Introduction

Rep. Robert Pittenger, R-N.C., listens to colleages on June 17, 2015, on Capitol Hill in Washington. Andrew Harnik/AP

It began on a golf course.

That’s where textile executive George Moretz and now-Rep. Robert Pittenger, R-N.C., forged a friendship during the early 2000s. The two belonged to Grandfather Golf & Country Club in Linville, North Carolina, a club where elite clientele pay up to $65,000 for memberships.

In 2008, Pittenger ran for lieutenant governor. As election day loomed, Pittenger loaned his own campaign $1.2 million, on top of $500,000 his wife, Suzanne, had already sunk into his effort. It didn’t matter: He lost anyway.

Now, with more than $1 million tied up in a failed campaign, Pittenger seemingly needed money. But he didn’t go to a bank. Instead, he went to Moretz, who had already contributed $7,250 to Pittenger’s failed effort, and in 2009, he borrowed hundreds of thousands of dollars from him.

When Pittenger ran for Congress and won in 2012, he still owed Moretz between $250,001 and $500,000. (Loan values are reported in broad ranges.)

Pittenger isn’t the only member of Congress with such generous friends.

A review of mandatory personal financial disclosure forms filed by all current members of the House and Senate reveals at least 19 have accepted loans from organizations or moneyed individuals instead of a bank or traditional financial institution. Often, these organizations and individuals rank among the lawmakers’ key political supporters. In two of these cases, the loans were made to members’ spouses.

Two of the loans were made in the early 1990s; the rest were made in 2003 or later. While two of the congressional members in question have recently paid off their loans, the other 17 or their spouses remain in debt to their benefactors. The loans range in value from $15,000 to $5 million.

Some of the members in question borrowed the money before being elected to Congress, effectively indebting them to wealthy benefactors during their initial days and months as elected federal officials.

There’s nothing illegal about such loans, even when the lender is also a campaign contributor. And there’s no explicit evidence of a quid pro quo in which legislative action was taken in exchange for the loan. But government watchdog groups and others say such arrangements raise serious concerns about possible conflicts of interest.

A review of campaign finance data revealed that at least seven of the members with non-bank loans also received campaign contributions from their lender.

That circumstance “raises the issue that this loan is no longer just an impartial business transaction,” said Craig Holman, government affairs lobbyist for Public Citizen, a non-partisan government watchdog group. “It strongly suggests that the source of a loan has a vested interest in the lawmaker.”

The practice is bipartisan: 13 Republicans and six Democrats (or their spouses) have accepted such loans, including two members who have guaranteed loans from a company or political committee.

Can money buy love?

Some of the loans identified during the review of the financial disclosure forms didn’t come from campaign contributors or others with clear business interests before Congress.

Some, such as in the case of Rep. Markwayne Mullin, R-Okla., came from family members; others came from businesses controlled by the members themselves, as in the case of newly-elected Rep. Roger Marshall, R-Kansas.

Mullin took out a loan in 2007 from his father, Jim Mullin, to purchase a plumbing business. The value of such loans is reported in broad ranges, and Mullin’s is valued at up to $1 million.

Marshall, a doctor, and his wife, took out two separate loans from businesses to which he’s tied.

His financial disclosure forms list him as the president of LVMC, Inc. and the chairman of Great Bend Regional Hospital. In January 2014, GBRH Properties 2009 LLC, lent Marshall between $15,001 and $50,000. The loan is not listed on his most recent filing, indicating it has been repaid. However, in April 2015 his wife received a loan of between $10,000 and $15,000 from LVMC, Inc. That loan is now listed as his own liability on Marshall’s most recent filing.

On the other side of the aisle, Rep. Jerrold Nadler, D-N.Y., borrowed somewhere between $50,001 and $100,000 from Gordon Kupperstein, a retired lawyer and actor, so that he could purchase shares in an upstate New York co-op of which Kupperstein is also a member.

House Financial Services Committee member Rep. Gregory Meeks, D-N.Y. questions Wells Fargo CEO John Stumpf on Capitol Hill in Washington on Sept. 29, 2016. Cliff Owen/AP

In 2012, Rep. Gregory Meeks, D-N.Y., was investigated by the House Ethics Committee regarding a personal loan worth $40,000, after being investigated by both the FBI and the Office of Congressional Ethics.

Meeks failed to mention the loan on his 2007, 2008 and 2009 financial disclosure forms, and didn’t make payments for three years. The House Ethics Committee acknowledged Meeks didn’t properly report the loan but ultimately cleared him of wrongdoing — in part because the lender, Edul Ahmad, had recently been convicted of mortgage fraud and didn’t testify. The FBI investigation never led to charges.

In order to pay off his debt, Meeks secured a separate loan from a company run by a prominent Democratic donor. Meeks continues to represent New York’s 5th district.

