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The AP Gets It Wrong: Desperate to get their scandals off the front page, the Republican Party is once again trying to smear Democrats. And this time, they're using the Associated Press to do it. The Associated Press gets it all wrong. The discredited reporter uses innuendo, intrigue and sensationalism to support a theory that simply isn’t true. The story is largely derived from talking points and bizarre allegations that have been posted on right wing web sites. This is not the first time Mr. Solomon has reported RNC research as fact. In a story he wrote in 2004, Mr. Solomon took language directly from an RNC document attacking Senator Kerry. Here are the facts: Senator Reid owned the land he sold in 2004. Reid’s 1998 land investment with Jay Brown was a proper and normal business transaction at market prices. Mr. Solomon’s insinuations that this land investment was related to federal land swaps that took place in the mid 1990’s are wholly inaccurate. Senator Reid and Jay Brown have been friends for 35 years, having met well before Senator Reid became an elected official. At the end of a phone interview with AP Radio on the midterm elections and Iraq, the AP instructed its journalists -- who had no information about Mr. Solomon’s story -- to ask Senator Reid about Mr. Solomon’s allegations. This exchange came only days after our office had met at length with Mr. Solomon for a detailed discussion. The AP radio division editor later called to apologize for ambushing Senator Reid with this question. AP Exclusive: Reid got $1 million for land he hadn't owned for 3 years The Facts: Senator Reid owned the land until he sold it. AP Graphic REID TIMELINE By JOHN SOLOMON and KATHLEEN HENNESSEY Associated Press Writers WASHINGTON (AP) _ Senate Democratic Leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show. The Facts: Senator Reid purchased land in 1998, sold it in 2004, and fully reported those transactions and his holdings during those six years. The creation of an LLC to manage the investment in 2001 was a technical legal step that did not alter Senator Reid’s actual ownership interest in the land. The reporters did the math wrong. Reid invested $400,000 in land, so his profit was several hundred thousand dollars less than the $1.1 million the lead sentence states. In the process, Reid did not disclose to Congress an earlier sale in which he transferred his land to a company created by a friend and took a financial stake in that company, according to records and interviews. The Facts: This sentence describes the transfer of land to an LLC by the LLC owners; it is not a sale. There was no sale to disclose. The Nevada Democrat's deal was engineered by Jay Brown, a longtime friend and former casino lawyer whose name surfaced in a major political bribery trial this summer and in other prior organized crime investigations. He's never been charged with wrongdoing _ except for a 1981 federal securities complaint that was settled out of court. The Facts: Nevada is a small state and Jay Brown has friendships and professional relationships with many prominent Nevadans of both political parties. Jay Brown is heavily involved in Nevada politics as a fundraiser and a donor to both Republicans and Democrats. Outdated allegations about Jay Brown’s activities and associates have no bearing on Senator Reid. Land deeds obtained by The Associated Press during a review of Reid's business dealings show: _The deal began in 1998 when Reid bought undeveloped residential property on Las Vegas' booming outskirts for about $400,000. Reid bought one lot outright, and a second parcel jointly with Brown. One of the sellers was a developer who was benefiting from a government land swap that Reid supported. The seller never talked to Reid. _In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land. The Facts: The creation of Patrick Lane, LLC, in 2001 involved a technical transfer of title from Reid and Brown. Reid and Brown continued to own the land through Patrick Lane and they continued to split the cost of property taxes and other expenses associated with the land consistent with their respective ownership interests. The public record of the zoning hearing discussed below reflects that Senator Reid was a principal in Patrick Lane with an ownership interest in the land. Since Senator Reid continued to own the land after the creation of Patrick Lane, LLC, he properly continued to list his ownership of the land on his financial disclosure forms prior to the actual sale of the land in 2004. It is not accurate to say that he reported that he “personally owned the land” – he reported he owned the land. There is no box on the form labeled “personal” or “corporate.” The use of an LLC to manage land investments efficiently is routine. It makes later legal transactions easier and addresses liability issues that might arise during the course of development. _After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator's investment. Reid reported it to Congress