Wrangel explains failure to pay back taxes as result of 'cultural and language barriers'

Thu Sep 11 16:55:05 UTC 2008

September 11, 2008
 Rangel Tries to Explain Back Taxes on Villa By DAVID
KOCIENIEWSKI<http://topics.nytimes.com/top/reference/timestopics/people/k/david_kocieniewski/index.html?inline=nyt-per>

WASHINGTON — Representative Charles B.
Rangel<http://topics.nytimes.com/top/reference/timestopics/people/r/charles_b_rangel/index.html?inline=nyt-per>said
on Wednesday that "cultural and language barriers" had hindered him
from understanding the finances of his Dominican Republic beach house, and
vowed to repay several thousand dollars in federal taxes he owes after
failing to report $75,000 in rental income from the villa. At a Capitol Hill
news conference, during which he was by turns remorseful and combative, the
congressman said that he had not been aware of the income and unpaid taxes
in part because he had trouble getting detailed financial statements from
the resort's managers in the Dominican Republic.

"Every time I thought I was getting somewhere, they'd start speaking
Spanish," Mr. Rangel said. The explanation was greeted with skepticism and
surprise by some people in his district, where Spanish is the primary
language in nearly half the households and even Mr. Rangel's own
Congressional Web site can be instantly translated to Spanish with just two
clicks of a computer mouse. The congressman brushed aside calls that he step
down as chairman of the powerful House Ways and Means Committee, and accused
Republicans who have demanded that he do so of trying to exploit his
financial missteps.

"I really don't believe making mistakes means you have to give up your
career," said Mr. Rangel, a Democrat from Harlem.

Mr. Rangel, a lawyer who has been a member of the tax-writing committee for
three decades, has found himself on the defensive in recent months because
of disclosures about the villa, his use of Congressional stationery to
solicit financial support for a City University center that will bear his
name and his rent-stabilized apartments in Upper Manhattan.

At the news conference, Mr. Rangel said that he had asked the House ethics
committee to investigate the issues surrounding the villa, which include his
failure to pay taxes on the rental income and the resort developer's
decision to waive the interest on a mortgage extended to him to buy the
home. He had previously requested that the committee examine his
rent-stabilized apartments and his fund-raising for the City University
center.

The congressman also released copies of documents he has submitted to the
committee and pledged to apologize to the public and fellow members of
Congress if he was found to have violated House rules.

"I personally feel I have done nothing morally wrong," he said. Pressed by
reporters about how, given his position and background, he could be ignorant
of the tax rules, he answered: "I never had any idea that I got any income."

Mr. Rangel bought the beachfront house at the Punta Cana resort and club in
1988. The resort, with tennis courts, a 1,500-acre nature preserve, golf and
a marina, has emerged as one of the most desirable in the Caribbean,
attracting celebrity investors like Oscar de la
Renta<http://topics.nytimes.com/top/reference/timestopics/people/d/oscar_de_la_renta/index.html?inline=nyt-per>and
Julio Iglesias and high-profile guests like former President Bill
Clinton<http://topics.nytimes.com/top/reference/timestopics/people/c/bill_clinton/index.html?inline=nyt-per>
.

Mr. Rangel said on Wednesday that he had never used the home more than four
days in any calendar year. He said he had occasionally let other members of
Congress stay at his villa for honeymoons or holidays, but declined to name
them.

The news conference, which drew about 50 reporters, lasted for more than an
hour, and while Mr. Rangel was contrite in accepting responsibility for his
errors, he also displayed some of the cantankerousness that has marked his
four decades in office,

When a reporter asked whether his errors had undermined his credibility to
the point that he should step down as leader of the committee, he responded
by asking the reporter how long he had been in journalism.

"I wouldn't judge whether it's time for you to leave," the congressman said.

According to the letter Mr. Rangel had previously sent to the ethics
committee and that he released on Wednesday, he bought the villa for
$88,900, putting $28,900 down and taking out a mortgage for the balance from
the resort owner.

While the resort made payments to Mr. Rangel every six months for his share
of the rental income, and stopped charging interest on his mortgage after
two years, the congressman said he paid little attention to the transactions
— and was unaware that the interest had been waived — because the money was
never sent directly to him or his wife but was instead used to pay down his
mortgage and cover other fees he owed the development.

Elaborating on his difficulty with the language barrier, Mr. Rangel said
that at various times over the past two decades, he tried to get the resort
to send financial statements more regularly, and asked for help from
Theodore Kheel, the prominent New York labor lawyer, who was a principal
investor in the project.

But Mr. Rangel said he was stymied by the company's impenetrable bureaucracy
and his inability to speak Spanish. He said it took a bilingual team
assembled by his lawyer, Lanny Davis, to sort the villa's finances out in
recent days.

Mr. Rangel conceded on Wednesday that he had been "irresponsible" in failing
to gather the information needed to report the income on his taxes or
financial disclosure forms, and acknowledged that as a member of Congress
and chairman of the Ways and Means Committee he should be held to a higher
standard of conduct.

Asked to release his tax returns, however, he declined, saying that might
infringe on the privacy of others. Mr. Davis, his lawyer, has said that Mr.
Rangel's wife, Alma, handled the family's finances.

Mr. Rangel said that his accountants were still calculating the total he
owed in unpaid taxes over the past five years, but that it was unlikely to
exceed $5,000 to the Internal Revenue
Service<http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org>.
Mr. Davis said that Mr. Rangel would probably owe another $5,000 to New York
State and New York City combined.

Republican leaders in Congress, who demanded on Tuesday that Speaker Nancy
Pelosi<http://topics.nytimes.com/top/reference/timestopics/people/p/nancy_pelosi/index.html?inline=nyt-per>strip
Mr. Rangel of his chairmanship, were unmoved by his explanation on
Wednesday.

Ken Spain, a spokesman for the National Republican Campaign Committee, said
Mr. Rangel should "go on a permanent vacation and trade his powerful
committee chair in for his favorite lounge chair on the beach."

Mr. Rangel also defended his advocacy on behalf of CUNY, which is trying to
raise millions of dollars to open the Charles B. Rangel Center for Public
Service to train students for careers in government. Mr. Rangel acknowledged
using his Congressional letterhead to ask leaders of charitable foundations
and businesses to support the project, but said he had asked only that they
meet with CUNY officials to discuss the project.

"I never asked for one nickel," he said. "I asked for a meeting."

Mr. Rangel did concede, however, that the ethics committee might find that
he had improperly used his Congressional stationery, and he said he would
abide by the committee's rulings.

The congressman nonetheless said it was unfair to judge his long career in
public service based on the ethics complaints. Hours before the news
conference, he was included on a list of the 20 most corrupt members of
Congress released by the group Citizens for Responsibility and Ethics in
Washington, an action he called "sad and unfair."

Mr. Rangel also dismissed the notion that he could be viewed as receiving an
improper gift from his New York City landlord, the Olnick Organization,
because the company allowed him to lease four rent-stabilized apartments,
one of which he used as a campaign office.

Mr. Rangel has since agreed to relinquish the campaign office, but says
there is nothing improper about keeping the others.

http://www.nytimes.com/2008/09/11/nyregion/11rangel.html?_r=1&oref=slogin

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