Bill Shaheen, the husband of Sen. Jeanne Shaheen, D-N.H., has received no less than four promissory notes from Marcia Kimball, a Democratic party activist who owned a children’s clothing store in Florida.

Kimball has been a financial supporter of Shaheen since at least the New Hampshire politician’s first run for the Senate in 2002, a race that she narrowly lost. The longtime contributor issued the first of the notes to Shaheen’s husband just over a decade later, in 2013. Altogether, the notes may have initially been worth as much as $550,000.

Reform advocates say these kinds of transactions, in which the lender has no obvious interest that could be influenced by Congress, are seemingly less problematic.

As the sums involved suggest, however, such loans have the potential to dwarf the amounts allowed in campaign contributions.

“The reason we have contribution limits on the books, the reason that an individual is limited in how much they can give to a candidate or an official is to limit corruption, and to limit the opportunities for influence and to make sure that no official is overly indebted to any particular person,” said Brendan Fischer, director of the federal reform program for the Campaign Legal Center, a nonpartisan election reform group based in Washington, D.C.

“While one would be limited to making a $2,700 campaign contribution to a candidate, they can, under the rules, make a $1 million loan to the same candidate,” Holman notes. “That buys a whole lotta love.”

‘A matter of concern’

Maybe it was just “love” that helped Delbert Ray Ellis and David Valadao, R-Calif., find each other.

In May 2008, before he was elected to the House, Ellis loaned Valadao between $1 million and $5 million to provide “financing for Valadao Dairy,” according to Valadao’s financial disclosure statement.

Valadao’s dairy farm has been in the family since his parents, immigrants from Portugal, started it in 1973. Ellis’ family owned nearby Mid-Cal Farms until 2014, when the company was dissolved.

Rep. David Valadao, R-Calif., poses during a ceremonial re-enactment of his swearing-in ceremony on Jan. 6, 2015, in the Rayburn Room on Capitol Hill in Washington. Jacquelyn Martin/AP

Reached by phone, Ellis said he “didn’t even talk to” Valadao and the loan actually financed a property Valadao bought from him. Ellis said he did not remember the exact amount of the loan, or the terms, but added that Valadao had already paid it off.

Before he could be asked any further questions Ellis hung up.

Valadao’s most recent filing still shows the loan as an active liability. A spokesperson for Valadao did not return emails seeking clarification about the loan.

Ellis has been a contributor to the congressman since the latter’s days in the California State Assembly, when he donated $2,500 to his first campaign. Since then Ellis has donated another $13,100 to Valadao’s campaigns for his seat in the House, according to Federal Election Commission records, maxing out in the last two election cycles.

As the vice chairman of the House Appropriations Committee’s Subcommittee on Agriculture, Valadao has come to be known in Congress as an advocate for cutting regulations on the farming industry. Ellis is described as retired in federal campaign filings as early as 2011, though he continued to be listed as a director of Mid-Cal Farms in state filings after that year.

“If Valadao is in a position to take action that might benefit Ellis,” says the Campaign Legal Center’s Fischer, “then the fact that Valadao owes over a million dollars to Ellis is a matter of concern.”

Both Valadao and Pittenger’s debts raise questions about their independence, Fischer said.

“In neither instance do these appear to be arms-length commercial relationships,” Fischer said. “These individuals made significant contributions to the campaigns of these candidates and then also extended loans that greatly exceeded contribution limits … it certainly could have the appearance of these individuals trying to offer something of value to candidates in order to curry favor with the officials.”

There is one requirement members of the House have to meet beyond simply reporting these transactions: They’re required under congressional rules to pay established commercial interest rates, Holman notes. But since they don’t have to report the rate, it’s not clear whether the rate they paid was an established commercial interest rate.

That’s potentially important, because interest rates vary from bank to bank. Banks aren’t often forgiving if someone can’t pay a loan back on schedule. Private loans could prove to be more flexible for the borrower.

‘Everything was reported fully’

Texas Democrat Henry Cuellar had his eye on some property in his hometown of Laredo. Like Pittenger and Valadao, he didn’t bother with a bank. Instead, he turned to his longtime campaign contributor Rasoul Khaledi, who lent him as much as $100,000.

Khaledi, who made the loan to Cuellar in December 2011, runs a company that owns 11 duty-free stores along the Mexican border, including a flagship store situated on property leased to him by the city of Laredo, Texas.

Khaledi and his relatives have contributed at least $31,000 to Cuellar’s campaign committee since 2002.

In Cuellar’s case, his relationship with Khaledi extends beyond the purely financial. During the summer of 2015, four of Khaledi’s children were awarded unpaid internships in Cuellar’s office.

