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How These Ultra-Wealthy Politicians Avoided Paying Taxes

How These Ultra-Wealthy Politicians Avoided Paying Taxes

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

As a member of Congress, Jared Polis was one of the loudest Democrats demanding President Donald Trump release his tax returns.

At a rally in Denver in 2017, he warned the crowd that Trump “might have something to hide." That same year, on the floor of the House, he introduced a resolution to force the president to release the records, calling them an “important baseline disclosure."

But during Polis' successful run for governor of Colorado in 2018, his calls for transparency faded. The dot-com tycoon turned investor broke with recent precedent and refused to disclose his returns, blaming his Republican opponent, who wasn't disclosing his.

Polis may have had other reasons for denying requests to release the records.

Despite a net worth estimated to be in the hundreds of millions, Polis paid nothing in federal income taxes in 2013, 2014 and 2015. From 2010 to 2018, his overall rate was just 8.2 percent — less than half of the 19 percent paid by a worker making $45,000 in 2018.

The revelations about Polis are contained in a trove of tax information obtained by ProPublica covering thousands of the nation's wealthiest people. The Colorado governor is one of several ultrarich politicians who, the data shows, have paid little or no federal income taxes in multiple years, exploited loopholes to dodge estate taxes or used their public offices to fight reforms that would increase their tax bills.

The records show that rich Democrats and Republicans alike have slashed their taxes using strategies unavailable to most of their constituents. Among them are governors, members of Congress and a cabinet secretary.

Richard Painter, the chief White House ethics lawyer during the George W. Bush administration, said the tax avoidance of these top politicians is “very, very worrisome" since both parties “spend like crazy" and depend on taxes to fund their priorities, from the military to Medicare to Social Security.

“They have the power to decide how much the rest of us pay and the power to spend the money, and then they're not paying their fair share?" Painter said. “That should be troubling to voters, both conservative and liberal. It should be troubling for everyone."

West Virginia Gov. Jim Justice, for example, is a Republican coal magnate who has made the Forbes list of wealthiest Americans. Yet he's paid very little or no federal income taxes for almost every year since 2000.

California Rep. Darrell Issa, one of the richest people in Congress, was one of the few Republicans to break with his party during the 2017 tax overhaul to fight for a deduction that — unbeknownst to the public — helped him avoid millions in taxes.

And the tax records of Republican Sen. Rick Scott of Florida and Trump's education secretary, Betsy DeVos, showed that both employed a loophole, which was accidentally created by Congress, to escape estate and gift taxes.

As ProPublica has revealed in a series of articles this year, these tactics, if sometimes aggressive, are completely legal. And they're not universal among wealthy politicians. ProPublica reviewed tax data for a couple dozen wealthy current and former government officials. Their data shows that many of them paid relatively high tax rates while employing more modest use of the fairly standard deductions of the rich.

The politicians who paid little or exploited loopholes either defended their practices as completely proper or declined to comment.

“The Governor has paid every cent of taxes he owes, he has championed tax reform and tax fairness to fix this broken system for everybody, to report otherwise would be inaccurate," Polis' spokesperson wrote in an email.

During the late 1990s dot-com era, Polis earned a reputation as a boy wonder. He turned his parents' small greeting card company into a website, bluemountain.com, which was among the first to enable users to send free virtual cards. He and his family sold the site in 1999 for $780 million.

With the windfall from the sale, Polis continued to start new ventures and invest, but he also began laying the groundwork for a career in politics. He landed in the governor's office in 2019 when he was just 43.

One of his tools for raising his profile was philanthropy. His generous donations to charity became a theme of both his 2008 run for Congress and his 2018 run for Colorado's highest office.

Philanthropy also helped keep his tax rate enviably low. In many years, the deductions he claimed for his charitable giving were large enough to wipe out half the income he would have owed taxes on. His giving allowed him, in essence, to take some of the money he would have paid into the public coffers and donate it instead to causes of his choosing.

But an examination of Polis' philanthropy shows that while he has given to a wide variety of causes, some of his donations served to promote him, blurring the lines between charity and campaigning.

According to the tax filings of his charity, the Jared Polis Foundation, the organization spent more than $2 million from 2001 to 2008 on a semiannual mailer sent to “hundreds of thousands of households throughout Colorado" that was intended to build “on a foundation of familiarity with Jared Polis' name and his support of public education." It was one of the charity's largest expenditures.

A 2005 edition of the mailer reviewed by ProPublica had the feel of a campaign ad. It was emblazoned with the title “Jared Polis Education Report," included his name six times on the cover and featured photos of Polis, a former state board of education member, surrounded by smiling school children.

The newsletters were discontinued just as he was elected. Because the mailers did not explicitly advocate for his election, they would have been legally allowed as a charitable expenditure.

A decade later, when he ran for governor in a race that he personally poured more than $20 million into, Polis featured his philanthropy in his campaign. In one ad, he used testimonials from an employee and a graduate of a business training charity he founded for military veterans.

Polis' spokesperson, Victoria Graham, defended the mailers, saying they were intended “to promote innovations and successful models in public education and to raise awareness for the challenges facing public education." She also pointed to a range of other philanthropy Polis was involved in, from founding charter schools, which she noted were not named after him, to distributing computers to organizations in need.

“His philanthropy is not and has never been motivated by receiving a tax write-off, and to state otherwise is not only inaccurate but fabricating motives and intent and cynical in its view of charity," Graham said.

While Polis' charitable giving has helped keep the percentage of his income he pays in taxes low, he has also been able to keep his total taxable income relatively small by using another strategy common among the wealthy: investing in businesses that grow in value but produce minimal income.

It sounds counterintuitive, but it's a basic principle of the U.S. tax system — one that typically benefits wealthy people who can afford not to take income. Investments only trigger income taxes when they produce “realized" gains, such as dividends from a stock holding, the sale of an asset or profits from a company. But an investment's growth in value, while it makes its owner richer, is not taxable.