as a personal land sale. The Facts: Senator Reid did not report it as a “personal” land sale. He reported the sale. There is no “personal” or “corporate” box on the form. Following re-zoning, the neighboring landowners approached Brown about purchasing the Patrick Lane property. The Reids and Browns sold the lots in early 2004 at a fair market price of $1.6 million. The development is now valued between $5.6 million and $13 million, just two years later. The sale of the land was properly reported on Senator Reid’s financial disclosure form. The complex dealings allowed Reid to transfer ownership, legal liability and some tax consequences to Brown's company without public knowledge, but still collect a seven-figure payoff nearly three years later. The Facts: Forming an LLC is not a “complex dealing” and the company was not “Brown’s company” – the LLC was owned by Reid and Brown. There are many reasons for forming an LLC: Like a corporation, an LLC is a separate and distinct legal entity. An LLC can obtain a tax identification number, open a bank account, and do business, all under its own name. [Missouri Business.Net] “It has the tax benefits of partnership,” while “limiting the liability of its members.” So, in the event the LLC were to go bankrupt, the members of the LLC would not be personally responsible for the loss. [“Limited Liability Company (LLC) Basics,” Business Week] Reid hung up the phone when questioned about the deal during an AP interview last week. The Facts: At the end of a phone interview with AP Radio on the midterm elections and Iraq, the AP instructed its journalists -- who had no information about Mr. Solomon’s story -- to ask Senator Reid about Mr. Solomon’s allegations. This exchange came only days after our office had met at length with Mr. Solomon for a detailed discussion. The AP radio division editor later called to apologize for ambushing Senator Reid with this question. The senator's aides said no money changed hands in 2001 and that Reid instead got an ownership stake in Brown's company equal to the value of his land. Reid continued to pay taxes on the land and didn't disclose the deal because he considered it a "technical transfer," they said. The Facts: Putting Land into an LLC is entirely appropriate. “[P]utting title to land in a Limited Liability Company in Nevada is not unusual at all. It fact it is not only very common, it is oftentimes preferred. It is entirely appropriate and often recommended that land investors use an LLC for the purposes of holding and transferring land.” [Statement of Chris Kaempfer senior partner at Kummer Kaempfer Bonner Renshaw & Ferrario, founder of its Land Use Practice and land use practitioner for over 25 years] They also said they have no documents proving Reid's stake in the company because it was an informal understanding between friends. The Facts: Under Nevada law, the legal default is that each member of an LLC receives an ownership interest in the LLC consistent with his or her contribution to the formation of the LLC. There is no need to have a document to record an ownership interest that exists as a matter of law. The 1998 purchase "was a normal business transaction at market prices," Reid spokesman Jim Manley said. "There were several legal steps associated with the investment during those years that did not alter Senator Reid's actual ownership interest in the land." Senate ethics rules require lawmakers to disclose on their annual ethics report all transactions involving investment properties _ regardless of profit or loss _ and to report any ownership stake in companies. The Facts: The creation of an LLC in 2001 did not result in profit or loss to Senator Reid because it was not an actual sale. Reid continued to own the land through the LLC and continued to report his ownership of the land until he actually sold it in 2004. If the Ethics committee requests a technical correction to Senator Reid’s financial disclosure forms we are happy to provide one. Kent Cooper, who oversaw government disclosure reports for federal candidates for two decades in the Federal Election Commission, said Reid's failure to report the 2001 sale and his ties to Brown's company violated Senate rules. "This is very, very clear," Cooper said. "Whether you make a profit or a loss you've got to put that transaction down so the public, voters, can see exactly what kind of money is moving to or from a member of Congress." The Facts: There is no issue of “profit or loss” when a person transfers land to an LLC that he or she owns. "It is especially disconcerting when you have a member of the leadership, of either party, not putting in the effort to make sure this is a complete and accurate report," said Cooper. "That says something to other members. It says something to the Ethics Committee." Other parts of the deal _ such as the informal handling of property taxes _ raise questions about possible gifts or income reportable to Congress and the IRS, ethics experts said. Stanley Brand, former Democratic chief counsel of the