August 14, 2011
A Businessman in Congress Helps His District and Himself
VISTA, Calif. — Here on the third floor of a gleaming office building overlooking a golf course in the rugged foothills north of San Diego, Darrell Issa, the entrepreneur, oversees the hub of a growing financial empire worth hundreds of millions of dollars.
Just a few steps down the hall, Representative Darrell Issa, the powerful Republican congressman, runs the local district office where his constituents come for help.
The proximity of the two offices reflects Mr. Issa’s dual careers, a meshing of public and private interests rarely seen in government.
Most wealthy members of Congress push their financial activities to the side, with many even placing them in blind trusts to avoid appearances of conflicts of interest. But Mr. Issa (pronounced EYE-suh), one of Washington’s richest lawmakers, may be alone in the hands-on role he has played in overseeing a remarkable array of outside business interests since his election in 2000.
Even as he has built a reputation as a forceful Congressional advocate for business, Mr. Issa has bought up office buildings, split a holding company into separate multimillion-dollar businesses, started an insurance company, traded hundreds of millions of dollars in securities, invested in overseas funds, retained an interest in his auto-alarm company and built up a family foundation.
As his private wealth and public power have grown, so too has the overlap between his private and business lives, with at least some of the congressman’s government actions helping to make a rich man even richer and raising the potential for conflicts.
He has secured millions of dollars in Congressional earmarks for road work and public works projects that promise improved traffic and other benefits to the many commercial properties he owns here north of San Diego. In one case, more than $800,000 in earmarks he arranged will help widen a busy thoroughfare in front of a medical plaza he bought for $16.3 million.
His constituents cheer the prospect of easing traffic. At the same time, the value of the medical complex and other properties has soared, at least in part because of the government-sponsored road work.
But beyond specific actions that appear to have clearly benefited his businesses, Mr. Issa’s interests are so varied that some of the biggest issues making their way through Congress affect him in some way.
After the forced sale of Merrill Lynch in 2008, for instance, he publicly attacked the Treasury Department’s handling of the deal without mentioning that Merrill had handled hundreds of millions of dollars in investments for him and lent him many millions more.
And in an era when the auto industry’s future has been a big theme of public policy, Mr. Issa has been outspoken on regulatory issues affecting car companies, while maintaining deep ties to the industry through the auto electronics company he founded, DEI Holdings.
He has a seat on its board, and his nonprofit family foundation, which seeks to encourage values like “hard work and selfless philanthropy,” has earned millions from stock in DEI, which bears his initials. Mr. Issa’s fortune, in fact, was built on his car alarm company, and to this day it is his deep voice on Viper alarms that warns potential burglars to “please step away from the car.”
In recent months, The New York Times has examined how some lawmakers have championed particular industries, pushing measures to protect and enrich supporters. In Mr. Issa’s case, it is sometimes difficult to separate the business of Congress from the business of Darrell Issa.
Mr. Issa, 57, did not respond to repeated written requests in the last three weeks to discuss his outside interests. In the past, he has said his business background has made him a better lawmaker. In at least one Congressional matter, however, he recused himself after being advised of a potential conflict.
But perhaps his clearest statement on the issue came last year amid Toyota’s recalls of millions of automobiles with dangerous acceleration problems. Then, Mr. Issa brushed aside suggestions that his electronics company’s role as a major supplier of alarms to Toyota made him go easy on the automaker as he led an investigation into the recalls.
“If anything,” the congressman said, “Toyota probably got a harder time by having an automobile supplier sitting up there on the dais saying ‘Hold it, I’m not letting you off the hook now.’ “
A Powerful Gadfly
As the influential chairman of the House Oversight and Government Reform Committee, Mr. Issa has proven both a reliable friend to business and a constant annoyance to an Obama administration that he sees as anti-business. Even before formally taking over the committee in December, he made headlines by asking 150 businesses and trade groups to identify regulations that they considered overly burdensome, and he has issued numerous subpoenas on his own authority in investigating programs he believes are harmful.
His pro-business policies usually align closely with those of the firms he has worked with in his wide-ranging business career both before and after he joined Congress. Congress has historically had more than its share of millionaires from storied American fortunes, from the Rockefellers to the Kennedys. But typically, those members lower their business profiles considerably and limit their active dealings to avoid potential conflicts of interest and the political repercussions that might follow from private business decisions.
