISI, Puerto Rico
GREGG HARPER, Mississippi JOE COURTNEY, Connecticut
REPORT STAFF
Daniel A. Schwager, Chief Counsel/Staff Director
Deborah Sue Mayer, Director of Investigations
Kelle A. Strickland, Counsel to the Chairman
Daniel J. Taylor, Counsel to the Ranking Member
Miguel Toruno, Senior Counsel
Tom Rust, Senior Counsel
Patrick McMullen, Counsel
Brittany M. Bohren, Investigative Clerk
LETTER OF SUBMITTAL
----------
House of Representatives,
Committee on Ethics,
Washington, DC, December 20, 2012.
Hon. Karen L. Haas,
Clerk, House of Representatives,
Washington, DC.
Dear Ms. Haas: Pursuant to clauses 3(a)(2) and 3(b) of Rule
XI of the Rules of the House of Representatives, we herewith
transmit the attached Report, ``In the Matter of Allegations
Relating to Representative Gregory Meeks.''
Sincerely,
Jo Bonner,
Chairman.
Linda T. Sanchez,
Ranking Member.
C O N T E N T S
----------
Page
I. INTRODUCTION......................................................1
II. HOUSE RULES, LAWS, REGULATIONS, AND OTHER STANDARDS OF CONDUCT....2
III.ANALYSIS..........................................................2
IV. FINDINGS AND CONCLUSION...........................................5
V. STATEMENT UNDER RULE XIII, CLAUSE 3(c) OF THE RULES OF THE HOUSE OF
REPRESENTATIVES...................................................7
House Calendar No. 171
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-709
======================================================================
IN THE MATTER OF ALLEGATIONS RELATING TO REPRESENTATIVE GREGORY MEEKS
_______
December 20, 2012.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Bonner, from the Committee on Ethics,
submitted the following
R E P O R T
I. INTRODUCTION
On May 18, 2011, the Office of Congressional Ethics (OCE)
submitted a Report and Findings to the Committee on Ethics
(Committee) regarding a $40,000 loan that Representative Meeks
received from Edul Ahmad (Ahmad loan) and a separate $59,650
loan that Representative Meeks obtained from a private
investment firm (investment firm loan), which Representative
Meeks used to repay the Ahmad loan with interest.\1\ In its
Report and Findings, OCE recommended that the Committee dismiss
the allegations regarding the investment firm loan because it
had all the ``normal indicia of a legitimate loan,'' and was
thus not an improper gift that would violate the House gift
rule. However, OCE recommended further review of the
allegations that the Ahmad loan was and should have been
disclosed as a gift on Representative Meeks' Financial
Disclosure Statements for 2007, 2008, and 2009. OCE's Report
and Findings did not address whether Representative Meeks
violated the House gift rule by accepting the alleged ``gift''
from Mr. Ahmad.\2\
---------------------------------------------------------------------------
\1\See Office of Congressional Ethics, Report and Findings
regarding Representative Gregory Meeks, Review No. 11-1048 (Report and
Findings).
\2\See id. at n. 58 (``The Board reiterates that, due to its lack
of jurisdiction, it does not find a substantial reason to believe that
Representative Meeks violated House gift rules in 2007 by accepting the
$40,000, which is a separate and distinct violation from financial
disclosure requirements.'') (emphasis in original.)
---------------------------------------------------------------------------
On August 1, 2011, the Committee voted to dismiss the
allegation regarding the investment firm loan. At that time,
the Committee indicated that it had ``accepted the OCE's
recommendation for further review of an allegation that
Representative Meeks failed to disclose a payment he received
in 2007 in a timely manner'' and was ``continuing to review
that allegation pursuant to Committee Rule 18(a).''\3\ This
Report summarizes the Committee's resolution of the allegations
regarding the Ahmad loan that OCE referred to the Committee for
further review.
---------------------------------------------------------------------------
\3\Statement of the Chairman and Ranking Member Regarding
Representative Gregory Meeks, Aug. 5, 2011.
---------------------------------------------------------------------------
II. HOUSE RULES, LAWS, REGULATIONS, AND OTHER STANDARDS OF CONDUCT
House Rule XXVI, clause 2 provides that Title I of the
Ethics in Government Act (EIGA) of 1978 ``shall be considered
Rules of the House as they pertain to Members, Delegates, the
Resident Commissioner, officers, and employees of the House.''
The EIGA, codified at 5 U.S.C. app. 4 Sec. 101 et. seq.,
provides that Members, officers, and certain staff of the House
are required to file an annual Financial Disclosure Statement
and to make a ``full and complete'' statement with respect to
several categories relating to their financial status,
including certain liabilities over $10,000 and all gifts from a
single source in a calendar year that are valued at more than
$335. House Rule XXV, clause 5(a)(3)(R)(v), states that Members
may not accept gifts, except that they may accept benefits ``in
the form of loans from banks and other financial institutions
on terms generally available to the public.'' Finally, House
Rule XXIII, clause 1, requires that Members and staff ``behave
at all times in a manner that reflects creditably on the
House.''