Rep. Henry Cuellar, D-Texas, left, and Rep. Debbie Wasserman Schultz, D-Fla., laugh during a news conference on Capitol Hill in Washington on Jan. 4, 2011. Charles Dharapak/AP

And Cuellar has long shown interest in issues tied to Khaledi’s businesses. As one of the founders of the Congressional Pro-Trade Caucus, he is an influential voice on U.S. trade policy. Cuellar played a role in the passage of Trade Promotion Authority legislation and supported various international trade agreements.

A representative for Cuellar insisted the congressman followed all the rules when he borrowed the money from Khaledi.

“Everything was reported fully, properly and transparently,” campaign spokesperson Colin Strother said.

Khaledi did not respond to requests for comment.

While Cuellar disclosed the existence of the loan and its approximate value, he did not disclose the loan’s interest rate and repayment schedule, since he didn’t have to.

Unlike the House, the U.S. Senate requires members to disclose the terms of a loan.

The requirements were laid out years ago by the respective chambers under the Ethics in Government Act.

While the U.S. Senate requires members to provide enhanced disclosure, the U.S. House provides what’s “required by the statute but no more,” said Robert L. Walker, who served as chief counsel and staff director for both the House and Senate Ethics committees.

Members of the House aren’t even mandated to share the terms of a loan with the House Ethics Committee itself before accepting it. The House Ethics manual devotes a mere two paragraphs to the subject.

The manual says only: “Before entering into a loan arrangement with a person other than a financial institution, Members … should contact the Committee for a review of the proposed terms, and a determination by the Committee on whether the loan is acceptable.”

“‘Should,’ in this instance, apparently does not mean ‘shall,’” the Campaign Legal Center’s Fischer said. “There is no hard-and-fast requirement.”

Reform advocates say the lack of disclosure of the terms by the House is particularly problematic.

“We have to take it at their word. And we really haven’t got a clue,” Holman of Public Citizen said. “That’s key to telling us whether or not there’s some effort to curry favor.”

Under the rules, the House Ethics Committee and its Senate equivalent could in principle deny a member of Congress permission to accept a loan if it posed a significant conflict of interest, or penalize them for accepting one that did.

In practice, that has not happened, at least in recent memory.

The House Ethics Committee declined to comment on the record, so it’s not clear how many of the House members involved contacted the panel.

Big money, modest disclosure

As for Pittenger, his relationship with Moretz became professional when Moretz last decade invested in Pittenger’s real estate firm.

Moretz then began supporting Pittenger’s political career. Since 2007, he’s given Pittenger’s various campaigns for office at least $9,500.

Pittenger disclosed the loan he’d received from Moretz in his first required financial statement upon being elected to the House in 2012. At the time, he listed the value of the loan as at $250,001 to $500,000.

But the original value of the loan is unknown. House disclosures only indicate how much a member still owes, not the loan’s initial dollar figure.

“Having run for office myself, and being unsuccessful, you get kind of wrapped up in a campaign and you end up spending more than you planned,” said Moretz, who launched an unsuccessful bid for Congress in 2004. “You get emotionally involved in the thing. I’ve been there, I’ve done that, I’ve spent more money on my campaign than I meant to or originally planned to, but I sorta knew where [Pittenger] was coming from and he needed some help.”

When asked about the loan’s timing, Moretz said: “It was when he [Pittenger] ran for lieutenant governor.”

Jamie Bowers, a spokesperson for Pittenger, stated that the loan was a “campaign issue” and suggested speaking to a representative of the 2008 lieutenant governor campaign.

Pittenger’s financial disclosure statement lists the loan as a note payable, with no indication as to the purpose of the loan.

The treasurer for Pittenger’s 2008 campaign for lieutenant governor, Charles T. Greer, did not respond to repeated requests for comment.

Pittenger reported the loan as a liability on his personal financial disclosure forms for 2012, 2013 and 2014. The loan had been partially paid off by 2013, and did not appear on his 2015 disclosure form, supporting Moretz’s assertion that Pittenger had paid the loan off in full.

Although Moretz’s loan was to Pittenger himself, it was hundreds of thousands of dollars more than the state’s limits would have allowed him to lend Pittenger’s campaign. According to the North Carolina State Board of Elections, the campaign finance laws at the time dictated that no one outside a candidate’s immediate family — a spouse, parent or siblings — could loan a campaign more than $4,000.

So while not illegal, the amount of the loan and its apparent purpose — to help out a friend who was out more than $1 million after a failed political campaign — raised ethics watchdogs’ eyebrows.

As far as the Campaign Legal Center’s Fischer is concerned, most political aspirants must have a network of wealthy friends who will finance their run for higher political offices. And they need to be comfortable with asking wealthy people for money.

“Another way of looking at this is this is a symptom of the broader problem of money in politics, and the way that the role of money in elections acts as a barrier to entry,” Fischer said.

It’s a barrier that, sometimes, doesn’t extend to fairways and putting greens.

Rahima Essop, Maria Elena Garcia and Renata Mosci contributed to this report, which was produced in conjunction with the Columbia Journalism School.