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Family matters JOSEPH A. SHEPARD, husband of Claire McCaskill, has seen his financial dealings become the target of political attacks. Now he talks about them.

Family matters JOSEPH A. SHEPARD, husband of Claire McCaskill, has seen his financial dealings become the target of political attacks. Now he talks about them.

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When an apartment complex for the elderly in Columbia, Mo., was about to go belly-up, the owners called Joseph A. Shepard.
Shepard, the husband of Democratic U.S. Senate candidate Claire McCaskill, loves fixing "a busted deal." So he snapped it up.
For 30 years, Shepard has used that flair for finance to amass a housing empire that, at one point, included nearly 10,000 apartments in 23 states.
When an apartment complex for the elderly in Columbia, Mo., was about to go belly-up, the owners called Joseph A. Shepard.
Shepard, the husband of Democratic U.S. Senate candidate Claire McCaskill, loves fixing "a busted deal." So he snapped it up.
For 30 years, Shepard has used that flair for finance to amass a housing empire that, at one point, included nearly 10,000 apartments in 23 states.

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Published by: Darin Reboot Congress on Sep 11, 2012
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St. Louis Post-Dispatch (Missouri)August 27, 2006 SundayFOURTH EDITIONFamily matters JOSEPH A. SHEPARD, husband of Claire McCaskill, has seen hisfinancial dealings become the target of political attacks. Now he talks aboutthem.BYLINE: By Virginia Young POST-DISPATCH JEFFERSON CITY BUREAU CHIEFSECTION: NEWSWATCH; Pg. B1LENGTH: 1448 wordsWhen an apartment complex for the elderly in Columbia, Mo., was about to gobelly-up, the owners called Joseph A. Shepard.Shepard, the husband of Democratic U.S. Senate candidate Claire McCaskill,loves fixing "a busted deal." So he snapped it up.For 30 years, Shepard has used that flair for finance to amass a housing empirethat, at one point, included nearly 10,000 apartments in 23 states.Now, those far-flung holdings have given the Missouri Republican Partyammunition against McCaskill in the Nov. 7 election. Party officials haveaccused her of hiding family assets, taking advantage of government subsidiesand conducting audits where she has conflicts of interest.The GOP has filed a complaint with the Senate Ethics Committee, alleging thatShepard's web of 264 interlocking companies is deliberately confusing.Questions revolve around how 175 of his partnerships can be valued at less than$1,000. McCaskill, the state auditor, said she has complied fully withdisclosure laws. According to the statement she filed with the Senate, thecouple's net worth totals between $13 million and possibly more than $30million.She said Shepard, whom she married in 2002, is a self-made businessman who hasimproved housing for poor people. His first project in the Bootheel region in1976 replaced "shacks, cardboard windows and outhouses.""Has he made money? Yes," she said. "But is there anything he's done that waswrong or illegal or not playing by the rules? No, of course not."Shepard, who avoided reporters when his nursing homes became an issue inMcCaskill's unsuccessful bid for governor in 2004, agreed to an in-depthinterview with the Post-Dispatch last month.For more than two hours in his white-columned office building in WebsterGroves, he answered questions. But he declined to turn over his tax return, asRepublicans have demanded."That's private," he said. McCaskill "argued with me, but I'm not going to doit."While Shepard's fortune provided $1.6 million when McCaskill battled Gov. BobHolden in 2004 for the Democratic nomination for governor, Shepard doesn'tanticipate a similar outlay this time."It's not like before," he said. "She ought to be able to make it on her own."
 
