Ireland does not easily give up its secrets. That may have been one attraction it held for Sen. Christopher Dodd in 1994 when he became an owner of a refuge on nearly 10 acres on the Irish west coast. The murky tale includes a felonious inside trader, a Kansas City businessman, a presidential pardon and what appears to be a financial bonanza to Dodd during the Irish property boom.
The saga of Dodd's lucrative Irish odyssey reveals that his two 2003 sweetheart loans from subprime mortgage titan Countrywide Financial were not the first time he enjoyed a financial advantage from a wealthy benefactor. The trail begins at one of New York's most desirable addresses.
In 1993, Dodd's close friend, New York bon vivant Edward R. Downe Jr., got a heaping helping of justice when his insider trader scheme caused him to plead guilty to violating tax and securities laws. Downe, who lived at exclusive 25 Sutton Place on the Upper East Side with his then wife, heiress Charlotte Ford, was nabbed setting up foreign accounts to make illegal insider stock trades for himself and some socialite friends. Dodd attended Downe's sentencing, where the schemer received three years' probation and 3,000 hours of community service. Downe agreed a year later to pay $11 million to the SEC.
While Downe fought the SEC in 1994 about paying the penalty, Dodd and William Kessinger of Kansas City, Mo., whom Dodd knew through Downe, purchased a house and nearly 10 acres (4 hectares in local parlance) on the island of Inishnee in the affluent Roundtree section of Connemara, in County Galway, Ireland, for $160,000.
Kessinger and Downe have a history as business partners in a Missouri real estate investment company.
Dodd, who says he contributed $12,000 to the purchase price, owned one-third of the house, Kessinger two-thirds. They purchased the property with a two-year mortgage from the seller of the property that was, according to Dodd's Senate financial disclosures for both 1994 and 1995, between $100,001 and $250,000.
The Irish land registry isn't open to the public in the manner of the American system. It probably appeared unlikely that anyone would discover the curious appearance of Downe's nearly illegible signature as the witness to Kessinger's signing the official transfer document. Downe, convicted, on probation and banned for life from the securities business, described himself as "private investor" on the document and included his New York address.
When Downe agreed to pay $11 million to the SEC in 1994, he claimed he was virtually bankrupt. Six months later, he made $2,000 in contributions to Dodd, again listing his occupation as "private investor." Must be a lot of loose change in the cushions at 25 Sutton Place, even in a "bankrupt" pauper's grand apartment.
In 1996, the Irish mortgage needed to be paid, and it was. A new mortgage was obtained, according to Dodd, for the same amount. He has reported collecting rent in ranges from $201 to $15,000 on his Senate ethics filings, though the names of the people who rented are not disclosed. Through 2001, Dodd declared his interest in the Irish property as worth between $50,001 and $100,000.
In 2001, Dodd did the favor of a lifetime for his pal, Downe. The veteran senator circumvented the normal Department of Justice vetting process and got Downe a full pardon from President Bill Clinton on his last day in office. Dodd initiated the pardon request and included in his two-page letter to Clinton the tidbit that he speaks to Downe nearly every day.
Buddies Downe and Dodd probably mentioned the Irish property now and then in their frequent surveys of the world's highs and lows. While they were speaking daily, real estate prices in Ireland were exploding.
Between 1994 and 2004, according to the Central Bank of Ireland, prices of existing homes (as opposed to new ones) nearly quadrupled. But not according to a 2002 bank appraisal that Dodd used in the purchase of Kessinger's interest.
That year, a year after Dodd obtained a pardon for Downe, Dodd purchased Kessinger's two-thirds interest in the Irish hideaway for only $127,000, according to Dodd. Irish property records obtained for this story show it as $122,351. That was slightly more than its value eight eventful years before, but much less than what might have been expected given the explosion of Irish real estate prices.
At the same time, Dodd financed the purchase of Kessinger's share with a 20-year variable rate mortgage from an Irish bank for approximately $159,000 at 3.85 percent.
In his 2002 Senate financial disclosure, Dodd, who berates bankers for failing to disclose the truth about their investments, reported the value of the "cottage" as between $100,001 and $250,000.
So it continues through Dodd's 2007 disclosure (his most recent). However, a vague and shifty note by the senator appears in his 2006 and 2007 disclosures when he declares "value based on appraisal at time of purchase."
Senate ethics rules require the valuation of an asset be from the close of the reporting period, which is Dec. 31. Dodd's spokesman says the rules require "a good faith estimate of the dollar value," not an annual reappraisal. To make a disclosure that reflected the effect of the Irish property boom risked unwelcome questions as Dodd began his quest for the presidency.
Someone might also have noticed that of all the affluent seaside towns in all the world, it's the one where Dodd has a home that Downe and current wife, Mary, have in the past few years have been sponsors of local events. Dodd and the Downes have even been sponsors of the same horsey Champion of Champions event in tony Roundstone. Dodd says the Downes have never stayed at or rented his house in Inishnee, nor had any financial role in it.
Now, as Dodd suffers public contempt for failing to offer a credible explanation for his dealings with Countrywide, he also faces questions about possible financial advantages gained in Ireland. U.S. Senate ethics investigators, now looking into Countrywide, should ask.