Lawyer: Rep. Rangel did not know of $75,000 condo income

WASHINGTON — Rep. Charles Rangel, D-N.Y., did not know that the Caribbean resort villa he purchased 20 years ago was financed with a no-interest mortgage from the developer and has generated $75,000 in income that he should have reported on tax and financial-disclosure forms, his lawyer said Friday.

Lanny Davis said Rangel, chairman of the House Ways and Means Committee — which oversees complex tax policy — was unaware until this week of the financial terms surrounding the Dominican Republic property because the developer of the Punta Cana Yacht Club did not regularly send annual financial statements to property owners.

The undisclosed income and favorable loan terms compounded the ethical controversies enveloping the 38-year veteran of Congress.

In July, Rangel asked the House ethics committee to examine his fundraising entreaties to corporations and foundations on behalf of a university academic center that bears his name and into his rental of several Harlem apartments at below-market rates.

Davis said Rangel likely will amend his federal, state and New York City tax returns and update his congressional financial-disclosure filings. He also will ask the ethics committee to add the Caribbean real-estate deal to its inquiry.

"We are confident that Mr. Rangel has done nothing wrong," he said.

That will not assuage the congressman's critics. Kenneth Boehm, chairman of the National Legal and Policy Center, said Friday that his nonprofit group, which promotes ethics in public service, had filed complaints against Rangel with the Justice Department and the IRS.

"Ordinary citizens are prosecuted all the time for tax evasion," Boehm said. "Rangel should not get special treatment."

Rangel paid $82,750 for the beachfront Casita 412 in 1988, financed in part by a $52,000 loan from the developer that since 1990 has been interest-free, according to Davis and records released by the resort and Rangel's office.

Rangel bought the property at the suggestion of Theodore Kheel, a friend and New York labor arbitrator who was a principal investor in the project.

Proceeds from rentals at the resort were automatically credited toward paying down the mortgage, Davis said, so the money did not flow directly into Rangel's pocket.

"He simply didn't realize that there was any actual income being generated, since he never received ... any checks over the last 20 years," Davis said.