Polis acknowledged his use of the strategy in 2008 after he released tax information during his first run for Congress and faced criticism for paying so little in taxes. “I founded several high-growth companies, and we would manage those for growth rather than for profit," he said. “When I make money, I pay taxes. When I don't make money, I don't."

In one of the recent years Polis paid no income taxes, his losses were larger than his income. In two of the years, it was about a million dollars. From 2010 to 2018, when he paid an overall rate of just 8.2 percent, including payroll taxes, his income averaged $1.5 million.

During that period of low taxes and relatively low income, Polis' estimated net worth rose sharply. Members of Congress only have to report the value of each of their assets in ranges, so assigning a precise number is impossible. But the nonprofit data site OpenSecrets, which makes estimates by taking the midpoint of the ranges, shows Polis' wealth growing from $143 million in 2010 to $306 million in 2017, making him the third richest-member of the House at the time. (Graham said congressional disclosure forms are confusingly formatted, potentially causing certain assets to be counted more than once, “so these numbers are likely wildly off." She did not provide alternative net worth figures.)

One of Polis' primary vehicles for building his fortune, while avoiding taxable income, appears to have been a family office, Jovian Holdings. The board of directors included his father, sister and a rather surprising outsider: Arthur Laffer. The famed conservative economist's Laffer Curve provided the Reagan administration with the intellectual basis for arguing that cutting taxes would increase tax revenue. (Polis' sister is a ProPublica donor.)

The term family office has a mom-and-pop feel, but it is actually part of the infrastructure of protecting the fortunes of the ultrawealthy, from crafting investment and tax strategy to succession and estate planning to concierge services. Depending on how they're organized, for instance as a business, their costs — the salaries of the staff, rent — can be deductible.

One of the executives at Polis' family office, according to her LinkedIn profile, is a seasoned tax expert who specializes in “maximizing cost savings both operationally and with all taxing authorities." She removed that detail around the time ProPublica approached Polis about his taxes.

Unlike ordinary investors, Polis was able to claim millions in deductions for some of the costs of his money management, specifically his family office, which contributed to lowering his tax burden. Ironically, the investment apparatus that helped Polis avoid taxable income became a tax break.

ProPublica discussed the scenario, without naming Polis, with Bob Lord, tax counsel for the advocacy group Americans for Tax Fairness. He said the public appears to be essentially subsidizing Polis' investing while getting little in return. With a typical business, he said, you get the tax break but also relatively quickly make taxable income.

The costs of a family office are “being taken even though the income may be way out in the future. It's just a giveaway," Lord said. “What is the public getting from it? This really, really rich politician gets to shelter his income while his investments grow and doesn't pay tax on it until he sells."

Deferring paying taxes is a valuable perk. But the strategy, Lord said, may allow Polis an even more lucrative outcome. Now that Polis has made his fortune, he may be able to largely dodge the tax system forever. Should he die before selling his investments, his heirs would never owe income taxes on the growth.

Graham acknowledged that the tax system unfairly benefits the wealthy but said Polis is not purposely avoiding income that would result in taxes.

“The Governor has long championed tax reforms precisely because the income tax is inadequate and a mismatched way to tax most wealthy people who do not have a regular income but who make money in other ways and should be taxed," she said. “Since 2006, Governor Polis has paid over $20 million in taxes on the money he earned on his gains and he has championed tax reforms that would lower the tax burden on middle-income earners and eliminate loopholes to ensure higher earners pay their share."

ProPublica's data shows that at least two federal officials have already taken steps to preserve their family fortunes for their heirs, exploiting loopholes that divert revenue from the federal government.

Scott, the Florida senator who ran one of the world's largest health care companies, and DeVos, Trump's education secretary and believed to be the richest member of his cabinet, have both stored assets in grantor retained annuity trusts — a form of trust used to avoid gift and estate taxes.

GRATs, as they're commonly known, were accidentally created by Congress in 1990. Lawmakers were trying to close another estate tax loophole and in doing so unintentionally paved the way for another one. The lawyer who pioneered the trusts estimated in 2013 that they had cost the federal government about $100 billion over the prior 13 years.

To use this tax-avoidance technique, you put an asset, like stocks or real estate, into a trust assigned to your heirs. The trust pays you back the starting value of the asset (plus some interest). If the original asset rises in value, the gains can go to your heirs tax-free.

GRATs have become widely used among the superrich. A ProPublica investigation found that more than half of the nation's richest individuals have employed them and other trusts to avoid estate taxes.

It's unclear from ProPublica's data how much DeVos, 63, and Scott, 68, were able to transfer tax-free.

DeVos and her husband employed a GRAT from at least 2000 to 2003. DeVos' father was a wealthy industrialist. Her husband was the president of Amway, a multilevel marketing company that focuses on health, beauty and home products. Her family is believed to be worth billions.

Her causes both before and during her time in government depended on tax dollars. As a donor and fundraiser for Republican causes, she pushed for charter schools and government subsidies to allow parents to send their kids to private schools. As education secretary, she pushed to send millions of federal dollars intended for public schools to private and religious schools instead.

Scott, one of the wealthiest senators, with a net worth likely in the hundreds of millions, used a GRAT for much longer, from at least 2001 through 2009. His tax data shows the assets in the trust — stakes of a private investment fund and family partnership he and his wife created — receiving millions in income.

When he was in the private sector, Scott benefited from federal programs like Medicare, which are funded by taxes. He built and ran Columbia/HCA, a massive chain of for-profit hospitals. After a fraud investigation became public, he resigned and the company paid $1.7 billion to settle allegations it overbilled government health programs. Scott has previously emphasized that he was never charged, though he acknowledged the company made mistakes.

Scott declined to comment. Nick Wasmiller, a spokesman for DeVos, said she “pays her taxes in full as required by law. Your 'reporting' is not only factually wrong but also doubles-down on the criminal actions that underpin ProPublica's political campaign to prop up the Biden Administration's failing agenda."

California Congressman Darrell Issa was one of a handful of Republicans who bucked his party in 2017 and voted against Trump's tax overhaul.

