Tag Archives: disclosure

Haslam Sells Stake in Loan Guarantee (or his blind trust did)

Gov. Bill Haslam has sold his stake in a multimillion-dollar loan guarantee to a prominent Knoxville developer, reports the Tennessean. The sale came three days after an earlier story on the original transactiion, though the buyer says it had been contemplated for some time.
In 2009, while he was mayor of Knoxville, Haslam personally guaranteed a loan of up to $5.5 million to local developer Budd Cullom. The arrangement was never plainly listed on Haslam’s annual ethics disclosure forms and the governor said it was not required.
…Haslam also amended his 2009 ethics form last week to reflect the multimillion-dollar sale of his stake in a national pawnshop chain. The transaction was omitted on his original form filed with the state Ethics Commission. One of Haslam’s first acts as governor was to roll back disclosure requirements, so it’s unknown how much he earned from selling his stock in EZ Corp, a Texas-based company that owned two pawnshops in Knoxville.
Haslam spokesman Dave Smith said the governor could not comment on the loan transaction because his investments are managed by a blind trust.
“Also, we’ve said before he was never very involved in day-to-day management even before the blind trust was established,” Smith said.
According to a financial statement filed with the secretary of state, Haslam assigned the loan guarantee on June 29 to Strategic Equity Partners. The Knoxville firm is owned by Raja Jubran, who said he has maintained a personal and social relationship with Haslam for 12 years. The amount Jubran paid for the assignment was not disclosed.
Cullom said he and Jubran had discussed the sale of the guarantee earlier this year and he had assented.
Jubran indicated the timing of the transaction three days after the initial report was a coincidence. Jubran said he had talked with Haslam about purchasing the loan guarantee in November.
According to Jubran, he dealt with the blind trust once Haslam was elected governor.
“I have also done business with him before he was governor,” Jubran said. “Last November I discussed with him purchasing this guarantee from him. Since he became governor, I dealt with his blind trust and it took some time to close the transaction.”
Jubran and his wife combined to contribute $10,000 to Haslam’s gubernatorial campaign. Other members of the Jubran family donated an additional $15,000.

Lobbying the Legislature Costs More Than Operating the Legislature (and related stories)

Apparently, more money is spent on trying to influence the Tennessee legislature than taxpayers spend to operate the institution.
That is the focal point in a series of stories on Tennessee lobbying that ran in Sunday’s News Sentinel. Steve Ahillen took all the reports on lobbyist compensation and lobbying related expenditures filed with the Tennessee Ethics Commission since 2006, the year it was created, and put together a database. The information he compiled was provided to yours truly, who cobbled together the stories.
Here’s a breakdown of the articles and related stuff:
_The centerpiece story reports that somewhere between $88.9 million and $232.1 million has been spent on lobbying since the reporting law began and, given all the limitations on what is reported, it’s probably a lot closer to the upper end of that figure.
That’s an average of $46.5 million per year. The total budget for all operations of the Legislature this year is $39.1 million.
Top spender on lobbying is AT&T and reports indicate a score or more of other companies and associations have lobbying expenditures in the million-dollar range. A list of the top spenders is HERE.
_Disclosed wining and dining of lawmakers by lobbyist employers totals about $2.4 million during the period, averaging close to $500,000 per year. This year set a new record of more than $558,000. (That $2.4 million on “in-state events,” by the way, is not included in the above totals of lobbyist compensation and related expenditures and is handled separately by the Tennessee Ethics Commission in its reporting.)
That’s probably a pittance compared to the old days, before restrictions were placed on lobbyist gifts to legislators in the form of meals, travel and other entertainment. Here’s an excerpt involving Tom Hensley, dean of the state’s lobbying corps.
Hensley said that, in the old days, “the entertainment was fun,” but the change in rules has really made no difference in the effectiveness of lobbyists or how they make their arguments for or against pending bills.
He often still goes to dinner or out for drinks with legislators, Hensley said, but nowadays each legislator simply pays his or her own tab while he pays only for his own food and drink.
In the old days, Hensley was nicknamed “the Golden Goose,” a tribute to his largess. In legislative lingo of the time, a “goose” was the person who picked up the tab at restaurants and bars.
Older legislators and lobbyists still call him “goose” on occasion. But the “golden” is rarely used with lawmakers paying their own way — except at the restricted events.
The new law also requires lobbyists to attend an ethics training class, a requirement Hensley said hasn’t made any difference in things either.
“You have to go to school to be ethical?? I don’t think so. If I wasn’t ethical, I wouldn’t have been here for 50 years.”

