MOST CORRUPT: REPRESENTATIVE EDOLPHUS TOWNS Representative Edolphus Towns (D-NY) is a fifteen-term member of Congress, representing New Yorks

10th congressional district. His ethics issues stem from using campaign funds to pay for his wifes car lease and accepting favorable mortgage rates from Countrywide Financial. Campaign Funds for Personal Use On May 1, 2012, as part of an investigation into congressional car leases, Inside Edition reported observing Rep. Towns wife, Gwendolyn Towns, driving an Infiniti car bearing congressional tags. 1 Inside Edition reported observing Ms. Towns day after day driving to the carwash, the dry cleaners and back and forth to work at a local hospital. 2 A subsequent New York Daily News article said Ms. Towns was observed attending no obvious campaign events with the car. 3 Nevertheless, Rep. Towns campaign committee, the Committee to Re-Elect Ed Towns, pays $602 a month for the Infiniti lease and has spent a total of $38,004 on it since June 2007. 4 According to Inside Edition, when asked whether his wifes use of the car was appropriate, Rep. Towns said, I have no idea what you are talking about. 5 A Rep. Towns campaign spokesman could not say whether Ms. Towns had reimbursed the campaign for her use of the vehicle, though Federal Election Commission (FEC) records for Rep. Towns campaign committee show no such reimbursements. 6 It is unclear how long Ms. Towns has been using the car. Countrywide Loans In June 2008, news stories reported Countrywide Financial had a VIP program offering favorable terms on loans to prominent borrowers, including then-Sen. Christopher Dodd (D-CT), Sen. Kent Conrad (D-ND), and other government officials. 7 The news reports led the House Oversight and Government Reform Committee to begin an investigation into the Countrywide
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Inside Edition Investigates Congressional Cars, Inside Edition, May 1, 2012; Alison Gendar, Congressman Ed Towns and his Wife Gwen Have a Ticket to Ride: Wife Tools Around Brooklyn in Car Paid by Hubbys Campaign, New York Daily News, May 2, 2012. 2 Inside Edition, May 1, 2012. 3 Gendar, New York Daily News, May 2, 2012. 4 Committee to Re-Elect Ed Towns, FEC Form 3, 2007-2012 Reports. 5 Inside Edition, May 1, 2012. 6 Gendar, New York Daily News, May 2, 2012; Committee to Re-Elect Ed Towns, FEC Form 3, 2007-2012 Reports. 7 Glenn R. Simpson and James R. Hagerty, Countrywide Friends Got Good Loans, Wall Street Journal, June 7, 2008; Daniel Golden, Countrywides Many Friends, Portfolio.com, June 12, 2008.

program. 8 In January 2009, while the investigation was still in its early stages, Rep. Towns assumed the chairmanship of the committee. 9 Rep. Darrell Issa (R-CA), then the committees ranking member, urged Rep. Towns to subpoena mortgage records that would show who received loans through the program, but Rep. Towns initially refused to do so, citing other ongoing investigations into Countrywide. 10 Meanwhile, in August 2009 the Wall Street Journal reported that Rep. Towns had taken out two home loans from Countrywide that appeared to have been serviced through Countrywides VIP unit. 11 Rep. Towns spokesman said the congressman did not know his mortgages had come through the VIP program, and he did not believe he had received any special benefits. 12 On October 23, 2009, Rep. Towns issued a subpoena to Bank of America, which acquired Countrywide in 2008. 13 After the bank responded with a list of 18,000 files, Rep. Towns narrowed the list of documents to be turned over to the committee to roughly 300, eliminating borrowers listing the House of Representatives as an employer. 14 Eventually, after Rep. Issa assumed the chairmanship in 2011 and issued another subpoena, the bank turned over tens of thousands of documents about the VIP loans. 15 In July 2012, the Oversight and Government Reform Committee issued a report that found an underwriter dismissed concerns about Rep. Towns low credit score, saying the credit shouldnt be a problem and that because this is a Congressman, the loan had to be processed on time. 16 The report shows Rep. Towns received two loans from Countrywide in the summer of 2003. In July, Rep. Towns applied for a loan on a second home in Florida. 18 Emails between Countrywide executives classified Rep. Towns case as that of an important customer. 19 Rep. Towns ended up receiving an $182,972, 30-year mortgage with an adjustable rate starting at 4.5 percent. 20 Less than a month later, Rep. Towns refinanced his home in Brooklyn, again through Countrywide, and received a $194,540, 30-year mortgage at an unspecified rate. 21 Records show that the word Congressman and VIP were written in big letters across one of the internal financial papers regarding his loan. 22 In addition, the report found VIP borrowers typically
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House Oversight and Government Reform Committee, 112th Congress, How Countrywide Used its VIP Loan Program To Influence Washington Policymakers, July 5, 2012 (House Oversight Report), p. 7. 9 Id.; http://democrats.oversight.house.gov/index.php?option=com_content&task=view&id=3408&Itemid=49. 10 John R. Emshwiller, Key Lawmaker Received Countrywide Loans, Wall Street Journal, August 7, 2009. 11 Id. 12 Id. 13 House Oversight Report, pp. 8, 48. 14 Larry Margasak, House Members VIP Loans Excluded From Subpoena, Associated Press, August 15, 2012. 15 Id.; House Oversight Report, p. 12. 16 Id., p. 60. 17 Id., pp. 59-60. 18 House Oversight Report, July 2012, pp. 59-60. 19 Id. 20 Id. 21 Id. 22 House Oversight Report, pp. 59-60.