Issa said he opposed the legislation because it all but eliminated the deduction taxpayers could take on their federal returns for state and local taxes. That provision was particularly contentious in high tax blue states like California, but most Republicans from his state still fell in line. The other GOP congressman in the San Diego area, for example, voted yes.

Limiting the write-off, known as the SALT deduction, was one of the few progressive changes in the Trump tax law. The deduction had long disproportionately benefited the wealthiest because they pay the most in state and local taxes. According to one projection, if the cap were removed from the deduction, households with income in the top 1 percent would reap the most benefit, paying $31,000 less a year on average — amounting to more than half of the total taxes avoided through the write-off. The top 25 percent of households would average less than $3,000 in savings a year, and the savings drop precipitously from there, with most households deriving no benefit.

In interviews and public statements, Issa said in fighting to preserve the deduction, he was defending the interests of middle-class taxpayers. “I didn't come to Washington to raise taxes on my constituents," he said at the time, “and I do not plan to start today."

It's true that more than 40 percent of taxpayers in Issa's former district, a relatively affluent swath of Southern California, were able to make at least some use of the deduction.

But the 68-year-old congressman, who made a fortune in the car alarm business, was in the top echelon of its beneficiaries. Between 2003 and 2017, his tax data shows, Issa generally paid a relatively high tax rate but was able to claim more than $51 million in write-offs thanks to the SALT deduction, an average of more than $3 million a year.

By contrast, households in his district that made between $100,000 and $200,000 and took the SALT deduction claimed an average of $14,843 in 2017.

Issa's spokesman, Jonathan Wilcox, declined to say if the SALT deduction's impact on the congressman's taxes factored into his decision to advocate for it.

“So much stupid," Wilcox said. “Be sure to write back if you ever do better than trolling for garbage."

Gov. Jim Justice is believed to be the richest person in West Virginia, controlling vast reserves of valuable steelmaking coal and owning The Greenbrier luxury resort. He made an appearance in 2014 on the Forbes list of 400 wealthiest Americans. Estimates of his net worth have ranged from the hundreds of millions to well over a billion.

Nonetheless, he's paid little or no federal income taxes for almost every year between 2000 and 2018, ProPublica's trove of tax records shows. In 12 of those years he paid nothing, and in all but two of those years, his rate didn't exceed four percent.

His largest tax payment came in 2009, when his family sold off much of its mining holdings to a Russian company for more than half a billion dollars. That year, after deductions, his tax rate rose to a modest 13.4 percent.

In more recent years, Justice, 70, has reported tens of millions in losses each year. That not only helped him to minimize his federal income taxes, it also allowed him to apply those losses to his profits from previous years — and get refunds for the taxes he initially paid in those years.

Justice's income was low enough in 2018 for his family to qualify for and receive a $2,400 coronavirus stimulus check, aid meant for low- and middle-income Americans.

The recent years of large losses reported on Justice's tax returns have coincided with real signs of financial problems. The coal industry's fortunes have rapidly declined. He's been hounded for unpaid bills and loans. The Russian company that bought much of his coal empire sued him and got him to buy back the assets — at a much discounted price but attached to significant debt. Forbes knocked him off its wealth ranking, citing escalating battles with two major lenders over unpaid debt. Justice's representatives have said he pays what he owes, and his business empire is in good shape.

But even before his empire began showing significant cracks, Justice was reporting losses or little income for a man so wealthy. From 1996 to 2008, Justice, who received a coal and farming fortune from his father, who died in 1993, either reported losses to the IRS or just a few hundred thousand dollars in income.

The disconnect could be explained by the generous deductions afforded to coal business owners.

For example, owners are allowed a depletion deduction, which allows them to take 10 percent of the revenue from coal they extract and write it off against their profit. This spin on depreciation can have outsized benefits because unlike normal depreciation — in which the write-offs are based on how much you paid for an asset — the write-off amount here faces no such limit, and can therefore exceed the initial investment. The deduction has been criticized by environmentalists and congressional Democrats as an overly generous giveaway.

Another benefit coal owners get is the ability to immediately expense much of their mine development costs on their taxes instead of being forced to stretch such deductions over a longer period of time. Justice has said that in the 15 years after his father's death, he oversaw “a massive expansion of multiple businesses which included significant coal reserve expansion" — development that could have provided him with a significant stockpile of such write-offs. (ProPublica has previously reported on other generous write-offs. Sports team owners, for example, are allowed to deduct the value of their intangible assets — such as media deals and franchise rights — as wasting assets, even as they rise in value.)

Experts said this could explain how Justice could have reported negative income of $15 million in 2008, a year in which Mechel, the Russian company that subsequently bought much of his family's coal empire, said that business alone produced about $94 million in EBITDA — a common measure of a business' profitability before taxes and some other expenses.

Justice declined to answer a list of specific questions about his taxes. In a statement, his lawyer, Steve Ruby, said Justice “has paid millions upon millions of dollars in state and federal income taxes and has always followed the law. In many years, his businesses have suffered losses as the result of weak coal prices combined with substantial outlays to save jobs at local businesses that other companies were abandoning.

“When many other coal producers were filing for bankruptcy, the Justice companies persevered and refused to take the easy way out through a bankruptcy proceeding, a decision that contributed to those losses. Like any other taxpayer, Gov. Justice does not owe income taxes in years in which his income is negative," the statement read.

Ruby confirmed that Justice received coronavirus stimulus checks but said he did not cash them.

Like Scott and DeVos, Justice has used GRATs to sidestep estate and gift taxes, his returns and court records suggest.

In 2008, the year before he sold much of his coal empire to the Russian company, two GRATs appeared on his returns for the first time. And when the Russian company sued Justice, it also sued him in his capacity as the trustee for those GRATs. Justice had placed at least some of the coal assets into the trusts before the sale, according to the lawsuit.

Ruby's statement did not address Justice's use of GRATs.

Political Leaders Consider New Bipartisan Push For Online Voting

Political Leaders Consider New Bipartisan Push For Online Voting

Online voting is emerging as a near-term solution for state political parties to continue party-run 2020 contests in response to the pandemic, a notable contrast with efforts in government-run elections to expand absentee voting.