There’s a searchable News Sentinel database on wining and dining events. The Ethics Commission also keeps a listing of all events, by year, in one of the best, most easily readable features of its website, HERE.
_Because of the way our state law is written and interpreted, many people advocating for the passage or failure of legislation can, and do, avoid being legally labeled as lobbyists. That, of course, means they avoid the disclosure requirements.
As for interpretation, the leading case is a 2010 decision by the ethics commission in dismissing – after two years of secret investigating and convoluted maneuvering — a complaint filed against a Nashville public relations firm that ran a campaign against wine-in-grocery-stores legislation.
The opinion is an interesting read for state government junkies and, as best I can tell, has never been made available before on the Internet. The link is HERE.
One curiosity of the opinion — In contrast to campaign finance law where corporations are treated as individuals –is that the commission says a corporation or other such entity cannot be a lobbyist – only real individual people.
“A majority of the Commission holds that under the Act, an entity cannot be a lobbyist and that only an individual can be a lobbyist and for this reason Seigenthaler was not lobbying in performing the services described in the complaint,” the opinion states.
Twenty-five other staes require disclosure of specifics on payments to individual lobbyists. The National Center for Money in State Politics recently did a roundup of all 50 state lobbying laws that’s cited in the article.
_A rundown on the types of lobbyists, who may be divided loosely into three categories – the contract lobbyists, the in-house lobbyists and the policy lobbyists. Plus thumbnail sketches on a few individual lobbyists in each category.

Haslam Disclosures Fall Short on $5.5M Loan, Pawn Shop Sale

Gov. Bill Haslam personally guaranteed a loan for up to $5.5 million while he was mayor of Knoxville to a prominent local developer, and did not plainly disclose the arrangement on his ethics disclosure forms, according to The Tennessean’s Nat Rau.
Haslam, who rolled back disclosure requirements for top state officials shortly after taking office, also did not disclose the sale of his multimillion-dollar stake in a pawnshop chain that had two stores operating in Knoxville
Haslam promised last week to amend his ethics form to reflect the sale of the stock, but he said he attempted to abide by the state’s disclosure requirements in both instances. The governor said he has never used his elected office to increase his personal wealth.
According to the governor, the loan arrangement with Knoxville developer Budd Cullom was listed on his 2010 disclosure form as income from Holrob Inc., which is the name of a real estate company that acted as a co-guarantor.
….Haslam said he believes the broader question is whether current ethics requirements properly reveal a public official’s investments. In the case of the loan, Haslam said he was repaid through Holrob, which he disclosed as a source of income on his 2010 form, though the public would never know about the arrangement with the developer. He pointed out that the loan was secured with properties outside of Knoxville.
“I’m really doing the thing the state asks us to do,” Haslam told The Tennessean. “It is a fair question. My response as a voter would be, it’s really why you’ve got to elect the right people, because there’s no way in those forms that you can ever really trace what somebody owns.”
Haslam said he guaranteed the loan to Cullom in 2008, when the economy was sinking and traditional credit markets were difficult to access.
Cullom is a managing partner in the firm Northshore Market Investors, which is in the midst of a $180 million commercial real estate project called Northshore Town Center in west Knoxville.
On two separate occasions, Cullom represented the development team when it brought a proposed zoning change before the city council, over which Haslam presided. Though he did not vote, Haslam did not recuse himself from the meetings when Cullom’s zoning proposal was considered.
…Haslam said his sale of stock in a pawnshop chain was not disclosed on his 2009 forms because of the timing of the transaction, which took place Dec. 31, 2008. At the time accountants filled out Haslam’s disclosure forms in January 2009, he no longer owned stock in the company, he said. However, he said, the sale had not yet been processed and therefore the accountants did not yet have a record of Haslam receiving income.
Haslam said he would amend his disclosure form to reflect the sale of the stock. On previous disclosure forms, Haslam listed his investment in Value Financial Services, which was purchased in 2008 by Texas-based EZ Corp.
The governor’s brother, James Haslam, also owned stock in Value and previously served as a member of the company’s board of directors.
Haslam’s investments are steered by money managers, he said, adding that he hasn’t personally picked a stock since he was in his 20s

