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Monday, November 19, 2007

When There's No "There" There

In the frenzied final days of Virginia’s 37th District Senate race I picked up and posted a story about a supposedly questionable real estate deal in which Ken Cuccinelli had allegedly been involved. At the time I took the position that Ken had a reputation for integrity but since this looked bad, he should explain it to his constituents. And along with some other bloggers I wondered why nobody from the mainstream media had picked up these allegations to investigate them.

Last Wednesday I found out.

That evening I spoke with Ken Cuccinelli, who called me to explain it. He made clear that he was doing so only because I was his constituent and he told me to feel free to use it on my blog or not, it was my decision. He personally was not inclined to answer what he felt was more a campaign dirty trick than a substantive charge. I think he was right. For myself, I just ran with the story rather than checking it out. I put the onus on him to answer it. A good journalist doesn’t do that and I knew better. Before you print an allegation like that, you call and get the subject’s explanation. If the person declines to talk to you, you put that in your article. I’ve criticized other journalists for failing to that. It’s basic good reporting and is a journalistic fundamental.

But I also tried to have it both ways. After all, I’m not a journalist. I’m an amateur with a day job so I simply put the story out with a disclaimer that I gave him the benefit of the doubt but it was up to Ken to answer the charge.

Not exactly.

It’s up to the person writing the piece to pick up the phone. I didn’t do that. Ken, who had every right to be annoyed, however, was the one who did exactly that.

So, I feel I owe it to him and his reputation to follow up and write what I now know and especially to inform my readers that he indeed answered my questions.

Frankly, I’m going to keep the explanation to the bare bones. I don’t want to rehash it or give it a new life. So, here’s the take home version:

Ken had a client whose family had been feuding for years. The client’s mother and sister were not speaking and the sister wanted to sell her one-third of a family home back to the mother. Ken was asked, as an attorney, to make a third party purchase. He bought the one-third interest in the property and four days later sold it to the mother. He was not a beneficiary and received no consideration. He was a nominee, or stand in, for the transaction. That’s why he legally was not obligated to pay a grantor’s tax. It’s also why he had nothing to declare from the purchase on his disclosure forms.

If he earned anything, it was in his capacity as an attorney for his law firm. Transactions like these are not unusual. They are employed routinely when families can’t get along and need to settle estate disputes and transfer property from one party to another.

In addition, the lobbyist client was somebody whom Ken had known previous to his becoming a state senator. In fact, he was introduced to that person by a law professor in college.

Finally, the media did follow up on the story. Four or five reporters, including one from WTOP and one from the Examiner, called Ken the next day and followed up on his account. The reason you neither read nor heard anything about it is because after those journalists did the research they found they had nothing to write about. There was no “there” there.

15 comments:

Jonathan Mark said...

"""He bought the one-third interest in the property and four days later sold it to the mother."""

Did he sell it to the mother for exactly what he paid for it? It seemed at the time as if he had realized a profit of thousands of dollars.

Was there a profit?

Not Larry Sabato said...

Karen, classy move on your part here.

Anonymous said...

AIAW. I follow that story also. It's not clear to me what you asked him.

Did you ask the following:

Question #1 - Senator, why did you receive a deed indicating you paid $160K for the property and then sign another deed days later indicating you had accepted a $185K promissory note in exchange for releasing your interest if you received no consideration?

Question #2 - Senator, why did you fail to disclose any of the particulars of this transaction on your economic conflict of interest disclosure filed with the Clerk of the Senate - either under (a) real estate interests, (b) income earned from outside businesses, or (c) securities owned (your $185K promissory note that I guess you're claiming never existed although you certified that to the Court).

Question #3 - Senator, if this was really your law firm's deal, then why wasn't your law firm listed on the deed instead of "Kenneth Cuccinelli II" on every single document? Did you list the "wrong" name there also?

Question #4 - Your lobbyist client's employer specifically gave you kudos for pressing various pieces that were part of their legislative agenda - father's rights right around the time this deal went down. Have you had any conversations with the "client" about legislation pending before the General Assembly that his organization was interested in?

Question #5 - You signed a deed citing a Grantor's Tax exemption indicating that you were a beneficiary of the trust. You were not. The Virginia State Bar issued a Legal Ethics opinion (LEO 1840) on 9/25/07 indicating that failing to disclose the true grantor in a transaction in an effort to avoid paying a grantor's taxes and other fees is unethical conduct. How does your conduct not violate that legal ethics opinion?

While you're at it, please provide a cite to the Code of Virginia that says that a "nominee, stand-in," as AIAW calls it, doesn't have to pay taxes on there transactions. You recently voted to raise the Grantor's tax in Northern Virginia, you must know that law pretty well. What other kinds of taxable transactions can I act as a "stand in" on? I find this kind of tax avoidance to be potentially very lucrative.

Question #5a - Are you still head of the Virginia Caucus for Grover Norquist's Americans for Tax Reform? Did that color your opinion as to whether you had an obligation to pay taxes in this transaction?

Question #6 - Why did the promissory note you indicated you had accepted in the second deed you file have an interest rate that was more than three times the going rate for 30-year mortgages? Short term money is usually lower interest rates.

AIAW - If you did not ask these questions, why not?

