Murkowski Land Deal with Stevens Biz Associate Raises Questions

Late last year, Alaskan real estate developer Bob Penney testified before a grand jury about his cozy relationship with Sen. Ted Stevens (R-AK). But it looks like Penney also has financial ties with Alaska’s other senator: Lisa Murkowski (R). At around the same time, she quietly bought a prime piece of property along the bank of the Kenai River from Penney.

Because of Alaska’s weak records requirements, it’s unclear whether Murkowski got a special deal from Penney. The market value of the 1.27 acre plot is worth around $300,000, according to Kenai real estate agents and locals. Both Penney and Murkowski’s office refused to reveal what Murkowski paid.

The arrangement alarms some watchdogs who see ethical and even legal issues stemming from the deal. Ryan Alexander, the director of Taxpayers for Common Sense, said that Penney’s history makes it look like he deliberately does business with Alaska politicians with an eye for future gain.

“It raises more than question, it raises concern,” said Alexander. “It puts [Murkowski] into that web of folks that has raised eyebrows.”

The only available information on Penney’s sale price (land transaction prices are not public record in Alaska) is a Deed of Trust, available here, that shows that Murkowski purchased the riverfront plot in late December of last year with a mortgage of $136,000. A borough assessment values the property at $214,000 – but real estate agents said that is well below what Penney could have fetched. Based on a review of Murkowski’s disclosure records, it’s unclear if she had enough cash on hand to handle such a large down payment.

Thanks to a TPMMuckraker reader in Soldotna who photographed the area where the wooded plot sits, we can catch a glimpse of the view. The photos are up here.

The land is near Penney’s lodge where he co-hosts the annual Kenai River Classic with Stevens. The event draws politicians and heavyweight defense executives from companies like Lockheed Martin and Boeing for a weekend of fundraising — and reveling. The invitational is tagged as a charity event meant to raise money for salmon habitat preservation, but it’s been criticized as a meet-up for influence peddling.

The longtime friends, Penney and Stevens, are also business partners. Penney brought Stevens in on a Utah land deal that turned a $15,000 investment into $100,000 for the senator. And the two own stakes in the same racehorse with former Veco executive Bill Allen, who recently pleaded guilty to federal bribery and conspiracy charges in a cash-for-votes scheme involving state lawmakers.

Around the same time Penney sold Murkowski the riverfront property, he testified before a grand jury investigating Stevens in the broad federal probe into political corruption in the state.

This appears to be the first hint of business ties between Penney and Murkowski, though Penney and his family have given Murkowski $10,500 in campaign contributions since 2003, according to the online database politicalmoneyline.com.

Penney didn’t want to discuss the finances of the deal when I spoke with him on the phone.

“Why should I tell you?” Penney said. “I have sold millions of dollars worth of property. I consider that a private transaction.”

When I pointed out that if he sold the property for below market value, it could be considered a sweetheart deal — he scoffed.

“There was not a campaign contribution,” he said. “This was a land transaction.”

Murkowki’s office called the purchase exempt from Senate financial disclosure, citing a clause in the ethics manual which says “property which is held or maintained solely for recreational or personal purposes does not have to be reported.” (ethics manual) The committee declined to comment for this story.

“She bought this for personal use just like millions of other people,” Danielle Holland said. “My response to your question, times six, is it’s for personal use.”

Not everyone agrees that “personal use” is an acceptable reason not to disclose a land purchase, like Ken Boehm of the Chairman of the National League and Policy Center. Boehm said that clause refers to “assets,” but not the “transactions” portion of the disclosure forms.

“It’s quite clear that the rules for financial disclosure require the disclosure of a real estate purchase or of an asset for more than $1,000,” Boehm said. “There are seven exceptions, and this isn’t one of them.”

Boehm said that for transactions, the closest exception is for a private residence.

“Vacant land that you may one day have a residence on is not an exclusion,” he said, adding that Murkowski should consider filing an amendment to her disclosure to say what she paid.

Boehm spearheaded an ethics complaint against Rep. Alan Mollohan (D-WV) for misrepresenting his finances on official disclosure forms. Now Mollohan’s under federal investigation for his habit of entering into real estate deals (including a farm and some beach-front property) with beneficiaries of his many earmarks. Former Rep. Duke Cunningham (R-CA) and Rep. Rick Renzi (R-AZ) can also attest to the headache of failing to disclose property deals.

A scholar at the conservative think tank the American Enterprise Institute, Norman Ornstein, flagged the new earmark rules as reason for erring on the side of disclosure. Under the reformed rules, senators need to be transparent about financial interests they might have near where federal funds are going to be sent.

“If people don’t know that you have the property then it makes it harder,” Ornstein said.

Of course, the infamous earmarking efforts of Alaskan lawmakers would make such a concern even more pressing.