Sen Santorums home mortgage foundation outlays raise questions

Author:

WILL BUNCH bunchw @phillynews.com 215-854-2957

Article Text:SEN. RICK

SANTORUM

and his wife received a $500,000, five-year mortgage for their Leesburg, Va., home from asmall, private Philadelphia bank run by a major campaign donor - even though its stated policy is to make loans onlyto its "affluent" investors, which the senator is not.Good-government experts said the mortgage from The Philadelphia Trust Co. raises serious questions about

Santorum

's conduct at a time when he is the Senate GOP's point man on ethics reform. They said it would be aviolation of the Senate's ethics rules if

Santorum

received something a regular citizen could not get.A campaign spokeswoman for

Santorum

, who is seeking re-election, said the couple's mortgage interest rate was"market-driven," but she refused to offer specifics, as did officials from Philadelphia Trust.A probe into

Santorum

's personal and political finances also found:* A political-action committee chaired by

Santorum

, America's

Foundation

, spends less money on direct aid to GOPcandidates - its stated purpose - and more on expenditures than similar PACs. And its expenditure reports are litteredwith scores of unorthodox expenses for a political committee, with charges at coffee and ice cream shops and fast-food joints as well as supermarkets and a home-hardware store.For example, America's

Foundation

made 66 charges at Starbucks Coffee, almost all in the senator's hometown ofLeesburg, Va., and 94 charges at another D.C.-area vendor, HMSHost Corp. Virginia Davis, the campaignspokeswoman, defended all the charges as campaign-related, saying the senator prefers to meet political aides incoffee shops rather than on Senate property.* A little-publicized charity founded by

Santorum

in 2001, the Operation Good

Neighbor

Foundation

, is notregistered in Pennsylvania, even though the majority of its fundraising and spending takes place here.What's more, three years of public tax returns show the charity spent just 35.9 percent of the nearly $1 million itraised during that time on charity grants, well below the 75 percent threshold recommended by experts. The group'sWeb site says it has distributed a total of $474,000 to groups, many faith-based, that fight social ills and urbanpoverty.The mortgageIt appears that

Santorum

's unconventional mortgage deal could pose the biggest problem for the senator, whoconsistently has trailed his likely November rival, Democratic state treasurer Bob Casey Jr., by double digits in thepolls. Unlike longtime Washington pol

Santorum

, Casey does not maintain a so-called "leadership PAC."Melanie Sloan, a former federal prosecutor who heads Citizens for Responsibility and Ethics in Washington, orCREW, said that "anytime he gets something that a regular person couldn't get, that's an improper gift" - regardlessof any fees or the interest rate.Officials with Philadelphia Trust have been generous supporters of

Santorum

's campaign since the private bankopened its doors in late 1998. Federal records show the company's executives, directors and their spouses havedonated $24,000 either to the senator's campaign or to the America's

Foundation

PAC. Of that total, $13,000 camefrom the man who signed the mortgage papers - Philadelphia Trust CEO Michael Crofton - and his wife.Crofton also has been chairman of the board of advisers for Operation Good

Neighbor

, and records show the bankhas donated at least $10,000 to the senator's charity.Philadelphia Trust advertises itself as an independent private bank for "affluent investors" - who have liquid assets ofat least $250,000 - and for institutions. On its Web site, it states that its "[b]anking services are available only toinvestment advisory clients whose portfolios we manage, oversee or administer."A call to the bank confirmed that its mortgages are only for investors and not for the general public.

According to a review of the annual financial-disclosure forms that

Santorum

files, he has never held an investmentportfolio with Philadelphia Trust. And in 2002, the year he obtained the mortgage, the value range he gave for hissmall number of investments could not have exceeded $140,000.The Pennsylvania senator bought the Virginia home, 43 miles from Capitol Hill, a year earlier for $643,361, and -according to Loudoun County property records - had received a $405,000 mortgage from a traditional lender. The2002 refinancing with Philadelphia Trust exceeded the initial loan by $95,000.The chairman of Philadelphia Trust - George Marlin, a one-time Conservative Party candidate for mayor of New York- said discussing any customer's transaction would violate bank privacy laws. Crofton did not return phone calls.A bank director, Karen Iacovelli, also would not answer questions in detail, but when pressed on whether the bankdoes loan business with non-investment customers, she said, "Yes and no - it's a judgment call."There is no evidence that

Santorum

- who sits on the Senate Banking Committee - took any official actions on behalfof Philadelphia Trust. The senator's campaign said no special treatment was involved."Sen.

Santorum

and his wife, who is an attorney and a nurse, applied for the mortgage using the standardapplication process that Americans must go through when applying for a mortgage and received a market-driven ratefor their second home in the Washington, D.C., area to house them and their six children when the Senate is insession," said Davis, the campaign spokeswoman. She would not answer follow-up questions.This is not the first time that

Santorum

's Virginia residency has posed political problems. In late 2004, the senatorcame under fire when it was revealed that the school district in Penn Hills, Pa., had paid roughly $67,000 tocyberschool the Santorums' six kids, even though the children are residing in the Leesburg home full-time.

Santorum

owns a much smaller home in Penn Hills and keeps his voting residence there; the home has most recently beenoccupied by Karen

Santorum

's niece.

Santorum

also made a surprising admission to The New York Times Magazine last year, telling the magazine that"[w]e live paycheck to paycheck, absolutely." He said that his parents - retired Veterans Administration employees -send him money every now and then.The PACThe senator - as well as his political aides - are able to travel the country for fundraisers and other events by billingthe cost to America's

Foundation

, a "leadership PAC."Federal election regulators have allowed members of Congress to establish these political-action committees tosupport other candidates and political-party activities, as long as the committee doesn't directly aid the campaign ofthe politician who created it.But

Santorum

's leadership PAC is noteworthy in several ways. America's

Foundation

has spent just 18.1 percent ofthe whopping $5,363,735 it has raised since the start of 2001 on direct aid to state and local candidates, less than allfive other leadership PACs that were compared, and considerably less than several of them.The other leadership PACs examined belonged to Senate GOP leaders Bill Frist of Tennessee and Mitch McConnellof Kentucky, Democratic leaders Harry Reid of Nevada and Dick Durban of Illinois, and House GOP leader Roy Bluntof Missouri.It's routine for a PAC like

Santorum

's to pay operating expenses, such as staffers and fundraising, renting halls forevents, related travel, and sometimes for rent and maintaining an office. But the probe found

Santorum

's federalrecords on PAC spending also contain scores of credit-card charges that experts found highly unconventional.In addition to the 160 charges at the two coffee vendors, Starbucks and HMSHost, America's

Foundation

chargednumerous meals at fast-food restaurants - eight at Arby's and four at Burger King, for example - as well as pizza andChinese restaurants in northern Virginia.The PAC also reported spending on a slew of American retailers. The list includes conventional office-supply storesbut also some that are unusual for campaigns, including charges at Overstock.com, Wal-Mart, Kmart, Target, CircuitCity, Barnes & Noble - even a $273.48 charge at a Restoration Hardware in Ardmore listed as "repairs."Five chargeswere made at Giant Food markets in Leesburg and another Virginia location.