Gaps revealed in Sanchez disclosure

California Rep. Linda Sanchez, the top Democrat on the Ethics Committee, failed to report mortgage details and a home-equity line on financial disclosure forms required under congressional rules, raising questions about her role as one of the top lawmakers policing ethics and financial issues for the House.
Sanchez did not reveal a mortgage on a home in Lakewood, Calif., which she has owned since 1999. As part of her financial disclosure reports from 2006 on, Sanchez declared annual rental income on the property between $2,500 and $5,000, but she never disclosed a mortgage on the home. Under House ethics rules, once a member earns income from a property, any liabilities against that property must be reported.

California real estate records also indicate Sanchez, along with her mother, took out a $200,000 mortgage on the property in 1999. Sanchez, who remarried in 2009, later sold the home to a trust she controlled with her then-husband and purchased it back following their divorce.

There is no allegation of impropriety stemming from the inaccurate disclosure forms, but a review of several years of Sanchez’s financial records shows a history of sloppy record-keeping for a member of Congress whose new job on the ethics committee is to review the ethics and financial disclosures of other lawmakers.

Sanchez also has other holes in her financial disclosure forms. She failed to disclose for more than two years a royalty agreement related to a book she co-wrote with her sister, Rep. Loretta Sanchez (D-Calif.), who has never declared the same royalty agreement on any of her disclosure reports. An aide to Linda Sanchez said the California Democrat never received any money from the book.

In addition, Sanchez appeared to violate the terms of her mortgage on a Capitol Hill condo by renting out the unit in 2009. A document Sanchez signed as part of her 2005 mortgage agreement on the condo — purchased from Sen. Barbara Boxer (D-Calif.) — barred her from leasing it to another party. The mortgage documents, along with real estate records and financial disclosure forms filed with the House, were reviewed by POLITICO for this report.

However, on her annual disclosure report filed in 2010 — which covers the previous year — Sanchez acknowledged receiving between $5,000 and $15,000 in rental income from the Washington condo. By renting out the unit, Sanchez was required to declare the mortgage on the property on her annual reports, which she did properly.

But Sanchez failed to report a $34,500 home equity line of credit she took out on the condo. When Sanchez reported she owned the property, she misreported the address.

Sanchez sold the Capitol Hill condo to Sen. Scott Brown (R-Mass.) last year for $290,000, according to public records.

After being contacted by POLITICO on Thursday, a Sanchez spokesman said the California Democrat would file an amended disclosure report to correct the errors.

The missing information could become a sensitive issue for Sanchez and House Minority Leader Nancy Pelosi (D-Calif.), who appointed her to the Ethics Committee post last month.

Pelosi’s office declined to comment on the omissions, referring questions on the issue to Sanchez’s office.

Adam Hudson, a Sanchez spokesman, called the errors “relatively small, inadvertent omissions” and said the congresswoman would file amended disclosure reports to fix the problems.

“It is very common for members of Congress to amend their FDs [financial disclosures], especially for inadvertent oversights such as these, and Congresswoman Sanchez will amend her FDs promptly,” Hudson said in a statement to POLITICO.

Hudson added: “In addition, although a filer can amend her FDs by simply sending the revised form or page without explanation, Congresswoman Sanchez will amend by letter, providing more detail than is required.”

Sanchez was first elected in 2002, joining her sister on Capitol Hill, and they were the first sisters to serve together in Congress. Loretta was elected to the House in 1996.

After serving on the Judiciary Committee for the past eight years, including playing a high-profile role in the congressional probe of the 2006 U.S. attorney firings, Sanchez was recently tapped by Pelosi to replace Rep. Zoe Lofgren (D-Calif.) as the top Democrat on Ethics.

But Sanchez’s appointment to the committee was troubling to ethics watchdogs. POLITICO reported that Sanchez’s chief of staff, Adam Brand, is the son of Stan Brand, lead attorney in the ongoing ethics investigation of Rep. Maxine Waters (D-Calif.). The Waters case is the most high-profile matter currently before the committee.

Brand also represented Loretta Sanchez in an ethics case involving both women. Linda Sanchez placed three staffers from her sister’s office on her payroll following an embezzlement scandal involving an aide to Loretta in 2006. The Ethics Committee reviewed the matter, but neither sister was charged with any wrongdoing.

Linda Sanchez responded to the POLITICO report by declaring that Adam Brand will have nothing to do with Ethics Committee business.

The questions over the accuracy of Sanchez’s annual financial forms — required of all members, senators and highest-paid congressional staffers — also come as the Ethics Committee has very slowly begun to prepare for the 112th Congress.

Rep. Jo Bonner (R-Ala.), chairman of the secretive panel, told POLITICO the Ethics Committee held its first organizational meeting last week.

Bonner also submitted the committee’s rules in the Congressional Record, as required under House rules.

But Bonner declined to answer any other questions, including whether the committee will continue its investigation into the Waters case. The Ethics Committee must vote to extend the probe into this Congress, and it is unclear whether there has been any agreement to do so.

Waters was charged last June with improperly intervening during the 2008 U.S. financial crisis on behalf of a minority-owned bank in which her husband owned more than $350,000 in stock. Waters vehemently denied the allegations and sought an ethics trial to contest the charges. That trial was postponed in November after more allegedly damaging information against Waters was uncovered, although sources close to the congresswoman said the delay showed the weakness in the Ethics Committee’s charges against her.

Last December, a behind-the-scenes partisan battle over the Waters case broke out inside the Ethics Committee over two investigators, Cindy Morgan Kim and Stacey Sovereign, involved in the probe. Lofgren, then-chairwoman of the committee, tried to fire the two women, but Republicans objected and the pair was placed on “indefinite administrative leave.” Kim and Sovereign were on the Ethics Committee’s payroll as of the end of January, according to the House payroll office.

Sanchez will play a critical role in deciding whether Kim or Sovereign will be retained by the committee, as well as the hiring of a new staff director for the panel. And Sanchez — or at least one other Democrat on the committee — will have to agree to continue the Waters probe in this Congress. Sanchez’s district is located next to Waters’s in Southern California.

Sanchez married James M. Sullivan in 2009. Sullivan is a former Democratic congressional candidate turned registered lobbyist and political consultant.

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