House, said Reid should have disclosed the 2001 sale and that his omission fits a larger culture in Congress where lawmakers aren't following or enforcing their own rules. "It's like everything else we've seen in last two years. If it is not enforced, people think it's not enforced and they get lax and sloppy," Brand said. SALE HIDDEN FROM CONGRESS The Facts: The reporter continues to refer to the 2001 transfer of land by Senator Reid to his own LLC as a sale. There was no sale in 2001. Reid and his wife, Landra, personally signed the deeds selling their full interest in the property to Brown's company, Patrick Lane LLC, for the same $400,000 they paid in 1998, records show. Despite the sale, Reid continued to report on his public ethics reports that he personally owned the land until it was sold again in 2004. His disclosure forms to Congress do not mention an interest in Patrick Lane or the company's role in the 2004 sale. The Facts: The company was not “Brown’s company” -- Senator Reid and Brown were owners of the LLC. There was no sale in 2001. Again, if the Ethics committee requests a technical correction to Senator Reid’s financial disclosure forms we are happy to provide one. AP first learned of the transaction from a former Reid aide who expressed concern the deal hadn't been properly reported. Reid isn't listed anywhere on Patrick Lane's corporate filings with Nevada, even though the land he sold accounted for three-quarters of the company's assets. Brown is listed as the company's manager. Reid's office said Nevada law didn't require Reid to be mentioned in the filings. "We have been friends for over 35 years. We didn't need a written agreement between us," Brown said. The informalities didn't stop there. PROPERTY TAXES LOOSELY HANDLED Brown sometimes paid a share of the local property taxes on the lot Reid owned outright between 1998 and 2001, while Reid sometimes paid more than his share of taxes on the second parcel they co-owned. The Facts: Throughout each year they owned the land, Senator Reid and Jay Brown paid taxes on it in proportion to their ownership interest. And the two men continued to pay the property taxes from their personal checking accounts even after the land was sold to Patrick Lane in 2001, records show. The reporter fails to understand his own fact: Senator Reid and Brown continued paying taxes on the land after 2001 in the same way they did before 2001 because nothing had changed. Their LLC was just a vehicle to hold the land, it had no assets or existence outside of Reid and Brown and their land investment. Brown said Reid first approached him in 1997 about land purchases and the two men considered the two lots a single investment. "During the years of ownership, there may have been occasions that he advanced the property taxes, or that I advanced the property taxes," Brown said. "The bottom line is that between ourselves we always settled up and each of us paid our respective percentages." Ultimately, Reid paid about 74 percent of the property taxes, slightly less than his actual 75.1 ownership stake, according to canceled checks kept at the local assessor's office. One year, the property tax payments were delinquent and resulted in a small penalty, the records show. Ethics experts said such informality raises questions about whether any of Brown's tax payments amounted to a benefit for Reid. "It might be a gift," Cooper said. Brand said the IRS might view the handling of the land taxes as undisclosed income to Reid but it was unlikely to prompt an investigation. "If someone is paying a liability you owe, there may be some income imputed. But at that level, it's pretty small dollars," he said. The Facts: When two business partners pay their proportional share of the costs of an investment, it is not a gift or income, period. FEDERAL LAND SWAPS Nevada land deeds show Reid and his wife first bought the property in January 1998 in a proposed subdivision created partly with federal lands transferred by the Interior Department to private developers. The Facts: The land swaps he is referring to here were all completed four years before Senator Reid bought his land. Reid's two lots were never owned by the government, but the piece of land joining Reid's property to the street corner _ a key to the shopping center deal _ came from the government in 1994. One of the sellers was Fred Lessman, a vice president of land acquisition at Perma-Bilt Homes. Around the time of the 1998 sale, Lessman and his company were completing a complicated federal land transfer that also involved an Arizona-based developer named Del Webb Corp. The Facts: Fred Lessman, part owner of one of the lots purchased by Reid and Brown and then- executive with Perma-Bilt refutes the suggestion that he had a relationship with Senator Reid. “I was first approached to sell the property at issue by my partner in the deal, who had been approached by another broker. The sales price was based upon fair market value. I had absolutely no contact whatsoever with Senator Reid or his office (or anyone