Rep. Capps rented room to staffer for years, didn’t report income to IRS for over a decade

Matthew Boyle Investigative Reporter
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In a possible congressional ethics violation, California Democratic Rep. Lois Capps rented a room in her personal home to one of her congressional staffers for years and did not report the income to the IRS — during that time, or for more than a decade — until 2012. Capps also withheld that information from the proper congressional authorities for five years — from 2001 until early 2006.

The staffer in question was Jeremy Tittle, a “case worker” in Capps’ district office from late 2000 until late 2004. According to Federal Election Commission records, Tittle was also a staffer for Capps’ political campaigns from as early as 2001 to as late as 2004.

Tittle, according to a letter that Capps personal accountant David Powdrell sent to the Legislative Resource Center on Capitol Hill on Feb. 13, 2006, rented the “studio portion of her [Capps’] personal residence in Santa Barbara, California” for several years. Tittle lived in Capps’ home from 2001 to 2005.

During the majority of the time during which Tittle paid Capps rent to live in her home, he was a staffer for both her campaign and her congressional office.

Capps’ failure to tell Congress about the arrangement may be a potential congressional ethics violation — because she had an unreported financial and transactional relationship with a staffer for several years. On its first page, the House Ethics manual says “members, officers and employees of the House should … not in any way use their office for private gain.”

According to the Powdrell letter, Tittle paid the congresswoman $41,480 from 2001 to 2005. Capps campaign spokesman Jeffrey Millman conceded in a phone interview with TheDC that the February 2006 letter from Powdrell was the first time Capps told Congress about the financial relationship she had with her staffer. He also said the room was rented at “market rate.”

“We’re willing to concede that that [letter] was the first time [Capps reported to congressional officials that she had staffer living in her home paying her rent],” Millman said.

Millman dodged, though, when pressed on whether Capps should have told the proper congressional authorities of her transactional relationship with her staffer before that 2006 letter — especially since the relationship was going on for five years. “Her accountant filed an amended financial disclosure form with the House when it was caught,” he said.

“As soon as they became aware of this, they immediately filed a corrected form,” Millman added.

When pressed on how Capps didn’t notice a congressional staffer living in her house paying her rent for five years, Millman again dodged: “When the problem was noticed, it was immediately corrected,” he said.

When further pressed, Millman deflected blame to Capps’ GOP opponent in the upcoming election: “That’s why it’s important for [Abel] Maldonado to publicly release his taxes for every year he’s held public office — to make sure that he’s properly paid his own taxes.”

In addition to Capps’ failure to report the income she received from Tittle to the proper congressional authorities for five years, she didn’t report the income to the IRS until this year. For six years, Capps had to file amended tax returns with the IRS to report that income she made off her staffer, and she didn’t do it until 2012.

“Capps’ accountant filed all her amended returns from 1998-2011 this year, and she has paid them,” Millman wrote in an email to TheDC.

“As soon as we became aware of this, Lois immediately filed an amended return and cleared it up right away,” Millman added. “The amended returns are on her website and everybody can look at it.”

But in those IRS tax returns posted on Capps’ campaign website, the dates when the amended returns from 2001 through 2005 — which include the income she from made from Tittle — were filed are not included on the documents. This could make it appear to average reader that the issue was resolved with the IRS in 2006, instead of more than 10 years after the first payments began. In reality, and by the Capps’ campaign’s own admission, this wasn’t resolved until 2012.

Capps’ decision to amend her tax returns and file them with the IRS just this year is politically convenient for her: She’s in the middle of a bitter re-election fight against former California Lieutenant Gov. Abel Maldonado and recent internal polling Maldonado’s campaign released puts him well within striking distance to take the seat in November. According to the internal poll, Maldonado is getting 46 percent of support and Capps gets 48 percent, with a 4.9 percent margin of error.

Capps has made the tax returns issue a major one in this campaign — and she has continually demanded that Maldonado release his tax returns. Maldonado has had some issues with the IRS as of late, and according to the Los Angeles Times, he and his family businesses owe “more than $4 million in taxes.”

Capps has used the tax returns issue as a way to attack Maldonado, though it’s now clear she didn’t even resolve her failure to report income with the IRS until this year. Maldonado campaign spokesman Kurt Bardella told TheDC that these new revelations, including the timing in which Capps handled this issue, are revealing about Capps’ motives with her attacks.

“At first, it appeared as if Congresswoman Capps was pointing fingers at Abel Maldonado in an attempt to avoid talking about issues like jobs and the economy,” Bardella wrote in an email. “Now it’s clear that Congresswoman Capps, who at this very moment is running a campaign commercial called ‘Trust’, was really playing a game of misdirection, hoping that her financial arrangement with a member of her own staff would not come to light.”

“The fact of the matter is that Congresswoman Capps failed to report income she was receiving from a member of her own staff, who was being paid both by her campaign and her congressional office, was renting a room in her own house,” Bardella added. “How does ten years go by before you get around to disclosing that to the IRS? Why were forms posted on her website that made it look like the issue was addressed in 2006? There are a lot of questions that Congresswoman Capps has to answer about this financial arrangement.”

Millman, Capps’ campaign spokesman, is still using this as a way to attack Maldonado, though. In the same email in which he told TheDC that Capps waited more than a decade to report that income to the IRS, he pivoted into an attack on Maldonado.

“And this is exactly why it’s so important for Maldonado to publicly release his taxes for every year he’s been in public office, to make sure that he has properly paid what he owes,” Millman said. “Unfortunately, we already know he owes $4.2 million in back taxes for 2006-08, and refuses to pay it, and now has been sued by the IRS for making improper deductions for his country club membership, home remodeling and other personal expenses.”

TheDC visited Capps’ congressional office on Capitol Hill Wednesday afternoon to attempt to ask her about this issue in person. Capps refused to discuss the issue and her chief of staff, Randolph Harrison, said he thinks it’s “not professional” to “ambush” a member of Congress in the hall. Harrison said Capps’ congressional office believes this is a “campaign issue,” and directed TheDC to Millman.

Harrison refused to answer whether or not Capps believes it’s ethically acceptable for a member of Congress, such as herself, to have a financial and transactional relationship with her congressional staff.

Millman said he agrees with Harrison in thinking that this is a campaign issue — adding “every issue is a campaign issue” — and said “yes,” when asked if he thought it’s ethically acceptable for such financial and transactional relationships to exist between members of Congress and their staffers.

Harrison refused to make Capps available to answer questions for TheDC, though she was in the office on Wednesday when TheDC visited.

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Matthew Boyle