Gov. Rick Scott’s campaign defended his financial disclosures as fully transparent Tuesday, but answers to specific questions about the details of his investments — or even when he’ll release his 2013 taxes — remain unanswered.
The statement, issued by campaign manager Melissa Sellers, came in response to a Miami Herald/Tampa Bay Times story published over the weekend analyzing his “blind trust,” his state financial disclosure and the differences in the way he reports his finances to the federal government and the public.
“The Governor is in full compliance with both federal and state reporting requirements, which are different,” Sellers wrote.
But that claim, at least regarding Florida’s “reporting requirements,” is a matter of dispute.
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Jim Apthorp, a longtime aide to former Gov. Reubin Askew, is suing to force Scott to adhere to the letter of a Florida constitutional requirement that elected officials make a “full and public disclosure” by annually filing “a sworn statement showing net worth and identifying each asset and liability in excess of $1,000 and its value.”
Scott hasn’t done that. Instead, Scott signed into law a “blind trust” statute that allows him to place his assets in an account, managed by a longtime business associate, that shields each asset annually from public view. Apthorp’s lawsuit, which is on appeal, is backed by an association of media organizations that includes the Herald/Times.
Scott, who reported a net worth of about $133 million, formed his blind trust in 2011 — two years before signing the blind trust law. He and Sellers say he did it to shield himself from knowing what his investments are and from subsequent charges of having a conflict of interest.
But, as the Herald/Times and the investigative Broward Bulldog website have reported, Scott did know what some of his investments were anyway; he signed off on them because of Securities and Exchange Commission rules.
“Some financial transactions require the Governor's signature to comply with federal SEC law,” Sellers wrote. “However, the Governor has no control over the purchase, sale or change of any assets.”
Information about Scott’s income and investments provided on state disclosure forms differ from financial information he furnished to the IRS and the Securities and Exchange Commission. In 2011, for example, Scott and his wife reported a net income of more than $67 million on their joint federal tax return. But on the financial disclosure form sent to the state, the governor reported a net income of less than $26 million.
Sellers said those discrepancies can be explained by losses or gains not reported in Scott’s financial disclosure. “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.”
In the “Setting the Record Straight” email, Sellers also points out the “fact” that the governor’s assets managers and trustee don’t coordinate with Scott on making investments. The Herald/Times never raised that claim.
The Herald/Times did point out that the governor’s lawyers had said that Florida’s blind trust law was “modeled” on a federal system, but under the federal system the governor’s trustees wouldn’t be considered independent.
Sellers claimed that “The Miami Herald Says Governor Scott’s blind trust isn’t truly blind.”
The Herald/Times pointed out that some — not all — asset transactions connected to the trust were not blind to the governor.
That’s not what the Herald/Times said. 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. Written requests for explanations and details of Scott’s investments went unanswered for days and remained unanswered Tuesday.
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.
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 the 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.”
“Even though First Lady Ann Scott is not an elected official, she and the Governor voluntarily released their tax returns to provide transparency,” Sellers wrote.
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 commission’s members are Scott appointees.
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.”
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.
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 campaign also trained its sights on Democrat Charlie Crist, Scott’s opponent.
“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 the prepared statement.
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.
The Herald/Times has requested Carole Crist’s tax returns and has not been provided copies of them.
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 as an asset worth only $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.
Scott will be under more pressure to disclose more of his finances by Tuesday, Oct. 15. That’s the deadline for most people who file extensions with the IRS to file their taxes.
It’s also the date of the first of two live televised debates between Scott and Crist.