U.S. Rep. Robert Pittenger has continued to play a role in the property-buying business he founded 30 years ago, although House Ethics Committee rules bar members of Congress from engaging in certain professions while in office.
Two investors told The Charlotte Observer that Pittenger has talked with them and others about land deals, finding buyers for properties, and shaping the company’s future. One investor said Pittenger told him that he can’t lead the company but can serve as an adviser.
Pittenger confirmed in August that his former company is under investigation by the FBI but has denied any wrongdoing. The Charlotte Republican – like all House members – is subject to a separate set of ethics rules.
These rules prohibit House members from practicing fiduciary professions that involve managing others’ assets, such as law and real estate, because of potential conflicts of interest. Pittenger’s undivided focus is supposed to be on the 800,000 constituents in the 9th Congressional District – not his private clients.
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House ethics rules are complex, ambiguous and riddled with exceptions. The House ethics manual is more than 400 pages of rules and appendices. Tom Rust, staff director for the House Ethics Committee, declined to comment about Pittenger’s case.
To avoid potential conflicts, Pittenger sold Pittenger Land Investments to his wife after he was elected in 2012. He said he has a letter from the Ethics Committee approving the sale. But he has refused to release it to the public – leaving questions about the transaction.
Charles Tiefer, a former acting general counsel of the House of Representatives, questions whether the sale to Pittenger’s wife is enough to absolve the lawmaker from potential conflicts, but he said the rules are written in a way that makes it easy for a smart member to evade and “fake compliance.”
“It’s a complete lack of transparency,” said Tiefer, a law professor at the University of Baltimore. “How can anyone possibly know what arrangements he and his wife have with each other? How can anyone possibly know if he’s given up management and income?”
Reached at the U.S. Capitol, Pittenger declined to explain his interpretation of House rules. But, in a statement issued by his office, he said that he has followed the advice of counsel in all private and public matters.
“Congressman Pittenger and his staff routinely check and double-check with Ethics staff to ensure full compliance with all rules and regulations, and Ethics staff has never raised any concerns,” said Jamie Bowers, Pittenger’s spokesman.
Suzanne Pittenger, Pittenger Land Investments’ CEO, did not respond to a request for comment.
Advising ‘behind the scenes’?
Pittenger Land Investments identifies raw tracts of land in potential growth areas, and then gathers investors to buy the properties, which are held by limited liability companies. The goal over time is to make a return by selling the properties to developers.
Some investors who have bought properties through Pittenger Land Investments said he continues to be actively involved in the company he founded in 1985.
Mike Haley, a former McDonald’s franchisee with ties to Greensboro, remembers receiving a short call from Pittenger in August, according to Mike Wenig, an attorney representing him. That was when PLI was proposing a deal to transfer management of the company to a Tampa-based real estate company called Landeavor.
“Mr. Haley has known Mr. Pittenger for a number of years, so it was not that unusual,” Wenig said. “In that call, Congressman Pittenger simply expressed his opinion that he thought that the offers being made by Landeavor were good deals for the limited liability companies.”
Wenig said Haley has heard that other investors also have had calls from Pittenger. After complaints from investors, PLI called off the Landeavor deal in August.
Haley and two family trusts are major Pittenger investors, with stakes in 38 LLCs. Representatives for the trusts have been requesting documents from PLI and raising questions about its accounting, record keeping and fees charged to investors.
Another source, who has invested with Pittenger in the past, said Pittenger has talked with him and other people about PLI business. Pittenger, the source said, called in August to discuss the investor vote on the Landeavor deal.
The source said Pittenger told him that he can’t be chairman or CEO of the company “but can advise quietly behind the scenes.”
Ethics rules also say a House member may not “permit his name to be used” by fiduciary businesses, and the Robert Pittenger Company in January 2013 officially registered a name change with the state, becoming Pittenger Land Investments. But his full name continued to be used in promotional materials on the website as recently as this week.
After queries by the Observer, however, a brochure on the site that included Robert Pittenger’s photo and a letter from the congressman touting the company’s past performance disappeared from the site.
Rules – and exceptions
Determining whether Pittenger violated any rules is difficult because the rules are full of exceptions.
Pittenger, for example, can do “incidental” work for his former real estate company as long as it’s considered a “return on equity” (profits from an existing business) and not being paid for the actual services, according to the House ethics manual. The member can give direction to the family business if any money made is basically a return on existing property and not generated by the personal work of the member.
In advocating for the Landeavor deal, Pittenger was backing a proposal that would have been beneficial to Pittenger Land Investments in a number of ways. According to documents reviewed by the Observer, Landeavor would have paid commissions to the company and “certain remuneration” related to the transfer of administrative functions. PLI also has an ownership stake in each property that was to be sold.
According to the ethics manual, a member can do a lot of work for the company – if it’s unpaid. But he can’t simply do the work and let his spouse pick up the check. If the “real facts,” as the manual states, are that the spouse is being paid for the services conducted by the member – then that’s considered the same as the member being paid. It isn’t permitted.
