New day, new political punching: DFL on offensive, questioning Tom Emmer’s personal finances

For months, the state’s Republican Party has been pounding away at Mark Dayton’s personal wealth and raised questions about the family trust fund that was established decades ago in South Dakota.

For months, Republican gubernatorial candidate Tom Emmer has campaigned on the theme that government must be like average Minnesotans and live within its means.

For months, the party and the candidate have demanded that Independence Party candidate Tom Horner reveal his client list from the days he was a partner in the Himle Horner public relations firm.

This morning, the proverbial shoe was placed on the other foot. It was the DFL’s turn to play political hardball.

Emmer’s mortgage history scrutinized
At a media event this morning, DFL Party Chairman Brian Melendez produced documents outlining Emmer’s seemingly unusual mortgage history on the Delano home the Emmers purchased, for $425,000, in 2002. Emmer’s home-financing arrangements, Melendez said, raise a legitimate question about a candidate who constantly is talking about how government must, like families, live within its means.

Public records show that Emmer has taken out a series of short-term loans — ranging from two to seven years — to pay for the house. Those records show that he’s borrowed a total of slightly more than $1.6 million over the nine years he and his large family have lived in the home and now have a debt of $527,090, a debt that appears to come due in less than two years.

(Emmer had a similar strategy in handling the financing of a Hennepin County property from 1988 through 1999. In that case, the loans were smaller, ranging from $23,200 to $224,500, as opposed to the Delano property loans, which have ranged from $50,000 to $307,000.)

At least some Capitol reporters have known about this financing structure for months. One website, Bluestem Prairie, reported essentially these same numbers a month ago and portions of that report were noted in MinnPost’s Daily Glean. Now, because of the DFL media event, it likely will become a major story across the major media in Minnesota.

In a story filled with unanswered questions, the big question is how this will play in the souls of Minnesota voters. Will this be the “October surprise” that has become so much a part of state politics? Will making an issue of the Emmer mortgages backfire on the DFL and its candidate? Will the Republicans be able to spin the story to make it appear that Emmer is just “Everyman” in this era of multi-mortgages and personal debt? Will this event force state legislators to write law requiring more financial disclosure in future elections?

Obviously, the Emmer campaign tried to blunt any damage the story might cause in a hastily called tele-conference with reporters shortly after the Melendez event.

Emmer campaign stays on message
But Cullen Sheehan, Emmer’s campaign manager, was armed with talking points, not facts. He repeatedly turned the discussion to Dayton’s wealth, not Emmer’s personal financial situation, or his refusal to release tax forms (as Dayton has done).

Emmer, Sheehan kept saying, is like “97 percent of Minnesotans.” He has a mortgage on his home, and “he pays his bills.”

“Shame on Brian Melendez,” Sheehan added.

He called the implication that Emmer doesn’t live within his means “blatant lies.”

He repeatedly made comments like this: “Tom’s last name isn’t Dayton, he didn’t marry a Rockfeller, he doesn’t have a trust fund in South Dakota on which he doesn’t have to pay Minnesota taxes.”

Sheehan said that Melendez is saying that “everyday Minnesotans” shouldn’t be able to run for governor.

But Sheehan didn’t address the question of how Emmer is paying off such a large debt.

It’s legitimate, Melendez said, to ask “How is he making payments? … Why would a bank lend you twice the value of a house?”

Melendez said there is no shame in refinancing and no shame in facing foreclosure, as thousands of Minnesotans do.

“But Tom Emmer isn’t an average Minnesotan,” Melendez said. “He’s running for governor. … Voters deserve to know the truth.”

DFL move politically risky?
Melendez was asked if there was a political risk in bringing up this subject so close to election. Is it not similar to former Gov. Rudy Perpich waving around the divorce papers of Jon Grunseth, his opponent at the time, in 1990? (Arne Carlson ultimately won that race, after Grunseth was forced, by scandal, to drop out nine days before the election. Many pundits of the time believed that Perpich diminished himself by trying to urge reporters to dig into Grunseth’s divorce.)

Melendez said he was “not waving the papers around.” Nor, he said, was he questioning the legality of anything involved in Emmer’s personal financial situation and was not suggesting that Emmer was receiving any “sweetheart deals.”

He was suggesting, however, that Emmer should release his income tax records, as Dayton has. He also said that seven mortgages since 2002 is unusual. He also said that’s it very unusual for people to finance their homes with short-term loans.

Will Emmer release his tax forms?

“No,” said Sheehan. “It’s not required. It’s not relevant. … He’s done everything he’s required to do.”

(That’s true. Minnesota does not require state candidates to disclose income tax returns.)

But the question remains: How is he paying off the debt, which must require thousands of dollars each month?

“He always has, and always will, pay off his mortgage,” said Sheehan.

(Records do show that foreclosure proceedings were started in 2005, but dropped, apparently when Emmer received a second mortgage — for $250,000 — early in 2006.)

Is Emmer able to pay off his debt either through income from his law firm or from savings he built up before his run for governor?

Sheehan responded again: “He’s paying his mortgage like most average Minnesotans.” But Sheehan said, “He’s not a millionaire, he doesn’t have a Renoir on his wall, he doesn’t have a trust fund in South Dakota.”

Emmer himself has implied that he’s been doing little work in his small law practice since the campaign began.

Sheehan said he knows little about Emmer’s law practice, except that currently the candidate is doing “nominal’ business. He thought that Emmer might have “two or three clients.”

Emmer campaign adopts Horner stand
A reporter asked Sheehan if Emmer would release the names of those clients. (Understand the context here: The candidate and the Republican Party have attempted to make a big issue of the fact that Horner has refused to divulge his client list from his days in the PR business.)

“I’m not a lawyer,” Sheehan said. “I don’t even know [if releasing a client list] is legal or not. … We’re not going to be releasing.”

He cited attorney-client privilege, much as Horner says that he’s “protecting” the confidentiality in his relationships with former clients.

There was an echo factor to all of this.

As has been the case from the start of the campaign, again today it was the party, not the candidate, straying from issues messages and diving into the personal.

Melendez said that the DFL had not spoken with the Dayton campaign about today’s event publicizing Emmer’s mortgage background. State Republican Chairman Tony Sutton has always insisted that none of the stuff it’s tossed in Dayton’s direction was cleared first by Emmer.

And there was Sheehan saying, “This is not a story. … This is not relevant.”

Where have we heard that before?

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.