Anonymous said...

You have an excellent blog, but this article is just wrong wrong wrong! You've talked to Ken Cuccinelli, have you also talked to all the people who have looked into this case closely? Have you taken the time to examine the evidence yourself? Ken Cuccinelli calls you on the phone, and that's it, end of story? It's time for a retraction of the retraction.

brimur said...

While I appreciate your inclination to give Ken the benefit of the doubt, I think the earlier anon. comment summarizes the huge lingering questions pretty well. There may indeed be no there there, and I applaud Ken for reaching out to you, but it still looks very very suspect and he's got a lot more explaining to do.

Anonymous said...

There may not be a fire here, but there's a heck of a lot of noxious smoke.

Not Larry Sabato said...

For all the bloviating of the comments, no one can explain why numerous members of the media started looking into this story and no one wrote about it. The burden of proof is on y'all not Ken, especially since reporters apparently looked close at this "story" and laughed.

Not Harry F. Byrd, Sr. said...

Well let's see... Amy Gardner announced on the Kojo Nbamdi (sp?) Show that this races was "over" and wasn't worth reporting on.

Come to think of it, aside from Marc Fisher, the Washington Post didn't run a single story on this race. How about we start with that.

Doug in Mount Vernon said...

NLS and AIAW, I am really disappointed in you guys. It doesn't take a rocket scientist to realize why this story is not done. $160K is not equal to $185K! It's pretty simple mathematics!

As someone who has also participated in "stand-in" transcations, I don't recall my attorneys, agents, or mortgagers ever telling me that I was not obliged to pay a grantor's or any other tax from the transaction.

There is still something fishy here, and Cooch and Frey's hesitancy to tackle this issue head-on in the press is quite telling, indeed.

AnonymousIsAWoman said...

To Anonymous 11:21, I didn't ask all those questions because I'm not an attorney nor an investigative journalist, a point I think I've made very clear. I frankly wouldn't have known enough law to have asked the same questions you just did.

Further, this is not my day job. I don't know any lawyer well enough to call him in the evening, after work hours, to ask for the expertise I would have needed. Nor could I spend an entire work day researching the many ramifications you have pointed out. My boss does not pay me to investigate people or write reports on them.

I simply wanted to acknowledge that Ken had called me about it and to put out what he had told me.

Any blogger or journalist who wishes can certainly follow up. However, if it's not your day job and if you can't do it well and fairly - and that would include investigating it thoroughly and then actually picking up the phone and calling Ken with those questions - then don't do it.

I couldn't do it well - at least not to my satisfaction. But I believe somebody accused of something has the right to answer and that their answer should be printed.

If you believe differently, that is your right and I respect it. But do it differently on your own blog.

Anonymous said...

Well if the title of your post had been "Cuccinelli Gives His Version" I'd let it pass, but you - a reputable blogger - titled your piece "When There's No There There" implying that there was nothing to this deal.

Who is the one not doing any research here? If you weren't willing, capable, or able to reach any conclusions then you should write a piece that says that. Instead you went after RK and others saying there's nothing to this story when you apparently weren't fully capable of reaching an informed conclusion.

Who is the one engaging in irresponsible blogging here?

Cuccinelli is a very charming guy - that's why he survives in that otherwise moderate district. In person, he's not the foaming at the mouth conservative he's made out of to be in the papers. It sounds to me like you got spun and don't want to admit it.

Anonymous said...

What a shocker - Ken Cuccinelli says there was nothing inappropriate about that illegal real estate transaction.

Alberto Gonzales also said there was nothing improper about him firing all those U.S. Attorneys.

Are you going to apologize to Gonzales too, AIAW?

Anonymous said...

This could be the most embarassing post on AIAW - ever. "Anynomous" yes. "Independent" - no.

Bullied by Ken Cuccinelli to print a retraction - most definitley.

Sad.

Anonymous said...

You may not have wanted to give it new life, AIAW, but you have.

>However, if it's not your day job and if you can't do it well and fairly- and that would include investigating it thoroughly and then actually picking up the phone and calling Ken with those questions - then don't do it.<

Your words. Bolding is mine. You owe your loyal readers an apology.

AnonymousIsAWoman said...

I may have been charmed by Ken but not bullied. Never made it a secret that on a personal level I like him. But I think he's too conservative for the 37th and does not represent the true wishes of the constituents. And I actually told him that last week when we spoke.

Also, I don't feel what I said was in any way an attack on Lowell or Raising Kaine. Lowell did leg work and has independent sources. I didn't. In retrospect, I should havel linked to Lowell with a minimum of comment and let him own the story since he actually did the legwork on it. And I stated I respect his integrity.

As for an apology, mine is simply that I shouldn't have stepped into something complicated where I had neither expertise nor the inclination to investigate. Already said that.

As I also said, any of you self-proclaimed experts are certainly willing to pick this up and investigate further.

I, however, plan to move on to things I do have expertise in, after the Thanksgiving Holiday. The things that actually made this blog as good as some of you seem to think it is. That is thoughtful analysis of politics, economics, religion and popular trends in society. And I will continue to support and write about the candidates I support and tell you why. Take each post on its individual merit. Or don't come back.