You are on page 1of 6

MOST CORRUPT: REPRESENTATIVE STEPHEN FINCHER Representative Stephen Fincher (R-TN) is a first-term member of Congress, representing Tennessees 8th

congressional district. Rep. Finchers ethics issues stem from concealing the source of a campaign loan and his failure to accurately disclose his income, assets, and liabilities on his personal financial disclosure forms. Concealing Source of Campaign Loan On October 29, 2009, Rep. Fincher, then a candidate for Congress, filed a required personal financial disclosure statement with the House Ethics Committee covering the period from January 1, 2009 to September 29, 2009. 1 On the form, Rep. Fincher reported his 2008 earned income from his family farm as $59,245. 2 He also estimated his total earned income for 2009 would be $60,000. 3 Rep. Fincher reported no liabilities and only one asset his farm, though he did not include a value for the property. 4 Notably, he reported no other assets such as savings accounts, money market accounts, stocks, or bonds. 5 Rep. Fincher filed another required personal financial disclosure statement on May 17, 2010, covering the period from January 1, 2009 to May 15, 2010. 6 This time, he listed his 2009 earned income as $124,016 more than double his earlier estimate. 7 Again, he reported the farm as his only asset. 8 On July 8, 2010, Rep. Finchers campaign committee, Steve Fincher for Congress, reported receiving a $250,000 loan from Rep. Fincher. 9 The committee told the Federal Election Commission (FEC) the loan from the candidate was unsecured, and carried no interest. 10 Given that Rep. Finchers financial disclosure forms reported few assets, reporters and Rep. Finchers political opponents began questioning the source of the money. 11 Rep. Fincher, through a

Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009; FEC Complaint filed by Sandler, Reiff & Young against Steve Fincher for Congress, filed September 29, 2010. 2 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009. 3 Id. 4 Id. 5 Id. 6 Rep. Stephen Fincher, Personal Financial Disclosure Statement for January 1, 2009 to May 15, 2010, filed May 17, 2010. 7 Id. 8 Id. 9 Stephen Fincher for Congress, FEC Form 3, Pre-Primary Report, July 23, 2010. 10 Id. 11 Chas Sisk, Fincher Slammed Over Finance Disclosures, The Tennessean, October 20, 2010; Tom Humphrey, Democratic Lawyer: Republican Fincher's Disclosures Dont Add Up, Knoxville News Sentinel, August 27, 2010.

spokesman, insisted he had filled out all required forms honestly, and accused his opponent, Democratic state Sen. Roy Herron, of trying to gin up a sideshow. 12 On August 27, 2010, Warren Nunn, chairman of Gates Banking and Trust Company, said the bank, not Rep. Fincher, was the actual source of the loan money. 13 Mr. Nunn would not disclose any more details about the transaction, including the loans terms or collateral. 14 Notably, Jackie Fincher, Rep. Finchers father, is a member of the banks board of directors. 15 In addition, Mr. Nunn donated $4,800 to Rep. Finchers campaign during the 2010 election cycle. 16 In October 2010, shortly before the election, Mr. Nunn wrote to the editor of The Commercial Appeal newspaper, defending the loan and asserting Mr. Fincher had not received preferential treatment, though he added we have done business with the Fincher family for over 30 years, and they have always done exactly what they said they would do. 17 On August 24, 2010, J. Houston Gordon, a prominent Tennessee Democrat and lawyer, sent a letter to the U.S. Attorneys Office in Memphis asking federal prosecutors to investigate whether Rep. Finchers campaign had omitted debts and assets on his personal financial disclosure forms. 18 On September 29, 2010, Sen. Herron filed a complaint with the FEC, asserting Rep. Finchers campaign committee had violated the Federal Election Campaign Act of 1971 by failing to report the bank loan. 19 The complaint noted Rep. Finchers failure to accurately disclose the source of the loan. 20 Despite the outstanding complaint, the October 2010 quarterly report filed by Rep. Finchers campaign committee did not provide additional information about the source of the loan, prompting Sen. Herron to file a supplemental complaint on October 18, 2010. 21 Sen. Herron argued that because the original complaint had provided Rep. Finchers campaign committee with notice of the problem, the failure to provide correct information about the loan in the October 2010 report represented a knowing and willful violation of campaign finance law. 22 Despite questions about the source of the loan, Rep. Fincher was elected to Congress on November 2, 2010. 23 On December 6, 2010, 34 days later, Rep. Finchers campaign finally submitted new information about the loan to the FEC, reporting for the first time that Rep.