Breaking House ethics rules could lead to a reprimand, censure or possibly expulsion from Congress. Expulsion is rare, but even a reprimand could have political ramifications for Pittenger – and the party – if it’s shown that he behaved improperly. He could also face a $10,000 fine or the amount of compensation if it’s determined he violated outside income statutes.
While Pittenger stresses that the ethics committee has not raised any concerns, Noah Bookbinder, executive director for the government watchdog Citizens for Responsibility and Ethics in Washington, said the committee often doesn’t get involved when a criminal investigation is underway. Recently, however, the ethics committee did launch an inquiry of campaign donations solicited by former Rep. Aaron Schock, R-Ill., at the same time the FBI was looking into allegations that he misspent campaign and political funds.
Several investors and colleagues told the Observer they weren’t aware of any ongoing involvement in the company by Pittenger.
Ken Walker, the former CEO of Meineke’s parent company, Driven Brands, and an investor, said he hasn’t talked business with Pittenger since he joined Congress in 2013. He said it’s always tough when the leader of a company leaves.
Kevin Wilkinson, a former campaign operations director and fundraising director for Pittenger, spent hours driving Pittenger around and meeting with potential donors.
“In all the time, and I spent a lot of time with the man, there was never times where he talked about business or he said ‘Let’s go drive by this land plot’ or ‘Hey, let’s go do this.’ It never happened,” Wilkinson said.
Questions about whether Pittenger may have broken House ethics rules follow revelations that federal agents are investigating personal loans and contributions the congressman made to his 2012 campaign.
The FBI and IRS are investigating whether Pittenger improperly transferred the money from Pittenger Land Investments, sources told the Observer. There are no limits on personal loans, but any contributions from family or family businesses are subject to strict guidelines.
Pittenger has denied any wrongdoing. He could face charges for making illegal corporate contributions or fraud if the personal loans are tied back to his family business.
Declines to release letter
Two Washington watchdog groups have called on Pittenger to release the House Ethics letter that he has said approved of the company sale to his wife.
In declining to make the letter public, Pittenger has said the document contains personal information. The Observer asked him for a copy of the letter with the personal information redacted, but he again declined.
Bookbinder, of Citizens for Responsibility and Ethics in Washington, said it’s important for the public to know what House Ethics approved and whether it corresponds with the congressman’s actual behavior.
“Hiding behind a letter whose content we don’t know does very little to satisfy his constituents or the public that he was acting in a way that he knew or believed to be within the rules,” he said.
When personal business, Congress collide
House Ethics Committee investigations over the years have included probes of family businesses and spouse’s professions.
U.S. Rep. Markwayne Mullin, R-Okla., is under investigation by the House Ethics Committee for participating in the plumbing business he’s owned with his wife. Mullins maintained that he checked with the House Ethics Committee after his election to Congress in 2012 to ensure that he was following guidelines. But the committee launched an investigation after the Office of Congressional Ethics reported last year that Mullin hosted a weekly radio show and appeared in numerous commercials for the company. “If Representative Mullin was personally involved in endorsing any services pursuant to outside employment, he may have violated House rules and standards of conduct,” the OCE report stated.
U.S. Rep. Ed Whitfield, R-Ky., is the subject of allegations that he used his House seat for family gain. The House Ethics Committee launched an investigation after a probe by the Office of Congressional Ethics concluded that there was “substantial reason to believe” that Whitfield permitted his wife to use his office to lobby on behalf of her employer. Investigators are looking into whether Whitfield “improperly used his official position for the beneficial interest of himself or his wife, and dispensed special favors or privileges to either his wife, the Humane Society Legislative Fund, or the Humane Society of the United States.”
U.S. Rep. Geraldine Ferraro, D-N.Y.: One of the House’s most celebrated ethics cases involved 1984 Democratic vice presidential candidate Ferraro. She was dogged by questions about her husband’s real estate business after she was picked to be Walter Mondale’s running mate. The Ethics Committee looked into whether Ferraro had violated congressional rules or laws for failing to disclose all her financial dealings. Ferraro denied involvement with her husband’s business, but inquiries found that she was an officer in the company. One company tenant was a pornography supplier with reported connections to the mob. Ferraro said she and her husband did not know of the tenant’s business.
Pittenger’s financial ties to family company
U.S. Rep. Robert Pittenger’s investments with Pittenger Land Investments, along with other assets, make him the 55th wealthiest member of Congress with a net worth of $6.86 million, according to Roll Call rankings.
On his 2014 financial disclosure, he lists PLI LLCs as assets held by he and his wife. He took out a loan from the company of between $1 million and $5 million in August 2008 and has yet to pay it back.
The loan came at the same time that he and his wife, Suzanne, were lending and contributing nearly $4 million to his unsuccessful campaign for lieutenant governor of North Carolina. The Pittengers later forgave the $1.7 million in loans they made to the campaign, according to campaign reports.
Pittenger’s 2012 report shows that he received a salary and bonus of $3.7 million from the company that year. He also had a defined benefit plan, terminated in 2012, that provided income between $100,001 and $1 million.