Feds Indict Congressman in Land Deal
By LARA JAKES JORDAN
Feb. 22, 2008
Republican Rep. Rick Renzi was indicted Friday on charges of extortion, wire fraud, money laundering and other matters in an Arizona land swap scam that allegedly helped him collect hundreds of thousands of dollars in payoffs.
Rep. Rick Renzi, a three-term member of the House, also served as Arizona chairman for GOP presidential front-runner John McCain's campaign.
A 26-page federal indictment unsealed in Tucson, Ariz., accuses Renzi and two former business partners of embezzlement and conspiring to promote the sale of land that buyers could swap for property owned by the federal government.
Renzi is a three-term member of the House. He announced in August that he would not seek re-election. Attempts to reach Renzi by phone on Friday through his congressional office in Flagstaff and his lawyer were unsuccessful.
The indictment accuses Renzi of using his position as a member of the House Natural Resources Committee to push the land swaps for business partner James W. Sandlin, a real estate investor from Sherman, Texas. It comes after a lengthy federal investigation into the land development and insurance businesses owned by Renzi's family.
As part of the alleged scam, Renzi and Sandlin concealed at least $733,000 that the congressman took for helping seal the land deals, the indictment says. They are each charged with 27 counts of wire fraud, extortion and money laundering, and conspiracy connected to the scam in Cochise County, Ariz.
"Renzi was having financial difficulty throughout 2005 and needed a substantial infusion of funds to keep his insurance business solvent and to maintain his personal lifestyle," the indictment says.
Additionally, Renzi and his second business partner, Andrew Beardall of Rockville, Md., allegedly embezzled more than $400,000 in insurance premiums in 2001 and 2002 to fund his first congressional campaign, according to the indictment.
All three men are scheduled to appear in federal court in Tucson on March 6.
"Public corruption creates a cynicism for government and unfairly stains legions of honest public servants," Assistant Attorney General Alice S. Fisher said in a statement. "These charges represent allegations that Congressman Renzi defrauded the public of his unbiased, honest services as an elected official."
Renzi is the Arizona chairman for GOP presidential front-runner Sen. John McCain's campaign. McCain seemed surprised when asked in Indianapolis for his reaction to the indictment, choosing his words carefully, shaking his head and speaking slowly.
"I'm sorry. I feel for the family; as you know, he has 12 children," McCain told reporters on the presidential campaign trail. "But I don't know enough of the details to make a judgment. These kinds of things are always very unfortunate.... I rely on our Department of Justice and system of justice to make the right outcome."
The land swap deal has dogged Renzi more than a year.
The indictment says Renzi refused in 2005 and 2006 to secure congressional approval for land swaps by two unnamed businesses if they did not agree to buy Sandlin's property as a part of the deal.
One of the businesses, seeking congressional approval for surface rights for a copper mining project in Renzi's district, failed to buy the land in early 2005. As a result, Renzi allegedly told the business, "No Sandlin property, no bill."
Renzi had previously owned some of Sandlin's property, and concealed his relationship with the real estate investor from the mining company even when expressly asked. At the time, Sandlin owed $700,000 of the $800,000 price tag on property Renzi sold him in Kingman, Ariz.
Meanwhile, Renzi allegedly pushed the land on a second firm, an unnamed investment group, that was trying to secure a federal land swap. If the firm accepted Sandlin's property as part of the transaction, Renzi allegedly said investors would receive a "free pass" through the House Natural Resources Committee, according to the indictment.
In April 2005, the investors reluctantly agreed to the deal.
"Please be sensitive to the fact that we are going way out on a limb at the request of Congressman Renzi," one of the investors wrote in an April 17, 2005 e-mail to a Renzi aide. "I am putting my complete faith in Congressman Renzi and you that this is the correct decision."
The investment group agreed to pay $4.6 million for Sandlin's land, the indictment says. Sandlin then paid Renzi $733,000 for his help in securing the land swap from the second business.
Renzi failed to report the income on financial disclosure reports to Congress, as is required.
Government watchdog group Citizens for Responsibility and Ethics in Washington applauded the Justice Department for holding Renzi "accountable given that his House colleagues refused to do so." The group has had Renzi on its "Most Corrupt Members of Congress" list for the last three years.
"Bluster aside, this latest in a string of congressional indictments demonstrates that Congress simply will not police itself," said CREW executive director Melanie Sloan.