US: Congressman's Condo Deal Is Examined
At the center of a federal inquiry into Representative Alan B. Mollohan, Democrat of West Virginia, is his real estate investment with a bankrupt distant cousin who touted his connections to one of Mr. Mollohan's nonprofit organizations to win work, including a federal contract in his district.
The relative, Joseph L. Jarvis Jr., faced $1 million debts in a personal bankruptcy case when he partnered with Mr. Mollohan in 1996, a few years after his aerospace company failed to fulfill its federal contracts and also filed for bankruptcy.
The 1995 West Virginia deal in Mr. Mollohan's district eventually soured too, and Mr. Jarvis walked away owing Mr. Mollohan's nonprofit group $67,681.63 in rent.
Still, Mr. Jarvis, Mr. Mollohan and their wives enjoyed a lucrative real estate partnership managing condominium rentals at the Remington, a 52-unit building that bills itself as "Washington's best kept secret." The couples own 27 Remington condos, which have more than tripled in value, to $8 million, over the decade.
Mr. Mollohan stepped down last month as the top Democrat on the House ethics committee amid an F.B.I. investigation into his personal finances and his handling of special federal appropriations known as earmarks. The Federal Bureau of Investigation has subpoenaed papers from the Remington partnership.
The inquiry was prompted by a 500-page complaint from a conservative Washington group accusing Mr. Mollohan of failing to properly report the Remington investment and questioning whether his relationship with Mr. Jarvis - whose lengthy list of creditors included the congressman's father and the federal government - was appropriate.
The Remington is one of three of Mr. Mollohan's real estate deals under scrutiny. The others are $2 million in beach property in North Carolina that he bought with the director of another earmark-dependent nonprofit he created, and a $900,000 farm purchased with a friend whose company got several federal contracts based on his earmarks.
Mr. Mollohan refused repeated requests to discuss the Remington and Mr. Jarvis, with a spokesman saying he was still compiling "documents necessary to answer questions" about his real estate transactions. Among the issues are why Mr. Mollohan and his wife borrowed $2.3 million from a bank on the same day in 1999 that they and the Jarvises loaned the partnership the same amount - both using the condominiums as collateral - and why these loans were not listed on the congressman's financial disclosure forms.
Mr. Jarvis and his wife, Rosemary, also declined to comment.
There is no evidence that Mr. Mollohan, first elected in 1982 and now a senior member of the House Appropriations Committee, intervened to help Mr. Jarvis procure the $1 million subcontract in West Virginia from the Energy Department in 1995.
However, court documents and multiple interviews show that Mr. Jarvis was not shy about mentioning his connections to Mr. Mollohan and the West Virginia High Technology Consortium Foundation that the congressman founded in his hometown, Fairmont. Indeed, Mr. Jarvis's home-state savvy was his strongest selling point.
In 1995, according to records filed in Mr. Jarvis's bankruptcy, an engineering firm, MRJ Inc., based in McLean, Va., agreed to pay Mr. Jarvis $3,000 a month to drum up business by capitalizing on opportunities at the high-tech consortium "and other relationships derived from his knowledge as a native of West Virginia." The Department of Energy contract grew from that partnership.
A former leader of the high-tech consortium said that Mr. Mollohan "told me to work with Jarvis, no question about it."
"It seemed like Joe was more important than the average bear, but it wasn't like you've got to help him out," this official said, speaking on the condition of anonymity for fear of retribution. "I recall Joe telling me that he and his wife knew Alan and that he suggested they come over."
During the same period he had the Department of Energy contract and started investing in the Remington with the Mollohans, from 1995 to 1997, Mr. Jarvis made four contributions to the congressman's campaigns. He did not make donations before and has not made them since.
Mr. Jarvis, 74, and Mr. Mollohan, 63, share a great-great grandfather, and Mr. Jarvis's son, Skeeter, said his grandmother Mildred and Mr. Mollohan's Aunt Tib were best friends who lived next door.
Mr. Mollohan's father, Robert, who preceded him in Congress and died in 1999, invested in and served on the board of an earlier venture of Mr. Jarvis's, Airspace Technology Corporation, based in Salt Lake City. Several people involved in that company said they believed the elder Mr. Mollohan helped Airspace get large contracts with the Air Force and the Federal Aviation Administration before it went bankrupt in 1991.
"Joe Jarvis was a great salesman - and one of the worst managers I've ever encountered," said J. Roderick Heller, who sat on the board of Airspace and was one of the few investors to eventually get his money back. "He's like the prospector who's out looking for gold. He finds 99 dry holes, and there's another one over the ridge, and he's sure the 100th is going to have gold."
In Mr. Jarvis's personal bankruptcy, which he filed in 1994, he staved off a liquidation of assets - Hearthstone, a six-bedroom home built in 1801 in Loudon County, Va., his wife's $9,000 engagement ring - by pointing to a contract he said he expected from the high-tech consortium (none arrived) and the MRJ partnership. Gary Citrenbaum, an executive at MRJ at the time, said he and a second company, NEXI, dreamed up an idea for software to help with nuclear decommissioning and decontamination, and enlisted Mr. Jarvis because the Department of Energy facility handling such things was in Morgantown, W.Va. - in Mr. Mollohan's district. Mr. Jarvis said in legal papers that he used his wife's Remington rental company, Arrey Industries, to take advantage of affirmative action set-asides, since she is an American Indian. Arrey held the contract and took 20 percent, subcontracting to the two other firms for the technical work.
Dr. Citrenbaum said he and Mr. Jarvis met with Representative Mollohan in Washington, and dined with Robert Mollohan. "It was clear from the way the retired congressman was talking that the families were very close," he added.
But the software project, called Phoenix, was canceled after the demonstration was developed, in part because of Mr. Jarvis's financial troubles, Dr. Citrenbaum and others said. MRJ later sued Mr. Jarvis for not paying its fees or rent on an office it gave him, winning a judgment for $120,000; he sent a check for $10,000 and another for $4,000, according to court records, and sold a painting by Emile Albert Gruppe, "Nymph Standing in a Birch Forest," but never handed over the proceeds.
As the Phoenix project was falling apart in 1998, the consortium signed an agreement not to sue Mr. Jarvis as long as he paid $1,000 a month to settle his debts for build-out and rent of an office in its headquarters. Gary L. Stoops, who negotiated the deal for the consortium, said Mr. Jarvis mentioned the Remington and said "he was going to check with Alan to determine about using that money" to repay the consortium, but came back and said that was not an option.
The debt remains on the consortium's books. "Never paid a nickel," its current president, James L. Estep, said of Mr. Jarvis.
- 106 Money & Politics