received documents showing their loans had been serviced by the VIP unit, though it did not specifically single out Rep. Towns as receiving such paperwork. 23 The report said VIP loan recipients rates were generally reduced by .5 percent, but did not specifically address the rates offered to Rep. Towns. 24 In addition, VIP borrowers typically had junk fees waived, usually saving around $350-$400. 25 Status of Investigations On May 30, 2012, the Campaign Legal Center filed a complaint with the FEC requesting an investigation into Rep. Towns campaign committee paying for his wifes car lease. 26 The status of the investigation is unknown. In addition, the House Oversight and Government Reform Committee referred information about Rep. Towns Countrywide loans to the House Ethics Committee. 27 The status of the investigation is unknown. Potential Violations Conversion of Campaign Funds to Personal Use Statute The Federal Election Campaign Act (FECA) prohibits a candidate for federal office from using campaign funds to pay the personal obligations of the candidate. The Act states that a contribution or donation . . . shall not be converted by any person to personal use. 28 The Act further specifies that a contribution or donation shall be considered to be converted to personal use if the contribution or amount is used to fulfill any commitment, obligation, or expense of a person that would exist irrespective of the candidates election campaign or individuals duties as a holder of Federal office. 29 Any non-campaign related automobile expense is explicitly defined as personal use. 30 If a campaign vehicle is used for personal activities beyond a de minimis amount, the campaign account must be reimbursed for such use within thirty days. 31 As the car paid for by the campaign seems to have been used primarily by his wife for non-campaign related purposes, Rep. Towns appears to have violated 2 U.S.C. 439a(b)(2)(C) and 11 C.F.R. 113.1(g)(1)(ii)(D).

Id., p. 5. Id., p. 6. 25 Id. 26 Complaint filed with the Federal Election Commission by the Campaign Legal Center, May 30, 2012; Abby Phillip, Watchdog Group Wants Probe of Rep. Ed Towns Car Use, Politico, May 30, 2012. 27 House Oversight Report, p. 13. 28 2 U.S.C. 439a(b)(1). 29 2 U.S.C. 439a(b)(2); see also 11 C.F.R. 113.1(g). 30 2 U.S.C. 439a(b)(2)(C). 31 11 C.F.R. 113.1(g)(1)(ii)(D).
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Conversion of Campaign Funds to Personal Use House Rule House Rule 23 provides that a member of Congress may not convert campaign funds to personal use in excess of an amount representing reimbursement for legitimate and verifiable campaign expenditures. 32 Further, Rule 23, clause 6(a) requires each member to keep his campaign funds separate from his personal funds. 33 The rule also provides that all campaign funds must be used for bona fide campaign or political purposes. 34 The Committee has warned members to keep in mind that each campaign outlay must not only be legitimate, but also verifiable, as such. 35 This requirement is separate from, and in addition to, whatever recordkeeping requirements are imposed by the Federal Election Commission . . . 36 Members are also prohibited from using their campaign funds for anyone elses personal purposes. Therefore, members may not use campaign funds to benefit a relative. 37 If an expense is both campaign-related and benefits someone personally, the campaign may only underwrite its pro rata share. 38 By using campaign funds to pay for a car used primarily by his wife for non-campaign related purposes, Rep. Towns appears to have violated House Rule 23, clause 6. Gift Rule Violations Rule 25, clause 5(a)(1)(A)(i) of the House Rules states a Member, Delegate, Resident Commissioner, officer, or employee of the House may not knowingly accept a gift except as provided in this clause. The Rules define gift to mean a gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value. 39 The term includes gifts of services, training, transportation, lodging and meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred. 40 Rule 25, clause 5(a)(3)(R)(v) allows members, officers, and employees to accept opportunities and benefits that are available to a wide group, specifically providing that they may accept loans from banks and other financial institutions on terms generally available to the public. Moreover, the House Ethics Manual states:

