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<DIV class=timestamp>August 14, 2011</DIV>
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<H1><NYT_HEADLINE version="1.0" type=" ">A Businessman in Congress Helps His
District and Himself</NYT_HEADLINE></H1><NYT_BYLINE>
<H6 class=byline>By <A class=meta-per title="More Articles by Eric Lichtblau"
href="http://topics.nytimes.com/top/reference/timestopics/people/l/eric_lichtblau/index.html?inline=nyt-per"
rel=author>ERIC LICHTBLAU</A></H6></NYT_BYLINE><NYT_TEXT>
<DIV id=articleBody><NYT_CORRECTION_TOP></NYT_CORRECTION_TOP>
<P>VISTA, Calif. — Here on the third floor of a gleaming office building
overlooking a golf course in the rugged foothills north of San Diego, <A
class=meta-per title="More articles about Darrell Issa."
href="http://topics.nytimes.com/top/reference/timestopics/people/i/darrell_issa/index.html?inline=nyt-per">Darrell
Issa</A>, the entrepreneur, oversees the hub of a growing financial empire worth
hundreds of millions of dollars. </P>
<P>Just a few steps down the hall, Representative Darrell Issa, the powerful
Republican congressman, runs the local district office where his constituents
come for help. </P>
<P>The proximity of the two offices reflects Mr. Issa’s dual careers, a meshing
of public and private interests rarely seen in government. </P>
<P>Most wealthy members of Congress push their financial activities to the side,
with many even placing them in blind trusts to avoid appearances of conflicts of
interest. But Mr. Issa (pronounced EYE-suh), one of Washington’s richest
lawmakers, may be alone in the hands-on role he has played in overseeing a
remarkable array of outside business interests since his election in 2000. </P>
<P>Even as he has built a reputation as a forceful Congressional advocate for
business, Mr. Issa has bought up office buildings, split a holding company into
separate multimillion-dollar businesses, started an insurance company, traded
hundreds of millions of dollars in securities, invested in overseas funds,
retained an interest in his auto-alarm company and built up a family foundation.
</P>
<P>As his private wealth and public power have grown, so too has the overlap
between his private and business lives, with at least some of the congressman’s
government actions helping to make a rich man even richer and raising the
potential for conflicts. </P>
<P>He has secured millions of dollars in Congressional earmarks for road work
and public works projects that promise improved traffic and other benefits to
the many commercial properties he owns here north of San Diego. In one case,
more than $800,000 in earmarks he arranged will help widen a busy thoroughfare
in front of a medical plaza he bought for $10.3 million. </P>
<P>His constituents cheer the prospect of easing traffic. At the same time, the
value of the medical complex and other properties has soared, at least in part
because of the government-sponsored road work. </P>
<P>But beyond specific actions that appear to have clearly benefited his
businesses, Mr. Issa’s interests are so varied that some of the biggest issues
making their way through Congress affect him in some way. </P>
<P>After the <A title="Times article."
href="http://www.nytimes.com/2008/09/15/business/15lehman.html">forced sale</A>
of Merrill Lynch in 2008, for instance, he publicly attacked the Treasury
Department’s handling of the deal without mentioning that Merrill had handled
hundreds of millions of dollars in investments for him and lent him many
millions more. </P>
<P>And in an era when the auto industry’s future has been a big theme of public
policy, Mr. Issa has been outspoken on regulatory issues affecting car
companies, while maintaining deep ties to the industry through the auto
electronics company he founded, <A href="http://www.deiholdings.com/">DEI
Holdings</A>. </P>
<P>He has a seat on its board, and his nonprofit family foundation, which seeks
to encourage values like “hard work and selfless philanthropy,” has earned
millions from stock in DEI, which bears his initials. Mr. Issa’s fortune, in
fact, was built on his car alarm company, and to this day it is <A
title="Mr. Issa’s voice on another Viper alarm."
href="http://www.youtube.com/watch?v=yoG1Z6T5g0A">his deep voice</A> on Viper
alarms that warns potential burglars to “please step away from the car.” </P>
<P>In recent months, The New York Times <A title="Articles in the series."