Senator John D. Rockfeller IV, Democrat of West Virginia, for one, has much of his money in blind trusts, run by outside trustees. And Senator John Kerry, Democrat of Massachusetts, has a number of family and marital trusts for money generated largely through the fortune of his wife, Teresa Heinz Kerry.
Mr. Issa, who grew up in a hardscrabble neighborhood near Cleveland and now owns homes north of San Diego and in Washington, has assets totaling as much as $725 million, outstripping by some measures even Mr. Rockefeller and Mr. Kerry. (Because lawmakers must disclose their assets only within broad dollar ranges, public reports do not allow for precise figures.)
According to his filings, Mr. Issa’s minimum wealth doubled in the last year, and he appears flush with cash: he bought dozens of mutual funds in 2010 worth as much as $80 million, managed by Wall Street powerhouses, without selling off any securities.
Mr. Issa’s transactions cover many pages in his annual disclosure reports, as he has traded huge volumes of stock funds and municipal bonds on a weekly or even daily basis. In 2008 alone, he traded some 360 securities totaling between $650 million and $2 billion.
Those investments have often produced sharp profits.
In one 2008 sale, months before the stock market crashed, his family foundation earned $357,000 on an initial investment of less than $19,000 — a return of nearly 1,900 percent in just seven months, the foundation reported to the Internal Revenue Service. It reported acquiring the security, then known as AIM International Small Company Fund, at a cost basis representing a tiny fraction of the market value.
In addition, Mr. Issa sold at least $1 million in personal holdings in the same fund that year but was not required to report what he paid.
Invesco, as the AIM fund’s manager is now known, told The Times it did not provide Mr. Issa’s foundation the steep discount. That suggests the foundation may have acquired the shares from a third-party broker.
A former government official said House ethics committee officials quietly inquired into Mr. Issa’s business interests last year because of possible conflicts in his electronics connections.
While the exact focus of those inquiries is not known, Mr. Issa’s ties to the industry are well established: in each of his first five years in Congress, he reported accepting free trips to Las Vegas from the Consumer Electronics Association for its annual convention. Such corporate-sponsored trips were allowed at the time, but Congressional rules have tightened since.
The inquiries did not produce sufficient evidence of ethics problems to move forward, the former official said.
Standards for determining a financial conflict are murky. House members are generally restricted from using their positions “for personal gain” or on matters in which they have a direct financial interest. But a 2009 ethics committee ruling added to the ambiguity, finding there is no prohibition on the mere “appearance” of a conflict.
There are also restrictions on taking salaries from certain businesses. While Mr. Issa’s wife draws a salary at their property management company, Mr. Issa — the firm’s president — does not.
A Balancing Act
Lawmakers must also avoid outside work that can pose a “time conflict,” and “detract from a member’s full time and attention to his official duties,” the guidelines say. By all accounts, these rules were designed to promote the notion of a full-time legislature.
Mr. Issa’s outside interests certainly appear to have kept him busy. Associates describe him as actively involved in business decisions, particularly in his auto electronics firm. His office did not discuss how he balances the time demands of Congress and his outside businesses. His management company, Greene Properties, which he runs with his wife from the office down the hall from his Congressional office in Vista, has acquired more than two dozen properties in the last five years, valued at up to a total of $80 million.
In nearby Carlsbad, a new office complex he owns advertises for prospective tenants. A few miles away, a Hooters restaurant rents space in another building he owns. Nearby, his medical complex bustles with doctors and patients and has few vacancies.
“Issa’s a smart businessman,” said Dean Tilton, a local real estate broker. “We haven’t seen real estate prices this low in 20 years, and he’s taking advantage of that.”
The hard-hit San Diego area has also benefited from federal money Mr. Issa brought through earmarks, which allow lawmakers to award money for their own pet projects. Indeed, more than two dozen of Mr. Issa’s properties are within five miles of projects he has personally earmarked for road work, sanitation and other improvements, an analysis by The Times shows.
His medical complex, for instance, sits directly along West Vista Way, a busy corridor scheduled for widening with $815,000 in funds Mr. Issa earmarked. The congressman bought the complex in 2008, soon after securing the first of two earmarks for the two-mile project and unsuccessfully seeking millions more. The assessor’s office now values the complex at $16 million, a 60 percent appreciation.