Who is Joe Shepard?The picture of Shepard that emerges from public records and interviews revealsa shrewd businessman who has aggressively sought public subsidies and mademillions, mainly in rural, low-income housing.In the mid-1980s, he even had a Washington office and traveled there every weekto lobby for the Council for Rural Housing and Development.Shepard, 60, said he has been hooked on business since his first accountingclass. He attended Principia College, a school for Christian Scientists inElsah, Ill., about 35 miles from St. Louis. Graduating in 1968, he was brieflya church practitioner, or lay minister, but found "it wasn't my calling."He soon got his first taste of deal-making. Shepard returned to his hometown ofEast Lansing, Mich., to help salvage his father's Red Wing shoe stores, whichwere threatened by the debts of a sister business.Moving to St. Louis in 1973, he ran financial projections for developers at anarchitectural firm, all the while looking for ways to become his own boss.He compares his entrepreneurial drive to a woman knowing she wants to be amother. "Well, I knew I was going to have my own business," he said. "I do proformas in my head. The more complicated it is, the more I enjoy it."In 1976, he founded Group Three Construction Co., the firm that would form thebackbone of his housing network. But the company got off to a shaky start: Onepartner immediately died in a plane crash.That left Shepard and partner Skip Mange, now a Republican St. Louis Countycouncilman."Neither of us had any money," Shepard quipped.Luckily, the federal Farmers Home Administration provided 1 percent loans.Shepard wooed investors while Mange, a civil engineer, supervised construction.Together, the pair developed more than 60 apartment complexes before Mange leftthe firm. On the mantle in Shepard's office is a photo of the pair at theirfirst groundbreaking -- in impoverished Hayti, Mo.Shepard also served on the board of the Children's Home Society of Missouri,which provides adoption services. He and his first wife, Suzanne Shepard,adopted four children, who now range in age from 24 to 30.How subsidies workShepard's housing empire eventually stretched across the South and Midwest,from Kissimmee, Fla., and Roanoke, Va., to Sylvan Grove, Kan., and Wilber, Neb.It consists of overlapping partnerships, which are virtually indecipherable toa layperson. Housing experts say there are several reasons for the Byzantinebusiness structures.The government requires a separate limited partnership for each project. Also,developers can sell their tax credits -- but only to buyers who own a share ofthe development.Diagrams Shepard provided look like spider webs. Take one example -- a 24-unitcomplex in Howardville, Mo.
 
Shepard developed the apartments. He also is a shareholder in six entities thathave a slice of the project's ownership. However, his stake amounts to lessthan 4 percent, and third-party investors own the rest.The low-income housing industry is lucrative for rich investors because theycan write off more money than a project produces, thus claiming a net loss fortax purposes.That helps explain why Shepard's interest in 175 companies is valued at lessthan $1,000 in the report McCaskill filed.As for the 192 companies listed as producing less than $201 in annual income,McCaskill's campaign says many of the projects have no return at all becausethe government controls the rent.Shepard has quit developing apartments and now works mainly as a middleman,selling tax credits. His other businesses include a property management companyand three Red Wing shoe stores, including one outside the South County mall.GOP cites conflictsDuring McCaskill's last campaign, Shepard's six nursing homes drew Republicanbarbs. They are likely targets again, even though he has sold most of thoseinterests.Republicans say McCaskill misled the public by saying Shepard was out of thebusiness in 2004. Records show he still received $3 million in rent fromnursing home companies that year. The GOP says the auditor should have hired anindependent firm to audit the regulatory unit that licenses nursing homes.McCaskill contends she has no conflict. Her audit, which is under way, doesn'toverlap with any period of time when her husband operated nursing homes, shesaid. He still owns a building that contains a nursing home in Moberly, Mo.Republicans also say McCaskill shouldn't audit the Missouri Housing DevelopmentCommission. They contend Shepard still benefits from subsidies because aGeorgia company that bought a Shepard development received a government loan.Shepard laughs at the allegation."You're telling me I can't even sell them? What should I do? Bomb them?"Shepard's maze of businesses could include an offshore tax shelter, Republicanssay. They point to McCaskill's disclosure statement, which lists an interest inthe Rural Housing Re-Insurance Co. of America Ltd., located in Bermuda.Bottom line: Republicans want Shepard's tax return."I believe that's something the public has a right to know," says GOP executivedirector Jared Craighead. "There are lots of hardworking citizens who make$28,000 a year and pay way too much in income taxes."Shepard says he and other developers created the Bermuda company in 1986because the property insurance market was tight and apartment projects wereunable to secure policies. McCaskill's campaign said he owns less than 6percent of the company.Still, Shepard's divorce from his first wife suggests that he knows how to holdtaxable profits down. The divorce filing, in St. Louis County Circuit Court,

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