href="http://topics.nytimes.com/topic/timestopic/se/t/thechampions/index.html">has
examined</A> how some lawmakers have championed particular industries, pushing
measures to protect and enrich supporters. In Mr. Issa’s case, it is sometimes
difficult to separate the business of Congress from the business of Darrell
Issa. </P>
<P>Mr. Issa, 57, did not respond to repeated written requests in the last three
weeks to discuss his outside interests. In the past, he has said his business
background has made him a better lawmaker. In at least one Congressional matter,
however, he recused himself after being advised of a potential conflict. </P>
<P>But perhaps his clearest statement on the issue came last year amid Toyota’s
recalls of millions of automobiles with dangerous acceleration problems. Then,
Mr. Issa brushed aside suggestions that his electronics company’s role as a
major supplier of alarms to Toyota made him go easy on the automaker as he led
an investigation into the recalls. </P>
<P>“If anything,” the congressman said, “Toyota probably got a harder time by
having an automobile supplier sitting up there on the dais saying ‘Hold it, I’m
not letting you off the hook now.’ ” </P>
<P><STRONG>A Powerful Gadfly</STRONG> </P>
<P>As the influential chairman of the House Oversight and Government Reform
Committee, Mr. Issa has proven both a reliable friend to business and a constant
annoyance to an Obama administration that he sees as anti-business. Even before
formally taking over the committee in December, he made headlines by asking 150
businesses and trade groups to identify regulations that they considered overly
burdensome, and he has issued numerous subpoenas on his own authority in
investigating programs he believes are harmful. </P>
<P>His pro-business policies usually align closely with those of the firms he
has worked with in his wide-ranging business career both before and after he
joined Congress. Congress has historically had more than its share of
millionaires from storied American fortunes, from the Rockefellers to the
Kennedys. But typically, those members lower their business profiles
considerably and limit their active dealings to avoid potential conflicts of
interest and the political repercussions that might follow from private business
decisions. </P>
<P>Senator John D. Rockfeller IV, Democrat of West Virginia, for one, has much
of his money in blind trusts, run by outside trustees. And Senator John Kerry,
Democrat of Massachusetts, has a number of family and marital trusts for money
generated largely through the fortune of his wife, Teresa Heinz Kerry. </P>
<P>Mr. Issa, who grew up in a hardscrabble neighborhood near Cleveland and now
owns homes north of San Diego and in Washington, has assets totaling as much as
$725 million, outstripping by some measures even Mr. Rockefeller and Mr. Kerry.
(Because lawmakers must disclose their assets only within broad dollar ranges,
public reports do not allow for precise figures.) </P>
<P>According to his filings, Mr. Issa’s minimum wealth doubled in the last year,
and he appears flush with cash: he bought dozens of <A class=meta-classifier
title="More articles about mutual funds and exchange-traded funds."
href="http://topics.nytimes.com/your-money/investments/mutual-funds-and-etfs/index.html?inline=nyt-classifier">mutual
funds</A> in 2010 worth as much as $80 million, managed by Wall Street
powerhouses, without selling off any securities. </P>
<P>Mr. Issa’s transactions cover many pages in his annual disclosure reports, as
he has traded huge volumes of stock funds and <A class=meta-classifier
title="More articles about municipal bonds."
href="http://topics.nytimes.com/top/reference/timestopics/subjects/m/municipal_bonds/index.html?inline=nyt-classifier">municipal
bonds</A> on a weekly or even daily basis. In 2008 alone, he traded some 360
securities totaling between $650 million and $2 billion. </P>
<P>Those investments have often produced sharp profits. </P>
<P>In one 2008 sale, months before the stock market crashed, his family
foundation earned $357,000 on an initial investment of less than $19,000 — a
return of nearly 1,900 percent in just seven months, the foundation reported to
the Internal Revenue Service. It reported acquiring the security, then known as
AIM International Small Company Fund, at a cost basis representing a tiny
fraction of the market value. </P>
<P>In addition, Mr. Issa sold at least $1 million in personal holdings in the
same fund that year but was not required to report what he paid. </P>
<P>Invesco, as the AIM fund’s manager is now known, told The Times it did not
provide Mr. Issa’s foundation the steep discount. That suggests the foundation
may have acquired the shares from a third-party broker. </P>
<P>A former government official said House ethics committee officials quietly
inquired into Mr. Issa’s business interests last year because of possible
conflicts in his electronics connections. </P>
<P>While the exact focus of those inquiries is not known, Mr. Issa’s ties to the
industry are well established: in each of his first five years in Congress, he
reported accepting free trips to Las Vegas from the Consumer Electronics
Association for its annual convention. Such corporate-sponsored trips were
allowed at the time, but Congressional rules have tightened since. </P>
<P>The inquiries did not produce sufficient evidence of ethics problems to move
forward, the former official said. </P>
<P>Standards for determining a financial conflict are murky. House members are
generally restricted from using their positions “for personal gain” or on
matters in which they have a direct financial interest. But a 2009 ethics
committee ruling added to the ambiguity, finding there is no prohibition on the
mere “appearance” of a conflict. </P>
<P>There are also restrictions on taking salaries from certain businesses. While
Mr. Issa’s wife draws a salary at their property management company, Mr. Issa —
the firm’s president — does not. </P>
<P><STRONG>A Balancing Act</STRONG> </P>
<P>Lawmakers must also avoid outside work that can pose a “time conflict,” and
“detract from a member’s full time and attention to his official duties,” the
guidelines say. By all accounts, these rules were designed to promote the notion
of a full-time legislature. </P>
<P>Mr. Issa’s outside interests certainly appear to have kept him busy.