III. ANALYSIS
A. Allegation that Representative Meeks Failed to Disclose the Ahmad
Loan as a Gift on His Financial Disclosure Statements
Representative Meeks' original 2007, 2008, and 2009
Financial Disclosure Statements did not disclose the Ahmad loan
as a gift to Representative Meeks. Representative Meeks did
disclose the Ahmad loan as a liability, for the first time, on
his 2009 Financial Disclosure Statement. On June 18, 2010,
Representative Meeks filed amendments to his 2007 and 2008
Financial Disclosure Statements, disclosing the Ahmad loan as a
liability on those statements as well.
Representative Meeks has admitted that he failed to
disclose the Ahmad loan, as either a liability or a gift, on
his 2007 and 2008 Financial Disclosure Statements.
Representative Meeks has asserted that his failure to report
the Ahmad loan as a liability was inadvertent and ``in good
faith,'' and stated that he promptly corrected the error when
he discovered it.\4\
---------------------------------------------------------------------------
\4\Letter from Representative Meeks to Chairman Bonner and Ranking
Member Sanchez, Sept. 9, 2011, at 6-7.
---------------------------------------------------------------------------
In a June 24, 2010, email to Committee staff,
Representative Meeks' Chief of Staff (COS) stated that
Representative Meeks' failure to disclose the Ahmad loan on his
Financial Disclosure Statements was a ``good faith oversight[]
that [was] not identified until very recently'' and that the
loan was reported ``as soon as practicable upon discovery.''
The COS added that Representative Meeks, who has been a Member
since 1998, had no reportable liabilities until 2007, and
``until recently thought of [financial disclosures] as an asset
reporting tool.'' The COS expressed that Representative Meeks
``sincerely regret[ted] these oversights.'' The COS further
indicated that Representative Meeks ``conducted a thorough
review of all the financial disclosure statutes, rules and
guidance offered in the House Ethics Manual, including
appendices, to ensure future compliance.''
The Committee's investigation confirmed that Representative
Meeks failed to disclose the Ahmad loan as a liability on his
2007 and 2008 Financial Disclosure Statements. Thus, even
assuming that the Ahmad loan was, in fact, a loan and not a
gift, Representative Meeks was not in compliance with EIGA and
House Rule XXVI, clause 2, which incorporated EIGA into the
House Rules.\5\ However, as discussed in Section IV, the
Committee found that Representative Meeks' non-compliance with
EIGA and House Rule XXVI, clause 2, was inadvertent and in good
faith.
---------------------------------------------------------------------------
\5\Of course, if the $40,000 from Mr. Ahmad was actually a gift,
Representative Meeks did not comply with EIGA and House Rule XXVI,
clause 2, by failing to report the gift on his 2007, 2008, and 2009
Financial Disclosure Statements. However, as Section III discusses, the
Committee did not conclude that the Ahmad loan was actually a gift.
---------------------------------------------------------------------------
B. Allegation That the Ahmad Loan Constituted an Impermissible Gift
In January 2007, Representative Meeks obtained a $40,000
loan from Mr. Ahmad, a businessman based in Representative
Meeks' congressional district.\6\ Mr. Ahmad is the CEO of the
Ahmad Group, a company made up of an assortment of businesses
mostly related to the real estate industry, including a real
estate agency, a mortgage brokerage, and an importer and
supplier of building materials. Mr. Ahmad has been described as
a friend of Representative Meeks.
---------------------------------------------------------------------------
\6\Letter from Representative Meeks to Chairman Bonner and Ranking
Member Sanchez, Sept. 9, 2011, at 2.
---------------------------------------------------------------------------
On July 8, 2010, the New York Daily News, citing two
anonymous sources, reported that Representative Meeks obtained
the Ahmad loan without any ``discussion about interest rates,
due dates or collateral requirements for the loan.''\7\ In the
press report, Representative Meeks denied this account, and
stated that the ``loan carried an annual interest rate of
12.5%, and was due within 10 years.''\8\ He also said that
there were documents for the loan, but he did not have them on
hand.\9\ On June 19, 2010, Representative Meeks reportedly sent
a check for $59,684 to Mr. Ahmad to ``repay the original loan
with an annual interest rate of about 12.5%.''\10\
---------------------------------------------------------------------------
\7\Greg B. Smith, FBI Looks Into Secret $40,000 Personal Loan to
Queens Pol Gregory Meeks, N.Y. Daily News, July 8, 2010.