Democrats in Minnesota, Colorado, Virginia, and Massachusetts and Republicans in Utah have either adopted policies that allow online voting following the outbreak or have been working with consultants to run online elections in the coming weeks.

These elections are not government-run primaries where all voters who turn out cast secret ballots. Rather, they are the next steps in presidential nominating contests, elections to party leadership posts, resolutions and other business.

“Last night, an emergency meeting of the Minnesota DFL [Democratic Farmer Labor] Party Executive Committee made the decision to move local convention activities away from in-person meetings and tele-conventions, and instead conduct party business via an online balloting system,” a March 17 statement by the Minnesota DFL said.

Colorado Democratic “Governor [Jared] Polis signed an executive order and House Bill… [that] allows delegates to vote by email, mail, telephone or app,” a March 17 press release said. The bill also “allows an individual who is physically present to carry up to five proxies [for voters not present], and allows the [state] party to reduce the number of participants required for quorum.”

The Democratic Party of Virginia was studying options that included electronic voting for its upcoming contests, said Virginia-based attorney Frank Leone, who also sits on the Democratic National Committee’s Rules and Bylaws Committee, the panel that oversees its presidential nominating contests.

“I don’t think anyone, in the next month or two months, is planning on doing it [participating] in person,” he said. “We’ve got caucuses in April that we are not going to do, although I think we have some ways around it. We have district conventions in May. We are thinking of doing those remotely and then various ways to address the state convention.”

“I think everybody is trying to figure out ways to do this without having more than 10 people in a room,” he said.

Democrats in Massachusetts and Republicans in Utah were considering using a smartphone-based app, developed by Voatz (which Massachusetts has previously used). While longtime opponents of online voting have criticized the Voatz app as untrustworthy, a half-dozen state parties — mostly Republican — may soon use it, a company executive said without naming all of the states.

An unexpected return

The emergence of online voting options in party contests would raise eyebrows in election policy circles under more normal circumstances, as opponents have been wary of any use of this technology that could validate it for state-run elections.

For example, a pressure campaign has been unfolding in Puerto Rico, where a bill awaiting the governor’s signature would phase in internet voting as a part of a response to recently destructive hurricanes. Opponents are urging a veto.

“Anyone in the world, including foreign nation states, criminal organizations, or our domestic partisans, can attack any Internet voting system, attempt to change votes, violate privacy, or disrupt the election—possibly in a completely undetectable way,” a March 19 letter from Verified Voting, a national advocacy group, to Gov. Wanda Vázquez Garced, said. Three-dozen academics, computer scientists, security experts and voting rights activists co-signed the letter.

Government-run elections are not the same as party contests. State-run elections are more regulated, including requiring state or federal certification of the voting systems. Party contests are less so and may not even require secret ballots. They share features with elections for other non-governmental entities, such as labor unions, corporate shareholders or even the Academy Awards.

But party-run contests are in a gray zone between private and public elections because their outcomes affect candidates and government. Thus, developers of new voting technologies have seen party contests as valuable proving grounds.

That strategy backfired in the Democratic Party’s 2020 presidential caucuses in Iowa and Nevada, when new digital apps and counting systems did not perform as pledged, delaying the results — followed by questions from some candidates about the reported outcomes’ accuracy.

Before emergencies like the pandemic and Puerto Rico hurricanes, online voting opponents had kept the option out of most government elections. A few exceptions involved trials where a few hundred people — mostly overseas troops and civilians — voted. As a result, Puerto Rico’s legislation has alarmed critics.

Among the signatories to the letter lobbying Gov. Vázquez Garced to veto Senate Bill 1314 were some of the experts who advised the DNC’s Rules and Bylaws Committee in 2019 before the RBC reversed course on requiring its 2020 caucus states to offer a remote participation option (which meant voting online or by cell phone). While virtual voting via phones did not happen, Iowa and Nevada had other problems.

Thus, it is somewhat ironic that a number of state Democratic parties are looking to online voting to continue their 2020 contests, even if these exercises do not involve voting by the general public. However, given the pandemic’s challenges, the DNC Rules and Bylaws Committee would not be scrutinizing the shift to online voting options as it might otherwise do, said James Roosevelt Jr., RBC co-chair.

“As long as it deals with how they will conduct their state convention, it is unlikely that we will look at it,” he said. “To the extent that it deals with the selection of national convention delegates, we might well look at it. Frankly, I think there is likely to be less scrutiny on our part under this state of national emergency than there would have been in normal times.”

The shift to online voting in the nominating process’s next stages — county or state conventions — raises the prospect that some of the voting systems deployed could also be used as a partial replacement for the Democratic National Convention, which is slated for July 13-16 in Milwaukee, Wisconsin.

Roosevelt also said that the DNC was still planning to hold its national convention in July. (The convention was timed to not conflict with the 2020 Olympics, which have not yet been postponed, but countries are saying they won’t send any athletes.)

As some states have moved their presidential primaries to June, Roosevelt said the RBC would review potential delegate allocation changes that possibly could affect the total number needed to nominate a presidential candidate. But the big picture, he said, was that state parties were not “postponing or canceling conventions.”

The RBC co-chair said that he favored any solution that increased access and participation in 2020’s party-run contests and primaries.

Primaries also changing

In response to the pandemic, state officials and election policy experts have been pushing a shift to voting by mail for 2020’s remaining elections. While executing that shift on a national level is a formidable task, Frank Leone said that some blue states were acting quickly to try to increase access in upcoming spring primaries.

In Virginia and New York, where an “excuse” is now needed to get an absentee ballot, state election boards have decided that voters could check a box on an application citing “an illness” — the coronavirus — to get a ballot, he said.

But in purple and red-run states, there are brewing fights over near-term voting options and rules. The Wisconsin Democratic Party and DNC filed an emergency suit on March 18 and won a court order to lift barriers to online voter registration before its April 7 primary. But the Texas Democratic Party has not convinced statewide officials to expand early voting for its May 26 primary runoffs.

