Lawmaker facing spending probe benefited from donor projects

AP News
|
Posted: Mar 13, 2015 4:16 PM
Lawmaker facing spending probe benefited from donor projects

WASHINGTON (AP) — Illinois Rep. Aaron Schock has built much of his personal wealth over a decade through real estate investments with political donors, an Associated Press review found. His relationships with other contributors, which afforded him flights on private planes and other expenses, are already under scrutiny.

Donors built, financed and later purchased a house Schock owned as an investment in a suburb of Peoria, Illinois. Schock owns a stake in a Peoria apartment complex involving other contributors. And he pushed for a federal appropriation that would have benefited a donor's development project, an Associated Press review found.

Schock, a 33-year-old rising Republican star named last year to a midlevel leadership role in the House, has disclosed personal wealth in a range centered on $1.4 million. He's made precocious business acumen a part of his appeal since joining Congress in 2009, sometimes calling himself a real estate developer.

Financial reports indicate Schock may have more than doubled his wealth since he was elected to Congress, although it is impossible to determine his gains precisely because values of his assets and liabilities are only reported in wide ranges.

Amid ethics complaints concerning his taxpayer-funded expenses and flights aboard donors' aircraft, Schock's business entanglements with contributors in several projects raise questions about the overlap between his personal finances and their political interests. Politicians can do business deals with donors as long as the terms are commercially reasonable.

Schock declined through a spokesman to discuss his finances with the AP. He told a newspaper late Wednesday that his real estate investments occurred at arm's length from donors.

"It's no different from when I see an opportunity," he told the Peoria Journal Star of the transactions disclosed in his financial statements. "I've been buying real estate since I was 18 years old."

A watchdog group has called for an ethics investigation amid revelations he used congressional money to redesign his office in the style of the TV show "Downton Abbey." He also billed taxpayers or his campaigns tens of thousands of dollars in private air travel on donors' planes. His office said he repaid some of those charges and is reviewing others.

Schock's business career began early. In high school, he bought 107 acres of farmland near Peoria — property he sold to the local sewage district two years later for more than $100,000 in profit. In college, he bought three rental properties across the street from Bradley University and sold them to the school a few years later for a profit of more than $120,000.

Running for political office put Schock's real estate career on hold, and he earned a salary of $56,000 after he was elected as an Illinois state legislator. But donors soon helped get him back into the real estate game.

In 2007, Peoria businessman Samuel Hoerr obtained permits to build a home on a Schock-owned lot in a golf course development called Augusta Estates. Schock and Hoerr — himself a campaign contributor — have been both listed as owners in varying local real estate records. Sam Hoerr did not respond to messages left at his business and cellphone. Members of the Hoerr family — a prominent Peoria family with interests in real estate and construction — have donated nearly $80,000 to Schock's campaign and supporting political committees since 2007. Schock's sister and campaign manager, Tania Hoerr, married into the family.

Schock financed the Augusta property in 2008 with a loan from Better Banks, a local banking chain controlled by Schock campaign contributor Steve Backlund. Schock repaid the mortgage when he sold the property in late 2012 to a Peoria couple who had donated to his House races.

His financial records show that Schock also earns between $50,000 and $100,000 each year in income from a stake in a Peoria apartment complex that a campaign donor had given in 2007 to The National Christian Foundation, a nonprofit that supports conservative causes. The Foundation then sold the investment to Schock and Hoerr family investments, according to its tax filings. The foundation declined to discuss the transaction.

Schock emerged from the deal with a 16 percent stake in the apartments, his share valued at $684,000. Financial disclosures show he borrowed more than $500,000 to pay for the apartment investments. Schock then switched that loan to Backlund's bank as well.

A year later, Schock was elected to Congress.

Backlund is active in Community Bankers Association of Illinois, which has spent more than $1 million since 2010 lobbying for the softening of banking regulations that the group said would hurt member banks. In May 2010, after the group's members pressed their case in Washington, Schock came out against a proposed Dodd-Frank banking regulation opposed by the association.

Backlund did not respond to several telephone messages left at his Peoria office by the AP. David Schroeder, the group's vice president of government relations, said Schock "has been a strong supporter of community banking issues, but beyond that we have no comment."

Schock has also sought to advance legislation that would benefit a real estate project owned by donor Alexis Khazzam, who hired Schock as a business-development consultant during Schock's time in the Illinois state legislature. In 2010, Schock proposed a $1.8 million "earmark" to fund replacing an old railroad in Peoria with a bicycle trail, though the earmark never got a vote in Congress. Had the tracks stayed in place, they would have hampered Khazzam's plan to build condos and restaurants adjacent to them, he said in a 2010 interview.

On Friday, Khazzam said he has no business involvement with Schock and that the congressman's support was unremarkable given the project's benefits to residents.

"Everyone in the city wants it to happen — it's a natural progression of cities turning green," he said.

In addition to Schock's investment in the Old Orchard apartments and the Augusta Estates property, his financial disclosures list an investment worth between $250,000 and $500,000 in a Delaware shell company, Aurelia Properties LLC, which Schock says owns a stake in a Peoria rental development called Woodsage Apartments.

"It's a group of investors, and the same thing with Old Orchard Apartments," he said.

___

Associated Press writers Jack Gillum and Kerry Lester contributed to this report.