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Renzi Paid Feds, State More than $320,000 over 2002 Investigation

 

WASHINGTON (By Mike Madden, Arizona Republic) May 2, 2007 — Rep. Rick Renzi paid hundreds of thousands of dollars in back taxes to settle charges that his businesses improperly financed his first campaign for office, according to documents released by federal regulators Tuesday.

 

The Arizona Republican already faces a federal corruption probe - as well as a growing political crisis - over allegations that he tried to use legislation for land swaps in Arizona to help a former business partner.

Tuesday's disclosure by the Federal Election Commission threatens to revive an older scandal over whether Renzi broke campaign finance laws when he was first elected in 2002, adding to doubts about his political future.

 

The new documents show Renzi's campaign agreed to pay the FEC $25,000 in January because he misreported campaign contributions and expenses in 2002. They also show that Renzi failed to disclose hundreds of thousands of dollars in personal income in 2002, when he filed his taxes for that year, and only recently paid more than $320,000 in federal and state back taxes on the income.

In September, Renzi said complaints stemming from the FEC audit were "desperate and erroneous allegations" launched by "liberal operatives." By the time he put that statement out, though, he had already filed the new tax returns and paid the back taxes.

In response to questions about the FEC release, Renzi's office issued a written statement Tuesday.

"I take responsibility for the inaccuracy of our first FEC report," Renzi said. "In an effort to clear it up, we hired a new CPA, and all our reports are now correct and complete. I am pleased this matter has finally been resolved."

House Republican leaders, who have not offered Renzi much public support, did not respond to calls for comment.

Democrats said Renzi broke the law.

"Arizonans in the 1st Congressional District deserve a representative who obeys the law and is accountable," said Fernando Cuevas, a spokesman for the Democratic Congressional Campaign Committee.

In the corruption probe and the FEC case, Renzi's political problems stem from questions about how his business investments have intersected - or possibly interfered - with his conduct as a lawmaker.

Pursuing evidence in the corruption investigation, FBI agents raided Renzi's businesses on April 19. That same day, House records show that an aide to Rep. Doc Hastings of Washington, the top Republican on the House Ethics Committee, pulled copies of Renzi's financial disclosure statements for 2003, 2004, 2005 and 2006. That could indicate the panel has opened an investigation into the matter.

Ethics committee rules prohibit aides or members from commenting on whether the panel is conducting an investigation.

The FEC case began when an audit three years ago found Renzi had loaned his 2002 campaign $369,000 from his businesses, violating a federal ban on corporate political contributions. Renzi disputed that, saying the money was from his personal funds.

The documents released Tuesday show he settled those charges by filing amended tax documents for 2002. Those new returns indicated that his businesses paid him and his wife, Roberta, $598,444 that year that he had never before disclosed, the FEC said. He paid back taxes on that income of $285,421 to the IRS and $38,409 to the Arizona Department of Revenue when he filed the new returns.

The Renzis own several businesses based in Sonoita, including an insurance company and a vineyard company, which also owns some real estate.

An accountant who reviewed Renzi's original 2002 tax returns called them "abysmal," ""confused" and "complex" in an e-mail to Renzi, which he turned over to the FEC.

Democrats say the corruption investigation, which is looking at land deals in Arizona involving James Sandlin, a former business partner of Renzi's, is also connected to a controversy over the forced resignation of Arizona's former top federal prosecutor, Paul Charlton.

Charlton had opened the investigation into Renzi well before Justice Department officials forced him to leave his post last December. Renzi's chief of staff, Brian Murray, called Charlton's office about the investigation last October.

The department has not yet turned over documents related to the investigation to House and Senate staffers looking into the ouster of Charlton and seven other former U.S. attorneys.

Renzi faces grave doubts about whether he will seek re-election or even serve out his current term, which expires in January 2009. He has already temporarily left all of his committees.

On Friday, he issued a written statement denying widespread rumors he was planning to resign from Congress. Potential candidates on both the Democratic and Republican side are preparing in case he does step down, which would lead to a special election to replace him.

The DCCC has opened a fundraising account to collect cash that would be turned over to the party's candidate if there is a special election.
 

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