Gephardt Dumps Ownership of Vacation Home: Transfers Half-Share to Co-Owners as GOP Eyes Finance, Tax Questions
Archibald, George, The Washington Times (Washington, DC)
House Minority Leader Richard A. Gephardt abruptly transferred his interest in a $900,000 seaside home at North Carolina's Outer Banks in the midst of a Republican ethics complaint about questionable tax breaks and bank financing discrepancies.
Laura Nichols, the Missouri Democrat's spokeswoman, confirmed yesterday that Mr. Gephardt and his wife, Jane, transferred their share in the three-story oceanfront home this month to a Bethesda couple who co-own the vacation getaway at exclusive Corolla Light resort near Duck, N.C.
Miss Nichols gave no details of the transfer and did not say whether the co-owners - insurance broker Jeffrey B. Conley and his wife, Michelle - had bought out the Gephardts. "Actually, it's not that clear-cut yet," she said. She confirmed the Gephardts were selling their share in the home but referred questions to Mr. Gephardt's attorney, Robert F. Bauer, of the law firm Perkins Coie. Mr. Bauer said he could not discuss the matter.
Mr. Conley was in his office but unavailable to take a reporter's call yesterday afternoon, his secretary said. He did not return the call.
The transfer occurred after Rep. Jennifer Dunn, Washington Republican, filed a complaint with the House ethics committee about discrepancies in Mr. Gephardt's financial-disclosure filings and bank records that raised questions about his avoidance of federal capital gains taxes on the real estate deal.
The House Democratic leader escaped $17,680 in capital-gains taxes on his profit from the 1991 sale of a seaside condominium in Duck by telling the Internal Revenue Service it was a rental investment property being sold in exchange for other income-producing property at Corolla, real estate filings show.
But in obtaining more favorable bank financing than they could have obtained to build a rental house on the Corolla lot, the Gephardts and Conleys pledged on mortgage deeds that the property would be used only as a second home, which precluded rental to others, according to bank officials.
Mortgage bankers said Mr. Gephardt's agreement not to rent the house was an apparent misrepresentation to obtain more favorable loan terms.
Those claims appear to put the Missouri Democrat in violation of federal tax and banking statutes and House financial-disclosure rules. The conflicting claims are under review by the House ethics panel, formally known as the Committee on Standards of Official Conduct. …