acting on his behalf for that matter) about the land transaction or any Perma-Bilt land exchange. The land obtained by Perma-Bilt in its land exchange was nowhere near this property. Any suggestion that the land sale between Senator Reid and myself is somehow tied in with the Perma-Bilt exchange is completely absurd.” [Statement of Fred Lessman] In the deal, Del Webb and Perma-Bilt purchased environmentally sensitive lands in the Lake Tahoe area, transferred them to the government and then got in exchange several pieces of valuable Las Vegas land. The Facts: The PermaBilt land swap and the Del Webb land swap were separate land swaps involving separate companies and separate parcels of land. Lessman was personally involved, writing a March 1997 letter to Interior lobbying for the deal. "This exchange has been through many trials and tribulations ... we do not need to create any more stumbling blocks," Lessman wrote. The Facts: At the time Fred Lessman wrote this letter in 1997, neither Del Webb nor Permabilt had even considered buying the land in Lake Tahoe that was involved in t he 1998 transaction. For years, Reid also had been encouraging Interior to make land swaps on behalf of Del Webb, where one of his former aides worked. In 1994, Reid wrote a letter with other Nevada lawmakers on behalf of Del Webb, and then met personally with a top federal land official in Nevada. That official claimed in media reports he felt pressured by the senator. Reid denied any pressure. The next year, Reid collected $18,000 in political donations from Del Webb's political action committee and employees. Del Webb's efforts to get federal land dragged on. In December 1996, Reid wrote a second letter on behalf of Del Webb, urging Interior to answer the company's concerns. The deal came together in summer and fall 1997, with Perma-Bilt joining in. In January 1998 _ just days before he bought his land _ Reid applauded the Lake Tahoe land transfers, saying they would create the "gateway to paradise." None of Reid's letters mentioned Perma-Bilt. Reid's office said the senator never met Lessman nor discussed the Lake Tahoe land transfer or his personal land purchase. A real estate attorney handled the 1998 sale at arms-length, aides said. "This land investment was completely unrelated to federal land swaps that took place in the mid-1990's," Manley said. Lessman said he never talked to Reid or asked for his help before the 1998 land sale, and only met the senator years later at a public event. "Any suggestion that the land sale between Senator Reid and myself is somehow tied in with the Perma-Bilt exchange is completely absurd," Lessman said. THE REZONING Clark County intended for the property Reid owned to be used solely for new housing, records show. Just days before Reid sold the parcels to Brown's company, Brown sought permission in May 2001 to rezone the properties so a shopping center could be built. Career zoning officials objected, saying the request was "inconsistent" with Clark County's master development plan. The town board in Spring Valley, where Reid's property was located, also voted 4-1 to reject the rezoning. The Facts: Nothing unusual about rezoning. Virginia Valentine, Clark County Manager, says that rezoning applications are frequently approved. “Based on the fast changing needs of communities in the Las Vegas Valley, the Clark County Commission reviews and frequently approves rezoning applications. Meetings are held twice a month to consider zoning changes. In 2001 and 2002, the County received over 370 applications for non-conforming zone changes, over three-quarters of which were approved. “Each individual request is initially reviewed by staff, followed by careful consideration by the Planning Commission and the full County Commission, which has final responsibility for zoning decisions on lands under county jurisdiction. All zoning meetings are public meetings with the opportunity for public input and discussion. The rapid rate of growth in southern Nevada means that zoning, rezoning and community planning are among the top issues on which the Clark County Commission deliberates.” Chris Kaempfer, senior partner at Kummer Kaempfer Bonner Renshaw & Ferrario, founder of its Land Use Practice and land use practitioner for over 25 years: “It is not uncommon now, and especially was not uncommon back in 2001 and 2002 (before the Land Use Guides had been updated), for the County Commission to approve a non-conforming zone change despite a staff recommendation of denial. Over the last 6 years, literally hundreds of non-conforming zone changes have been approved over a staff recommendation of denial. County planning staff virtually always will recommend denial of a non-conforming zone change. However, unlike the responsibilities of County planning staff, which are by their nature more limited, it is the responsibility of the County Commission to consider factors other than compliance with the Land Use Guide. The Commission must consider changes in the neighborhood, traffic patterns, similar