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Scott's campaign offers defense of financial disclosure but no 2013 tax return

Mary Ellen Klas, Times/Herald Tallahassee Bureau

Tuesday, October 7, 2014 4:23pm

Gov. Rick Scott's campaign manager defended the governor's financial disclosures as complete on Tuesday but continued to leave unanswered several questions raised by the Miami Herald and Tampa Bay Times about irregularities in his financial disclosure report.

The response came from campaign manager Melissa Sellers, not the governor's staff attorneys or his communications office to whom the Herald/Times directed their questions, and she used the opportunity to turn the response into an attack on Charlie Crist, the governor's campaign opponent.

In essence, Sellers argued the governor lost money in 2011 when his tax return showed net income of $68 million but his financial disclosure rose to only $25.9 million and, despite Scott's signature on documents filed with the Securities and Exchange Commission, he was not aware of what the documents said.

"In addition to making a sweeping disclosure of assets before placing them into a new blind trust to avoid even the appearance of a conflict of interest, Governor Scott released joint tax returns with the First Lady that outline both of their income and investments, a standard of full transparency that Charlie Crist has not met,'' Sellers wrote in a prepared statement.

The Herald/Times reported that investment documents filed with federal and state regulators raise questions about the completeness of Scott's financial disclosure as well as whether the governor retains a role in managing his personal fortune. The Florida Constitution requires the governor to provide a complete disclosure of his assets valued at more than $1,000 to seek re-election.

After reviewing hundreds of documents, the Herald/Times found that some of the governor's assets reside in different trusts and partnership accounts for which he was listed in federal records as the "beneficial owner," but the governor did not list the full value of those assets in his financial disclosure reports.

Sellers did not deny that the documents filed with the Securities and Exchange Commission contain the governor's signature, but she denied that he considers himself the beneficiary of the assets. She said the assets are included in the governor's blind trust portfolio and "the Governor has no control over the purchase, sale or change of any assets.''

Sellers said that the governor is removed from any knowledge of those assets because he signed a blind trust agreement "that shields him of any knowledge of the individual assets or their values held in the blind trust."

The Herald/Times reported that four companies list Scott as the beneficial owner of the stock held by the various trusts -- a value of about $54.8 million as of December 2013 – but the governor reported controlling only $18.1 million worth of those stocks on his Florida financial disclosure form.

Sellers did not address why the governor is listed as the beneficial owner for the various trusts but denied that governor had knowledge of the management of those assets.

"Going above and beyond what the law requires, Governor Scott made a sweeping disclosure of assets from the old blind trust – before they were placed in a new one to avoid even the appearance of a conflict of interest,'' she wrote. "In 2011, he placed all of his assets in a blind trust so he would have had no knowledge if his investment in Argan, NTS, Wireless Telecom or Quepasa was bought, sold or changed."

The conflict between the state's blind trust law, which allows lump sum reporting, and the state constitution which requires elected officials to disclose all assets worth more than $1,000 is the subject of a lawsuit that is on appeal in Tallahassee. The plaintiffs argue that the blind trust law, enacted at the behest of the governor, allows officials to hide "information that Florida citizens and voters have a right to know."

Sellers defended the governor's decision to disclose both the assets in his blind trust and his tax returns for 2010, 2011 and 2012 as "going above and beyond what the law requires."

She did not explain why the governor has not released his 2013 tax return, even though his has filed a financial disclosure for that year, and the governor has refused to answer if and when he would release it.

"The Miami Herald says Governor Scott's financial disclosures are not accurate because information about Scott's income and investments provided on state disclosure forms differ from financial information he furnished to the IRS,'' Sellers wrote.

The Herald/Times report raised questions about the completeness of the governor's financial disclosures but did not conclude they were inaccurate. That conclusion would require a level of detail about the governor's assets which neither Sellers, nor the governor, has provided.

Sellers explained that the governor "is in full compliance with both federal and state reporting requirements, which are different. Even though First Lady Ann Scott is not an elected official, she and the Governor voluntarily released their tax returns to provide transparency."

She said that differences between the governor's disclosure and his federal tax returns can be attributed to the fact that the "federal tax returns include the First Lady's income as well as income from three trusts of which Governor Scott is neither the trustee nor the beneficiary, while the financial disclosure only reports income earned by Governor Scott himself, as required by the Florida Commission on Ethics."

