6:00: Morning News

Manchin’s corporate partnership, said to be in blind trust, is right there for all to see

CHARLESTON, W.Va. — Senator Joe Manchin says he has no more knowledge of his investment in a failing $15 million hotel than anyone else because he’s in a blind trust. But Manchin’s partnership that’s listed as an investor in the hotel is plain to see for anyone — including Manchin — in his annual Senate financial disclosure form.

Manchin’s latest financial disclosure form does list the Joseph Manchin III Qualified Blind Trust right there on Line 7, with a value of between $250,001 to $500,000 and an income of $5,001 to $15,000.

Way down below that, separately listed on Line 18, is AA Properties — the partnership with longtime adviser Larry Puccio that’s said to be a corporate investor in the hotel deal.

AA is listed at a value of $50,001 to $100,000 and producing income of $11,200.18.

A blind trust means that the senator doesn’t know the contents. So the senator wouldn’t know its value, wouldn’t be listed as a member and wouldn’t even know exactly what investments the trust has made. So it would not appear separately on the financial disclosure form unless some big mistake had happened.

If you’re curious enough to take a gander at the financial disclosure form, you’ve got to go here and then agree to some terms that include your promise to not use the material for a credit rating. In the search field for last name type “Manchin” and the financial disclosure forms come up. The most recent is at the top.

Those who file the annual financial disclosure forms have to check a box indicating they “certify the statements I have made on this form are true, complete and correct to the best of my knowledge and belief.”

In other words, senators are supposed to be aware of what they are filing.

Manchin was asked earlier this week about a federal lawsuit against Mountain Blue Hotel Group, which has been defaulting on a $15,470,000 loan for Hilton Garden Inn Morgantown at Suncrest Town Center.

Among the investors listed in the hotel deal is AA Properties, said to have a 12 percent share of the deal.

Both the original loan and the lawsuit list Manchin and Puccio as 50-50 partners in AA.  AA Property, Manchin and Puccio are listed on pages 58 and 59 of this loan document.

“I have no idea. I’m in a blind trust,” Manchin said Monday following an economic development announcement at the West Virginia Regional Technology Park.

“I have no idea on that. The only thing I’m told is that we have no involvement whatsoever, and we were very passive investors. Blind trust, and no involvement. I’ve paid all the taxes I’ve ever been sent a tax bill on. I always will and always have, so I have had no notification of any of this.”

The role of Manchin and Puccio has been confusing from the start.

In the first stories published about the hotel lawsuit, Manchin’s staff said he is not an investor in AA.

AA is listed not only on Manchin’s current Senate financial disclosure form but also on reports dating back to at least 2012. He was elected to the Senate in a special 2010 election.

AA has been listed with the West Virginia Secretary of State’s Office since late 2008, although only Puccio is named on the documents in his role as a manager. Also, Manchin’s wife Gayle listed AA in her own financial disclosure submitted for her role as West Virginia’s secretary of Education and the Arts. That too lists the blind trust separately.

Soon after the first stories came out, Manchin’s staff and Puccio updated their statements to acknowledge investment in AA but to say they are not invested in the troubled Morgantown hotel.

“Most certainly, take it to the bank, AA is not a stockholder and has no affiliation nor ownership with the hotel company, nor does Manchin or Puccio,” Puccio said on August 16.

That same day, Manchin’s congressional staff sent out an email stating, ““Senator Manchin has part ownership in AA Property, but AA Property has no ownership or affiliation with the hotels.”

Asked several times, several ways to reconcile the stated lack of investment with both the original loan and the lawsuit, no one involved could provide clarity over the course of almost a month.

This Wednesday morning, Steve Ruby, a private attorney for Manchin, said the listing in the lawsuit was a mistake that would be ironed out and made clear through court fillings still to come.

“The statement in there that AA is a member of Mountain Blue LLC — that was a mistake. We’ve communicated that to the lenders counsel. We’re working on getting that corrected, and I’m hopeful that correction will be made soon,” said Ruby, a former assistant U.S. attorney who is now in private practice with the Bailey Glasser law firm.

Ruby went on to say, “Nobody has alleged that AA did anything wrong. They were only named for technical reasons having to do with federal jurisdiction, and even that was erroneous. We’re working right now on getting that erroneous statement corrected.”

The weeks of confusing statements have drawn the attention of the Republican Party at the national level. Manchin is heading into a competitive 2018 election season with two of West Virginia’s top Republicans, Congressman Evan Jenkins and Attorney General Patrick Morrisey, vying to take him on.

“Joe Manchin’s repeated misleading statements about his tax-evading hotel investment raise the question of what exactly it is that he’s hiding. West Virginians deserve to know the truth about Manchin’s shady business dealings and why he continues to mislead when questioned about them.” stated Bob Salera, a spokesman for the National Republican Senatorial Committee in an email to MetroNews.

Manchin has been in a blind trust dating back to his time as West Virginia’s governor. Guidance for senators establishing or dealing with qualified blind trusts is available through the Senate Committee on Ethics:

“A QBT allows grantors to avoid potential conflicts of interest or the appearance of such conflicts during Senate employment. By turning over the management of assets to an independent trustee, a QBT generally will allow the grantor to be fully invested in the market without worrying about potential conflicts of interest and the possibility of having to recuse oneself from handling official business. In addition, a QBT may help avoid even the appearance of a conflict of interest.”

The guidance provided by the ethics committee advises against placing a business entity — as might describe AA — into a blind trust because it’s hard for a trustee to manage.

“Generally, grantors will inject publicly-traded securities (stock, bonds, and mutual funds) and cash into a QBT. Conversely, real property, a business entity, or assets held in a qualified retirement plan are typically not ideal assets to inject into a QBT because those types of assets are generally not able to be managed and controlled entirely by the trustee as required by law.”

There are specific lines in the trust agreement that’s part of the process that would indicate that AA’s open listing elsewhere — with its value and income — would not jibe with a blind trust.

For example: “The Trustee shall not knowingly or negligently disclose to the public or to any interested party any information as to the acquisition, retention, or disposition of any particular securities or other Trust property.”

And: “A reporting individual need not report the holdings of or the source of income from any of the holdings of any qualified blind trust.”



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