July 7 2010 10:11 AM

Congressional bloodhound should get a whiff of himself

For more than a year, Darrell Issa has been on a “tireless quest for scandal.”
Photo courtesy of Darrell Issa

 During the last 18 months, Congressman Darrell Issa has made a name for himself: “Obama's Chief Antagonist.”
At least, that's what the Washington Post recently dubbed the U.S. representative from Vista. Politico.com has called him a “conservative firebrand” whose “daily denunciations draw cheers from partisans and booking from TV producers.” Talking Points Memo described Issa's first 18 months as ranking Republican on the House Committee on Oversight and Government Reform as a “tireless quest for scandal.”

His investigations have included Toyota, ACORN, the Environmental Protection Agency and whether the Obama administration offered U.S. Rep. Joe Sestak a job to keep him out of the Pennsylvania Senate race.

“He's throwing a lot of mud and seeing what will stick,” says Melanie Sloan, executive director of the government watchdog group Citizens for Responsibility and Ethics in Washington (CREW). “I think he's always looking for an issue that he can use to hurt the White House. That doesn't mean he's always wrong. I just question his motives.”
Issa has made it clear that, should the Republicans gain a House majority in November, he plans to double his staff and begin issuing subpoenas.

These investigators may want to start with Issa himself. A CityBeat analysis of Issa's 2010 financial disclosure statementan annual report of his financial holdingsrevealed several conflicts of interest and a real-estate deal that benefited Issa to the tune of $3 million.

Issa filed his form on June 15, 2010, and, at 17 pages, it's significantly longer than most of his congressional colleagues (Rep. Brian Bilbray, for example, turned in an eight-page form). That's because Issa, who founded the company behind the Viper car-alarm system, is among the wealthiest members of Congressif not the richest.
Congress members are required to itemize all investments, income and transactions over the course of the previous year. However, they only have to specify that the value was within a certain range, such as $15,000 to $50,000 or $5 million to $25 million.

At the end of 2009, Issa was worth a minimum of $161 millionthe maximum is impossible to determine since Issa lists his company, DEI LLC, as worth “over $50 million.” He reported between $6 million and $37 million in income, not including his congressional salary. He also bought and sold at least $150 million in property, mutual funds, municipal bonds and other investments.

Last summer, Issa went on a property-buying spree. In the span of two months, he bought industrial complexes in Oceanside and Carlsbad and a condo overlooking Oceanside Bay. Even his son picked up a home in Vista.
The Carlsbad complex, however, is at the center of a lawsuit playing out in Los Angeles County Superior Court. A bank lender in Ventura County is accusing a bank of selling Issa the building for at least $3 million less than it should have.
The property is a series of five brand-new buildings near McClellan-Palomar Airport in Carlsbad. Currently, all but one unit is empty, but they can be rented through Greene Properties, a company that employs Issa's wife and son. The project was dreamed up by Orange County “new urbanism” developer David Dirienzo, who defaulted on a $36-million construction loan in January 2009.

The main lender, East West Bank, put the property up for auction but decided not to sell, instead filing a $12-million “credit bid” to hang onto it. Two weeks later, the bank sold the property to Issa's company, DEI LLC, for $8.5 million. 

In the complaint, Ventura County Business Bank, a secondary lender with an 8.3-percent interest in the original loan, accuses East West of negligence and “breach of implied covenant of good faith and fair dealing.” The complaint alleges that East West did not properly market the property and that the bank declined offers to buy the property and loan that were “significantly in excess” of what Issa paid. It specifically states that East West “discouraged” a potential buyer from making an $11.5-million bid on the property, which could have resulted in a $3-million discount for Issa.

This sort of real-estate deal may be familiar to San Diegans. In 2005, Randall “Duke” Cunningham, a former member of Congress representing San Diego County, was caught in a bribery scandal that centered around property bought and sold at abnormal prices.

