Clarence Thomas failed to fully repay $267,000 loan for luxury RV, inquiry finds
The US supreme court justice Clarence Thomas failed to repay much – or possibly all – of a “sweetheart deal” to borrow more than $267,000 to buy a luxury motor home, a Senate committee found.
The existence of the $267,230 loan, made by the businessman Anthony Welters in 1999 and forgiven in 2008, was first reported by the New York Times. On Wednesday, the Times quoted Michael Hamersley, a tax lawyer and congressional expert witness, as saying “‘this was, in short, a sweetheart deal’ that made no logical sense from a business perspective”.
The original RV story came amid a torrent of reports, many by ProPublica, about alleged ethical lapses by Thomas, a conservative appointed in 1991 who has failed to declare numerous lavish gifts from rightwing donors.
Thomas denies wrongdoing but the reports, particularly concerning the mega-donor Harlan Crow, alongside stories about other justices’ undeclared gifts and windfalls, have prompted questions about impartiality on the conservative-dominated court and calls for ethics reform.
Senate Democrats have proposed such reform but it has little chance of success, given Republican opposition. The chief justice, John Roberts, has resisted calls to testify.
Supreme court justices are nominally subject to the same ethics rules as all federal judges but in practice govern themselves.
In the case of the luxury RV – a Prevost Marathon Le Mirage XL – Welters loaned Thomas the money in 1999. The businessman told the Times: “I loaned a friend money, as I have other friends and family. We’ve all been on one side or the other of that equation.”
But on Wednesday the Senate finance committee said it had now seen documents that showed an annual interest rate of 7.5% but no obligation to pay down the principal, only annual interest payments of $20,042. The committee also said it had seen a note from Thomas promising to abide by the terms.
“None of the documents reviewed by committee staff indicated that Thomas ever made payments to Welters in excess of the annual interest on the loan,” the panel said.
As described by the Times, when the loan came due, in 2004, Welters granted a 10-year extension “despite the fact that the previous year Justice Thomas had collected $500,000 of a $1.5m advance for his autobiography, according to his financial disclosures. Then, in late 2008, Mr Welters simply forgave the balance of the loan, according to the committee’s report.”
A contemporaneous note, the committee said, showed Welters saying Thomas’s “interest only” payments exceeded the value of the RV. But evidence did not back up this claim, with Welters having given investigators only one copy of a canceled check from Thomas, for the annual interest amount.
Hamersley told the Times: “No bank behaving in a commercially reasonable, arms-length manner would have given that loan in the first place. And a bank doesn’t just say, ‘Oh gee, you’ve paid a lot in interest – we’re good, no need to pay back what you actually owe.’”
Hamersley also said the Internal Revenue Service would treat any such gift as taxable income.
Ron Wyden, the Democratic chair of the Senate finance committee, said: “Now we know that Justice Thomas had up to $267,230 in debt forgiven and never reported it on his ethics forms.
“Regular Americans don’t get wealthy friends to forgive huge amounts of debt … Justice Thomas should inform the committee exactly how much debt was forgiven and whether he properly reported the loan forgiveness on his tax returns and paid all taxes owed.”
Calls for Thomas to resign, or to be impeached and removed, have proliferated. Such outcomes remain vastly unlikely but on Wednesday Caroline Ciccone, president of the watchdog Accountable.US, said Thomas had reached “a new low”, the justice going “about business as usual on the supreme court while skirting all ethics standards to cash in on his wealthy friends – to the tune of hundreds of thousands of dollars.
“Justice Thomas clearly views his position on our nation’s highest court as a chance to upgrade his own lifestyle with no consequences. As becomes more clear by the day, he is unfit to serve on our high court. Justice Thomas must resign.”