Mr. Issa owns a number of commercial properties near the planned $171 million expansion of State Route 76. The project, intended to ease traffic for tens of thousands of commuters, was helped by $245,000 in his earmarks.
A regional transportation official said the earmarks supplemented state financing to move the projects along.
Local leaders say they are just grateful for the money, regardless of any suggestions locally in San Diego that Mr. Issa stands to benefit.
“I don’t really blame the guy,” said John Aguilera, a Vista city councilman. “As a politician, that’s his job to bring a slice of the pie back home, and as a businessman, he’s going to invest in the areas that he champions.”
Some ethics experts wonder, however, whether Mr. Issa’s business interests invite problems.
“The idea is you’re supposed to be a full-time congressman,” said Robert M. Stern, who runs the nonprofit Center for Governmental Studies in California. “There may not be a direct conflict of interest, but it creates an appearance that he is trying to influence a policy on issues where he has an investment.”
In 2009, as earmarks became a damaging symbol of Congressional abuse, Mr. Issa joined other lawmakers in pledging to discontinue them. And in recent weeks, he has attacked “the culture of government overspending” in pushing for deep cuts in the national debt.
Mr. Issa’s dual roles reach beyond earmarks.
At a House hearing in 2008 on a much-debated proposal to merge the satellite radio companies Sirius and XM, despite objections on competitive grounds, Mr. Issa praised the “viable combined market” the deal would create as he questioned Sirius’s chief executive and talked of opportunities for expansion.
What Mr. Issa did not mention was that his electronics firm was then in a lucrative partnership with Sirius to distribute its audio products.
While Mr. Issa sold off his controlling interest in DEI soon after he was elected, he remains a board member with a half-million shares in the firm held by his family trust. His management firm also receives $2 million a year for leasing DEI its Vista plant.
DEI’s partnership with Sirius, which continued after the merger, caused friction with competitors. In a lawsuit settled out of court, U.S. Electronics accused Sirius and DEI of freezing it out of the market through anticompetitive practices that relied on “a web of deception, threats and lies” aimed at “the enrichment of certain of its officers and directors.”
When a watchdog group, the Center for Public Integrity, asked Mr. Issa about his role in the merger, his office said the congressman’s participation in the House hearing posed no conflict because his founding of DEI was “public knowledge.” But after advice from House ethics lawyers, Mr. Issa avoided any votes on the issue afterward.
With its brand-name audio and electronics products, DEI caught the eye of an equity company, Charlesbank Capital, which bought the company in June for $305 million, or $4.45 a share — nearly three times the presale price. The premium promises a payday of at least $2 million for Mr. Issa’s foundation, which has already earned more than $10 million from sales of DEI stock. (Mr. Issa is now a defendant in a lawsuit brought by DEI shareholders; the suit claims the deal was structured to give him and other directors a “windfall not shared by other stockholders.”)
Ties to Merrill Lynch
The lines between Mr. Issa’s many interests have also become entangled in his frequent criticism of regulators and his frequent defense of Wall Street. At a series of hearings in 2009, Mr. Issa accused Treasury officials of a “cover-up” of their role in Bank of America’s $50 billion purchase of Merrill Lynch months earlier. Most pointedly, he accused Ben S. Bernanke, chairman of the Federal Reserve, of bullying Bank of America “behind closed doors” into buying Merrill Lynch at bargain rates and then lying about it.
“I for one,” Mr. Issa told the Fed chairman, “am looking at Main Street America, the stockholders who in some cases got less than they would have gotten through other means. This includes Chrysler, General Motors and, of course, Bank of America and Merrill Lynch.”
Mr. Issa did not mention his own extensive links to Merrill Lynch.
In a television interview days later, however, he said: “I bank at Merrill Lynch. I’m very well aware that every broker there, all the people who were stockholders, were furious that they were in fact being fire-saled to them.”
And Mr. Issa is no ordinary Merrill customer.
His transactions there have totaled more than a billion dollars in the last decade, records show. In the aftermath of the firm’s acquisition in September 2008, in fact, he bought and sold at least $206 million in Merrill Lynch mutual funds in the next 15 days, records show.
His ties to the bank deepened last year, records show, as Merrill Lynch gave him two “personal notes” for lines of credit worth at least $75 million.
