Secretary of Commerce Embroiled in Countless Ethics Violations
U.S. Secretary of Commerce allegedly siphoned over $120 million from past business associates.
Even with a net worth of over $700 million, Secretary of Commerce Wilbur Ross has a reputation of intense frugality – such as stealing handfuls of Sweet’N Low from a nearby restaurant so he didn’t have to buy his own. It seems like the habit of skimming from those around him also carried over into his professional life.
One of Ross’s former partners, David Storper, filed a lawsuit against Ross a few years ago for stealing some of his private equity interests and trying to cover it up with fake paperwork. While the case was settled confidentially between the two men two weeks ago, the lawsuit shed light on several other allegations (resulting in more lawsuits and even a $2.3 million SEC fine). The Commerce Secretary is alleged to have stolen $120 million throughout his career.
In addition to this, Ross lied to federal officials last November about selling the assets he promised, keeping between $10 to $50 million worth of stock. A month later, he finally sold the investments — and for $1.2 million more than he would have received in November. Since then, lawmakers have pressured the Securities & Exchange Commission to launch an investigation into his trading. Meanwhile, another group has asked the Inspector General to investigate conflicts of interest because Ross served as a business partner to a Chinese company while working on U.S.-China trade relations.
The Bottom Line: “[Ross] is a public servant who can’t tell the truth,” said one of his former colleagues, and the people deserve a public servant who can not only tell the truth, but one who values the people over money.
New York Rep. Chris Collins Arrested for Insider Trading
Law enforcement officials announced on Wednesday that NY Congressman Chris Collins has been arrested on charges on insider trading. While he served on the board for Innate Immunotherapeutics, a biotech company based in Australia, he passed nonpublic information along to his son, who then passed it along to his fiancee’s father. The tip involved a failed drug trial that Collins knew would hurt the company’s stock price, so the three men – along with countless others they told – sold their investments before the news broke, saving them roughly $768,000 in total. All three have now been indicted by a federal grand jury.
This is not the first time questions have been asked about Collins sharing information about Innate. Last year, Health and Human Services Secretary Tom Price received information from Collins about the biotech company, and Price’s investments in the company became a focal point of his confirmation hearing. A probe by the Office of Congressional Ethics later found in October “substantial reason to believe that Representative Collins shared material nonpublic information.”
Collins appeared in federal court Wednesday afternoon, and his lawyers vow he will be “completely vindicated.”
The Bottom Line: Ironically, Collins served on the Congressional Oversight and Investigations Subcommittee, which examines waste, fraud, and abuse of taxpayer dollars within a variety of government departments and agencies. Paul Ryan has since removed Collins from the committee. True oversight and accountability is impossible when one of the committee’s members is himself committing fraud and breaking the public trust.
A Federal Judge Just Closed a Huge Dark Money Loophole
On Friday, a federal judge ruled that dark money can no longer be spent on political advertisements.
Last Friday, a federal judge closed a loophole that allowed dark money to secretly fund political advertisements since 1980. The rule said that, as long as the donations weren’t designated for a specific political ad, non-political groups, or 501(c)4’s, didn’t have to disclose their donors to the public. The Citizens United ruling in 2010 only exacerbated this opaque donation process by removing limits for corporate and mega-wealthy individual donors. In 2016 alone, $180 million poured into the election through this loophole.
Citizens for Responsibility and Ethics in Washington (CREW) brought the lawsuit against the Federal Election Commission, specifically for their handling of a 501(c)4 group called Crossroads GPS. Crossroads, which spent $71 million in 2012, acted as the defendant.
Ultimately, Chief Judge Beryl Howell ruled that the FEC regulation undermined any attempt at campaign finance transparency and gave the FEC 45 days to close the loophole. There is debate over whether the ruling will affect spending this election cycle. Unfortunately, it does not affect dark money spending on “issue ads,” which do not explicitly promote a candidate. It is also likely that Crossroads GPS will seek to appeal the decision.
The Bottom Line: This lawsuit marks a turning point for campaign finance law since the Citizens United ruling, giving the people more accountability for the anonymous dollars that pour into our elections.
That’s all for this week, folks. If you have a corruption story you’d like to see covered here, send us an email at email@example.com