Belden Street property. The earmark was killed in July of that year. The Pelosis increased their financial stake in the property, and the next year Pelosi asked for the earmark again, and this time she succeeded.7 On another occasion she secured $12 million for the beautification of Geary Boulevard in San Francisco, which happens to abut an investment property the Pelosis own on Point Lobos Avenue.
Nancy Pelosi is not the only elected official who earmarked a mass transit project that was in close proximity to real estate holdings and apparently profited handsomely from it. Congresswoman Carolyn Maloney represents parts of Queens and Manhattan, including the Upper East Side 'silk stocking district.' A former member of the New York City Council, Maloney was first elected to Congress in 1992. For many years she was married to an investment banker, Clifton Maloney, until he passed away in 2009.
In 2007, Congresswoman Maloney, together with New York Senators Charles Schumer and Hillary Clinton, secured an earmark of $167 million for a new MTA subway line. In 2009, she helped obtain another $277 million for the project. In 2010, a third earmark, for $197 million, was approved. The long-sought-after Second Avenue subway, running up the East Side of Manhattan, could finally begin construction. It will likely take years to complete, at a cost running well over $10 billion.
Maloney owns a building at 409 East 92nd Street, valued at between $5 million and $25 million. On her personal financial disclosure, she lists it as a 'rental property & residence.' Plans for the new subway line feature a stop that happens to be three blocks away from her building—again, right in the 'sweet spot.'
Congressman Bennie Thompson of Mississippi inserted into the 2010 federal budget an earmark to expand a small regional airport.8 The airport was not in his district. It was not in the state of Mississippi. Indeed, it wasn't even in the South. Thompson's earmark was for $800,000 to upgrade the Napa Valley, California, airport—specifically, for a 'runway 36L glidescope.'
Why would a congressman from Mississippi put in an earmark for an airport dubbed 'Skyport to Wine Country'? Perhaps the answer lies in the fact that Nancy Pelosi had contributed to his rise to the chairmanship of the House Committee on Homeland Security. The Pelosis own a vineyard and home in St. Helena, California, worth between $5 million and $25 million, and another property nearby. They also own a stake in an exclusive resort called Auberge du Soleil in Rutherford, worth between $1 million and $5 million. All of these properties are
Funding for the expansion of the Napa Valley airport by a congressman from Mississippi is not the only earmark that has benefited Pelosi's personal investments. Also in 2008, an earmark was inserted in the federal highway bill to widen and improve an exit ramp on California's historic Highway 101. That might not strike anyone as unusual, except for the fact that the interchange is
So why did legislators do Pelosi a favor? She is the most powerful Democrat in the House. If you want to get something done, it needs to go through her.
The earmark game is bipartisan. Republican Senator Judd Gregg of New Hampshire, whose father, Hugh Gregg, served as governor and was long active in the New Hampshire Republican Party, has spent the bulk of his adult life in political office. Judd was first elected to Congress in 1980, elected governor in 1988, and to the U.S. Senate in 1992. A little more than a decade after joining the Senate, he became chairman of the powerful Budget Committee. In a show of bipartisanship, President Obama tried to nominate Gregg to be his secretary of commerce in 2009. Gregg first accepted, then withdrew, deciding instead to stay in the Senate. He retired in 2010.
Judd Gregg had a reputation as a fiscal conservative, but he was always fond of earmarks. He obtained $266 million in research and development money for the University of New Hampshire, for example, and the school generously named its new technology center Gregg Hall.10
While he served as chairman of the powerful Senate Budget Committee, Gregg earmarked some $66 million in taxpayer money to transform Pease Air Force Base in Portsmouth, New Hampshire, into a business park. He managed to secure $24.8 million for a new federal building there, and at least $24.5 million for New Hampshire National Guard projects at the base, including a new fire and crash rescue station. In addition, he garnered almost $9 million for a new wing headquarters, and $8 million to transform the base from military to civilian use, including buying snow-removal equipment and building a parking lot. For good measure, he was able to pull down $475,000 for structures to shield office buildings at the base from airplane and other noises.
Did I mention that Senator Gregg's brother, Cyrus, happened to be the developer of the air base? Or that Senator Gregg himself had invested between $450,000 and $1 million of his own money in what is now called the Pease International Tradeport? Along the way, the senator has collected between $240,000 and $650,000 on his investment. (Curiously, like Hastert, Gregg did not list all of the real estate addresses on his financial disclosure forms.)11
Before he secured the earmarks, Gregg invested through several partnerships, including 222 International Drive, LLP, and Say Pease, LLC. The former, for the development of a commercial building, was valued at around $11 million.12
When President Obama announced then-Senator Gregg as his choice for commerce secretary in 2009, Gregg was asked about the earmarks and how he profited from them. 'I am absolutely sure that in every way I've complied with the ethics rules of the Senate both literally and in their spirit relative to any investment that I've made anywhere,' he stated to the press. Unfortunately, he is correct—and that, of course, is the problem: this stuff is
Redeveloping a military base using taxpayer money to boost your investment is of course a benefit, personal and financial: Gregg was able to put his thumb on the scale of fair-market reward for his investment. The former senator now works for Goldman Sachs as a consultant, where he provides 'strategic advice' and assists 'in business development initiatives.'14
These kinds of deals are not at all uncommon. Congressman Ken Calvert of California is a Republican member of the powerful Appropriations Committee and was first elected to Congress in 1992. His background is in real estate, and through a real estate firm he partly owns, run by his brother Quint, he is still an active investor.
In 2005, Calvert and a partner paid $550,000 for a 4.3-acre parcel of land just south of March Air Reserve Base in Southern California. Shortly afterward, he secured $1.5 million in taxpayer money to support commercial development around the base. Less than a year after the earmark, Calvert and his partner sold the land (without having made any improvements) for $985,000—a 79% profit. Not bad!
In the early summer of 2005, Calvert's real estate firm brokered a sale involving a property at 20330 Temescal Canyon Road, in Corona, California, which was a few blocks from a proposed interchange for Interstate 15. Calvert then helped secure an earmark to build the interchange. Within six months, the property was sold at a nearly $500,000 profit. Calvert's firm received a commission on both transactions. Good work if you can get it.
Calvert was careful: he sent both of these earmarks to the House Ethics Committee for approval, because he stood to benefit personally from them. The committee, in a letter signed by Congresswoman Stephanie Tubbs Jones and Congressman Alcee Hastings, said the use of taxpayer money was fine because any profits 'resulting from the earmark would be incremental and indirect and would be experienced as a member of a class of landholders.' In other words, Calvert was not the sole beneficiary, and the earmarked funds were not paid directly to him. 15
Congressman David Hobson of Ohio helped obtain federal earmarks to build a freight transfer center at the Columbus airport to help ship goods to and from central Ohio. The trouble is that Hobson co-owned an office building near the project, and his tenants included freight companies such as FedEx that would use the freight center. He'd bought the building in 2001, and over the next seven years secured $30 million in federal transportation money to build the freight terminal, which was part of the conversion of old Rickenbacker Air Force Base outside Columbus. On another occasion, in 2004, Hobson worked to get nearly $2 million in taxpayer money to widen a road near Dayton, which happened to run right in front of a condominium development in which he was an investor. He had bought into the project only one year earlier.
Hobson retired from office in 2008. The House Ethics Committee, at the time chaired by Congresswoman
