Officials with three nonpartisan open-government groups said this week that the House Committee on Ethics should investigate whether US Representative John F. Tierney was required to publicly disclose more than $200,000 that his wife received while managing a bank account with money that came from her brother’s illegal gambling business.
Tierney, an eight-term Democrat locked in a tough reelection fight, has not listed the money on financial disclosure forms that members of Congress file annually, asserting that the money was a gift from a relative and therefore exempt from federal reporting requirements.
Federal disclosure laws require members of Congress to disclose the source of income received by a spouse, but not gifts from a relative.
“It was a gift to my wife, so it was not income; it was not reportable,” Tierney said during a July 3 press conference.
But the watchdog groups said a strong argument can be made that the money Patrice Tierney received was income, not a gift, and that the account she managed on behalf of her brother, Robert Eremian, should have been disclosed as an asset.
“The whole situation raises serious questions about compliance with the spirit of the law and the ethical obligations of members of Congress,” said Stephen Spaulding, staff counsel at Common Cause, a nonpartisan group that advocates for open government. “Certainly one would want to err on the side of disclosure and not get into hair-splitting when it comes to ethical obligations.”
Court records show that Patrice Tierney received much of the money in monthly $1,000 checks that she wrote to herself, an arrangement, the groups said, more akin to a salary than the type of gift the exemption was designed for. Patrice Tierney served a month in federal prison last year after admitting to helping her brother file false tax returns.
“The idea behind the exclusion for gifts from relatives is that if your brother gives you a Christmas present, you don’t have to report it,” said Bill Allison, editorial director at the Sunlight Foundation, a nonpartisan group that advocates for transparency in government. “Clearly, getting a regular check over time sounds a lot like income.”
Members of Congress must report gifts worth more than $350, unless received from a relative.
Spaulding, moreover, said the fact that Patrice has said she received the money because she was being “appreciated” for work she performed on behalf of her brother’s children could also mean that the money should be considered income, not a gift.
“If there was a quid pro quo, if the money was given in exchange for something, it’s not necessarily a gift,” he said.
On Monday, the Globe asked Tierney’s Washington office if he had sought guidance from the Ethics Committee on the issue. Late Thursday, his spokeswoman, Kathryn Prael, said Tierney contacted the Ethics Committee after his wife’s guilty plea.
“Congressman Tierney followed all financial disclosure rules, consulted with the Ethics Committee, most recently in 2010, and was not asked to amend his filing,” Prael said. “It is no surprise to see these inaccurate and baseless attacks during an election year.”
Prael would not say what specifically Tierney asked of the committee, despite repeated requests by the Globe. In particular, she would not say whether he asked if he should report the source of the money his wife received or the existence of the bank account she managed. Prael said she did not believe that Tierney asked for the guidance in writing and did not receive a written opinion.
On its website, the Ethics Committee says it offers both oral and written advice. But it also encourages written inquiries on matters that are “unusual or complex,” noting that only a written opinion may serve as insurance against adverse action by the committee at a later date.
Another aspect of Patrice Tierney’s arrangement with her brother could also raise questions, according to the groups: the account that Patrice Tierney managed for her brother and from which she wrote the monthly checks. Tierney, they said, would have been required to disclose the existence of the account if he benefited from the money in it. Federal prosecutors have said that at least $7 million passed through the account during the time Patrice Tierney was managing the funds and writing checks to herself.
At his July 3 press conference, Tierney said he “didn’t get any money” from the account. He also said the account was Robert Eremian’s personal account and described his wife as someone who was given the authority to sign checks from it. But in court testimony last year, Patrice Tierney agreed with federal prosecutors who said that she was a joint account holder and that the account was opened in her name and her brother Robert’s name.
Tierney’s 2006 vote against the Unlawful Internet Gambling Enforcement Act, which made it easier for officials to prosecute gambling on the Internet, is another reason the Ethics Committee or the Office of Congressional Ethics should look into whether Tierney met his disclosure obligations, the watchdog groups said.
“This is why there is a disclosure law,” said Allison, “so the public can make a judgment about whether the member is voting in the public interest or the member’s own private interest.”
Sheila Krumholz — executive director of the Center for Responsive Politics, a nonpartisan political research group — added: “We believe the Ethics Committee and/or the Office of Congressional Ethics should investigate.”
Prael said Tierney’s vote was based on his belief that Internet gambling should be legal and not on Robert Eremian’s financial interests.
“He had reasons quite unrelated to his brother-in-law to vote the way he did,” she said. Prael also said that Tierney, operating under the belief that his brother-in-law was working for a legal gambling concern and knowing his wife had received gifts from him, consulted with the Ethics Committee and was told those circumstances should not bar him from voting.
The Office of Congressional Ethics was created by Congress four years ago in an effort to bring more transparency to congressional ethics investigations. Composed of private citizens, the office investigates allegations of misconduct by members of Congress and may refer findings to the Ethics Committee, which enforces House rules and federal laws governing the behavior of members of Congress.
Questions about Tierney’s financial disclosures arise as the veteran Democrat is being challenged in his bid for a ninth term by Republican Richard R. Tisei, a former state senator and a 2010 candidate for lieutenant governor.
In the campaign, Tierney has been shadowed by his wife’s relationship to the illegal gambling enterprise run by Robert Eremian, another brother, Daniel, and their associates. In 2010, she pleaded guilty to aiding and abetting the filing of false tax returns by her brother, Robert, who managed the enterprise from Antigua, where he is a fugitive from justice facing more than 400 counts of racketeering, illegal gambling, and other charges.
Last year, Daniel Eremian was convicted on the same charges. At his June sentencing, he ignited controversy when he said Tierney “knew everything” about the illegal gambling enterprise. Days later, Robert Eremian echoed the accusation. But neither brother has provided evidence to back up that assertion, and Tierney has said he did not know the brothers were involved in illegal gambling until shortly before they were indicted.
During Daniel Eremian’s trial last year, prosecutors called Patrice Tierney as a hostile witness and questioned her about $223,000 they say she received.
At his press conference last month, Tierney said the figure was “very much inflated,” adding that his wife received much of the money to reimburse herself for expenses. But his office would not identify those expenses and would not say why Patrice Tierney would need to reimburse herself when she had direct access to the account funded by her brother.
For her part, Patrice Tierney, while testifying at Daniel Eremian’s trial, insisted she was not being paid by her brother to run the account. Instead, she said, she was being “appreciated” for work she performed assisting his children.
“So it’s fair to say you profited from managing this account to a great degree, did you not?” a prosecutor asked.
“I received gifts from my brother for helping him,” she replied.
“It’s a lot of money, correct?,” the prosecutor continued.
“Yes, I did a lot of work,” she said.
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