A real estate investment by House Democratic leader Nancy Pelosi's husband went undisclosed for years and has opened a window into a loophole that allows House members to avoid specifying some of their financial assets.
In 2010 and 2011, Pelosi voluntarily reported the Sacramento, land investment as an asset of her multimillionaire husband, Paul. She had not reported the investment for about 10 years previously because it was held by an S corporation her husband had set up, said Nadeam Elshami, a spokesman for the California congresswoman.
Under House financial disclosure rules, lawmakers are not obligated to specify the separate assets of an S corporation which is a business in which individual investors pay taxes on
profits rather than the company.
Pelosi decided in 2010 to voluntarily disclose the investment because the land had become more valuable, Elshami said.
Pelosi first reported in 2010 her husband's investment in Russell Ranch LLC. It was described then as undeveloped residential real estate in Sacramento worth between $1 million and $5 million. In 2011, she listed the value between $5 million to $25 million.
In 2009, when Nancy Pelosi was the House's speaker, she had vocally promoted the daughter of her husband's business partner in Russell Ranch as U.S. ambassador to Hungary. Elshami said there was no connection between reporting the investment and the ambassadorship. Eleni Tsakopoulos Kounalakis was confirmed by the Senate for the position.
"The decision was made to list the asset voluntarily and separately for clarity and transparency purposes. It was added to the report because (the value of the land) was a larger amount,''
Paul Pelosi had said earlier that he had been a limited partner in Russell Ranch for more than a dozen years.
"My initial investment was in the $1 million to $5 million range,'' he said. "Recently, the general partner determined that the value of my interest was in excess of $5 million and that's why it was reported in that category. It's been close to $5 million for several years.''
Pelosi's disclosure of the Russell Ranch investment was first reported by The Washington Times.
She regularly disclosed the range of total assets of her husband's S corporation in accordance with the rules.
Congressional ethics watchdogs said disclosing the specific investments of an S corporation should be required in the House rules. Staff members at the House Ethics Committee and the watchdog groups said they did not know how or why they escaped coverage.
Bill Allison, editorial director at the Sunlight Foundation, said, "You don't have to list every copy machine but major investments should have to be disclosed.''
Common Cause spokeswoman Mary Boyle said, "We give Nancy Pelosi credit for disclosing when she didn't legally have to. In an ideal world, they should disclose this. It would be interesting to know why they exempted this in the first place.''
Melanie Sloan, director of Citizens for Responsibility and Ethics in Washington, said, "It seems clear there's a need to fix it. We have richer and richer members, and they may have more of this sort of thing. Leader Pelosi didn't violate the rules.''