The rightwing billionaire real estate developer Harlan Crow is facing a possible showdown with Senate investigators looking into the financial arrangement behind lavish vacations, private flights and other perks that were given to the conservative supreme court justice Clarence Thomas but never publicly disclosed.
At the centre of the Senate investigation are questions about the tax treatment of the gifts – which could be worth millions of dollars – and what Crow’s financial treatment of those expenses might reveal about the true nature of his relationship with Thomas.
A lawyer for Crow admitted in a recent letter to Senator Ron Wyden, the Democratic chairman of the finance committee, that it was his understanding that expenses associated with luxury flights and yacht trips for Thomas were paid back to Crow’s “family entities” at rates “prescribed by law”.
But the lawyer – Michael Bopp, a partner at Gibson Dunn who specializes in representing clients in congressional and government investigations – did not provide any information about who made the payments, and when.
It is, for example, unclear whether the reimbursement payments were made by Crow himself or another party, and whether they were made contemporaneously or only after the lavish gifts became public.
Wyden has accused Crow of “stonewalling” basic questions about his gifts to Thomas and his family and said that Bopp’s most recent letter “raises more questions than it answers”. He has also said he is discussing next steps to compel Crow to respond fully to his questions, including by subpoena.
The Oregon senator launched his investigation in the wake of a series of stories published by ProPublica that detailed Thomas’s beneficial relationship with the Republican mega-donor.
The investigative news outlet reported several instances in which Thomas was a guest on Crow’s yacht, the Michaela Rose, including trips to Indonesia, New Zealand and Savannah, Georgia. He also reportedly regularly made use of Crow’s jet for other travel, including one trip to New Haven that would have cost about $70,000 on an equivalent jet. Thomas earns a salary of $285,000 a year as an associate justice, a salary he has previously complained was too low.
Nor was Crow’s largesse limited to expensive vacations and trips. ProPublica also reported that Crow companies bought property from Thomas, his mother, and his late brother’s family, and that Crow Holdings LLC also paid for private school tuition for Thomas’s grand-nephew, who he previously said he was raising “like a son”.
Ethics experts have said Thomas broke the law when he failed to disclose the gifts on his public disclosure records. Crow has denied trying to influence the justice and has said he offered similar hospitality to other close friends.
For tax lawyers like Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, knowing how Crow’s companies – which made the payments to the private school and own the jet and yacht – characterized the expenses would provide much greater insight into how Crow viewed his relationship with Thomas.
If the businessman had the payments categorized as business expenses, for example, it would contradict assertions by Crow and Thomas that the trips and other gifts were based merely on the pair’s longstanding relationship. Instead, it would imply that Crow believed the expenses could boost his companies.
“The key question, at least so far is, should Clarence Thomas have reported the luxury items he is being given by a billionaire,” Rosenthal said.
The new admission that someone – possibly Crow personally – has reimbursed Crow’s companies for the gifts Thomas was given makes clear the payment was essentially made on Thomas’s behalf.
“You might want to know, how much did Harlan Crow value these plane rides, yacht trips, tuition payments?” Rosenthal said. “We don’t know a lot of information.”
Wyden’s committee has suggested it is ready to take more aggressive actions to seek out those answers, including a possible subpoena of Crow’s tax records. In order to do that, the senator would require the agreement of at least every Democrat on the Senate finance committee. If he has a majority of the committee’s support, and executed a subpoena, Crow’s legal team would probably fight it, putting him in breach of the subpoena.
Experts say it could ultimately be a legal fight too difficult for Wyden to win, because he would need 60 votes in the Senate to pursue legal action against Crow, and he is unlikely to have enough Republican support to pursue such a challenge.
Crow’s lawyers have suggested Wyden is pursuing an “impermissible legislative tax audit of a private citizen” and that Congress did not have the power to “expose facts for the sake of exposure”.
Furthermore, Crow’s team have said Wyden’s inquiry raised “separation of power concerns” because it targeted “personal financial information relating to Mr Crow’s friendship with a sitting supreme court justice”.
