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Pittenger campaigns as federal probe enters second year

U.S. Rep. Robert Pittenger plans to file for re-election Friday in a newly drawn district, even as a federal investigation of his former real estate company enters a second year. Here Congressman Robert Pittenger speaks at a town hall meeting in August.
U.S. Rep. Robert Pittenger plans to file for re-election Friday in a newly drawn district, even as a federal investigation of his former real estate company enters a second year. Here Congressman Robert Pittenger speaks at a town hall meeting in August. rlahser@charlotteobserver.com

U.S. Rep. Robert Pittenger plans to file for re-election Friday in a newly drawn district, amid a federal investigation of his former real estate company that is entering a second year.

FBI and IRS agents have interviewed at least two investors with Pittenger Land Investments in recent weeks, sources familiar with the situation told the Observer, a sign that the probe that began last spring is ongoing.

The Observer previously reported that federal investigators are looking into personal loans and contributions Pittenger made to his 2012 congressional campaign. The FBI and IRS are examining whether Pittenger improperly transferred the money from PLI, which is now run by his wife, Suzanne.

The Charlotte Republican confirmed in August that PLI was under investigation but has repeatedly denied any wrongdoing. Pittenger in November asked the bipartisan House Ethics Committee to conduct a probe of his role at PLI, saying he wanted to confirm his compliance with House rules.

Pittenger is seeking re-election to a third term in a district that the state legislature dramatically reshaped last month. New congressional boundaries were drawn to satisfy a court order issued by a panel of federal judges that considered two of the state’s districts racially gerrymandered.

The 9th Congressional District once covered mostly south Charlotte and parts of Union and Gaston counties, but it now rambles east from southeast Charlotte to Cumberland County. Filing for the state’s congressional primary started Wednesday, and the vote will be June 7. A three-judge panel still needs to approve the final map.

The investigation could complicate Pittenger’s re-election bid, said Eric Heberlig, a political science professor at UNC Charlotte.

“Typically, incumbent members of Congress have a pretty easy skate for re-election,” he said. “One of the few times that they have trouble is when they do have ethics investigations.”

The investigation likely would have been less trouble in his old district, which is solidly Republican, he said. The new district is more uncertain, Heberlig said, but the Democrats may not be able to get a candidate “positioned to take advantage” of the investigation into Pittenger’s company.

Paul Shumaker, chief strategist for the Pittenger campaign, said the redistricting has meant a shifting of resources, with candidates now forced to buy TV advertising in both Raleigh and Charlotte.

“This (district) spans two media markets,” Shumaker said. “It means the price point for this race is only going to be much higher if the geography holds.”

As for the federal investigation, he said he doesn’t expect it to be an “overriding or compelling issue” in the campaign. “The congressman has consistently maintained very high approval levels,” Shumaker said. “We feel very good about where we are.”

Pittenger’s campaign has said he plans to file Friday for re-election. As of Thursday, former Union County commissioner Todd Johnson, a Republican, and Charlotte businessman Christian Cano, a Democrat, had filed for the seat.

Mooresville attorney and former CIA officer George Rouco (pronounced RO-ko) filed to run before the recent map changes and received endorsements from former House members Sue Myrick and Robin Hayes. But in an interview Thursday, Rouco said he is still mulling his plans for the newly drawn district, in which he would no longer live.

If he runs, he said the federal investigation will be a topic on the campaign trail. “It’s an integrity issue,” he said.

Rouco said he has heard from some people worried about a possible scenario in which Pittenger could be indicted after winning the primary but before the general election, potentially putting the seat at risk for the GOP. “Then the Republican Party will have to scramble,” he said.

But David Wasserman, House editor for The Cook Political Report, said an indictment doesn’t necessarily end a candidate’s chances. In 2014, Rep. Michael Grimm, R-N.Y., won re-election after an indictment on federal tax fraud charges.

“Partisan polarization,” Wasserman said, “is so severe that an indictment doesn’t move a race all that much.”

Investors interviewed

Pittenger founded his namesake real estate company three decades ago but transferred the company to his wife after he was elected to Congress in 2012 to meet House ethics rules.

Over the years, PLI identified raw tracts in potential growth areas and gathered investors to buy the properties, which were held by limited liability companies. The goal over time was to make a return by selling the properties to developers. As manager, PLI also collects annual fees from investors for property taxes and other expenses.

Some investors have said they are unhappy with the way PLI has handled their investments, with some questioning the slow pace of land sales and the transparency of the company’s operations. The Observer also reported in August that some investors were surprised by markups that PLI applied to the tracts before selling them to the LLCs.

PLI has said the business has a successful track record and is taking steps to sell the properties. Robert Pittenger has said the markups were standard procedure and fully disclosed.

In their investigation, FBI and IRS agents have interviewed investors, congressional staffers and other people familiar with Pittenger’s role at the company, the Observer has reported.

The interviews have continued in recent weeks, with agents talking with at least two additional investors, sources told the Observer, speaking on the condition of anonymity because of the sensitive nature of the investigation. In one of the interviews, the agents asked about markups that PLI applied to land purchased by its investors as well as any communication the investor had had with Robert Pittenger, one of the sources said.

The FBI, IRS and U.S. attorney in Charlotte declined to comment.

The FBI is “very reluctant to take any action that would be perceived as influencing an election,” said Chris Swecker, a retired assistant FBI director who once headed the bureau’s criminal investigative division. “But at the same time, if they have a fully predicated investigation they’re going to move forward with the investigation itself.”

The ultimate decision to prosecute would be in the hands of the U.S. attorney and the Department of Justice when a case involves a sitting congressman, said Swecker, who is not involved in the Pittenger case. The FBI finds itself in a similar situation in the probe of Hillary Clinton’s handling of classified information in her emails when she was secretary of state, he noted.

Pittenger’s attorney, Ken Bell, has previously said he not seen anything that “even suggests criminal activity” by his client and that he hopes authorities “act quickly and publicly to absolve” the congressman. Bell did not immediately respond to a request for comment.

Pittenger seeks donors

In a recent email to supporters, Robert Pittenger cited the challenges of his district’s new geography but did not mention the federal probe.

Pittenger urged supporters to contribute to his Pittenger Victory Fund at an event last week at the home of Charlotte businessman Felix Sabates. The email said he was looking to a “Committee of 100” to raise $10,000 each.

“I hope I can count on you for your continued support as I meet the new challenge created by our federal judiciary,” Pittenger said in the email obtained by the Observer.

Shumaker, the campaign’s chief strategist, said $1 million is the minimum needed to run for a North Carolina congressional district.

In an interview, Sabates said that he didn’t know how much money was raised at the event but that it was well-attended. Sabates said he’s not worried about the FBI investigation.

“I talked to (Rep. Pittenger) about that, and he wasn’t concerned about it,” Sabates said. “I know Robert well enough that if he has a concern, he would have mentioned something.”

Staff writer Mike Gordon and Greg Gordon in the McClatchy Washington Bureau contributed.

Rick Rothacker: 704-358-5170, @rickrothacker

Management change in works?

In November, Pittenger Land Investments reached a deal with a subsidiary of a Charlotte-based real estate company, South Street Partners, to run the real estate firm’s 52 limited liability companies. But investors rejected the proposal over the way the deal was structured.

It’s possible, however, that another deal could be in the works, subject to investor approval.

Two Charlotte attorneys, Adam Doerr and Jim Cooney, confirmed that they are representing PLI investors, but they declined to comment on any discussions with the Pittenger firm. “These are groups of investors that have come together,” Cooney said, declining to provide further details.

PLI did not respond to a request for comment.

Rick Rothacker

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