The Four Freshmen Disclose Personal Finances

Personal financial disclosure filings from congressmen were due Wednesday – the first such annual filing by Tennessee’s four freshmen as members the U.S. House of Representatives (though they had a filing as candidates). Here’s a rundown on some of the reporting.
Black Reports $16.5 Million in Assets
First-term Republican Rep. Diane Black is the wealthiest member of Tennessee’s congressional delegation, according to the Daily News Journal after a review of her personal financial disclosure form.
(Congress members) must list assets worth more than $1,000, excluding private homes, but values are reported in such wide ranges that it is impossible to determine exactly how much a member of Congress is worth. Black and her husband, David, listed assets totaling at least $16.5 million.
The Blacks’ largest asset is their interest in Aegis Sciences Corp., the Nashville forensic chemical and drug-testing laboratory that David Black founded. They sold between $25 million and $50 million in company assets in 2010 and bought between $5 million and $25 million.
That sale explains why Black’s assets appear to have dropped since 2009, said her spokeswoman, Stephanie Genco. Black’s 2009 disclosure statement showed assets of at least $33.8 million and placed her among the wealthiest members of Congress.

Fincher Clarifies Farm Finances
Freshman Rep. Stephen Fincher, who was elected despite some controversy over his personal finances, has clarified the value of his family farm and his debts, reports The Tennessean.
Fincher’s 2010 personal financial disclosure form, released Wednesday, lists Stephen and Lynn Fincher Farms as the Frog Jump, Tenn., Republican’s only asset, worth between $500,000 and $1 million. Farm income amounted to $103,882 in 2010, according to the form.
His previous statement, in 2009, reported no assets and about $60,000 in income, raising questions as to how the farmer and gospel singer was able to lend his campaign $250,000 last year. That led to a Federal Election Commission investigation, which is pending.
Fincher’s new report also listed between $1.1 million and $2.5 million in liabilities, mostly for loans on farm equipment. His 2009 report listed no liabilities. Fincher’s campaign lawyer, Eliot Berke, called the omissions on the 2009 report an “honest misunderstanding” of the reporting requirements for businesses. He said Fincher submitted amendments to that report when he filed his 2010 statement.

Fleishmann Makes Millionaire’s Club
Despite spending nearly $700,000 of his own money to help win his congressional race last year, Republican U.S. Rep. Chuck Fleischmann, of Chattanooga, still had enough assets to qualify him for Congress’ millionaires’ club, reports the Chattanooga TFP.
In personal financial disclosures for 2010…the 3rd Congressional District freshman lawmaker reported assets of between $1.66 million to $3.41 million. He reported no liabilities.
Fleischmann, an attorney, disclosed holdings including an interest in his and his wife’s law firm, Fleischmann & Fleischmann. He valued his interest at between $50,001 to $100,000. He also reported $163,144 last year in income from the law firm. As a congressman, he now makes $174,000 annually but cannot continue to practice law. Spouses are required to list income sources but not amounts.
…Among the assets he listed was between $500,001 to $1 million invested with “Wells Fargo Investments.” His annual disclosure listed income of between $15,001 to $50,000 in dividends, interest and capital gains from the sale of part of the investment, which was unspecified.
He reported total unearned income such as interest, dividends and sales for all holdings at between $28,705 to $83,500.

DesJarlais Less Than $1 Million in Assets
U.S. Rep. Scott DesJarlais, of Jasper, reported assets of between $403,009 to $945,000 last year. (From the same Action Andy’s report in the Chattanooga TFP covering Fleishmann.)
The 4th Congressional District lawmaker, who is a physician, says in his disclosure that he earned $148,905 from his practice and had unearned income such as interest as well dividends and other income of between $5,002 to $15,200.
He valued his medical practice at between $100,001 to $250,000. He owns a commercial lot in South Pittsburg, Tenn., valued at between $50,000 to $100,000. He had two Pacific Life annuities valued at between $50,000 to $100,000 each.
DesJarlais reported selling two stock funds with Morgan Stanley during last year’s GOP primary at a loss.
His liabilities were pegged at $95,004 to $250,000. Among other debts, he owes between $15,001 to $50,000 on his Bank of America Mastercard. He has a business line of credit at $15,001 to $50,000 with First Southern Bank of Scottsboro, Ala.
DesJarlais spokesman Robert Jameson did not respond to request for information about the congressman’s net worth nor whether he had sold his doctor’s practice.

Database Makes It Easier to Access Haslam Cabinet Financial Info

The reports on financial holdings of Gov. Bill Haslam’s 26 top-ranking members have been assembled in one place by TNReport.
The database includes appendices that are not available on the Tennessee Ethics Commission website the official state home for the reports,. And it’s a lot easier to use.
The database doesn’t yet include Education Commissioner Kevin Huffman or head of the Department of Intellectual Disabilities Jim Henry, who took office just days ago. But TNReport says they’ll be added once the reports are filed.