The pandemic is changing the way that America votes. But whether online voting will be expanded beyond party contests is an open question. Computer scientists who oppose online voting, including those who signed the letter urging a Puerto Rico veto, said that they expected it to arise in discussions about the pandemic.

“I would suspect the situation is this: Governors and their staff have N+1 things that are critical right now. Someone says, ‘Well, we could just take the election online, and that would solve one of the critical issues,'” Duncan Buell, University of South Carolina Computer Science and Engineering Department chair, said via email. “Thus, a decision would be made to do what seems easy at the time.”

“In this time of pandemic, it is to be expected that the issue will arise many times,” concurred David Jefferson, a computer scientist at Lawrence Livermore National Laboratory, who has studied voting for decades. “I think/hope that election officials are so busy with preparing for a huge surge in mail-in voting that they will not want to take on the additional burden and risk of learning about and fielding online voting.”

Buell and Jefferson said that there were dividing lines when considering online voting’s use. They emphasized that voting for presidential delegates at a national convention — or even Congress voting remotely — was not the same circumstance as all of an election district’s voters casting secret ballots.

“It is not just nonsecrecy that allows online voting,” Jefferson added. “It should actually be public who voted and for what. Only that way can all voters verify that their ballots were correctly cast, and everyone can verify that only eligible voters are listed as having voted — and at most [voting] once, and everyone can verify the outcome.”

And any online system also has cybersecurity risks, he said, where meddlers could seek to disrupt the process or corrupt the results.

“To prevent other kinds of mischief, it is important to have strong authentication of the voters, e.g., through two-factor authentication such as a password and RSA token,” he said. “And any online voting system is still vulnerable to denial of service attack, so there are still risks.”

Indeed, every voting system has risks. The question has always been: Do the benefits outweigh the liabilities? In an unexpected pandemic, online voting options, once scorned, are being reassessed with that equation.

Steven Rosenfeld is a senior writing fellow and the editor and chief correspondent of Voting Booth, a project of the Independent Media Institute. He is a national political reporter focusing on democracy issues. He has reported for nationwide public radio networks, websites, and newspapers and produced talk radio and music podcasts. He has written five books, including profiles of campaigns, voter suppression, voting rights guides, and a WWII survival story currently being made into a film. His latest book is Democracy Betrayed: How Superdelegates, Redistricting, Party Insiders, and the Electoral College Rigged the 2016 Election (Hot Books, March 2018).

‘Roll Call’s’ Ten Richest Members Of Congress For 2014

‘Roll Call’s’ Ten Richest Members Of Congress For 2014

By CQ Roll Call staff

WASHINGTON — They invested in an aquaculture business, a bank and good old blue chip stocks and bonds.

The richest members of Congress found myriad ways to get wealthier in 2013, CQ Roll Call’s annual survey of congressional wealth shows.

Many lawmakers’ portfolios shrugged off the effects of a government shutdown, the civil war in Syria and the botched rollout of the health care law to ride a wave that sent the Dow Jones industrial average to its biggest gain in 18 years.

The ten richest won’t set new standards for diversity. All are white. Two are women.

Although Republicans took the top two spots this year, Democrats filled out the rest of the top ten. The list is dominated by veteran members such as seven-term Rep. Darrell Issa (R-CA), the wealthiest lawmaker, whose car-alarm fortune and high-yield bonds drove his net worth to more than $357 million and earned him the No. 1 spot for the second year in a row.

No. 3 on the list, Democratic Rep. John Delaney of Maryland, increased his net worth by more than 60 percent.

That’s not to say everyone prospered. Sen. Richard Blumenthal (D-CT) registered a year-to-year drop-off in net worth of more than $20 million, though the actual decline could have been far less given the wide asset value ranges allowed by the reporting system, and an amendment he filed to his 2012 report.

Lawmakers are required to file annual disclosure forms revealing such details as stock market holdings, real estate investments, bank accounts, credit card balances, student loans and other assets and liabilities.

Their minimum net worth is determined by subtracting the total minimum value of all liabilities from the total minimum value of all assets.

The system provides an incomplete picture because valuations are reported in broad categories spanning millions of dollars, making it impossible to ascertain a lawmaker’s precise net worth unless he or she opts to voluntarily break down actual dollar amounts. Few do. Members also are exempted from disclosing the value of personal residences or federal retirement savings accounts.

What the forms do reveal is an unusual variety of ways to get rich, or to try.

Rep. Jared Polis (D-CO), among the youngest members of the financial elite, has a stake of at least $1 million in the world’s only venture capital firm devoted to fish farming, Aquacopia, with more invested in Uber and Japanese senior housing.

The median household net worth in the United States stood at $68,828 in 2011, with 69 percent of households holding some form of debt, according to the most recent U.S. Census statistics.

The Ten Richest Members Of Congress:

Rep. Darrell Issa (R-CA)

Net worth: $357.25 million

Minimum assets: $432.25 million

Minimum liabilities: $75 million

For the second year in a row, Issa tops the list as the richest member of Congress.

Issa lists seven high-yield bonds as being worth more than $50 million — the highest disclosure category. How much those bonds are actually worth is unknown; they could be worth hundreds of millions of dollars each.

But just as his wealth could be many times higher than the picture provided by his disclosure, it also could be far less. Issa maintains two liabilities valued at $75 million — one personal loan from Union Bank that is between $25 million and $50 million and another personal loan from Merrill Lynch that is listed in the highest category of $50 million. That loan could be many times more than Issa is obligated to report. His true rank on our list depends greatly on how much he actually owes to Merrill Lynch.

Before his election to Congress, the Californian made his fortune founding Directed Electronics — based in Vista, Calif. — which manufactures car alarms. Now, Issa appears to make his money through the bond market and high-end real estate.
___

Rep. Michael McCaul (R-TX)

Net worth: $117.54 million

Minimum assets: $118.04 million

Minimum liabilities: $0.5 million

McCaul may be, according to his financial disclosure, the second-richest member of Congress, but he didn’t list a single asset in his name — not even a bank account worth at least $1,000. Instead, McCaul’s wealth is entirely connected to his wife, Linda McCaul, the daughter of Clear Channel Communications founder Lowry Mays.