12

Erik Schelzig and Ben Evans, Dem Lawyer Questions Finchers Disclosure to House, Associated Press, August 27, 2010. 13 Id. 14 Id. 15 Alex Isenstadt, Fincher Under Fire for Campaign Loan, Politico, October 21, 2010; Richard Locker, Stephen Fincher Received State Farm Grant in Addition to Federal Farm Subsidies, The Commercial Appeal (Memphis, Tenn.), October 14, 2010. 16 http://www.opensecrets.org/indivs/search.php?name=Nunn%2C+Warren&state=&zip=&employ=&cand= Fincher&c2010=Y&sort=N&capcode=hyybp&submit=Submit. 17 Warren Nunn, Letter: You Can Bank on Fincher, The Commercial Appeal (Memphis, Tenn.), October 23, 2010. 18 Schelzig and Evans, Associated Press, Aug. 27, 2010; Humphrey, Knoxville News Sentinel, Aug. 27, 2010. 19 FEC Complaint filed by Sandler, Reiff & Young against Steve Fincher for Congress, filed September 29, 2010. 20 Id. 21 Federal Election Commission, MUR No. 6386, First General Counsels Report, March 9, 2011. 22 Id. 23 Bartholomew Sullivan, Tennessee 8th Congressional: Fincher Rides GOP Juggernaut to Win, The Commercial Appeal (Memphis, Tenn.), November 2, 2010.

Fincher had borrowed the money from Gates Banking and Trust on July 7, 2010. 24 The new filing also reported the original loans interest rate, 6.5%, with a due date of November 30, 2010. 25 Rep. Fincher secured the loan with collateral of $600,000 in crops, his home, and a noninterest-bearing deposit account of undisclosed value. 26 Supplemental information filed with the FEC characterized the loan as a business expense, though the money seems to have been used exclusively for Rep. Finchers campaign. 27 Rep. Finchers campaign also amended an earlier report to reflect the new information about the loan, and reported having paid back the bank on November 30, 2010. 28 Rep. Finchers lawyer, Elliot Berke, described the errors in the filing as honest technical reporting errors, and said the lag time in amending the filings was due to the need for an internal review. 29 Incomplete Personal Financial Disclosures On May 16, 2011, Rep. Fincher filed a personal financial disclosure with the House Ethics Committee revealing assets and liabilities substantially different from those reported on his previous disclosures. 30 For instance, Rep. Fincher for the first time reported a value for his farm: between $500,001 and $1,000,000. 31 Additionally, Rep. Fincher reported liabilities that had not been included on his previous disclosures: nine loans taken out in 2008, 2009, and 2010, worth altogether between $1.64 million and $6.47 million. 32 The money was used to purchase trucks and farm equipment. 33 Candidates and members of Congress do not have to report loans taken out by their businesses, but personal loans such as these must be reported. 34 Mr. Berke called the omissions from the 2009 report an honest misunderstanding. 35 Status of Investigation In July 2011, the FECs acting deputy associate general counsel for enforcement, Susan L. Lebeaux, sent a letter to Mr. Berke, stating the commission would not take further action against Rep. Fincher. 36 The letter indicated the six-member bipartisan commission, equally
24 25

http://query.nictusa.com/pdf/525/10030510525/10030510525.pdf#navpanes=0. Id. 26 Id. 27 Id. 28 Bartholomew Sullivan, Finchers Disputed Loan Detailed, The Commercial Appeal (Memphis, Tenn.), January 13, 2011. 29 Bill Theobald, Fincher Files Explanation of Controversial Loan, Gannett News Service, January 11, 2011. 30 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011. 31 Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2009, filed October 29, 2009; Rep. Stephen Fincher, Personal Financial Disclosure Statement for January 1, 2009 to May 15, 2010, filed May 17, 2010; Rep. Stephen Fincher, Personal Financial Disclosure Statement for Calendar Year 2010, filed May 16, 2011. 32 Id. 33 Id. 34 House Comm. on Standards of Official Conduct, House Ethics Manual, p. 258 (110th Cong., 2d Sess., 2008 ed.); Tennessee Department of State, UCC Debtor Lookup, Fincher, available at http://state.tn.us/sos/bus_svc/UccSearch.htm. 35 Elizabeth Bewley, Fincher Clarifies Assets, Debts, The Tennessean, June 22, 2011. 36 Bartholomew Sullivan, Federal Election Commission Ends Investigation into Rep. Stephen Fincher's Campaign Loan, The Commercial Appeal (Memphis, Tenn.), July 7, 2011.