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Rule 23, cl. 6(b); House Comm. on Standards of Official Conduct, House Ethics Manual, p. 163 (110th Cong., 2d Sess., 2008 ed.). 33 Id. 34 Rule 23, cl. 6(c); House Ethics Manual, pp. 152, 163. 35 Id. 36 Id., p. 165 (emphasis in original). 37 Id., p. 166. 38 House Ethics Manual, p. 166. 39 Rule 25, cl. 5(a)(2)(A). 40 Id.

The public has a right to expect Members, officers, and employees to exercise impartial judgment in performing their duties. The receipt of gifts or favors from certain persons or interests may interfere with this impartial judgment. The recipient of a gift will naturally feel grateful, and the giver may expect favorable treatment or consideration in return. 41 Gifts create an appearance of impropriety that may undermine the public=s faith in government. 42 The receipt of unusually favorable loans creates exactly the sort of appearance of impropriety that the gift rule was designed to address. If Rep. Towns accepted loans from Countrywide with a reduced interest rate and with junk fees waived terms not generally available to the public he may have received improper gifts in violation of House Rules. Conduct Not Reflecting Creditably on the House House Rule 23 requires all members of the House to conduct themselves at all times in a manner that reflects creditably on the House. 43 This ethics standard is considered to be the most comprehensive provision of the code. 44 When this section was first adopted, the Select Committee on Standards of Official Conduct of the 90th Congress noted it was included within the Code to deal with flagrant violations of the law that reflect on Congress as a whole, and that might otherwise go unpunished. 45 This rule has been relied on by the committee in numerous prior cases in which the committee found unethical conduct including: the failure to report campaign contributions, 46 making false statements to the committee, 47 criminal

House Comm. on Standards of Official Conduct, House Ethics Manual, p. 23 (110th Cong., 2d Sess., 2008 ed.). Id., p. 24. 43 Rule 23, cl. 1. 44 House Ethics Manual, p. 12. 45 House Comm. on Standards of Official Conduct, Report Under the Authority of H. Res. 418, H. Rep. No. 1176, 90th Cong., 2d Sess. 17 (1968). 46 House Comm. on Standards of Official Conduct, In the Matter of Representative John J. McFall, H. Rep. No. 951742, 95th Cong., 2d Sess. 2-3 (1978) (Count 1); In the Matter of Representative Edward R. Roybal, H. Rep. No. 95-1743, 95th Cong., 2d Sess. 2-3 (1978). 47 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of California), H. Rep. No. 95-1741, 95th Cong., 2d Sess. 4-5 (1978); H. Rep. No. 95-1743 (Counts 3-4).
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convictions for bribery, 48 or accepting illegal gratuities, 49 and accepting gifts from persons with interest in legislation in violation of the gift rule. 50 By converting campaign funds to personal use and by accepting improper loans from Countrywide, Rep. Towns may have engaged in conduct that does not reflect creditably on the House.

House Comm. on Standards of Official Conduct, In the Matter of Representative Michael J. Myers, H. Rep. No. 96-1387, 96th Cong., 2d Sess. 2, 5 (1980); see 126 Cong. Rec. 28953-78 (Oct. 2, 1980) (debate and vote of expulsion); In the Matter of Representative John W. Jenrette, Jr., H. Rep. No. 96-1537, 96th Cong., 2d Sess. 4 (1980) (member resigned); In the Matter of Representative Raymond F. Lederer, H. Rep. No. 97-110, 97th Cong., 1st Sess. 4, 16-17 (1981) (member resigned after Committee recommended expulsion). In another case, the Committee issued a Statement of Alleged Violation concerning bribery and perjury, but took no further action when the member resigned (In the Matter of Representative Daniel J. Flood, H. Rep. No. 96-856, 96th Cong., 2d Sess. 416, 125-126 (1980)). 49 House Comm. on Standards of Official Conduct, In the Matter of Representative Mario Biaggi, H. Rep. No. 100506, 100th Cong., 2d Sess. 7, 9 (1988) (member resigned while expulsion resolution was pending). 50 House Comm. on Standards of Official Conduct, In the Matter of Representative Charles H. Wilson (of California), H. Rep. No. 96-930, 96th Cong. 2d Sess. 4-5 (1980); see 126 Cong. Rec. 13801-20 (June 10, 1980) (debate and vote of censure).

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