“This certainly raises red flags,” says Craig Holman, government affairs lobbyist for Public Citizen's Congress Watch. The watchdog group expressed similar concerns in Copley Press reporter Marcus Stern's first story about the Cunningham scandal. “The property could not have lost $3 million in value in two weeks, so there must be some deliberate or careless pricing of the property that benefitted Issa.”

Issa did not return calls for this story, but he did answer questions posed by the Pacific Coast Business Times, when its reporter noticed the lawsuit when it was initially filed in Ventura County Superior Court.

“I realize that there's anomaly... The real [price] difference is in the perceived value,” he said.

Issa is not identified in the suit, which is something Ventura County Business Bank CEO Gerald Lukiewski emphasized to CityBeat before declining an interview. East West did not respond to interview requests.

Doug Lozier, a senior vice president at CB Richard Ellis, the firm that brokered the deal, offered a possible explanation for the anomaly. Although he has no direct knowledge of the deal, he says that Issa's companies have a reputation of being financially sound. East West may have preferred a smooth sale with Issa rather than a prolonged transaction with a higher bidder.

“If Issa could pay all cash, but for $3 million less, that might've made it appealing to the seller,” Lozier says.
Based in Pasadena, East West Bank specializes in serving the Chinese-American community. In December 2008, it received more than $306 million in federal bailout money. During the last year, it has grown into the largest independent bank in Southern California, in part because the Federal Deposit Insurance Company chose East West to take over the accounts of two failed banks. In one case, the FDIC blocked a Chinese takeover of the bank in order to hand it to East West.

CityBeat has so far been unable to establish any specific connections between Issa and East West Bank: Bank officials have not contributed to his campaign and he has sponsored no legislation that would specifically benefit the bank.
That said, Issa has established himself as an enemy of the financial-reform plan forwarded by Democrats and the White House. The day after the East West deal closed, for example, Issa issued a statement opposing expanded regulation. He claimed: “Government regulators have played shadowy roles in organizing bailouts and face serious accusations that they have abused their authority.”

Zachary Roth, the former Talking Points Memo writer who profiled Issa, sees an irony here.

“Just about every time there's even the slightest hint of wrongdoing by the Obama administration, Congressman Issa is the first in line to call for an investigation,” Roth says. “If an administration official had potentially received a $3 million discount on a foreclosed property, does anyone think Issa wouldn't be jumping up and down about it?”
Dave Levinthal, spokesman for the Center for Responsive Politics, says Issa should come forward with the details of the deal.

“There might be much ado about nothing,” Levinthal says. “But at the same time, when you're talking about deals with millions and millions of dollars then an explanation on the representative's part would be helpful.”
CREW would like Issa to explain some of his investments in Goldman Sachs; by the end of 2009, Issa had between $5.1 million and $15.5 million invested in the embattled financial giant's High Yield Fund. After the Securities and Exchange Commission filed a fraud lawsuit against Goldman Sachs in April 2010, Issa launched an investigation, alleging that the SEC may have timed the lawsuit to bolster the Democrats' push for financial reform.

“The Goldman Sachs thing is the most troubling,” CREW's Melanie Sloan says. “That he recently invested money with Goldman Sachs and then is making statements protective of Goldman Sachs suggests his views may be informed more by his own financial holdings than Goldman Sachs' actions.”

Issa's financial disclosures also reveal that he is the landlord for the Cincinnati headquarters of Environmental Quality Management, a company that provides emergency-response and clean-up services to federal entities such as the Environmental Protection Agency (EPA) and the Department of Defense. The firm has received $724 million in federal money since 2000, including contracts for Hurricane Katrina clean-up and Columbia Space Shuttle Recovery.
Only July 1, 2010, Issa released a report titled “How the White House Public Relations Campaign on the Oil Spill is Harming the Actual Clean-up,” which challenges the timeliness and amount of assets the administration has dedicated to the spill.

EQM has received more $7 million since 2004 from the EPA for oil spill clean-up projects; none so far has been related to the Deepwater Horizon spill.     

Write to dave@sdcitybeat.com and editor@sdcitybeat.com.


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