More on Bush’s Eminent Domain $14 Mil Windfall: He Allegedly Used Influence as Gov to Illegally Increase Stadium’s Value – and Left Local Residents with $7.5 Mil Debt

Criminal behavior: Last week we reported that when he was an owner of the Texas Rangers George W. Bush used eminent domain to seize private property in Arlington, Texas, in order to build a baseball stadium. Less than ten years later, when he was governor of Texas, Bush sold his interest in the Rangers and profited over $14 million.

This exactly the sort of gambit used by former Illinois governor Otto Kerner, who was convicted of tax fraud as a result. Why was Gov. Kerner prosecuted but not Gov. Bush? Well, for one thing, Gov. Kerner was a Democrat.

Since then, we have learned that there is much more to this story. First, it appears that Mr. Bush evaded paying sufficient taxes on the sale. Second – and, more signficantly – he appears to have illegally used political influence as governor of Texas to increase the value of his share – actions that mirror the activities of an Illinois governor who was convicted of income tax fraud for influencing public policy that benefited his holdings in a race track .

Finally, the Rangers ultimately refused to pay the court-ordered $7.5 million settlement to the family whose land Bush seized, leaving the taxpayers of Arlington to cover the debt.

The allegations that Bush evaded paying sufficient taxes on the sale of the Rangers and that he broke the law by using his political influence to increase the value of the stadium property come from the excellent Make Them Accountable news site:

A review of George W. Bush’s 1998 tax return reveals that he reported the sale of his share of the Texas Rangers baseball team as a long term capital gain. As a result, he paid a tax on the more than $15 million proceeds at a tax rate of 20%, as opposed to the 39.6% rate on ordinary income. According to a press release dated June 18, 1998 from the Dallas Morning News, Bush paid $606,000 for about 1.8% of the team and became the managing general partner of B/R Rangers Associates, Ltd., a limited partnership that owned the team. Under the terms of the agreement, Mr. Bush was given an additional 10.2% of the proceeds as additional compensation if the team was sold. The incentive compensation became effective if the other partners received their entire investment back plus a 2% return per year…

According to IRS Revenue Procedure 93-27, “The receipt of a partnership capital interest for services provided to or for the benefit of the partnership is taxable as compensation.” As most people know, compensation is taxed as ordinary income, subject to the highest tax rates; in this case 39.6%. Mr. Bush treated the incentive portion of his proceeds as long term capital gain, and accordingly reduced his tax liability by at least $2.4 million.

This is exactly the sort of gambit used by former Illinois governor Otto Kerner, who was convicted of tax fraud as a result:

In 1972, Gov. Kerner was convicted of income tax fraud for influencing public policy that benefited his holdings in a race track corporation. On the advice of his accountants, Gov. Kerner treated the proceeds ($180,000) of his race track stock as long term capital gain subject to the reduced tax. The U.S. Attorney, James Thompson, prosecuted Gov. Kerner for falsely treating these proceeds as a capital gain because Gov. Kerner’s public policies had a substantial effect on the appreciation of the stock…

Bush’s cushy deal with the Rangers makes the bogus Whitewater “scandal” sound penny-ante, but we’ll never see a serious investigation into whether Mr. Bush broke the law as long his corrput allies who run the Congress are in charge.

According to an IRS agent who worked on the Kerner case, the government’s theory was based on the idea that a true capital gain is based on the assumption that natural market forces enhance the value of the property sold. Natural market forces can include the legitimate contributions of managing partners. However, the government concluded, and the jury affirmed, the fact that people in official policy positions who enhance the value of their own property in whole or in part are guilty of a corrupt practice, and accordingly the gain is not capital gain. This is consistent with the theory behind giving tax incentives only for legitimate capital appreciation.

It is clear that former Gov. Bush had a clear incentive to affect public policy for his own benefit. In the Kerner case, Gov. Kerner was already a wealthy man, and the proceeds he received were not significant in relation to his net worth. In the case of former Gov. Bush, the at least $12 million incentive he received was the bulk of his liquid assets.

Why was Gov. Kerner prosecuted but not Gov. Bush? Well, for one thing, Gov. Kerner was a Democrat.