Likewise, Mr. Issa has aggressively defended Goldman Sachs, another Wall Street giant.
When the Securities and Exchange Commission brought a major lawsuit charging Goldman with fraud last year, Mr. Issa fired back by opening an investigation. The timing of the lawsuit, he said, smacked of a “partisan political agenda” meant to help President Obama and bolster a bill overhauling financial regulations.
His charge drew nationwide attention, putting regulators on the defensive, but the S.E.C. inspector general later found “no evidence” of political meddling.
Mr. Issa came to Goldman’s defense again last month in a letter to regulators complaining about restrictions on financial firms. Broker dealers “such as Goldman Sachs” faced “a substantial reduction in leverage” because of excessive capital requirements, he wrote.
As with Merrill Lynch, Mr. Issa is keenly interested in Goldman’s performance.
A few weeks before opening his inquiry into the Goldman lawsuit, in fact, he bought another large batch of shares in one of the firm’s high-yield mutual funds, records show. By the end of the year, his stake in Goldman’s fund was worth as much as $25 million.
Barclay Walsh contributed research.
This article has been revised to reflect the following correction:
Correction: August 16, 2011
An article on Monday about the business empire of Representative Darrell Issa, Republican of California, misstated the worth of the companies involved in his splitting up of a holding company. The split entailed separate multimillion-dollar companies, not multibillion-dollar ones.
Correction: August 26, 2011
An article on Aug. 15 about Representative Darrell Issa’s business dealings, using erroneous information that Mr. Issa’s family foundation filed with the Internal Revenue Service, referred incorrectly to his sale of an AIM mutual fund in 2008. A spokesman for the California Republican now says that the I.R.S. filing is “an incorrect document.” The spokesman, Frederick R. Hill, said that based on Mr. Issa’s private brokerage account records, which he made public with redactions, the purchase of the mutual fund resulted in a $125,000 loss, not a $357,000 gain.
And the article, using incorrect information from the San Diego county assessor’s office, misstated the purchase price for a medical office plaza Mr. Issa’s company bought in Vista, Calif., in 2008. It cost $16.3 million, the assessor’s office now says — not $10.3 million — because the assessor mistakenly omitted in public records a $6 million loan Mr. Issa’s company assumed in the acquisition. Therefore the value of the property remained essentially unchanged, and did not rise 60 percent after Mr. Issa secured federal funding to widen a road alongside the plaza.
NYT’s Issa story under scrutiny
By: Jake Sherman and Keach Hagey
August 19, 2011 09:56 AM EDT
New York Times reporter Eric Lichtblau opened his Monday front page story on the overlap between Rep. Darrell Issa’s business and governmental work with a compelling scene:
“Here on the third floor of a gleaming office building overlooking a golf course in the rugged foothills north of San Diego, Darrell Issa, the entrepreneur, oversees the hub of a growing financial empire worth hundreds of millions of dollars.”
But here’s the problem: Lichtblau, a Pulitzer Prize winner, says he never saw that exact view of Shadowridge Country Club — though he did visit the third floor of the building. And Issa’s office says the course cannot be seen from anywhere in the building.
That’s only a minor point in a story that Issa, the chair of the House Oversight and Government Reform committee, is saying is riddled with inaccuracies. In the days since the story ran, Issa has been on a crusade against the story, which put Issa’s business and political life under a tough spotlight.
Issa claims that The Times asserted a building he bought went up in value, when it did not and the story said Issa went easy on Toyota during congressional inquiries because a company he founded was a supplier to them, when in fact Issa says his Directed Electronics corporation does not have a relationship with Toyota. Issa’s camp also says the Times’ assertion that his charitable foundation reaped a windfall from a financial holding is false, as he actually lost money on the investment.
The Times is standing by Lichtblau and the story. The paper is not going to issue the front-page retraction that Issa’s camp demanded Friday morning, though the paper did issue a correction on the story on Tuesday on a separate matter.
Dean Baquet, the Times’ D.C. bureau chief who is becoming a top editor in New York this fall, said he is looking at Issa’s office’s complaints.
“I think if you look carefully at Mr. Issa’s complaints, and the story, you will see that there is nothing that gets to the heart of it,” Baquet said. “Happy to consider any mistakes they point out, and we are looking at those. But I’m not seeing a need for any sort of retraction.”
