In 2002, Rep. Gary Ackerman (D-NY) claims he got a $14,000 loan to “buy” stock in an Israeli company called Xenonics from the company’s biggest shareholder, a man named Selig Zises. In 2005 and 2006, he says he “sold” the stock for more than $100,000 after Xenonics went public. He then paid back the loan and even threw in 6% interest.
The windfall was first reported Sunday by New York Daily News reporters Benjamin Lesser and Greg B. Smith.
Who would have thought that a member of Congress could be such a savvy investor? After all, holding office involves long hours and little chance of real wealth. Isn’t it nice to see an underpaid public servant find a way to make ends meet?
Ackerman acknowledged his great sacrifices over the years by telling the Daily News, “I’ve spent an entire lifetime doing what I do trying to help people.”
But wait, the Daily News subsequently reported that the stock deal might have been related to Ackerman’s official duties after all. Ackerman hosted a meeting in his Congressional office between Xenonics representatives and Israeli government officials, who were potential customers for the company’s night vision equipment. It is still not clear whether the meeting took place before or after the stock purchase. Ackerman claimed in a statement today that it occurred “eight years or so ago.”
Ackerman defended the meeting to the Daily News this way:
I arranged a meeting in which I introduced representatives of Israel to Xenonics because I believed that the technology used by the company for night vision lighting could contribute to Israel’s national defense, and could save Israeli lives as it was already being used to save American lives in Afghanistan.
Wow, now we are really impressed. Not only was Ackerman’s relationship with Xenonics a chance for a dedicated public servant to augment his meager pay, but it was also a way to save lives. A Twofer! What a shame it violates House Rules.
Of course, one problem with buying and selling stock is the paperwork. It’s even worse for members of Congress who are required to disclose loans and capital gains. According to the Daily News:
Ackerman offered various explanations for the terms of the loans. Questioned about the 2002 loan, he first claimed he paid it off in 2005, then changed that to 2004. When The News noted no loan is mentioned on his 2004 financial disclosure form, he amended the report days later.
In response to News queries, he also changed the number of years he had to repay the 2002 loan, from five to three.
After refusing to say why he took the loan, he admitted it was for Xenonics stock. Ackerman claims both loans were “due by a date certain,” but provided no documents to back it up.
Documents he provided make clear the 2002 loan was made on favorable terms. There’s no repayment schedule, no date by which the loan is due, and no record of property or any assets pledged as collateral.
The only documents Ackerman could produce was a one-page “General Promissory Note” dated March 12, 2002 and a check to Selig Zises from his joint account dated Dec. 12, 2004. Both were signed by his wife, Rita.
Ackerman’s disclosure forms claim he “purchased” and “sold” the stock, but he never actually owned it. Zises said Ackerman “owned an interest in my stock…I was in control of the sale.”
Asked why he would borrow money from Zises and not a bank, Ackerman said, “It was easier.”
Things were even easier than they looked. The Daily News also reported:
It’s not clear whether Ackerman would have had to pay back the loan if the stock had collapsed, but Zises indicated he would not. In an interview with The News, he said, “Gary is one of my closest friends. I was only happy for Gary to make some money. If the thing succeeded, he paid me back.”