And when all is said and done, the post-Bush Rangers apparently have left the city of Arlington high and dry, forcing local residents to cough up the millions Bush and his partners owed the family whose property they seized:

[The Chicago Tribune reported in July 2005 that] “members of the Mathes family [the owners of the property that was condemned to build the stadium] thought their 13 acres were worth $7.5 million, [but] were offered $817,000 to make way for the baseball stadium. After many years in court and substantial lawyers’ fees, they got the $7.5 million.”

That … set of facts – an offer of $817,000 for a $7.5 million property – suggests the nature of what we’re up against. It looks like grand larceny.

The Rangers new owners apparently refused to pay the court-ordered $7.5 million settlement for the land Mr. Bush seized. As a reader from Arlington wrote last week:

The Rangers refused to pay the difference to the Mathes family, which forced the City of Arlington to pay it in order to protect its bond rating. This in turn caused increased taxes and decreased services – all to make that little moron even wealthier than he already was.

Bush’s cushy deal with the Rangers makes the bogus Whitewater “scandal” sound penny-ante. The Clintons lost money on their Whitewater real estate investment and Bush profited by at least $14 million. But we’ll never see a serious investigation into whether Mr. Bush broke the law as long his corrupt allies who run the Congress are in charge.

26 Comments

  • November 9, 2005 - 1:05 am | Permalink

    This is so typical of bush. As a member of the ‘ethics committee’ for Harkin oil he participated in cooking the books to conceal a $13 million loss, when this did not wash with the SEC he then insider traded his stocks and made $850,000. Harkin tanked shortly thereafter. bush did not report this transaction, as required, untill long after it was timely.

  • Joy Mcc;ellan
    November 9, 2005 - 5:55 am | Permalink

    Bush and his Republican friends own Texas and can do what they damn well please here. Too bad for the rest of us working folks who have to use our “beautiful minds” to worry about the high cost of oil, Bush’s war, poor schools (thank god for Mississippi)and sleazy politicians like Delay.

  • cwazycajun
    November 9, 2005 - 5:59 am | Permalink

    what do u expect from bush..the man is devoid of anything resemblin his so called christian morals or ethics .His family from the beginin have been a stain on america from his grandfather a nazi war profiteer to today just a dry drunk that cant seem to admit mistakes if u would consider goin to Iraq a mistake it waznt it waz intentional and our guys die and they get richer just more bush history

  • Kerry
    November 9, 2005 - 7:48 am | Permalink

    Bush family is an evil empire. Shrubby should be in prison for many things, this 7.5 mil among them. Awol for another. IMPEACH THE CHIMP NOW.

  • Sally
    November 9, 2005 - 9:26 am | Permalink

    Oh my gawd! This was all public knowledge BEfORE the 2000 election! Why wasn’t it brought to light then?

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  • November 9, 2005 - 10:07 am | Permalink

    >>>This was all public knowledge BEFORE the 2000 election! Why wasn’t it brought to light then?

    It was brought to light long before the 2000 election…by “left-wing” and “alternative” news sources and Web sites. The mainstream media wouldn’t touch the story, and the wimpy Kerry campaign refused to try to make it an issue.

    Add this to the dozens or maybe hundreds of criminal or impeachable offenses committed by Chimpy McFelon that “we” have known about for years, but the majority of people either are just now learning about or haven’t heard a word about.

  • brisa
    November 9, 2005 - 10:09 am | Permalink

    It wasn’t brought to light because the corporate media preferred a Republican dominated government. Well, they got it. They continue to protect their interests to this day.

  • Chris in Santa Fe
    November 9, 2005 - 11:15 am | Permalink

    Yeap, we’ve been duped. A lot of Texans, like myself, could have told you this back in 98′ or 99′. Whatever! Point being, I believe, is we have an authentic thug sitting in the White House. This “man”, (President Bunny Pants)I believe, should be removed from office and locked up along with other members of his family. And I don’t wear a tin-foil hat.

  • Heffe
    November 9, 2005 - 11:38 am | Permalink

    Everyday he draws breath tells me these is no god.