He also argued that Lichtblau’s lede was not misleading.
“I don’t think it implied — at least to my mind — that Issa’s office overlooked the golf course,” he said. “I think it is trying to give a sense that this is a building in a cool area. That’s the way I always read it. Otherwise it really would have said his office overlooked the golf course. That would have been even cooler to say.”
He believes the pushback over the golf course view is a distraction from the story’s main point.
“It feels to me, to be frank, that the discussion of a very sophisticated and nuanced story has been shifted to what the story did not say, rather than what it did say,” he said. “What it did say is that Mr. Issa is doing something rare among members of Congress by actively leading a business empire and that this raises questions that are rarely confronted. I think that is a very, very legitimate issue to explore in the pages of the paper.”
Lichtblau, who did visit the hall of the third floor, told POLITICO he didn’t see the golf course from any of the windows of that floor. He said he stood at Shadowridge Country Club, about a quarter mile to the southwest of the building, and could see the building from there.
He also said a brochure for the building’s lessor bragged about its golf course views. Issa’s office said it does not know about any advertisement describing such views. A posting on the lessor’s website for the building boasts patios “with direct views to golf driving range.”
Lichtblau said the “golf course was some color, but the point of the lede was, symbolically, what it said to have his business office literally next door to his congressional office.”
Issa’s communications director Frederick Hill wrote in a memo to reporters that Lichtblau’s reporting that Issa’s congressional and corporate offices overlook a golf course is untrue — and they included a video. Hill also says that Lichtblau declined to give Issa’s staff his editor’s contact information.
In the story, Lichtblau said DEI was a “major supplier” of Toyota. Issa’s office denies in an online statement that DEI was a supplier at all.
In a statement Friday evening, Toyota spokesman Carly Schaffner said “DEI Holdings is not a direct supplier of Toyota, however, it is possible that Toyota dealers procure their products. As independent business owners, Toyota dealers make available to their customers a variety of aftermarket products to enhance their automotive ownership experience.”
Lichtblau said the financial information that Issa’s office is now disputing was initially provided to the Internal Revenue Service and other authorities by Issa’s company and foundation.
“If theirs is incorrect data, it’s data that they have supplied to public officials, under penalty of verifying that it’s accurate,” he said.
As Lichtblau notes in the story, he tried unsuccessfully for three weeks to get an interview with Issa to discuss these matters. Lichtblau said Issa’s office did not respond to a detailed memo he sent asking about the specific matters with which it is now taking issue, including the apparent 1,900 percent return on one of his foundation’s investments.
Issa and his aides have long had tension with Lichtblau. The California Republican and his aides were unhappy with a May 23, 1998 story that Lichtblau wrote while he was at the Los Angeles Times and Issa was running for the U.S. Senate – the headline on that piece was “Issa’s Rags-to-Riches Tale Has Some Ugly Chapters.”
Lichtblau theorized this history likely contributed to Issa’s decision not to participate in the story while it was being reported.
“He really does have a long memory when it comes to that story, so it’s unfortunate that, given that, that may have been part of the reason that they just completely shut us down in reporting the story,” he said.
Issa’s camp expects to hear back from Times editors, and separately The Times’ public editor has also been poking around on the issue.
“Congressman Issa’s office forwarded us the request for retraction that was sent last evening to Times editors, so we will have to review it like we do any other complaint we receive,” said Joseph Burgess, assistant to the Times’s public editor. “Prior to that, we were looking into the correction requests made by Congressman Issa’s office.”
The Times Friday ran another story about Issa’s business dealings, this time taking aim at a public offering of a corporation he is involved with. It was the second story about the Oversight chairman this week.
Issa is the bombastic chairman of the top investigative committee in Congress, and takes it upon himself to be the check on the Obama administration’s actions. He is worth several hundred million dollars in assets, making him perhaps the richest lawmaker in Washington.
© 2011 POLITICO LLC
The influential chairman of the House Oversight and Government Reform committee is neck-deep in a war of words with none other than The New York Times, and neither powerful interest appears to be backing down.
Congressman Darrell Issa, R-Vista, was the subject of a front-page report Monday raising questions about whether he has used his official powers to enhance his personal interests.
One of the wealthiest members of Congress, Issa did not cooperate with the reporter writing the story. The paper said Issa did not respond to repeated requests to discuss his business and political interests.
