House Ethics Orders Schmidt to Pay Back $500K In Improper Legal Fees

The House Ethics Committee has cleared Rep. Greg Meeks (D-NY) of charges that he took out an inappropriate loan he received from a businessman but is still investigating whether he disclosed it properly.

Likewise, the panel exonerated Rep. Jean Schmidt (R-OH) of any wrongdoing in accepting $500,000 in legal services from the Turkish American Legal Defense Fund, a Turkish-American interest group, even though they found them to be improper gifts under House rules and are demanding she repay the attorneys. The committee also decided against pursuing an investigation into Rep. Luis Guiterrez’ July 26 arrest during a immigration protest in front of the White House. Guiterrez paid a $100 fine for failing to obey a lawful order of a policeman.In the matters involving Meeks and Schmidt, the House Ethics Committee was acting on recommendations made by the Office of Congressional Ethics, a quasi-independent body tasked with looking into allegations against members and furthering their findings on to the full ethics panel for further review.

Citizens For Responsibility and Ethics in Washington filed a formal ethics complaint against Meeks last summer over allegations he failed to disclose $40,000 he received from a businessman in the state. Meeks repaid the $40,000 personal loan, but only after the FBI started looking into the transaction.

In its Friday announcement regarding Meeks, the committee said even though the loan was not made by a commercial institution, it was provided on commercially reasonable terms that included a recorded written agreement, collateral and repayment terms.

The allegations against Schmidt are more complicated, stemming from litigation involving statements David Kirkorian, who has twice sought to challenge her for the 2nd District seat, made against her and whether she improperly relied upon donations from the Turkish American Legal Defense Fund to fight Kirkorian in court instead of setting up an independent legal expense trust.

Krikorian had filed multiple complaints to the OCE, alleging that the Ohio lawmaker improperly received free legal services from the TCA and its legal defense fund in violation of House rules. Schmidt has said she followed House rules and repeatedly sought Ethics Committee advice about the legal defense funds, but according to OCE report, she started receiving the legal assistance in the fall 2008 and only sought the committee’s advice after Krikorian filed his first complaint in September 2009.

In its final report on the matter, the Ethics Committee cited repeated interactions with Schmidt and her office as they advised her about the legal payments. On Aug. 1, the committee unanimously voted not to empanel an investigative subcommittee to look into the matter further because they believe Schmidt unknowingly accepted legal expense payments from the Turkish American Legal Defense Fund and didn’t believe further investigation would turn up new evidence.

Instead they ordered Schmidt to stop accepting legal work from the group, disclose the amount already accepted and pay back the attorneys who helped her fight various Ohio cases over the last three years.

Schmidt and Krikorian have repeatedly clashed in court since the 2008 election cycle, challenging each other before the Ohio Elections Commission, the Ohio courts and U.S. district court.

As Roll Call reported earlier this year, in the only pending case, Schmidt filed a defamation suit in the Clermont County Common Pleas Court in June against Krikorian, seeking $6.8 million in damages. Krikorian, an Armenian-American has accused Schmidt of accepting funds from Turkish political interests. In October 2009, the Ohio Elections Commission ruled that Krikorian made false statements when he circulated a flier in 2008 containing similar accusations.

The Ethics Committee’s decision that Schmidt did not knowingly accept the improper gift of legal work contradicts findings in the OCE report, as well as the panel’s recent precedent regarding legal expense trusts.

For example, last fall the ethics panel said Rep. Charles Rangel (R-NY) could not accept pro bono legal assistance to help him fight a string of ethics charges because he had yet to set up a legal expense trust.

In addition, the Ethics Committee did not address evidence included in the OCE report on the Schmidt matter that the Turkish American Legal Defense Fund (TALDF) attorneys had told the OCE investigators that they were “under the impression that they were providing legal services at no costs to Representative Schmidt.”

The OCE report on Schmidt also cited one of the TALDF attorneys as testifying in a deposition before the Ohio Election Commission that he had told Schmidt and her campaign “that we would not charge them legal fees.”

Reacting to the news, Krikorian was pleased Schmidt will be forced to pay back the $500,000 but said he didn’t buy the argument that she didn’t know the attorneys weren’t charging her for their work.

“Personally I find it hard to believe that Jean Schmidt did not know the facts regarding her own attorneys in legal actions which she commenced in her own name – I find that to be laughable!” he said.

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