The Herald/Times reported there is a discrepancy between the net income the governor reported on his federal tax returns and his financial disclosure form. Sellers explained that is because "both income and losses from both the Governor's and the First Lady's assets, including trust assets, are made available in their joint tax return."

The Herald/Times reported that financial documents show that while the governor's blind trust is only one of his trusts, he is listed as the "beneficial owner" of the stock held by several of the other trusts, including the one held by his wife, Ann.

The SEC requires that anyone who profits from a security is considered a beneficial owner and any beneficial owner who holds more than 10 percent of a company's stock must fill out a report to the SEC.

Sellers said the governor was no longer a beneficiary but did not provide anything to counter the documents filed with the SEC.

The Herald/Times reported that, unlike the Scotts, the Crists file their taxes separately. Before their 2008 marriage, Carole Crist was independently wealthy from a family Halloween costume business. Crist's disclosures show his trial-lawyer income has boosted his net worth to $1.3 million.

While Crist has publicly disclosed his 2013 tax return, Scott has not.

Like Scott, however, Crist drew fire for his disclosures because his consulting company, Charlie Crist LLC had a profit of $255,330 in 2013, yet Crist listed the company only as an asset worth $128,884.

The Herald/Times reported that although some records exist about the eight Scott family trusts and corporations, the entities are privately held and the governor has not honored requests for copies of them.

As a result, there is no way for the public to know what assets the trusts control or how much each is worth.

Hundreds of documents filed with state and federal regulators across the country show that for nearly two decades the governor has divided his assets among these trusts and at least 28 companies have reported that Richard L. Scott and his family of trusts and investment companies have been significant owners of their outstanding stock.

Below are the questions presented to the governor's office in writing and still remained unanswered by the campaign's response:

1. Where are the 2013 taxes? What sort of extension did he file for? When are they going to release it?

2. We have calculated the following discrepancies in net income, as reported to the IRS, and income reported to the state of Florida via the Form 6. Please explain the discrepancies:

NET INCOME FINANCIAL DISCLOSURE INCOME

2009

$6,870,041

$8,290,298

2010

$7,482,065

$11,489,516

2011

$67,811,702

$25,920,639

2012

$7,379,570

$3,183,984

2013

-

$3,259,528

3. How could the governor sell assets in both Solantic and Drives in 2011 and have his net income drop by more than $25 million?

4. Please explain why the governor has employed the practice of dividing assets into several trust accounts?

5. How is the governor's trust truly blind when SEC records indicate he automatically signs off on financial transactions?

Please provide us with the establishing documents for the following companies that discloses who is the beneficial owner:

Richard L. Scott blind trust

* Columbia Collier Management LLC

* Richard L. Scott Investments LLC

* Richard and Frances A. Scott Family Partnership

* Richard L. Scott Revocable Trust

* Scott Family Florida Partnership Trust

* F. Annette Scott Revocable Trust

* Richard L. Scott Florida Trust

Please provide a list of the investments or assets of each of these:

* Richard L. Scott blind trust

* Columbia Collier Management LLC

* Richard L. Scott Investments LLC

* Richard and Frances A. Scott Family Partnership

* Richard L. Scott Revocable Trust

* Scott Family Florida Partnership Trust

* F. Annette Scott Revocable Trust

* Richard L. Scott Florida Trust

Here is Sellers' complete statement:

STATEMENT FROM MELISSA SELLERS, CAMPAIGN MANAGER, RICK SCOTT FOR FLORIDA: "In addition to making a sweeping disclosure of assets before placing them into a new blind trust to avoid even the appearance of a conflict of interest, Governor Scott released joint tax returns with the First Lady that outline both of their income and investments, a standard of full transparency that Charlie Crist has not met. Breaking a decades-long political tradition of openness and sunshine, Crist has refused to release both his and his spouse's tax returns. Floridians have an expectation of full transparency from candidates that run for governor that go above and beyond what the law requires, and only one candidate has met that standard: Rick Scott."