“As his private wealth and public power have grown, so too has the overlap between his private and business lives, with at least some of the congressman’s government actions helping to make a rich man even richer and raising the potential for conflicts,” the story said.
The story questioned his ties to satellite radio company Sirius and the former investment house Merrill Lynch, and his participation in federal policymaking affecting those companies. Other members of Congress, the Times noted, place much of their wealth in blind trusts to avoid conflicts. Not so with Issa, an active businessman.
More locally, the newspaper claimed that “more than two dozen of Mr. Issa’s properties are within five miles of projects he has personally earmarked for road work, sanitation and other improvements.”
Almost immediately, Issa disputed the premise of the article and took issue with specific elements of the report, written by Pulitzer Prize-winning journalist Eric Lichtblau.
The initial response noted the story misreported the value of Issa’s holdings as “multibillion-dollar” rather than “multimillion-dollar.” The Times corrected that error Tuesday.
The San Diego Union-Tribune, which runs selected Times stories off the wire, sought Issa’s side of the story before running this one. On Friday, his staff released a seven-page rebuttal outlining 13 separate problems with the story and demanding a front-page retraction.
“It’s very clear with the errors, the exaggerations and half-truths that this was not a story to find facts,” spokesman Frederick Hill said. “This was a story to try to smear Congressman Issa.”
The U-T decided not to publish the original story while the Times reviews Issa’s complaints.
“We believe the story to be an accurate and fair account,” Times spokeswoman Danielle Rhoades Ha said. “Of course we are looking at any factual issues his staff has raised.”
Dean Nelson, director of the journalism program at Point Loma Nazarene University, said Issa may be overreacting to a legitimate examination of a public official’s record.
“The New York Times was doing its job, alerting the public as to where are some potential conflicts of interest,” Nelson said. “That’s a role the news media should be playing.”
Hill responded: “Being subject to scrutiny is certainly fair, but Congressman Issa believes that news reporting should be accurate and fact-based.”
The Times reported that Issa is worth as much as $725 million — more by some measures than Sens. John D. Rockefeller and John Kerry. Hill did not dispute that Issa’s net worth has climbed during his service in Congress, but said the congressman has never exercised undue influence.
“His investments have performed well,” Hill said.
The Watchdog reviewed four of the most serious allegations about the Times story.
SALE PRICE INCORRECT
Issa’s office said the Times misreported the sale price of an office building Issa bought after he secured Congressional earmarks for road improvements on the same street.
The Watchdog reported in April that Issa requested $17 million in earmarks for street improvements along West Vista Way before he bought the building and that the lower amount of $815,000 was approved.
The Times said the sale price of the building was $10.3 million and it “soared” in value to $16.6 million due in part to the earmarks pushed by Issa.
County Assessor-Recorder-Clerk Ernie Dronenburg on Friday confirmed the original sale price was $16.6 million, which is the amount The Watchdog reported in April.
The correct dollar amount of the sale could indicate that the earmarks increased the value of the building before Issa bought it, causing him to pay more.
1,900 PERCENT PROFIT
Issa’s office says The Times was wrong in citing a “1,900 percent” profit the Issa Family Foundation made over seven months following an initial investment of less than $19,000 in the AIM International Small Company Fund.
The Times used the gain as an example of how Issa’s investments “have often produced sharp profits.”
Hill said the assertion appears to be based on “an incorrect form obtained by The Times.” He said the investment actually was $500,000 and the foundation lost $125,000 by the time it was sold.
SUPPLIER OF TOYOTA
The Times reported Issa “went easy” on Toyota during 2010 congressional hearings because his electronics company was “a major supplier of alarms to Toyota.”
Issa said the story “offers no evidence and Directed Electronics is in fact not a supplier to Toyota.”
The automaker issued a statement saying, “DEI Holdings is not a direct supplier of Toyota, however, it is possible that Toyota dealers procure their products. As independent business owners, Toyota dealers make available to their customers a variety of aftermarket products to enhance their automotive ownership experience.”
VIEW IN QUESTION
Issa’s office takes issue with a reference in the first paragraph saying the Vista Republican’s office building is “overlooking a golf course in the rugged foothills north of San Diego.”
