Question of wealth: McCaskill hasn't said how she'd deal with conflicts

WASHINGTON -- If elected to the U.S. Senate, Claire McCaskill likely would confront several potential conflicts of interest because of the nature of her husband's businesses, experts say.

But McCaskill won't say how she would deal with such situations, such as establishing a blind trust or recusing herself from serving on some committees or from voting on bills that affect husband Joseph Shepard's business interests.

"Before making any determination about what personal decisions she plans to make once elected, she must first concentrate on winning on Nov. 7," spokeswoman Adrianne Marsh wrote in an e-mail.

McCaskill is the Democratic candidate running against Republican Sen. Jim Talent of Missouri in a tight race.

Marsh said McCaskill would "fight to improve ethical standards in Washington. É Claire will follow all ethics rules and disclosure rules of the Senate to the letter, as she's done throughout her campaign."

"Completely inadequate," scoffed Gary Ruskin, director of the nonpartisan Congressional Accountability Project.

"The candidate should have a real plan on how she will handle any ethics matters arising from her husband's holdings," Ruskin said. "She has a responsibility É to the public trust."

A disclosure report filed with the Senate this year puts McCaskill's net worth at between $13 million and $30 million, possibly more. Even the low end of that scale would make her one of the Senate's 10 richest members, according to estimates by Roll Call, a Capitol Hill newspaper.

The family fortune is based on Shepard's involvement in developing and managing low-income housing. The industry is heavily federally regulated and subsidized.

Shepard has interests in hundreds of partnerships in low-income housing projects. He also buys and sells tax credits, a market entirely dependent on government policies.

... One of Shepard's interests -- a Bermuda-based reinsurance company -- shares attributes with a tax shelter the IRS wants Congress to rein in. ...

McCaskill's campaign did not respond to a request to interview Shepard. In the past, aides have said Shepard and his partners founded the Rural Housing Reinsurance Co. in 1986 because it was difficult to find existing companies to reinsure their low-income housing projects.

The campaign has said Shepard owns less than 6 percent of the company, a stake worth between $250,000 and $500,000. The Senate disclosure form listed less than $201 in income from the company.

Shepard has refused to disclose his tax returns. His 1995 returns, released in a divorce case, show no income from the reinsurance company. They also show he paid no federal income taxes that year.

Bermuda connection

Bermuda corporate records say Shepard was the company's chairman beginning in 2000. The phone number for the company is that of a law firm in Bermuda.

Asked for material on the services the company provides, Ellie Dolding, who answered the phone at the law firm and has been listed in records as a director and assistant secretary of the reinsurance company, said: "I'm not really sure where you would go for that." Some experts say that if a reinsurance firm does not have employees or offices and does not market its services, its purposes are suspect.

It's all about avoiding taxes, said Robert McIntyre, director of Citizens for Tax Justice, a Washington watchdog group. "That's the whole point of them. I've heard so many excuses for doing it. But why is it in Bermuda? There's only one reason. Because of taxes."

"There is absolutely no tax sheltering that is occurring that is not part of a tax code that Senator Talent embraces," McCaskill said Monday night at a debate in Springfield.

But if the Senate does take up legislation aimed at curtailing such shelters, McCaskill would be in a position to help decide whether one of her husband's major investments could survive. The Senate has passed several bills to limit such businesses, but they were stalled or watered down in the House.

Perceived conflicts

The Senate narrowly defines a conflict of interest as something that arises when senators introduce or help pass legislation that serves only to further the financial interests of themselves, their families, or a limited group of people that includes their families. ...

McCaskill has made Washington ethics a platform of her campaign and has introduced her own ethics plan, dealing mainly with lobbying reform.

The best way for her to avoid trouble given her husband's businesses would be to put their assets in a blind trust, or divest the family interests and put the money in mutual funds, ethics experts said.

If Shepard is unwilling to sell his interests, McCaskill could seek guidance from the Senate Ethics Committee on whether she should recuse herself from votes on some bills.

Several wealthy members of Congress use blind trusts.

On the other side

Brenda Talent, Senator Talent's wife, is a suburban mother of three -- and a tax lawyer earning a six-figure salary in the St. Louis office of powerhouse law firm Bryan Cave.

Campaign aides say the Talents are "very sensitive" to the ethical obligations that arise from a spouse with a successful career. ...

The Talents reported a net worth last year of between $300,000 and $1.3 million. They do not have a blind trust and do not intend to establish one, Chrismer said.

"They recognize when you serve in public office you forfeit a certain amount of privacy when it comes to financial information," Chrismer said, noting the couple released their tax returns.