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

Tom Emmer
MinnPost/Terry Gydesen
Tom Emmer

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.)

Brian Melendez
Brian Melendez

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.

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Comments (12)

  1. Submitted by Tommy Johnson on 10/21/2010 - 02:23 pm.

    ***
    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.”
    ***

    Hmmm…. THAT one sounds familiar!

    http://www.youtube.com/watch?v=VySnpLoaUrI

    Emmer’s frequent refinancing raises a big red flag up the flagpole; did Emmer get his mortgages via “Liar Loans”?

    Yes, “Liar Loans”. Don’t know what a “Liar Loan” is?

    Google it.

    More on Emmer and the question of “Liar Loans” here:

    http://mnprogressiveproject.com/diary/7512/liar-loans-and-tom-emmers-finances

    If questions are posed to Sheehan about “”Liar Loans” and Emmer, expect an encore performance of:

    “The Senator has reported every gift….”

    “That wasn’t the question, Cullen….”

    “The Senator has reported every gift…”

  2. Submitted by Brian Simon on 10/21/2010 - 03:05 pm.

    Strange move. Dayton’s ahead, why lower the level of discourse?

  3. Submitted by Michael Hunt on 10/21/2010 - 04:05 pm.

    it would be helpful to know the market value of the property. Is Emmer upside down? If so, who were the lenders and why’d they make the loans?

  4. Submitted by Paul Brandon on 10/21/2010 - 06:52 pm.

    I remember back when I was in college (50 years ago) I used to ‘kite’ checks:
    Write a 5$ check one week (you could buy something with it then ;-);
    write a $10 check the next week (banks had a longer float then) to cover it and get some more cash;
    a $15 check the next week;
    and so on until pay day.
    Some of us have grown up since then.

  5. Submitted by Richard Schulze on 10/21/2010 - 07:58 pm.

    Brian is right. Seems to be more downside than not. He needs to attract undecideds not feed the base more red meat.

  6. Submitted by Greg Kapphahn on 10/21/2010 - 09:11 pm.

    I’m sure Emmer would have had no trouble procuring a 30-year fixed rate mortgage and making his payments if he didn’t have to pay such astronomical Minnesota income taxes…

    or perhaps not.

    Considering the nature of these loans, I can’t help but wonder what kinds of friends a person has to have in high places in the banking community to successfully finance a house in this way, because I can promise you that precious few “average Minnesotans” could have gotten mortgage loans that were structured in this way.

    The whole thing smells rather strongly of crony capitalism and inside deals that are NOT available to the rest of us.

    Perhaps Emmer “pays his bills,” but that doesn’t necessarily make him anything like the average struggling Minnesotan, especially if he doesn’t have to worry about the same kinds of bills we do, and can arrange sweetheart deals with friends to rescue him whenever he’s gotten himself in trouble.

  7. Submitted by Thomas Swift on 10/21/2010 - 10:25 pm.

    If the Democrat party is taking the campaign into the gutter, count on “mnprogreasive” to drag it into the sewer.

  8. Submitted by Roger Iverson on 10/21/2010 - 11:24 pm.

    Emmer is following in Pawlenty’s footsteps. Pawlenty wanted to borrow to cover for some of the State’s deficits and kick the problem down the road. Let someone else pay for it long after Pawlenty was gone.
    Emmer has arranged a series of questionable loans normal Minnesotans cannot get. These are not the mortgages the rest of us have. He is pushing his financial problems down the road. Even if he made it to the governorship, he will lose his house and move into ours. His posturing about fiscal responsibility sickens. How hypocritical and ironic.

  9. Submitted by dan buechler on 10/22/2010 - 07:39 am.

    Thomas you are certainly expanding my vocabulary. A few days ago porkulous (by the way I like polish pork so much more than the bland american pork). Today mnprogreasive. Maybe I gotta start watching Glenn Beck to keep expanding my mind. But I agree this seems like a knucle headed tatic.

  10. Submitted by Jeff Goldenberg on 10/22/2010 - 10:58 am.

    The calculus on negative campaigning is simple and the closer we get to election day the more etched in stone the calculus becomes.

    In a two-person race, negative campaigning can have three potential positive consequences for the initiator:

    1) Motivate your own base
    2) Suppress the other guy’s base
    3) Persuade the stupids (undecideds) to go your way

    Any negative attack that checks two or more of these boxes is worthwhile in a campaign’s final stages.

    In a three person race the calculus is similar, but the variables can be more race specific.

    Eleven days out, the DFL views Horner as a benign suppository of any Emmer support they can peel away. That is, in their view right now, Horner can’t win.

    So for this race, the three potential positive outcomes of a negative attack are:

    1) Motivate your own base
    2) suppress the other guy’s base
    3) push the other guys’ base to the benign third party guy

    This attack would appear to check boxes 2 and 3 pretty effectively for the DFL. It doesn’t help with #1, its not juicy enough. But until they sense a backlash on this (I wouldn’t anticipate one), this is a button worth pushing for the DFL through election day.

    When you understand this aspect of politics (or any public issue with a clearly defined end date), its easier to remain calm in its face. The truth, like politics, is not necessarily uplifting.

  11. Submitted by Colin Lee on 10/22/2010 - 11:32 am.

    If the DFL wants to attract undecideds, they should focus more on the 2002-2003 session. Republicans still hold the record for the largest state spending increases in the last fifteen years with the MN House, US Senate, US House, Presidency, and Governor’s office in their control. In a recent candidate forum, I heard a GOP candidate criticize a 3% transportation bond while defending Pawlenty’s education cost shifts, which are high-interest, short term debt hidden from state books. They want voters to believe GOP spending claims are more sincere this time around. I see no reason to believe them as long as corporate campaign donations still flow into their coffers in exchange for subsidies and favorable regulation. The spirit of Casino Jack Abramoff is alive and well.

  12. Submitted by Dennis Tester on 10/23/2010 - 09:14 pm.

    If the Dayton campaign wants to start getting personal, let’s have a look at Dayton’s divorce records or his primary source of income which is from his tax-sheltered trust fund or his medical records including his psychotropic prescriptions.

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