The U-T visited Issa’s offices on Friday, and the Shadowridge Country Club isn’t plainly visible. It’s about a 1.5 mile drive from Issa’s parking lot to the clubhouse.
The Times reporter told the website Politico that he did not see the golf course from the building, but that he saw the building from the golf course. The U-T was unable to gain access to the course, which is private.
The area is not characterized by rugged foothills so much as suburban living. Down the street are a Burlington Coat Factory, Target and 24 Hour Fitness.
“I don’t think it implied — at least to my mind — that Issa’s office overlooked the golf course,” Times Washington Bureau Chief Dean Baquet told Politico. “I think it is trying to give a sense that this is a building in a cool area.”
August 19, 2011
Citing 13 Erroneous Statements, Issa Demands NY Times Retract Error-Ridden Front Page Story
WASHINGTON. D.C. – The office of Congressman Darrell Issa (R-Vista, CA), Chairman of the House Oversight and Government Reform Committee has formally requested that the New York Times issue a front-page retraction for an error-filled article entitled, “Helping His District, and Himself.”
The New York Times has so far issued one correction and is reviewing other errors cited by Rep. Issa’s office and the request for the retraction. It has promised to respond.
Below is the formal request for a retraction sent by Rep. Issa’s office yesterday to editors of The New York Times:
On behalf of Rep. Darrell Issa, please accept this as a formal request for a full front page retraction, including the headline, “Helping His District, and Himself,” that ran in the Monday, August 15 edition of the New York Times. The request for a full front page retraction is based on numerous errors that invalidate the primary assertions made in the story that is a false and sensationalized account Rep. Issa’s efforts to conduct congressional oversight of the Obama Administration and other matters.
This request is being sent after New York Times reporter, Eric Lichtblau, who wrote the story, refused to share the contact information of his editors for a discussion of errors in the story as requested by Rep. Issa’s congressional office.
The central claim in the New York Times story is an allegation of self-dealing on the part of Rep. Darrell Issa, as the story describes, “with at least some of the congressman’s actions helping to make a rich man richer” and “specific actions that appear to have clearly benefited his businesses.”
The New York Times story cites three central examples it believes justifies these allegations:
• A medical complex purchased by Rep. Issa in 2008 that the Times story alleges enjoyed a 60 percent appreciation as it increased in value from $10.3 million to $16.6 million, “at least in part because of the government-sponsored road work” that Rep. Issa supported.
• That he “went easy” on Toyota during 2010 hearings on unintended acceleration due to “his electronics company’s role as a major supplier of alarms to Toyota.”
• An alleged 1900 percent profit Rep. Issa’s charitable foundation made on an investment of “less that $19,000” that was sold seven months later for $357,000 “months before the stock market crashed.”
All central examples, however, are wildly inaccurate, and the truth deserves to be told.
• The medical complex the Times story alleges enjoyed a 60 percent appreciation since it was purchased for $10.3 million and is now valued at $16.6 million is a patently false claim. According to the buyer’s final settlement statement, the property in question was not purchased for $10.3 million as the New York Times reported but for $16.6 million – the exact same figure of its current tax assessment. According to these numbers, the appreciation is not 60 percent but roughly zero. In addition, the government sponsored road work noted in the article has not even begun and Rep. Issa’s requests for the project (which were publicly announced and made on behalf of and at the request of the City of Vista, and the San Diego Association of Governments which is the regional transportation planning authority) all came before the 2009 property purchase.
• The allegation that Rep. Issa “went easy” on Toyota during 2010 hearings because of “his electronics company’s role as a major supplier of alarms to Toyota” is again an example of a factual error in the Times story that lends no support to the story’s central premise. While the Times story tells readers that Rep. Issa’s former company, Directed Electronics, is a “major supplier of alarms to Toyota,” the story offers no evidence, and Directed Electronics is, in fact, not a supplier to Toyota. The New York Times also fails to note that Rep. Issa does not have a personal financial interest in Directed Electronics.
• The “1,900 percent” profit allegation is, again, based on reporting errors by the New York Times. This is assertion is based on an incorrect form obtained by the Times. According to a financial transaction record, the Issa Family Foundation’s initial investment in the AIM Small Company fund was not $19,000 but $500,000. The asset was later sold for $375,000 resulting in a $125,000 loss – not a 1900 percent gain as was reported.
