For his shady business dealings and efforts to bypass campaign laws, the Republican Senate candidate in Washington state, Dino Rossi, has been listed as one of 12 "crooked candidates" in 2010 by Citizens for Responsibility and Ethics in Washington (CREW).
According to CREW research, Rossi's relationship with lobbyists David and Richard Ducharme and real estate mogul Michael Mastro deserves investigation. In the 1990s, as a state senator, Rossi and the Ducharmes accepted a $2 million loan from Mastro to buy a property. Rossi failed to report a separate $50,000 portion of the deal on his campaign financial disclosure forms. It was a similar reporting failure that caused ethics problems for now-troubled Rep. Charles Rangel, D-N.Y.
Mastro, who donated thousands to Rossi's failed campaign for Washington state governor, subsequently filed for bankruptcy as his investment schemes collapsed in 2009. At the time of the failure of his real estate empire, Mastro's dealings with investors came under investigation by the Washington Department of Financial Institutions, after he created a scheme that, according to descriptions of the deal on CREW's website, seemed not unlike the Bernie Madoff affair.
Because such ethics violations are not investigated after five years, the details of Rossi's relationship with Mastro have not been fully revealed. In fact, some in Washington state are demanding a more careful scrutiny of Rossi's income tax filings and business dealings after Rossi and the Ducharmes made $600,000 on the real estate deal with Mastro. Some media accounts raised questions about Rossi's failure to pay thousands in back taxes.
While Mastro's motives for providing then-state-senator Rossi with such a lucrative deal and his subsequent campaign donations are unclear, Rossi's political positions seem to be based on his personal ambitions and financial dealings. According to one Seattle Times report archived on the CREW website, Rossi has complained about state regulations that govern health and safety in apartment buildings he owned. The news report also uncovered complaints by tenants in Rossi-owned buildings about a "mold problem." If elected, Rossi has promised to fight state and federal regulation of industries he holds investments in.
Rossi's get-rich-quick schemes weren't confined to real estate. According to the CREW analysis, he also talked the Ducharmes into investing thousands in the Eastside Commercial Bank, installing David Ducharme as CEO. As of 2007, when he prepared to launch his second failed bid for governor, Rossi claimed to hold only $75,000 worth of investments in the bank on his financial disclosure forms.
Rossi's bank then undertook the sort of deals and practices that most observers blame for the collapse of the U.S. financial sector in 2008. In 2009, federal investigators declared the bank to be "engaged in unsafe and unsound banking practices relating to its strategic and capital planning, credit underwriting, credit administration, concentration risk management, and liquidity management." They demanded the bank owners inject $3 million into the bank to make it sound. As of May 2010, Rossi's group has not fully complied.
Apart from his shady business dealings and failure to fully report them on campaign disclosure documents, CREW also described how Rossi created a foundation with obvious ambitions for political office that helped him further avoid full transparency. He used his foundation, called Forward Washington, to pay himself an annual salary of $75,000 and to use its resources like a campaign fund without abiding "by campaign contribution limits or disclosure laws," CREW stated.
Only when state investigators looked into the matter did Rossi step down as president of the foundation.
In 2008, watchdog groups filed a 180-page complaint against Rossi for accepting almost $7 million in campaign funds from the Building Industry Association of Washington (BIAW) and allegedly coordinating campaign activities without that group, for which Richard Ducharme has been a lobbyist. While state investigators cleared Rossi of technical violations of the law, CREW maintained that Rossi and BIAW "skirted the law in promoting his candidacy" and attacking Rossi's Democratic opponents.
If Rossi succeeds in his bid for the U.S. Senate, it is likely that he will face immediate ethics problems. But it his ideological positions that anger working families most, according to analysis of his voting record by the Washington State Labor Council.
While in the state legislature, Rossi voted to cut benefits for unemployed workers, to gut laws that provide overtime pay to workers, to kill collective bargaining rights for workers, and to block protections for victims of domestic abuse. Worst of all Rossi voted to give legal immunity to employers that intentionally harm workers and to weaken state laws that protect workers, notably in the building industry with which he has strong business ties.
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