\8\Id.
\9\Id.
\10\Report and Findings at 11.
---------------------------------------------------------------------------
While Members are not prohibited from obtaining a loan from
a friend or any other non-financial institution, to be
permissible such loans must satisfy certain criteria as set out
in the House Ethics Manual (Ethics Manual). Specifically, the
Ethics Manual states that Members ``may accept a loan from a
person other than a financial institution, provided that the
loan is on commercially reasonable terms, including
requirements for repayment and a reasonable rate of
interest.''\11\ Committee precedent holds that other ``normal
indicia of a loan'' include ``a written loan agreement or note
[and a] maturity date.''\12\
---------------------------------------------------------------------------
\11\House Ethics Manual (2008) at 68.
\12\In the Matter of Representative Charles H. Wilson, H. Rep. No.
96-930, 96th Congress 2d Sess. 4 (1980).
---------------------------------------------------------------------------
The Ethics Manual cautions Members that the determination
``[w]hether a loan from a person other than a financial
institution is on terms that are `commercially reasonable,' and
hence acceptable under the Committee's determination, will
depend on a number of facts and circumstances. Thus, before
entering into a loan arrangement with a person other than a
financial institution, Members and staff should contact the
Committee for a review of the proposed terms.''\13\
Representative Meeks did not request such a determination from
the Committee before accepting the Ahmad loan. Thus, if the
Ahmad loan was not provided on ``commercially reasonable
terms,'' then Representative Meeks may have violated House Rule
XXV, clause 5(a)(3)(R)(v), which states that Members may not
accept gifts, except that they may accept benefits ``in the
form of loans from banks and other financial institutions on
terms generally available to the public.''\14\
---------------------------------------------------------------------------
\13\House Ethics Manual at 69 (emphasis in original).
\14\House Rule XXV, clause 5(a)(3)(A), clarifies that Members may
accept ``[a]nything for which the Member . . . pays the market value .
. .''
---------------------------------------------------------------------------
Representative Meeks has represented to the Committee that
he obtained a personal loan in the amount of $40,000 from Mr.
Ahmad on January 29, 2007.\15\ According to Representative
Meeks, ``the loan was an unsecured balloon loan to be paid,
with interest, within 10 years'' and ``the loan was recorded on
a form loan agreement.''\16\ Representative Meeks further
informed the Committee that he ``tried to locate the agreement
but could not, and believes it is lost.''\17\ Representative
Meeks stated that when he elected to repay the loan, which he
did on June 19, 2010, he was thus required to estimate the
interest due.\18\ Representative Meeks stated that he
ultimately paid an interest rate of 12.5%, compounded annually,
which Representative Meeks' representatives had determined was
the market rate for an unsecured loan in the 2007-2010
timeframe.\19\
---------------------------------------------------------------------------
\15\Letter from Representative Meeks to Chairman Bonner and Ranking
Member Sanchez, Sept. 9, 2011, at 2.
\16\Id.
\17\Id.
\18\Id.
\19\Id.
---------------------------------------------------------------------------
Committee staff questioned Representative Meeks' COS about
the Ahmad loan on two occasions. In June 2010, the COS
indicated that the COS would produce the loan agreement to the
Committee, but then informed Committee staff that, after
consulting with Representative Meeks, a copy of the loan
document could not be found. The COS further advised
Committeestaff to contact Mr. Ahmad directly in order to obtain it. In
November 2011, the COS told Committee staff that, after initially being
told by Representative Meeks that a written copy of the loan existed,
Representative Meeks informed the COS that he could not find it. The
COS stated that Representative Meeks said the contract was a standard
document that Representative Meeks had purchased at a store and that he
was very angry at himself for having lost it.
The Committee staff has not been able to interview Mr.
Ahmad. This is because Mr. Ahmad currently has a federal
criminal case pending against him for conspiracy to commit bank
and wire fraud and Mr. Ahmad's attorney has informed Committee
staff that Mr. Ahmad would decline any request for a voluntary
interview with the Committee, and, if subpoenaed, Mr. Ahmad
would invoke his Fifth Amendment rights unless the Committee
gave him immunity from criminal prosecution.\20\ Although
Committee staff has not spoken with Mr. Ahmad, Committee staff
did talk with Mr. Ahmad's attorney on October 6, 2010, and
again in August 2012. In October 2010, the attorney told the
Committee staff that ``the facts are the facts'' and that
``there was no loan document signed by Representative Meeks and
there was no fixed interest rate.'' In August 2012, staff
followed up with the attorney to determine if there was any
documentary evidence to corroborate these statements. The
attorney informed Committee staff that, to his knowledge, there
are no such documents.
