Didn’t Nancy Pelosi say that this will be the cleanest congress in history? Pelosi may have had noble dreams but when you look at her tenure and the scandals by Chris Dodd, Charlie Rangel, John Murtha and others she has not followed through on their scandals. In fact she has allowed the ethics process to drag out in these cases.
There is a new Senior Democratic Party congressman who is drawing attention of the ethics committee, Rep. Gary Ackerman (D-NY) a 27 year year veteran Representative of NY’s 5th district may have broken House ethics rules with no-money-down stock deal. The story was broken by the NY Daily News today.
The gist of the scandal is that Ackerman hosted a meeting between Israeli officials and a defense contracting firm in his congressional office, in which he had invested money (via a no money down loan) whose stock he later sold at a big profit.
The Queens Democrat put no money down when he obtained private stock in the company, Xenonics Inc., relying on $14,000 borrowed in 2002 from the company’s top shareholder, a longtime friend.
The sweetheart loan required no collateral and had no written payback date, a potential violation of House ethics rules. When the company went public, its stock soared. Ackerman says he repaid the loan at 6% interest and sold the stock for more than $100,000 in 2005 and 2006.
House ethics rules bar members of Congress from using Congressional resources to promote commercial enterprises, stating:”The prohibition against use of House resources to support unofficial undertakings clearly applies to support of business endeavors.”
The rules also require written repayment plans for any loans Congress members take out. Ackerman confirmed he had no such written plan for the 2002 loan.
In the last few years, Ackerman arranged a meeting in his Washington office between Xenonics founder Alan Magerman and two Israeli officials, Magerman said.
Magerman said he tried to convince the Israelis to buy Xenonics’ NightHunter, a high-powered flashlight used by the U.S. military. Magerman said Ackerman was “trying to be very helpful.”
Of course he was trying to be helpful he had a stake in the company.
“He was nice enough to arrange the meeting,” he said. Israel did not buy the product. Magerman said he was unaware Ackerman had invested in his company.
Ackerman released a statement saying he “bought and sold his interest in Xenonics stock at its proper and fair-market value,” and the transactions were “consistently, continually disclosed on his annual disclosure forms.
Ackerman gave more than one explanation about the loan from longtime friend Selig Zises, then Xenonics’ top shareholder.
Ackerman, who said Zises suggested the investment to him, has a second loan for between $15,000 and $50,000 from Zises.
“It’s more or less the same arrangement” as the first loan, he said. “I don’t remember the exact terms.” He later said the loan, taken out in 2007, was due in 2012.
The loans are among many ties between Ackerman and Zises and his brother, Seymour. Ackerman has invested up to $100,000 in personal money and $750,000 from his campaign treasury with the Zises-run investment firm, Family Management Corp., and its affiliates.
Ackerman said he has about $15,000 in FMC and has gotten “mixed results.”
“Over a great number of years, my friend Selig Zises has made investment suggestions – winners and losers – and separately Seymour Zises has managed some of my portfolio, also with mixed results,” Ackerman wrote in response to questions.
He described the Zises brothers as close friends. Over the years he’s hired Selig’s daughter as a legislative assistant and praised Zises family members and employees in the Congressional Record.
The Zises have been longtime donors to Ackerman’s campaign committee, donating $53,000 to his campaigns ($23,000 since June 2007).
Ackerman offered various explanations for the terms of the loans. Questioned about the 2002 loan, he first claimed he paid it off in 2005, then changed that to 2004. When The News noted no loan is mentioned on his 2004 financial disclosure form, he amended the report days later.
In response to News queries, he also changed the number of years he had to repay the 2002 loan, from five to three.
After refusing to say why he took the loan, he admitted it was for Xenonics stock. Ackerman claims both loans were “due by a date certain,” but provided no documents to back it up.
Documents he provided make clear the 2002 loan was made on favorable terms. There’s no repayment schedule, no date by which the loan is due, and no record of property or any assets pledged as collateral.
The only documents Ackerman could produce was a one-page “General Promissory Note” dated March 12, 2002 and a check to Selig Zises from his joint account dated Dec. 12, 2004. Both were signed by his wife, Rita.
Congressman Ackerman has some explaining to do. Even if he didn’t do anything wrong, it certainly smells. He made a $100,000 profit on the sale of stock in a defense contracting company and used his house office as a trading mart,hosting a meeting in his House office between the firm, which was trying to sell its technology, and Israeli government officials.
House ethics rules do not allow a congressional office for a commercial purpose so at the very least that meeting went against ethics.
Now add that to the fact Ackerman has not been exactly forthcoming with the inquiries into his deal and he has changed his story more than once. He hasn’t even been able to keep his dates straight. Its this lack of transparency that makes the American Public suspicious about all politicians, no matter which party they come from.