Main menu

Cleaver, Kind, and Booker to Treasury Department IG: Investigate Reports of Corruption at Treasury and White House

Oct 31, 2019
Press Release

(Washington, D.C.) – Today, United States Representatives Emanuel Cleaver, II (D-MO) and Ron Kind (D-WI), as well as United States Senator Cory Booker (D-NJ), sent a letter to Department of Treasury Inspector General Richard Delmar calling for an investigation into multiple reports of impropriety by senior officials within the Treasury and White House when implementing the 2017 Opportunity Zones tax incentive program. Additionally, the lawmakers are requesting the Treasury and White House officials turn over all relevant communication to enforcement agencies and legislators for review.

“The underlying legislation, the Investing in Opportunity Act, was intended to support the growth and revitalization of our nation’s most economically underserved communities. It was not the intent of Congress for this tax incentive to be used to enrich political supporters or personal friends of senior administration officials, as recent reports indicate,” the lawmakers wrote.

“If any of these allegations prove to be true, it would be a perverse violation of public trust, a distortion of congressional intent, and a violation of federal law. We urge the Inspector General’s office to conduct a thorough and complete investigation of these allegations and report to Congress, as well as appropriate enforcement entities, your findings with all deliberate speed,” the lawmakers wrote.

A report in the New York Times last weekend alleges that, in a controversial policy reversal, the Treasury Department ignored the department’s own guidelines for opportunity zone designation. The underlying legislation established a process in which governors from each state nominated high-poverty census tracts as Opportunity Zones, and the Department of Treasury was entrusted with ensuring their eligibility through a certification process. Reporting by the New York Times alleges that senior Treasury officials abdicated those duties, bending regulations to benefit well-connected investors.

In a separate report from ProPublica, emails suggest that multi-billionaire and owner of the Cleveland Cavaliers Dan Gilbert successfully lobbied to have a neighborhood made eligible by the program despite failing to meet poverty requirements. The resulting designation has likely been a financial boon for the billionaire, as he has invested an estimated $3 billion in Detroit real estate, the vast majority of which are now in opportunity zones.

“As someone who helped design this program, I can say unequivocally that Congress never intended these tax breaks for struggling communities to be granted unilaterally by the Treasury Secretary to his personal friends or political allies,” said Congressman Cleaver. “If what is being reported is true, and the Secretary circumvented federal obligations, it is imperative that the Inspector General get to the bottom of it. As the overseers of the Executive Branch, Congress has a responsibility to investigate these disturbing claims, and that is just what I intend for us to do.”

“The goal of Opportunity Zones is to spread capital and economic growth throughout the country. However, thanks to tax cuts that were hastily passed in 2017, Opportunity Zones were haphazardly implemented, apparently empowering some in this Administration to give friends and political allies kickbacks and special rules instead of helping the communities it was designed for. We must look into the way this program was implemented and root out any and all corruption within it – or risk the program never reaching its true potential,” Congressman Kind said.

The text of the letter is available below.

Richard K. Delmar

Acting Inspector General

U.S. Department of Treasury

Office of Inspector General

1500 Pennsylvania Avenue, N.W.

Room 4436,

Washington, DC 20220

Dear Inspector General Delmar,

We write to express our deep concern surrounding allegations of misconduct by senior officials within the Department of Treasury in the implementation of the 2017 Opportunity Zone tax incentive (P.L. 115-97). We request that the Department of Treasury’s Inspector General initiate an investigation into allegations raised in recent news reports of possible misconduct by White House and Treasury Department officials. We urge the Inspector General to do a complete review of all Treasury Department certified Opportunity Zones for eligibility requirement conformance. Further, we request that the Inspector General assist in determining if there was any misconduct by private individuals and/or groups in violation of U.S. law, regulation, or legal holding by gathering and furnishing to enforcement authorities and Congress all relevant information on Opportunity Zone designation and regulation for review.