Exactly how much money McCaul and his wife have is a mystery. Several of the holdings in his wife’s name are in the broad spousal asset category of $1 million or more. On his 2011 disclosure, McCaul listed many of those same assets as being worth at least $50 million — the highest category. In that year, his wealth was estimated to be at least $305 million, and even though his wealth has been calculated closer to $100 million for the past two years, there’s no reason to believe he has any less money now than he did in 2011.

But even if some assets are being dramatically undercounted, McCaul’s wealth is still staggering — as is the number of assets listed in his wife’s and children’s names. The McCaul family’s wealth is almost entirely invested in the stock market and in municipal bonds.

The family portfolio shows a wide-range of traditional stocks — AT&T, Wal-Mart, Berkshire Hathaway — as well as investments in a number of government bonds, with a special emphasis on investment projects in Texas.

Even with all the wealth, McCaul does maintain a mortgage debt of between $500,001 and $1,000,000 on his personal residence in Austin, Texas. It happens to be the only thing on his financial disclosure to which he is formally connected; it’s a joint liability with his wife.

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Rep. John Delaney (D-MD)

Net worth: $111.92 million

Minimum assets: $113.99 million

Minimum liabilities: $2.07 million

One year after gaining notice as the most well-off congressional candidate elected in 2012, Delaney’s minimum net worth soared by almost 64 percent. He’s now the wealthiest Democrat in Congress — and the third-richest overall.

The self-made financier is the only current member who has been a chief executive of a publicly traded company, and he’s held that title at two businesses he created. The son of a unionized electrical worker, Delaney founded HealthCare Financial Partners as a young lawyer in 1993, which specialized in lending money to smaller medical firms. He sold his controlling interest six years later for more than half a billion dollars and used the profits to start CapitalSource of Chevy Chase, Md., which loans to small and midsize businesses that can’t get credit at good rates from bigger banks.

Although he stepped away from the bank’s day-to-day leadership before taking office, CapitalSource continues to be the principal font of Delaney’s riches. His stake in the firm, which topped $25 million the year he was elected, grew to exceed $50 million during his freshman year in the House.

A member of the Financial Services Committee, Delaney has a stake of between $5 million and $25 million in another suburban Maryland financial services firm he helped found: Alliance Partners, which specializes in helping small banks pool resources to invest in big projects. He also has investments of comparable significance in Congressional Bancshares Inc. of Bethesda, Md.; a hedge fund in San Francisco; an equity fund in New York and a money market account at Goldman Sachs. (The values of the last two assets jumped from the minimum $1 million range a year earlier.) He has smaller stakes in 16 other investment partnerships.

Delaney has more than $5 million on deposit with Wells Fargo and lesser balances at six other banks. A family trust owns stock in three dozen companies, from Airgas to Williams-Sonoma. He and the trust have also purchased more than 40 different municipal bonds, about a third of them issued in Maryland.

Last year, Delaney got an influx of cash by exercising $4.7 million in CapitalSource stock options, and his wife, April, sold more than $2.5 million of her shares. The money that would have more than paid for the Capitol Hill townhouse the couple recently bought (without a mortgage). The Delaneys live in Potomac, Md., a half-hour drive from the Capitol but just outside the boundaries of the sprawling district where he spent $2.3 million of his own money to get elected two years ago.

The congressman’s only major liabilities, valued between $1 million and $5 million, are his mortgage on that house and the investment capital he borrowed from a newly formed family trust 16 years ago.

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Sen. Jay Rockefeller (D-WV)

Net worth: $108.05 million

Minimum assets: $113.55 million

Minimum liabilities: $5.5 million

Rockefeller, an heir of the oil tycoon John D. Rockefeller, makes Roll Call’s richest list in his last year in Congress, this year climbing up one spot with a minimum net worth of $108 million. That’s an increase of $25 million from last year. The leap is caused by one of his blind trusts increasing in value from the $25 million to the $50 million range.

Rockefeller’s wealth is concentrated in three separate blind trusts: the trusts at JPMorgan and Wells Fargo are each worth at least $50 million, and the third, at United National Bank in Charleston, W.Va., is worth at least $5 million. Because the highest category for disclosure is $50 million or more, Rockefeller’s assets from the JPMorgan and Wells Fargo trusts could be much higher than the minimum amount he was required to disclose. His total assets are worth at least $113 million, up from at least $89 million in 2013.

Recent transactions include the sale of property in D.C.’s Cleveland Park neighborhood by his spouse, Sharon Rockefeller. The five-bedroom, 3.5-bath home was not their primary residence, and the disclosure listed a value of at least $1 million. Sharon Rockefeller also owns more than $1 million in PepsiCo corporate securities stock, and she received compensation of more than $1,000 for serving on PepsiCo’s board.

Rockefeller listed only two liabilities on his disclosure form. The first is a 1998 demand loan from United National Bank in Charleston, W.Va., worth at least $5 million. The second is a 2013 mortgage worth at least $500,000 in Sharon Rockefeller’s name. The mortgage was for a New York City apartment as detailed on previous years’ forms. It was previously worth at least $1 million, indicating the Rockefellers have paid down part of it.
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Sen. Mark Warner (D-VA)

Net worth: $95.13 million

Minimum assets: $95.13 million

Minimum liabilities: $0

Virginia’s senior senator, who recently became the junior Democrat on the Senate Finance Committee, made an enormous fortune as a venture capitalist before he turned 40, which is about when he began spending some of his millions to launch his rapid rise in Virginia politics.

After taking a job out of law school as a fundraiser for the Democratic National Committee, Warner started ventures in energy and real estate, but really hit it big in telecommunications. He convinced some investors to help him purchase cellular telephone licenses the government was selling for a relative song in the early 1980s and then staked a big and early claim in Nextel, which soon blossomed into one of the biggest wireless service providers. It was swallowed by Sprint Corp. a decade ago, by which point Warner had been state party chairman, staged one closer-than-expected bid for the Senate, had been elected governor and was being touted as a prime presidential prospect. Instead, he cruised into the Senate six years ago on a “radical centrist” platform and is the clear but not quite prohibitive favorite to win his second term this fall.

