NASHVILLE – U.S. Sen. Corker says “filing errors” made by his accountants are the reason why his ethics disclosure statements failed to cite specific dates on a dozen trades he made in stock of Chattanooga-based CBL & Associates Properties Inc.
The trades sometimes amounted to millions of dollars, the Wall Street Journal reported Wednesday.
“I am extremely disappointed in the filing errors that were made in these earlier reports where the accounting firm mistakenly used realized gain/loss methodology instead of the Senate financial disclosure guidelines,” the Tennessee Republican said in a statement. “Therefore, in a few cases, only the sale and gain or loss of the transaction was reported.”
Corker, a former Chattanooga mayor, amended his disclosures to reflect the dates after the newspaper posed questions last week over apparent discrepancies in his Senate disclosures going back years.
“As a result of this inquiry, and after completing a full review, we are correcting this oversight,” Corker said.
Among other things, the newspaper reported that Corker, a member of the Senate Banking Committee, paid between $1 million and $5 million in 2011 for CBL shares, reselling them five months later for a 42 percent profit. Earlier purchases in 2009 for trust accounts established for his daughters “likely netted more than $1 million, though in that case the exact gain is impossible to calculate,” according to the report.
The senator, who made a fortune in construction and real estate prior to entering the Senate in 2006, is one of the wealthiest members of Congress. This week, Roll Call ranked Corker as the 23rd richest among the 100 senators and 435 representatives with an estimated net worth of $17.98 million.
The senator’s accountant, David DiStefano, a partner at G.R. Rush & Co. PLLC, said in a Times Free Press interview the firm has prepared Corker’s tax returns for years. The tax returns were used to prepare the senator’s annual financial disclosures, required under Senate ethics rules.
“We have many of the tax documents that we have used in preparing his tax returns that include gain and loss statements from various brokerage firms,” DiStefano said. “Therefore, we would go through those reports and pick up all the sales of securities the best that we could and report purchases of securities, as well.
“But,” DiStefano added, “we didn’t have a detailed transactional report from the brokers that showed every single transaction every month. There was a potential to miss one, and we certainly did.”
Bob CorkerAlthough noting that “nobody gave us a year’s supply of all the detailed transactions,” DiStefano said that “in all probability we should have asked for that.” He added he is a “little frustrated with myself the last thing I want to do is make a mistake.”
Corker’s office said in a statement the senator “always has disclosed to the public that he invests in CBL since he first held stock in the company back in 2007. The accounting firm that worked on his financial disclosure reports properly listed the sale and gain or loss of some transactions, but did not list the day they were purchased so after completing a full review, we are correcting this technical oversight.”
The senator’s ties to CBL go back years. After college, he worked for a company that constructed buildings for CBL. Corker later started his own construction firm and eventually became a commercial real estate developer. CBL executives over the years have contributed to his campaigns – they’re frequent contributors to GOP candidates and officeholders.
Company officials did not respond to a request for comment.
The Journal reported Corker has bought or sold CBL stock 45 times. His wife and two daughters made 25 additional CBL trades in accounts in their names, the newspaper reported.
While Corker disclosed making between $1 million and $5 million on CBL trades in both 2010 and 2012, he conceivably may have lost money in other years, the Journal reported. That’s because senators are only required to report profits, not losses, on investments.
Mistakes are often made in disclosures and because ethics regulators want to encourage lawmakers to correct them there are no penalties. Ethics rules allow senators to invest in specific companies provided they don’t trade based on inside information they gain through their position of public trust.
In 2011, the Journal cited Corker’s frequent trading in CBL, a relatively small company by Wall Street standards. He told the newspaper he “watched the trading range on this hometown-based stock” and “found that especially during times of market volatility it trades within wide ranges.”
He added: “I’ve bought it heavily when it is at the low end of that range and then I hold it until there is upward movement, when I sell.”
The Journal said that strategy proved successful in March 2009 on one of the previously undisclosed trades. CBL stock traded near its low of $2.07. On March 9, 2009, accounts in the name of Corker’s daughters made a pair of purchases of CBL stock worth a total of $200,000 to $500,000.
The first time any CBL shares were sold from that account, on May 12, 2010, the stock had risen more than sevenfold to about $16, the Journal reported. It noted the trade likely netted a gain of at least $1 million.
Corker’s office said losses on other CBL trades in his children’s accounts in 2010 wiped out that gain. The same accounts had paid about $24 a share for more than $2 million of CBL shares in 2008, and those trades most likely suffered significant losses.
The Journal reported other previously disclosed trades successfully took advantage of movements in the company’s stock. In three separate trades in June and July 2010, Corker bought between $3 million and $15 million in CBL shares. The day after the last trade, the stock rose when investment-research firm UBS Securities said it was upgrading its outlook, the Journal reported. From July 7 to July 26, when Corker started to sell the stock, it was up 18.3 percent.
Corker’s office says other investment-research firms didn’t have quite the sunny outlook as UBS.
Contact Andy Sher at asher@timesfreepress.com, 615-255-0550 or follow on Twitter @AndySher1.