GOVERNOR SCOTT'S TAX RETURNS

CLAIM: The Miami Herald says Governor Scott's financial disclosures are not accurate because "information about Scott's income and investments provided on state disclosure forms differ from financial information he furnished to the IRS …" (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: The Governor is in full compliance with both federal and state reporting requirements, which are different. Even though First Lady Ann Scott is not an elected official, she and the Governor voluntarily released their tax returns to provide transparency. Differences between Governor Scott's financial disclosure to the State of Florida and his federal tax returns can be attributed to the following:

* o The federal tax returns include the First Lady's income as well as income from three trusts of which Governor Scott is neither the trustee nor the beneficiary, while the financial disclosure only reports income earned by Governor Scott himself, as required by the Florida Commission on Ethics.

* o The federal tax returns include losses that reduce the final adjusted gross income, while the financial disclosure does not report such losses and reports gross income only.

* FACT: By not releasing both his and his spouse's tax returns, Charlie Crist has not met the standard of full transparency Governor Scott has set.

GOVERNOR SCOTT'S FINANCIAL DISCLOSURES

CLAIM: The Miami Herald says Governor Scott's financial disclosures are incomplete because he "does not disclose the entire value of 17 assets that reside in at least eight different trust and partnership accounts and for which he's listed in federal records as the 'beneficial owner.'" (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: The Governor is in full compliance with federal and state reporting requirements. Going above and beyond what the law requires, Governor Scott made a sweeping disclosure of assets from the old blind trust – before they were placed in a new one to avoid even the appearance of a conflict of interest. In addition, both income and losses from both the Governor's and the First Lady's assets, including trust assets, are made available in their joint tax returns – released voluntarily even though the First Lady is not an elected official.

CLAIM: The Miami Herald says Governor Scott's financial disclosures are inaccurate because "records filed with the SEC from four of these companies - Argan Inc., NTS Inc., Wireless Telecom Group, And Quepasa - report that Scott is the beneficial owner of the stock his trusts hold, a value of about $54.8 million as of December 2013" yet "the Governor reported controlling only $18.1 million for those stocks on his Florida financial disclosure form." (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: The Governor is in full compliance with both federal and state reporting requirements, which are different. Going above and beyond what the law requires, Governor Scott made a sweeping disclosure of assets from the old blind trust – before they were placed in a new one to avoid even the appearance of a conflict of interest. In 2011, he placed all of his assets in a blind trust so he would have had no knowledge if his investment in Argan, NTS, Wireless Telecom or Quepasa was bought, sold or changed.

CLAIM: The Miami Herald says Governor Scott's blind trust isn't truly blind because "the various Scott family investment trusts and partnerships often act in tandem with his blind trust and involve Scott's long-time financial advisors - raising questions about how independent the trust is from the Governor." (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: Governor Scott has gone above and beyond the requirements of Florida law by signing a blind trust agreement that shields him of any knowledge of the individual assets or their values held in the blind trust. Any individual who has knowledge of the trust's assets is not legally permitted to discuss that information with the governor. This is a precautionary step supported by the Florida Commission on Ethics in order to prevent even the appearance of a conflict of interest.

CLAIM: The Miami Herald says Governor Scott's blind trust isn't truly blind because "he has signed off on transactions involving some of its assets in recent SEC reports." (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: Some financial transactions require the Governor's signature to comply with federal SEC law. However, the Governor has no control over the purchase, sale or change of any assets.

CLAIM: The Miami Herald Says Governor Scott's blind trust isn't truly blind because it "uses a longtime business associate, partner and current financial manager for his wife's investments" and "that arrangement isn't considered 'independent' or permissible for a blind trust in the federal system." (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: Blind trust trustees are trusted parties who are also independent. Blind trust rules prohibit Alan Bazaar, as well as associated consultants and accountants, from telling the Governor any specific assets within the trust or the value of those assets. The blind trust exists to protect the people of Florida from having an elected official make decisions in his or her own self-interest. The Governor strictly follows the law in every respect.

CLAIM: The Miami Herald says after Governor Scott transferred his investment in Solantic to the First Lady's trust, Governor Scott still had control over his investments because "federal documents submitted to the SEC in other transactions show the governor was the trust's 'beneficial owner' and therefore had a major say over its assets." (Mary Ellen Klas and Marc Caputo, "Governor Rick Scott's Complex Finances Raise New Questions About His State Disclosure," The Miami Herald, 10/3/14)

* FACT: The Governor and First Lady sold Solantic Corporation in 2011.

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