After big gains in his personal fortune the previous year, Warner’s net worth stayed flat in 2013. His minimum net worth decreased by $1 million since last year — a minuscule fraction of the $95.1 million total. Warner has no liabilities, and his assets remain largely tied up in blind trusts for the benefit of his family — portfolios over which he has no control and minimal awareness of the assets or transactions. The MRW Blind Trust is for the senator’s benefit. The LDC Blind Trust is for the benefit of his wife, Lisa Collis. Their children also have several hundred thousand dollars worth of assets in their trusts.

The senator’s most valuable investments are worth more than $5 million each. All five are part of his blind trust.

Warner sits on the board of directors of The Kennedy Center for the Performing Arts. He is also on the board of the Collis Warner Foundation, Inc., the family’s charitable arm run by his wife. He reports no earned income from either position.

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Rep. Jared Polis (D-CO)

Net worth: $73.56 million

Minimum assets: $80.09 million

Minimum liabilities: $6.53 million

The youngest lawmaker among the 10 wealthiest members of Congress, Polis has a diverse and unusual portfolio stocked with emerging growth and startup investments.

The Colorado Democrat’s assets include stakes of at least $1 million in the world’s only aquaculture venture capital firm, Aquacopia; the Colorado Internet startup Confluence Commons Inc. (to which he also extended a line of credit worth at least $5 million) and the AIP Japan Fund V, which invests in senior housing in that country. Polis also has a blind trust worth at least $25 million that he set up after being elected to Congress. It delivered more than $1 million of income last year.

Diverse real estate investments in Colorado and Japan yielded at least $480,000 in additional income. And Polis benefited from the run-up in the value of stock in the ride-share company Uber Inc., with a stake now worth at least $500,000.

Polis reported more than $6.5 million in liabilities, including a Merrill Lynch line of credit worth at least $5 million.
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Sen. Richard Blumenthal (D-CT)

Net worth: $62.06 million

Minimum assets: $62.56 million

Minimum liabilities: $0.5 million

Blumenthal may have been the biggest loser year-to-year in Congress, with a minimum net worth that fell more than $20 million and dropped him a few places on the 50 Richest list. However, the Connecticut Democrat filed an amendment last October to his 2012 disclosure form concerning the trust of his wife, Cynthia, the daughter of New York real estate magnate Peter Malkin. The adjustment means 2013 may not have brought nearly as much hardship to the couple as it seems.

Blumenthal’s 2013 filing is speckled with private equity and hedge fund holdings. There’s also a real estate company in Sao Paulo, Brazil, multiple properties in midtown Manhattan and entities that leased and operated the Empire State Building. Blumenthal additionally lists at least $600,000 worth of gold held at JPMorgan.

The senator receives an annual pension for his 20 years of service as Connecticut’s attorney general before being elected in 2010, and he reported a single mortgage of $500,001 to $1 million as a liability.
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Rep. Scott Peters (D-CA)

Net worth: $45.04 million

Minimum assets: $45.11 million

Minimum liabilities: $0.07 million

The freshman Democrat from San Diego remains among the dozen richest members for a second straight year. He reported minimum net worth of $45 million at the end of his first year in the House, an increase of less than 1 percent since his year as a candidate.

That’s thanks in part to the investments he made with the millions he earned as an environmental attorney in the 1990s representing businesses and government agencies in their regulatory disputes. But it’s also because his wife, Lynn Gorguze, has been successful at the helm of Cameron Holdings, a private equity firm focused on manufacturing enterprises established by her father, former Emerson Electric executive Vincent Gorguze. She holds at least $14 million in assets, mainly investments in mutual funds and manufacturing companies.

Peters, who’s in a tossup race for a second term in one of California’s most politically competitive districts, has so far donated about $72,000 to his campaign. He invested almost $3 million to oust GOP incumbent Brian Bilbray in 2012, and Peters clearly has the resources to spend that much and more this fall. He continues to invest heavily in municipal bonds, with $12.5 million in paper issued all across his home state, along with notes issued by local governments in nine other states and Puerto Rico.

The congressman also reported $21,000 in pension payments from the City of San Diego, where he was a councilman for eight years and a port commissioner for four years. He donated the retirement nest egg to the city’s public library.
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Sen. Dianne Feinstein (D-CA)

Net worth: $43.72 million

Minimum assets: $43.72 million

Minimum liabilities: $0

Not much has changed for Feinstein and her husband, private equity magnate Richard Blum, except that the form published for 2013 did not show the $2 million in liabilities present a year ago.

Feinstein’s a classic case of one of the biggest faults in the reporting requirements: assets in Blum’s name may be reported in a broad category of more than $1 million, so the calculated minimum net worth may be a significant understatement.

Blum’s assets include holdings in Current Media, the company headed by former Vice President Al Gore that was sold to Al-Jazeera. He has significant holdings through Blum Capital Partners in an array of businesses, including the Carlton Hotel chain and OZ Fitness.
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Rep. Suzan DelBene (D-WA)

Net worth: $37.89 million

Minimum assets: $37.89 million

Minimum liabilities: $0

DelBene saw her wealth increase substantially over the past year as the price of stock in Microsoft, where she and her husband both worked as executives, rose and they sold it off.

The Washington Democrat reported a minimum of $37.9 million in assets in 2014. That’s $14 million more than last year, when the freshman lawmaker first landed on the list. She is the second wealthiest women in Congress and is tops among first-term, female lawmakers.

She and her husband, Kurt, who left Microsoft last year and now oversees the federal government’s online health care enrollment website, HealthCare.gov, made at least $2.5 million last year by selling off their remaining stock in the technology giant. Not surprisingly, Kurt DelBene returned his federal salary to the U.S. Treasury.