divided between Republicans and Democrats, needed a majority to vote to take action on the matter, but the vote was tied. 37 Subsequent documents released by the FEC showed all six commissioners had found reason to believe the misreporting of campaign information to the FEC by Rep. Finchers campaign committee had violated the law, but they split over whether to assess a civil penalty, 38 preventing the FEC from taking further action. 39 Legal Fees The April 2011 quarterly report for Rep. Finchers campaign committee showed the committee paid $5,519 in legal fees to the Law Offices of Elliot S. Berke, PLLC and $2,000 to McGuire Woods, LLP. 40 The committee also reported paying $10,873 to Mr. Berkes office for legal fees in 2010. 41 Potential Violations Campaign Finance Law Violations The Federal Election Campaign Act and FEC regulations require candidates for Congress to disclose information about loans to their campaigns. 42 A candidates campaign committee must report the identity of any endorser or guarantor of a loan, the date of the loan, and its amount. 43 When a candidate obtains a bank loan for use in connection with his or her campaign, the campaign committee must disclose the loan, its date, amount, and interest rate, the name and address of the lending institution, and the types and value of collateral or other sources of repayment that secure the loan. 44 As all the members of the FEC concluded, by twice filing campaign finance disclosure reports concealing the true source of the loan to his campaign, Rep. Fincher violated 2 U.S.C. 434(b)(3)(E) and 11 C.F.R. 104.3(d)(4). False Statements on Personal Financial Disclosure Forms The Ethics in Government Act of 1967 requires all members of Congress and candidates for Congress to file financial disclosure reports. 45 Under the statute, the attorney general may seek a civil penalty of up to $11,000 against any individual who knowingly and willfully falsifies or fails to file or report any information required by the Act. 46
Elizabeth Bewley, Herron Criticizes FECs Decision on Fincher Loan, The Tennessean, July 10, 2011. Federal Election Commission, MUR No. 6386, Statement of Reasons: Chair Cynthia L. Bauerly and Commissioners Steven T. Walther and Ellen L. Weintraub, July 21, 2011. 39 2 U.S.C. 437c(c). In August 2011, Sen. Herrons campaign committee sued the FEC for failing to enforce the law against Rep. Fincher. The suit is pending. See Herron for Congress v. Federal Election Commission, 1:11-cv01466 (D.D.C. 2011). 40 Stephen Fincher for Congress, FEC Form 3, April Quarterly Report, April 15, 2011. 41 Stephen Fincher for Congress, FEC Form 3, Year End Report, January 31, 2011. 42 2 U.S.C. 434(b)(3)(E); 11 C.F.R. 104.3(d). 43 2 U.S.C. 434(b)(3)(E). 44 11 C.F.R. 104.3(d)(4). 45 Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978). 46 5 U.S.C. app. 4, 104.
38 37

Federal law further prohibits anyone from making any materially false, fictitious, or fraudulent statement or representation 47 on a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch. 48 By submitting financial disclosure forms that misreported the value of his assets and failed to disclose numerous personal loans, Rep. Fincher may have violated the Ethics in Government Act and 18 U.S.C. 1001. Conduct Not Reflecting Creditably on the House House Rule 23 requires all members of the House to conduct themselves at all times in a manner that reflects creditably on the House. 49 This ethics standard is considered to be the most comprehensive provision of the code. 50 When this section was first adopted, the Select Committee on Standards of Official Conduct of the 90th Congress noted it was included within the Code to deal with flagrant violations of the law that reflect on Congress as a whole, and that might otherwise go unpunished. 51 This rule has been relied on by the committee in numerous prior cases in which the committee found unethical conduct including: the failure to report campaign contributions, 52 making false statements to the committee, 53 criminal convictions for bribery, 54 or accepting illegal gratuities, 55 and accepting gifts from persons with interest in legislation in violation of the gift rule. 56 By filing campaign finance disclosure reports concealing the true source of the loan to his campaign, and submitting financial disclosure forms that misreported the value of his assets and

18 U.S.C. 1001(a)(2). 18 U.S.C. 1001(c)(1). 49 Rule 23, cl. 1. 50 House Ethics Manual, p. 12. 51 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176, 90th Cong., 2d Sess. 17 (1968). 52 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 951742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No. 95-1743, 95th Cong., 2d Sess. 2-3 (1978). 53 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4). 54 House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No. 96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4 (1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong., 1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 416, 125-126 (1980)). 55 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending). 56 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980) (debate and vote of censure).
48

47

failed to disclose numerous personal loans, Rep. Fincher acted in a manner that brings discredit to the House.