Associates describe him as actively involved in business decisions, particularly
in his auto electronics firm. His office did not discuss how he balances the
time demands of Congress and his outside businesses. His management company, <A
href="http://www.greene-properties.com/default.asp?action=home">Greene
Properties</A>, which he runs with his wife from the office down the hall from
his Congressional office in Vista, has acquired more than two dozen properties
in the last five years, valued at up to a total of $80 million. </P>
<P>In nearby Carlsbad, a new office complex he owns advertises for prospective
tenants. A few miles away, a Hooters restaurant rents space in another building
he owns. Nearby, his medical complex bustles with doctors and patients and has
few vacancies. </P>
<P>“Issa’s a smart businessman,” said Dean Tilton, a local real estate broker.
“We haven’t seen real estate prices this low in 20 years, and he’s taking
advantage of that.” </P>
<P>The hard-hit San Diego area has also benefited from federal money Mr. Issa
brought through earmarks, which allow lawmakers to award money for their own pet
projects. Indeed, more than two dozen of Mr. Issa’s properties are within five
miles of projects he has personally earmarked for road work, sanitation and
other improvements, an analysis by The Times shows. </P>
<P>His medical complex, for instance, sits directly along West Vista Way, a busy
corridor scheduled for widening with $815,000 in funds Mr. Issa earmarked. The
congressman bought the complex in 2008, soon after securing the first of two
earmarks for the two-mile project and unsuccessfully seeking millions more. The
assessor’s office now values the complex at $16 million, a 60 percent
appreciation. </P>
<P>Mr. Issa owns a number of commercial properties near the planned $171 million
expansion of State Route 76. The project, intended to ease traffic for tens of
thousands of commuters, was helped by $245,000 in his earmarks. </P>
<P>A regional transportation official said the earmarks supplemented state
financing to move the projects along. </P>
<P>Local leaders say they are just grateful for the money, regardless of any
suggestions locally in San Diego that Mr. Issa stands to benefit. </P>
<P>“I don’t really blame the guy,” said John Aguilera, a Vista city councilman.
“As a politician, that’s his job to bring a slice of the pie back home, and as a
businessman, he’s going to invest in the areas that he champions.” </P>
<P>Some ethics experts wonder, however, whether Mr. Issa’s business interests
invite problems. </P>
<P>“The idea is you’re supposed to be a full-time congressman,” said Robert M.
Stern, who runs the nonprofit Center for Governmental Studies in California.
“There may not be a direct conflict of interest, but it creates an appearance
that he is trying to influence a policy on issues where he has an investment.”
</P>
<P>In 2009, as earmarks became a damaging symbol of Congressional abuse, Mr.
Issa joined other lawmakers in pledging to discontinue them. And in recent
weeks, he has attacked “the culture of government overspending” in pushing for
deep cuts in the <A class=meta-classifier
title="More articles about the national debt."
href="http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html?inline=nyt-classifier">national
debt</A>. </P>
<P>Mr. Issa’s dual roles reach beyond earmarks. </P>
<P>At a House hearing in 2008 on a much-debated proposal to merge the satellite
radio companies Sirius and XM, despite objections on competitive grounds, Mr.
Issa praised the “viable combined market” the deal would create as he questioned
Sirius’s chief executive and talked of opportunities for expansion. </P>
<P>What Mr. Issa did not mention was that his electronics firm was then in a
lucrative partnership with Sirius to distribute its audio products. </P>
<P>While Mr. Issa sold off his controlling interest in DEI soon after he was
elected, he remains a board member with a half-million shares in the firm held
by his family trust. His management firm also receives $2 million a year for
leasing DEI its Vista plant. </P>
<P>DEI’s partnership with Sirius, which continued after the merger, caused
friction with competitors. In a lawsuit settled out of court, U.S. Electronics
accused Sirius and DEI of freezing it out of the market through anticompetitive
practices that relied on “a web of deception, threats and lies” aimed at “the
enrichment of certain of its officers and directors.” </P>
<P>When a watchdog group, the Center for Public Integrity, asked Mr. Issa about
his role in the merger, his office said the congressman’s participation in the
House hearing posed no conflict because his founding of DEI was “public
knowledge.” But after advice from House ethics lawyers, Mr. Issa avoided any
votes on the issue afterward. </P>
<P>With its brand-name audio and electronics products, DEI caught the eye of an
equity company, Charlesbank Capital, which <A
href="http://www.sdbj.com/news/2011/jun/20/shareholders-approve-dei-sale-charlesbank-capital-/">bought
the company</A> in June for $305 million, or $4.45 a share — nearly three times
the presale price. The premium promises a payday of at least $2 million for Mr.