zone changes in the area, neighborhood input and a myriad of other factors which would make compliance with the Land Use Guide in a particular case either unnecessary or inappropriate. That is why over the years many non-conforming zone changes have been approved despite a staff recommendation of denial. . .” [Statement of Chris Kaempfer] Brown persisted. The Clark County zoning board followed by the Clark County Commission voted to overrule the recommendation and approve commercial zoning. Such votes were common at the time. The Facts: Such votes were extremely common. As Ms. Valentine’s statement notes – over ¾ of such “not conforming” zone changes were approved in the 2001-2002 time period. At least six applications for non-conforming zone changes were approved by the Planning Commission and the County commission on the same day that the Patrick Lane application was considered following a contrary staff-level recommendation. Moreover, a year before the Patrick Lane zoning application, a parcel of land across the street had received approval for similar re-zoning despite a negative staff recommendation. [Information available on the Clark County Website here: http://dsnet.co.clark.nv.us/webimage/dsimageview.asp] Before the approval in September 2001, Brown's consultant told commissioners that Reid was involved. "Mr. Brown's partner is Harry Reid, so I think we have people in this community who you can trust to go forward and put a quality project before you," the consultant testified. With the rezoning granted, Patrick Lane pursued the shopping center deal. On Jan. 20, 2004, the company sold the property to developers for $1.6 million. Today, a multimillion dollar retail complex sits on the land. Las Vegas is developing rapidly – profit from a land investment should be expected. The land in question is now worth as much as $13 million. More than 5,000 People Move to Clark County, NV Every Month. “Clark County is one of the fastest-growing areas in the country, with more than 5,000 people moving here each month. Three of five of them move into unincorporated Clark County, often because of economic opportunities. The county has about 38,930 licensed businesses.” [Clark County Website] One New Home Is Completed Every Nine Hours in the Las Vegas Metro Area. “A concept all southern Nevadans are familiar with is growth. It is estimated that construction of a new home is completed about every nine hours, 365 days a year in the Las Vegas metro area. In 2000 a total of 21,216 new homes and 26,493 resale homes were purchased. More than one third of all homes in the Las Vegas area are five years old or newer. Median sales prices of homes in Las Vegas are among the most reasonable in the country, as are property taxes.” [Las Vegas Chamber of Commerce] Twenty Residential Development Projects of over 300 Acres Each Are Currently Being Completed. [Las Vegas Chamber of Commerce] Population and Employment Expected to Grow by 4%. Clark County's population is expected to grow by about 4 percent in 2006, while employment will grow about 4 to 5 percent, according to statistics from UNLV's Center for Business and Economic Research. On Jan. 21, 2004, Reid received more than $1.1 million of the sale proceeds. Reid disclosed the money the following year on his Senate ethics report as a personal sale of land, not mentioning Patrick Lane. The Facts: Reid did not disclose the sale of land as a “personal sale” – he disclosed the transaction . There is no place on the form to check “personal” or “corporate.” A BUSINESS PARTNER'S PAST Brown has been a behind-the-scenes power broker in Nevada for years, donating to Democrats, Republicans and charities. He represented a major casino in legal cases and dabbled in Nevada's booming real estate market. The Facts: Jay Brown has given widely – over $100,000 in the past three election cycles -- to politicians inside and outside of Nevada. While his has predominantly given to a variety of Democratic candidates, Brown has given to Republican Senator John Ensign, Ensign’s Battle Born PAC, and Republican Congressman Jim Gibbons. For example, Jay Brown has donated $10,000 to Congressman Gibbons’s “Education First” PAC. Brown befriended Reid four decades ago, even before Reid served as chairman of the Nevada gaming commission and decided cases involving Brown's clients. Brown's name has surfaced in federal investigations involving organized crime, casinos and political bribery since the 1980s. This past summer, federal prosecutors introduced testimony at the bribery trial of former Clark County Commission chairman Dario Herrara that Brown had taken money from a Las Vegas strip club owner to influence the commission. Herrara was convicted of taking kickbacks. Brown was never called as a witness. Brown declined to discuss past cases where his name surfaced, including Herrara. "The federal government investigated this whole matter thoroughly, and there was never any implication of impropriety on my part," he said.
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