In addition, the lede line of the Times story – an attempt by the New York Times to foreshadow a corporate image of Rep. Issa’s congressional office – contains a factual inaccuracy in introducing intentionally distorted imagery. The story begins, “Here on the third floor of a gleaming office building overlooking a golf course in the rugged foothills north of San Diego, Darrell Issa, the entrepreneur, oversees the hub of a growing financial empire worth hundreds of millions of dollars.” As this video shows, however, the office building located at 1800 Thibodo Rd. in Vista does not overlook a golf course.
Because of these errors, and another error the New York Times did correct that grossly exaggerated the value of some holdings held by Rep. Issa, the following lines in the New York Times original story that ran August 15 are incorrect or made on baseless assertions:
• The title, “Helping His District and Himself” implies that Rep. Issa has engaged in self-dealing. The only evidence the story offers for this assertion are factually flawed assertions.
• The lede, “Here on the third floor of a gleaming office building overlooking a golf course in the rugged foothills north of San Diego, Darrell Issa, the entrepreneur, oversees the hub of a growing financial empire worth hundreds of millions of dollars.” The building where Rep. Issa’s office is located does not overlook a golf course as the reporter Eric Lichtblau implies he personally observed.
• “Mr. Issa has … split a holding company into separate multibillion-dollar businesses.” Rep. Issa does not own a single multi-billion business (The Times has issued a correction for this error).
• “As his private wealth and public power have grown, so too has the overlap between his private and business lives, with at least some of the congressman’s government actions helping to make a rich man even richer and raising the potential for conflicts.” The only examples the New York Times raises of Rep. Issa’s public actions benefiting his private holdings are the erroneous examples previously noted.
• “In one case, more than $800,000 in earmarks he arranged will help widen a busy thoroughfare in front of a medical plaza he bought for $10.3 million.” The story erroneously reports the property’s purchase price which was, in fact, $16.6 million. It also fails to mention that at the time he sought funding for his district he did not own this property.
• “At the same time, the value of the medical complex and other properties has soared, at least in part because of the government-sponsored roadwork.” The roadwork in question has not begun and, as noted previously, the New York Times’ assertion that the value of the medical complex has “soared” is based on false information. The Times’ statement also conflicts with the statement of a quoted source in the story, Dean Tilton the local commercial property broker, who describes this as the worst market in twenty years. The Times suggests road projects miles away from those owned by Rep. Issa benefit him. By this logic, wouldn’t the entire area be booming as a result of Rep. Issa’s earmarks?
• “But beyond specific actions that appear to have clearly benefited his businesses, Mr. Issa’s interests are so varied that some of the biggest issues making their way through Congress affect him in some way.” The New York Times fails to provide accurate examples of “specific actions that appear to have clearly benefited his businesses.”
• “After the forced sale of Merrill Lynch in 2008, for instance, he publicly attacked the Treasury Department’s handling of the deal without mentioning that Merrill had handled hundreds of millions of dollars in investments for him and lent him many millions more.” The New York Times fails to note that Rep. Issa’s transactions with Merrill Lynch have been appropriately disclosed in his annual ethics filing.
• “In Mr. Issa’s case, it is sometimes difficult to separate the business of Congress from the business of Darrell Issa.” Again, the New York Times story fails to provide factually accurate examples for this assertion.
• “Then, Mr. Issa brushed aside suggestions that his electronics company’s role as a major supplier of alarms to Toyota made him go easy on the automaker as he led an investigation into the recalls.” Rep. Issa’s former company is not a supplier to Toyota.
• “In one 2008 sale, months before the stock market crashed, his family foundation earned $357,000 on an initial investment of less than $19,000 — a return of nearly 1,900 percent in just seven months, the foundation reported to the Internal Revenue Service.” This assertion is based on an incorrect document. The actual purchase price was not $19,000, but $500,000 and resulted in a $125,000 loss.
• “That suggests the foundation may have acquired the shares from a third-party broker.” This assertion is based on the false 1900 percent claim.
• “Mr. Issa is keenly interested in Goldman’s performance.” This statement lacks a basis in fact as Rep. Issa does not have investments dependent on Goldman Sach’s performance.
I appreciate your attention to these thirteen errors contained in the August 15 story and look forward to hearing your response to our request for a front-page retraction of the story due to the inaccuracies that fully undermine the premise of the article.
Director of Communications