---------------------------------------------------------------------------
\20\Mr. Ahmad was arrested on June 22, 2011, and indicted on August
18, 2011. On September 22, 2011, the Department of Justice asked the
Committee to refrain from contacting Mr. Ahmad.
---------------------------------------------------------------------------
IV. FINDINGS AND CONCLUSION
As discussed in Section III.A, even assuming that the Ahmad
loan was, in fact, a loan and not a gift, Representative Meeks
did not disclose the loan as a liability on his 2007 and 2008,
Financial Disclosure Statements, and thus did not comply with
EIGA and House Rule XXVI, clause 2, which incorporated EIGA
into the House Rules. In analyzing Representative Meeks'
omission, it is important to recognize that inadvertent errors
on Financial Disclosure Statements are ``not uncommon,'' as the
Committee noted in a recent report:
[B]etween 30% and 50% of all Financial Disclosure
Statements reviewed by the Committee each year contain
errors or require a corrected statement. For over 95%
of these inaccurate Financial Disclosure Statements,
the filer appears to be unaware of the errors until
they are notified by the Committee. Some filers also
appear to become aware of errors after being notified
by members of the media or outside groups who review
the statements and other public records. Generally,
unless there is some evidence that errors or omissions
are knowing or willful, or appear to be significantly
related to other potential violations, the Committee
notifies the filer of the error and requires that he or
she submit an amendment, which is then publicly filed.
Once the amendment is properly submitted, the Committee
takes no further action.\21\
---------------------------------------------------------------------------
\21\House Comm. on Ethics, In the Matter of Allegations Relating to
Representative Vernon G. Buchanan, H. Rpt. 112-588, 112th Congress, 2d
Session, 2012, at 5.
Representative Meeks has stated that he made a good faith
effort to comply with the financial disclosure requirements and
that his failure to disclose the Ahmad loan as a liability on
his Financial Disclosure Statements was the result of an
inadvertent oversight. If the Committee had identified evidence
sufficient to establish that the Ahmad loan was actually an
impermissible gift, then the Committee could have inferred that
Representative Meeks' failure to disclose the gift was knowing
or willful. The Committee cautions that each Member is
responsible for filing timely and accurate Financial Disclosure
Statements, and proper disclosure is necessary to be in
compliance with House Rules and federal law. However, as
discussed below, the Committee determined that the evidence did
not establish that the Ahmad loan was an impermissible gift.
Further, there is no evidence that Representative Meeks'
failure to disclose the Ahmad loan as a liability on his
Financial Disclosure Statements was in bad faith or was knowing
or willful. The Committee's practice in such cases is to notify
a Member of the identified errors on their Financial Disclosure
Statements and require them to publicly amend their Statements.
In this case, Representative Meeks has already publicly amended
his Financial Disclosure Statements to properly disclose the
Ahmad loan. Therefore, the Committee concludes that no further
action is necessary with respect to Representative Meeks'
failure to disclose the Ahmad loan, and considers the
investigation of this allegation closed.
The record is less clear with respect to the allegation
that the Ahmad loan was an impermissible gift. As discussed in
Section III.B, Committee staff has not been able to interview
Mr. Ahmad. However, Representative Meeks has consistently
represented to the Committee, to his COS, and to the Managing
Member of the investment firm that provided the loan used to
satisfy the Ahmad loan, that the loan was memorialized in
writing and had a set repayment schedule and rate of interest.
Representative Meeks has asserted that he cannot produce the
loan document now because he has misplaced it. Thus, even if
the Committee was able to interview Mr. Ahmad, and Mr. Ahmad
contradicted Representative Meeks' version of events regarding
the Ahmad loan, the Committee would be left with a ``swearing
contest'' between a Member and a person who has pled guilty to
conspiracy to commit bank and wire fraud, and is awaiting
sentencing. Unless Mr. Ahmad was able to provide some
documentary evidence indicating that the payment to
Representative Meeks was not a loan--or that it did not have
the standard indicia of commercial reasonability, such as
written terms and a commercially reasonable rate of interest--
it would be unreasonable for the Committee to conclude, on the
basis of his testimony alone, that Representative Meeks was
lying to the Committee.
Given this situation, and in light of the representations
from Mr. Ahmad's attorney that Mr. Ahmad has no documents to
support the allegation that the loan had no written terms or
set interest rate, and that Mr. Ahmad would assert his Fifth
Amendment rights if the Committee issued a subpoena for his
testimony, the Committee has decided to close its investigation
regarding the allegation that Representative Meeks received an
improper gift from Mr. Ahmad.
V. STATEMENT UNDER RULE XIII, CLAUSE 3(c) OF THE RULES OF THE HOUSE OF
REPRESENTATIVES
The Committee made no special oversight findings in this
Report. No budget statement is submitted. No funding is
authorized by any measure in this Report. No oversight findings
are considered pertinent.