Politics & Government

FBI, IRS step up probe of Rep. Pittenger’s ties with former real estate firm

U.S. Rep. Robert Pittenger on Thursday asked the bipartisan House Ethics Committee to conduct an investigation of his role with his former real estate company, Pittenger Land Investments. Here Pittenger speaks to the media at the conclusion of a town hall meeting in Mooresville on Aug. 11, 2015.
U.S. Rep. Robert Pittenger on Thursday asked the bipartisan House Ethics Committee to conduct an investigation of his role with his former real estate company, Pittenger Land Investments. Here Pittenger speaks to the media at the conclusion of a town hall meeting in Mooresville on Aug. 11, 2015. rlahser@charlotteobserver.com

The FBI and IRS have interviewed more people in recent weeks about U.S. Rep. Robert Pittenger’s role with his former real estate company, sources told the Observer Thursday, a sign that an investigation that began this spring continues.

The Charlotte Republican confirmed in August that Pittenger Land Investments was under investigation but has repeatedly denied any wrongdoing. Separately, Pittenger on Thursday 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.

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.

Agents have interviewed investors, congressional staffers and other people familiar with Pittenger’s role at the company, including representatives from the GreerWalker accounting firm in Charlotte, one source told the Observer on Thursday. The firm has handled accounting duties for Pittenger’s campaign as well as PLI. GreerWalker representatives could not immediately be reached.

The investigation is focusing on certain business practices and operations at PLI, and more interviews are planned, sources told the Observer. The sources spoke on condition of anonymity, citing the sensitivity of the case.

Pittenger has previously said he has provided all information requested of him and that he will continue to cooperate. It’s not clear whether any charges will result.

Pittenger founded PLI three decades ago but transferred the company to his wife, Suzanne, to meet House ethics rules after he was elected to Congress in 2012. Some investors have been unhappy with the recent performance of the company and have raised questions about record keeping and accounting at the firm, the Observer has reported.

In a statement Thursday, Pittenger said he has “lived a life of integrity, personally, professionally, and in public service. Regrettably, recent media reports have not conveyed accurate information regarding our activities. Out of respect for my constituents, and love for my family, I am requesting a full investigation by the Ethics Committee to confirm my compliance with House rules.”

Pittenger said his “objective is to address these issues directly and confirm that I have always acted properly and in full respect for the law and House Ethics rules.”

Jamie Bowers, Pittenger’s director of communications, declined to comment specifically on the FBI and IRS investigation.

Although House Ethics Committee rules bar members of Congress from engaging in certain professions while in office, Pittenger has continued to play a role in PLI, the Observer reported last month.

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. The idea is that members of Congress should be focused on their constituents, not their private clients.

Pittenger has said he has a letter from the Ethics Committee approving the sale to his wife. But he has refused to release it to the public. Bowers said Thursday that the congressman is not going to release the letter to the media.

“Congressman Pittenger has requested the bipartisan House Ethics Committee conduct a full investigation into his activities as it relates to their 2012 letter,” Bowers said. “Their attorneys and experts will determine the outcome of the investigation apart from further speculation and conjecture.”

Jordan Libowitz, of the government watchdog Citizens for Responsibility and Ethics in Washington, said he finds it surprising that Pittenger is calling for an investigation because he has previously said the House Ethics Committee has cleared the transaction.

“If they already cleared him, why would he need an investigation from them to clear him?” he asked. “It doesn’t make a whole lot of sense.”

Libowitz, whose group has been calling for Pittenger to release the letter, said “it seems clear that whatever is in the letter does not help him in the way that he hoped it would, or he would just release that letter.”

It’s uncommon for members of Congress to call for an investigation of themselves, but Libowitz said it has happened in the past. U.S. Rep. Charlie Rangel of New York called for an investigation of himself in 2008 after reports that he was renting rent-stabilized apartments in Manhattan and using one as a campaign office. The Democrat was also accused of using congressional stationery to solicit funds for his foundation. Two years later, the House censured Rangel for financial misconduct.

Paul Shumaker, a longtime North Carolina GOP strategist currently working for U.S. Sen. Richard Burr, said he thought Pittenger’s request for an investigation was a good idea.

“Sounds like a guy who is confident he doesn’t have anything to hide,” said Shumaker, who described Pittenger as a fighter. “I’ve always advised transparency is the best process.”

Tom Rust, staff director for the Ethics Committee, declined to comment about Pittenger’s case.

Committee rules stipulate that the panel will consider any inquiry from a member seeking an investigation of their own conduct. If it’s in the form of a complaint, the committee has two weeks to determine whether the inquiry is properly filed and then 45 days for a preliminary investigation. If further investigation is warranted, members can impanel an investigative subcommittee that has subpoena power.

The committee may also defer any action if it has reason to believe the matter is being reviewed by law enforcement.

Campaign contributions

Pittenger is a former state senator who was first elected to Congress in 2012. He was re-elected in 2014 and is expected to run in 2016. Candidates start filing for office Dec. 1.

The federal probe, however, could be dampening his fundraising going into the next election.

Pittenger’s campaign recently reported its lowest fundraising quarter since his election to Congress. In the period ended Sept. 30, Pittenger raised just $53,000, according to Federal Election Commission data. For comparison, his primary challenger, Mooresville attorney George Rouco, who has never held elected office and has little name awareness, raised $51,000 in the same period.

Pittenger did better in the previous quarter, raising $151,532 for the period ending June 30. But in the quarter ending March 31, he raised just $67,418.

Pittenger raised $281,000 in the first nine months of 2015 compared with $438,879 in the first nine months of 2013.

“Some potential donors probably paused based on the congressman’s current situation,” said Nathan Gonzales, editor and publisher of the nonpartisan Rothenberg-Gonzales Report. “I think it’s more difficult to raise money if you are facing any sort of allegations over ethics.”

Shumaker, the GOP strategist, said dollars alone don’t determine a candidate’s strength. He said donors probably feel that Pittenger doesn’t need money because he lacks a formidable challenger.

He did not think the federal investigation has had much of an impact on Pittenger’s fundraising.

“It could give some pause, but those who have known him and known him a long time, I don’t think it gives them pause,” Shumaker said. “The reality is what he’s going through is nothing new to American politics.”

Management change in works

Pittenger’s former company identifies raw tracts in potential growth areas and 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. As manager, PLI also collects annual fees from investors for property taxes and other expenses.

This year, the company stopped buying new properties and instead has focused on selling its existing portfolio. PLI explored a deal with a Florida-based company called Landeavor but canceled the transaction in August after concerns from investors.

Some investors have also told the Observer they were unhappy with the way PLI has handled their investments, including marking up the price of land that was sold to the LLCs. Pittenger has said the markups were standard procedure and fully disclosed.

Investor Mike Haley, a former McDonald’s franchisee with ties to Greensboro, has served as a rallying point for upset investors. He and two family trusts have 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. They are also seeking more information about loans that were made between the LLCs and PLI, according to a letter sent to investors in September.

A Charlotte-based real estate firm, South Street Partners, told the Observer last month that it is in talks to become the new manager of the properties overseen by PLI. Investors will likely be asked to vote on the transfer, and one potential sticking point could be whether PLI is relieved of all liability for previous actions. South Street managing partner Patrick Melton on Thursday said the firm is still in talks with PLI.

Rick Rothacker: 704-358-5170, @rickrothacker