Following several news reports of possible wrongdoing in the implementation of Opportunity Zones, which was drafted and supported by our offices, we find it crucial that the Office of Inspector General investigate these allegations. The underlying legislation, the Investing in Opportunity Act, was intended to support the growth and revitalization of our nation’s most economically underserved communities. It was not the intent of Congress for this tax incentive to be used to enrich political supporters or personal friends of senior administration officials, as recent reports indicate.

This week, the New York Times (NYT) published reports of alleged widespread misconduct and corruption at the Treasury Department, and, in some instances, possibly under the personal direction of Secretary Steven Mnuchin himself. The Tax Cuts and Jobs Act established a process by which governors from each state would nominate high-poverty census tracts in their respective states, to ensure that the place-based tax incentive would best meet the needs of their communities. Treasury was to then certify that the governor-nominated tracts met the criteria for Qualified Opportunity Zones (QOZs). The NYT report revealed that a controversial reversal regarding the eligibility of a Nevada QOZ was driven by politics and personal relationships at the expense of low-income communities. Despite originally declaring the Nevada tract ineligible, months of heavy lobbying by wealthy investors led to the “unusual decision [being] made at the personal instruction of Mr. Mnuchin” to allow for Storey County to be made eligible.

The recent reporting revealed that officials at Treasury, the Internal Revenue Service (IRS), and the Community Development Financial Institutions Fund (CDFI), all expressed opposition to the decision: Annie Donovan, who previously ran the Treasury office in charge of designating areas as Opportunity Zones, said Treasury officials were “troubled” by the unusual action by the Secretary. An internal memo to the Treasury Secretary warned that such a reversal would “[open] the door for accusation that the determination process was influenced by political consideration or bias”. Despite these warnings from staff, Secretary Mnuchin instructed Treasury officials to allow the otherwise ineligible tract to qualify for the incentive.

This report follows an October 24, 2019 ProPublica article on Dan Gilbert, founder of Quicken Loans, that alleged coordination with White House officials to ensure his real estate properties were included in a designated opportunity zone. In an email obtained by ProPublica, Michigan economic development official, Christine Roeder, asked her colleague to call Quicken Loans’ executive vice president for government affairs about opportunity zones and writing, “They worked with the White House on it and want to be sure we are coordinated.” The article highlights that less than two weeks after the email was written, the Trump administration revised its list of census tracts that were eligible for the tax break.

We urge the Inspector General to do a complete review of all Treasury Department certified Opportunity Zones for eligibility requirement conformance. We further request that the Inspector General collect any and all communication, including but not limited to government records, notes, correspondence, and call logs, between the Treasury Department, White House administration officials, and outside entities on the subject matter of designation of census tracks as Opportunity Zones. Additionally, we request any and all communication regarding the drafting of regulations related to Opportunity Zones between the date enactment of PL 115-97 and July 15, 2019. This information should be furnished to appropriate federal enforcement agencies and Congress for review. It is imperative the Inspector General determines if any Treasury Department official helped circumvent policy or practice to personally assist a business or individual.

If any of these allegations prove to be true, it would be a perverse violation of public trust, a distortion of congressional intent, and a violation of federal law. We urge the Inspector General’s office to conduct a thorough and complete investigation of these allegations and report to Congress, as well as appropriate enforcement entities, your findings with all deliberate speed.

Sincerely,

Emanuel Cleaver, II

Member of Congress

Ron Kind

Member of Congress

Cory A. Booker

Member of Congress

###

 

Emanuel Cleaver, II is the U.S. Representative for Missouri's Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Blue Springs, Grain Valley, Oak Grove, North Kansas City, Gladstone, Claycomo, and all of Ray, Lafayette, and Saline Counties. He is a member of the exclusive House Financial Services Committee; Chairman of the House Subcommittee on National Security, International Development, and Monetary Policy; member of the Select Committee on the Modernization of Congress; member of the Committee on Homeland Security; and a Senior Whip of the Democratic Caucus. For more information, please contact Matthew Helfant at 202-225-4535 or Matthew.Helfant@mail.house.gov A high-resolution photo of Congressman Cleaver is available here.