Issa’s foundation, which has already earned more than $10 million from sales of
DEI stock. (Mr. Issa is now a defendant in a lawsuit brought by DEI
shareholders; the suit claims the deal was structured to give him and other
directors a “windfall not shared by other stockholders.”) </P>
<P><STRONG>Ties to Merrill Lynch</STRONG> </P>
<P>The lines between Mr. Issa’s many interests have also become entangled in his
frequent criticism of regulators and his frequent defense of Wall Street. At a
series of hearings in 2009, Mr. Issa accused Treasury officials of a “cover-up”
of their role in Bank of America’s $50 billion purchase of Merrill Lynch months
earlier. Most pointedly, he accused Ben S. Bernanke, chairman of the Federal
Reserve, of bullying Bank of America “behind closed doors” into buying Merrill
Lynch at bargain rates and then lying about it. </P>
<P>“I for one,” Mr. Issa told the Fed chairman, “am looking at Main Street
America, the stockholders who in some cases got less than they would have gotten
through other means. This includes Chrysler, General Motors and, of course, Bank
of America and Merrill Lynch.” </P>
<P>Mr. Issa did not mention his own extensive links to Merrill Lynch. </P>
<P>In a <A title="Transcript of the interview."
href="http://bit.ly/qA7jNy">television interview</A> days later, however, he
said: “I bank at Merrill Lynch. I’m very well aware that every broker there, all
the people who were stockholders, were furious that they were in fact being
fire-saled to them.” </P>
<P>And Mr. Issa is no ordinary Merrill customer. </P>
<P>His transactions there have totaled more than a billion dollars in the last
decade, records show. In the aftermath of the firm’s acquisition in September
2008, in fact, he bought and sold at least $206 million in Merrill Lynch mutual
funds in the next 15 days, records show. </P>
<P>His ties to the bank deepened last year, records show, as Merrill Lynch gave
him two “personal notes” for lines of credit worth at least $75 million. </P>
<P>Likewise, Mr. Issa has aggressively defended Goldman Sachs, another Wall
Street giant. </P>
<P>When the Securities and Exchange Commission brought <A
href="http://www.nytimes.com/2010/04/17/business/17goldman.html">a major
lawsuit</A> charging Goldman with fraud last year, Mr. Issa fired back by <A
href="http://www.cbsnews.com/8301-503544_162-20002971-503544.html">opening an
investigation</A>. The timing of the lawsuit, he said, smacked of a “partisan
political agenda” meant to help President Obama and bolster a bill overhauling
<A class=meta-classifier
title="More articles about financial regulatory reform."
href="http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html?inline=nyt-classifier">financial
regulations</A>. </P>
<P>His charge drew nationwide attention, putting regulators on the defensive,
but the S.E.C. inspector general later found “no evidence” of political
meddling. </P>
<P>Mr. Issa came to Goldman’s defense again last month in <A
title="The letter (PDF)."
href="http://online.wsj.com/public/resources/documents/CFTC.pdf">a letter</A> to
regulators complaining about restrictions on financial firms. Broker dealers
“such as Goldman Sachs” faced “a substantial reduction in leverage” because of
excessive capital requirements, he wrote. </P>
<P>As with Merrill Lynch, Mr. Issa is keenly interested in Goldman’s
performance. </P>
<P>A few weeks before opening his inquiry into the Goldman lawsuit, in fact, he
bought another large batch of shares in one of the firm’s high-yield mutual
funds, records show. By the end of the year, his stake in Goldman’s fund was
worth as much as $25 million. </P><NYT_AUTHOR_ID>
<DIV class=authorIdentification>
<P>Barclay Walsh contributed
research.</P></DIV></NYT_AUTHOR_ID><NYT_CORRECTION_BOTTOM>
<DIV class=articleCorrection>
<P><SPAN class=italic>This article has been revised to reflect the following
correction:</SPAN></P>
<P>______________________________</P></DIV></DIV></FONT></DIV>
<DIV><FONT size=2 face=Verdana>Wayne A. Fox<BR><A
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