  • Heffe
    November 9, 2005 - 11:50 am | Permalink

    Of course I meant “there”.

  • Margaret
    November 9, 2005 - 12:17 pm | Permalink

    And what about those other partners who “gave” him some of their equity as a bonus as part of their agreement? I thought I also read that, as governor, he subsequently granted some state money management contracts to them. Could this not be construed as a bribe of an elected official? A big one!!

  • Ricardo
    November 9, 2005 - 12:32 pm | Permalink

    For 4 years, Bush kept saying there should be a baseball team in DC. Of course, the previous Washington Senators pulled up stakes and became the Texas Rangers. Now DC has the former Montreal team, but I can’t help but ask – if Bush wanted a team in DC so badly, why not just move his team back?

  • Heffe
    November 9, 2005 - 1:02 pm | Permalink

    To Ricardo,
    don’t you think MLB has enough trouble with out Bush getting involved?
    Besides, he sold his part of the team.

  • Bruno De Marco
    November 9, 2005 - 3:01 pm | Permalink

    The Bushes have been involved in criminal activity for four generations. Until the FBI and the CIA are removed from Executive control and given professional leadership for life, alla the supreme court, our ability to deal with “upper level crime” will be out to lunch. Following the money trail, as this article does, is important. Like, how much money have the leading neocons, Cheney, Rummy, Rice, Wolfowitz, et al, pocketed since undertaking public office. Until that aspect is dealt with, we’re in for more rip offs at the highest level.

  • Roles
    November 9, 2005 - 3:29 pm | Permalink

    If Bush did something illegal as you allege, contact Ronnie Earle and get him to get a Grand Jury to hand down indictments. It has been 8 years of doing nothing to charge him but 8 years of constant, obviously false accusations.

  • suzanne
    November 9, 2005 - 9:15 pm | Permalink

    Something has to be done about this. We need to start getting some hard facts of past illegal dealings on Bushy boy. Surely there are some dots to be connected somewhere – tid bits that haven’t been “sponged out” as was done with his National Gaurd records. There needs to be a closing in on him from directions. Maybe there are a few little choice things out there that can be unearthed where he broke the law …..since the big things he’s done like take us to war, torture, speeding the death of the planet along through facilitating global warming don’t seem to register

  • Belle Shepherd
    November 10, 2005 - 4:22 am | Permalink

    I personally think that it is time for Bush and Company to be relieved of their duties. This has to be done before we can get the country back into some semblance of order and regain the respect of other countries. He is a black mark against America and if he is left to continue in his errant ways, it will be the end of America and what she stands for.

    Belle

  • Emma
    November 10, 2005 - 2:12 pm | Permalink

    Bush has never been held accountable for the numerous crimes he has committed in his life – so, of course, he does what he wants, when he wants, because he knows NO ONE will lay a hand on him no matter what he’s done, is doing, or planning to do. This is what the Republican white male is all about – take what you want, when you want no matter what it takes including, lying, stealing, cheating and if necessary killing, which is probably the only crime not yet known, but I wouldn’t be surprised if this too was on the list of crimes for all the “Bushes”.

  • Bruno De Marco
    November 10, 2005 - 2:26 pm | Permalink

    Roles, I’m into gossiping. It is not my job to “do something” about “alleged” and “obviously false” accusations. There is a growing moutain of books that get into these “alleged” and “obviously false” matters. Also, there are institutions like the Department of Justice, the FBI and the CIA whose job it is to deal with what is being commonly discussed by people like us and professionally documented by people like, say, Gary Webb and a host of others. It isn’t easy to nail the crooks in our current environment. So, give me a break. Let me gossip without feeling guilty about not organizing a grand jury investigation. All the best, Bruno D.

  • Bluecat
    November 10, 2005 - 8:44 pm | Permalink

    10.11.05

    George(Titanic)Bush

    Give him a thata boy button.
    The LORD said “Vengeance is mine”

    Bluecat

  • Adrian Mobley
    July 24, 2007 - 1:54 pm | Permalink

    FYI
    Check on tax incentives and eminent domain.

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