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Rep. Mullin faces ethics investigation over his plumbing business income

story by Ryan Saylor
rsaylor@thecitywire.com

U.S. Rep. Markwayne Mullin, R-Westville, Okla., could be in hot water now that the House Committee on Ethics has received a referral from the Office of Congressional Ethics regarding outside employment activities of the eastern Oklahoma congressman.

At issue is Mullin's continued involvement in Mullin Plumbing, a Broken Arrow-based business he and his wife have owned for the last 17 years. Since taking office, Mullin has continued to be the face and voice of the company on television and radio in the Oklahoma City and Tulsa media markets, while also continuing active involvement in the company's day-to-day operations, according to the OCE referral.

While Mullin reported personal income of $91,731 in 2012 when he was elected to Congress, the OCE report that was referred to the Committee on Ethics states that Mullin last year received income from Mullin Plumbing and other companies he owns in excess of $600,000.

"If Representative Mullin received more than $26,955 of outside earned income in 2013, he may have violated House rules and federal law," the report states, adding that he may have also violated House rules and federal law if it is proven that he “endorsed any services pursuant to outside employment,” as well as serving as an officer or member of the board of directors for one or more companies.

In addition to the previously stated allegations, the OCE said "there is substantial reason to believe that the income he received is earned income because: (1) his share of the profits from the plumbing companies are, at least in significant part, for attracting or retaining clients; and (2) his 'distributions' from the company his wife wholly owns are not a return on any equity that he holds."

Washington, D.C.-based attorneys for Mullin have disputed the allegations in the OCE referral to the Committee on Ethics, stating that Mullin sought guidance from the OCE during his time in office and attempted to follow the advice he received. The attorneys, Robert Walker and Jan Witold Baran of Wiley Rein LLP, said that any income Mullin received in 2013 was not earned income.

"None of this income was earned income or income in connection with services to those businesses, but the OCE grossly exaggerates the amount which could even arguably be viewed as earned or as personally received in connections with services," they wrote in their Jan. 22, 2014, response.

The attorneys claim that only $95,000 "was income personally received by Rep. Mullin," further elaborating on how the plumbing company's specific type of corporation functions.

"To simplify a great deal, in Subchapter S corporations — such as each of the Mullin family businesses under consideration here — payment of the corporation's tax obligations and other business expenses 'flow through' the individual owners/shareholders of the corporation. Thus, with respect to the Mullin family business corporations, of the 'over $600,000' attributed as income to Rep. Mullin in 2013 by the OCE, the following amounts actually satisfied tax and other obligations of the business corporations:
• $387,425.00 — tax payments to the IRS and to the Oklahoma Tax Commission
• $69,983.44 — payments to Rep. Mullin's father for purchase of the business
• $87,702.00 — for purchase of rental properties

"For tax and accounting purposes, these payments were treated as distributions to Rep. Mullin. Nonetheless, they were business payments and expenditures of the corporations. In fact, all checks for payments and expenditures included in the above-cited totals went directly from the paying corporations to the payees and not to Rep. Mullin. Certainly, therefore, none of these payments or expenditures constituted 'earned income' to Rep. Mullin as that term is used by the Committee."

In the response, Mullin's attorneys explain that the congressman spent "thousands" of dollars to restructure his companies — which include five different companies valued in the millions of dollars, according to his 2012 financial disclosure report — in order to be in compliance with the OCE and the Committee on Ethics.

In an interview Monday (March 24) with KOTV in Tulsa, Mullin said part of his efforts to be in compliance with the law included hiring a CEO for the company, in addition to the restructuring of his companies at the suggestion of the OCE.

In announcing that the Committee on Ethics would review the matter based on referral by the OCE, Ethics Committee Chairman K. Michael Conaway, R-Texas, and Ranking Member Linda Sánchez, D-Calif., explained the reason for their committee's investigation.

"Pursuant to House Rule XI, clause 3(b)(8)(A) and Committee Rule 17A, the Chairman and Ranking Member jointly decided on February 6, 2014, to extend the Committee’s review of the matter.  In order to gather additional information necessary to complete its review, the Committee will review the matter pursuant to Committee Rule 18(a).  The Committee notes that the mere fact of conducting further review of a referral, and any mandatory disclosure of such further review, does not itself indicate that any violation has occurred, or reflect any judgment on behalf of the Committee," they said, adding that no further public statements would be made until after the completion of the initial review.

In a statement, Mullin took aim at unnamed members of the House for what he claimed were more egregious ethics violations and again said he followed the OCE recommendations.

"Apparently it’s acceptable for Members of Congress to own stock in companies we regulate in Congress, but somehow our plumbing company crosses some line. This is more of the kind of thing that leaves people scratching their heads and saying ‘only in the government,’" he said. “After first getting elected we set up a meeting with the House Ethics Committee to determine what we needed to do to comply with all House ethics rules regarding our businesses. We have followed those recommendations to the letter, even at significant expense to our company."

Following is Mullin's full statement regarding the actions of the House Committee on Ethics.

“This review - based on an anonymous complaint - is referring to whether we want citizen legislators or just professional politicians making laws that impact our jobs, our families and our communities.

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“The politicians said Dr. Tom Coburn couldn’t deliver babies when he got elected to the U.S. Senate. Now they are trying to say that I shouldn’t be involved in the family plumbing business that my wife and I have spent the last 17 years building. Apparently it’s acceptable for Members of Congress to own stock in companies we regulate in Congress, but somehow our plumbing company crosses some line. This is more of the kind of thing that leaves people scratching their heads and saying ‘only in the government.

“After first getting elected we set up a meeting with the House Ethics Committee to determine what we needed to do to comply with all House ethics rules regarding our businesses. We have followed those recommendations to the letter, even at significant expense to our company.

“Many of the problems facing our nation today require the kind of commonsense, practical business approach that citizen legislators can provide. The politicians believe Congress is a place for other professional politicians and now the bureaucrats are trying to say I shouldn’t be allowed to work in the company I have spent the last 17 years of my life building.

“I will continue to fight for the right to stay involved in my business. The stakes in this fight are not just my rights as a business owner. We are talking about the very nature of our government. Will we continue to allow real citizen legislators to serve in Congress as our Founding Fathers envisioned? Or do the bureaucrats have the power to say that only career politicians are allowed?”

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