The largest new asset the couple listed is their main residence worth at least $5 million in Medina, Wash., a tony enclave just outside of Seattle whose most famous resident is Microsoft founder Bill Gates. They do not hold a mortgage on the property.

Most of their other assets are spread across a variety of investment accounts, including two funds worth at least $5 million apiece. They also have several million dollars invested in both university and municipal bonds. DelBene lists no liabilities.

Photo: stanfordsis via Flickr

In Colorado, Lines Are Drawn For Election Battle Over Fracking

In Colorado, Lines Are Drawn For Election Battle Over Fracking

By Maeve Reston, Los Angeles Times

GREELEY, Colo. — When Rep. Jared Polis found that a 100-foot tower and a drilling operation had been built last year across the road from his weekend home, he told his story on YouTube, predicting that by fighting for “sensible regulations” he would become the anti-fracking “poster boy.”

That could come true if two Polis-backed ballot measures to restrict fracking in Colorado qualify for the November ballot. If proponents have collected enough valid signatures by Monday, the state’s voters will decide on one initiative requiring all new oil and gas wells to be set back 2,000 feet from any home or school — a major expansion of the current buffer requirement of 500 feet — and a second that would give communities more control over drilling by adding an “environmental bill of rights” to the state’s constitution.

Polis’ proposed ballot measures have touched off a furious battle in this state, where the number of active wells has doubled in the last decade, creating thousands of jobs in what has become a $29.5 billion industry. Among those who do not share his views: two fellow Democrats in re-election races for governor and U.S. Senate. Those races would be far more unpredictable with the measures on the ballot.

Polis said he was prompted to act after learning that thousands of constituents faced experiences similar to his own in Weld County. The quest to find “some sense of balance” in fracking regulations, he said, has become a pressing issue. Polis, who is independently wealthy, has not disclosed how much he plans to spend on the ballot measures or how much he has put in so far.

At least nine other states have enacted regulations governing fracking, according to the National Conference of State Legislatures, and hundreds of bills to restrict the practice have been proposed in state legislatures across the country.

“People are worried about their health, their family’s health, water and surface spills,” Polis said. “The jobs this is costing, the damage to our economy, the damage to the quality of life, continues every day that we don’t have sensible regulations.”

Opponents argue that the two measures would amount to a backdoor ban on hydraulic fracturing, a technique in which water, sand and chemicals are injected into the ground at high pressure to extract oil and gas. Primed for the fight by the decision of five Colorado towns to ban fracking since 2012, the oil and gas industry and aligned business groups have vowed a vigorous campaign that is expected to cost tens of millions of dollars.

The anticipated flood of spending has made the initiatives the biggest wild cards in the November election, when Coloradans will also decide whether to re-elect U.S. Senator Mark Udall and Governor John Hickenlooper, both Democrats.

The reason: Colorado’s views on fracking do not break neatly along party lines, and voters have been almost evenly divided.

The ballot measures “could have an impact on all sides,” said Craig Hughes, a Colorado political consultant who ran Democratic Senator Michael Bennet’s winning campaign in 2010. “It’s too easy and simplistic to say it will help one side or the other.”

Several political experts said a get-out-the-vote program funded by wealthy opponents of the measures could turn out more white Republican men than a normal midterm election year, but could also motivate low-income Latino and African-American voters who are concerned about the potential loss of jobs.

Complicating the ability to predict voter behavior is the fact that the intensity of sentiments about fracking tends to vary widely depending on how close voters live to wells. Residents in Weld County, where the concentration of wells is the highest, are often far more engaged, for example, than those in the more populous Denver suburbs.

Hickenlooper, a former petroleum geologist who once drank fracking fluid to show that it was “benign,” spent months trying to forge a compromise. When that failed, he vowed to fight the measures, which he said “risk thousands of jobs, billions of dollars in investment, and millions of dollars in tax revenue.”

The governor’s stance on oil and gas issues has angered some environmentalists, who view him as too closely aligned with the industry. That could cost him in the toss-up race against Republican Bob Beauprez.

In the Senate race, Republican Rep. Cory Gardner has accused Udall of failing to fight for Colorado jobs when he avoided taking a position on the ballot measures for months.

“If an energy ban is passed in Colorado, it will overnight wipe out 120,000 jobs, $12 billion of our economy, $1 billion of taxes that fund new roads and new schools,” Gardner said in an interview, drawing figures from a University of Colorado economic study.

Udall ultimately came out against the ballot measures, framing them as “one-size-fits-all restrictions.” He said Gardner was putting up “a straw man” by suggesting that he would stand in the way of energy development.

“Coloradans believe that we should not drill everywhere, but there are many places we should,” Udall said in an interview. “But there is a balance; we can protect jobs and we can protect our quality of life.”

As those debates play out on the campaign trail, activists on both sides are preparing for battle.

The Polis-backed group leading the signature drive, Coloradans for Safe and Clean Energy, has publicized the more than 495 spills that occurred in 2013. An analysis by the Denver Post last week showed that oil and gas spills are occurring at a rate of two a day this year, often without notification to residents.

“This industry is completely running roughshod over the state right now,” said Nick Passante, a spokesman for the signature group.

But opponents of the ballot measures say the spill data are being distorted for political gain. An industry-backed issue committee called Protecting Colorado’s Environment, Economy and Energy Independence is already running ads meant to dispel what they say are myths about fracking.

Spokeswoman Karen Crummy criticized “fear-mongering by environmentalists,” saying many Coloradans do not understand the practical effect of the two ballot measures. She noted, for example, that the state’s current 500-foot setback rule for wells affects an 18-acre area. Increasing that radius to 2,000 feet, she said, would affect a 288-acre area.

“There won’t be anyplace to really drill,” she said.

The other side disputes that analysis. The argument over who is doing more cherry-picking of the data will continue well into the fall, at great cost.

“I think people understand what’s at stake here,” said Dan Hopkins, spokesman for a business group known as Coloradans for Responsible Reform, which has reserved $8 million in television time against the ballot measures. “Over the next few months it will get even clearer.”

Photo: Jimmy Emerson, DVM via Flickr