Ethics in Government Act of 1978 Promulgates Candidates Filing Financial Disclosure Statements

by John Lopez

As Illinois Family Action begins looking at the Financial Disclosure statements (FD) of Republican candidates seeking the Republican nominations on June 28 for U.S. House or U.S. Senate, voters have an early look at the kind of Member of Congress they would be if nominated and elected on November 8.

Last week, the suburban Chicagoland’s Daily Herald ran articles about FDs for both congressional candidates and incumbents.

In addition to the contents of an FD, other factors will complement a congressional primary voter’s decision whom to support in an election.

The FD is a good place to start vetting since it’s the most self-disclosure of their individual, spouse’s and in some cases dependent children a congressional candidate will do that is required by federal law.

Before continuing, here is a brief introduction to what an FD is from the U.S. House clerk’s office:

“Financial Disclosure Reports include information about the source, type, amount, or value of the incomes of Members, officers, certain employees of the U.S. House of Representatives and related offices, and candidates for the U.S. House of Representatives.

“These reports are filed with the Clerk of the House as required by Title I of the Ethics in Government Act of 1978, as amended. 5 U.S.C. app. § 101 et seq.

“Section 8 of the STOCK [Stop Trading on Congressional Knowledge] Act of 2012, as amended, requires the Clerk of the House of Representatives to provide online public access to financial disclosure reports filed by Members of Congress and candidates for Congress.”

I am starting with reviewing Major (ret.) Michael Pierce’s (R, Naperville), who explored a bid for the IL-11 Republican nomination late last year but decided in January of 2022 not to run.

For disclosure, I was a paid consultant for Major Pierce, and I helped prepare his FD for submission to the U.S. House clerk, which was submitted at the end of 2021, before he ended his exploratory committee.  Since his FD is still online, this will be a reference point to share with Illinois Family Action readers.

Personal note from John Lopez: What I do, and what I’ve been doing for over 3 years as a contributing author to McHenry County Blog and now at Illinois Family Action is to apply discernment to facts presented, and let readers judge for themselves.

Thoughtful readers do that, and let me know what they think.

Nothing I write about anyone’s campaign is personal.  I’m not working for or against any candidate or their supporters in any way.  Discerning an FD literally strictly business.

One other thing, I don’t claim to be an “expert” on FDs.  Just reviewing multiple copies over the past 3 years gives me a perspective of what I look for when I vet a congressional candidate, and it is hoped thorough candidate vetting begins with reading how a campaign discloses financial information about themselves, and where applicable their spouse and dependent children.

As shared previously, honesty/integrity is the most important character I seek in any candidate, and the FD is the place to discern if a candidate if being completely honest.  If a candidate cannot be honest about themselves, how will they be if elected to office?

FD Structure: A congressional candidate’s FD is divided into 6 sections, called “schedule”, and will walkthrough each schedule the candidates filed.

Schedule A: Assets and Unearned Income

The assets and unearned income of a congressional candidate, their spouse and a dependent child must be reported. The “Owner” column if left blank is the candidate, “JT” stands for joint, “SP” for spouse, and “DC” for dependent child.

Major Pierce and his wife have been married for nearly 20 years, and their one child still lives at home.

FD Schedule As, the value of the asset and any income generated is disclosed in dollar-ranges, not specific amounts

Next to each asset description is a two character code. The codes on Major Pierce’s Schedule A are:

• BA = bank account (all candidate, spouse and dependent children interest bearing bank accounts with over $5K deposits must be disclosed individually if individual deposits in an account is at least $1K)
• CO = collectible
• IH = Individual Retirement Account held in cash
• PE = pension
• OT = Other (see asset description and/or comments)
• WU = whole/universal insurance

The complete list of codes can be viewed here.

Major Pierce’s listing of qualified assets and/or unearned income for both himself and his wife, including joint holdings are self-evident of a lifetime of hard work after serving his country for 20 years in the United States Army and earning a PhD.

In the preparation of Major Pierce’s FD, assets listed, including real estate ownership, utilized a “trust, but verify” level of discernment.  Real estate ownership is public information, and a candidate’s FD will be subject to public scrutiny by not only mainstream media, but all interested parties, including voters themselves.

For example, the three real estate holdings, in three different states, were confirmed through lookup of the properties at the respective county recorders in the, the state of Georgia, the upper peninsula of Michigan, and Missouri.

Additional assets on the 2nd half of Major Pierce’s FD Schedule A reveal more public disclosures:

In addition to additional land holdings which were also confirmed with real estate records, Major Pierce discloses ownerships in two corporate entities within the state of Georgia, both for-profit and not-for-profit corporations.  Applying trust but verify discernment, the two corporate entities were confirmed within the Georgia secretary of state’s office under Major Pierce’s name.

Final list of assets for Major Pierce:

Schedule C: Earned Income

Congressional candidates, and their spouses must report any “earned income” in Schedule C.

The candidate must report entire preceding year’s earnings, and filing year-to-date earnings. A spouse only needs to identify the source of earned income and the type, but not amounts.

Major Pierce fully discloses the name of his employer, and the type of work it does. Salary figures are all of 2020 and 2021.

If a candidate earns speaking fees, or any kind of honoraria, it must be disclosed in Schedule C.

Travel/expense reimbursements for speeches are not required to be reported by congressional candidates.

Schedule D: Liabilities

Liabilities, or debts, for Major Pierce and his wife, are listed above under Schedule D.

The same owner codes apply to Schedule D as used in Schedule A.

Something discovered nearly a year ago while writing for McHenry County Blog article while reviewing Congresswoman Lauren Underwood’s FD filed in August of 2021 was her first home purchase.  Congressional candidates and their spouses do not have to disclose mortgages for a primary personal residences, unless it’s generating rental income (which would require an entry in Schedule A).

While it is not known, short of looking up the information through the Will County Recorder’s, if the Major Pierce’s home in the Will County portion of Naperville has a mortgage, in event there is a mortgage and Pierce had won election to Congress, he would have to include it in his Member’s FD in May of 2023.

The Liabilities section was covered in the recent article about IL-11 Republican candidate Mark Carroll, who’s endorsed by Illinois Family Action, where like Underwood’s home purchase, voters first became aware of the IRS liability Carroll has.  The full story about Carroll’s FD liability can be viewed here.

Schedule E: Positions

Any position the congressional candidate holds, either paid or volunteer, must be disclosed in Schedule E.

This disclosure includes being a member of a corporate board, an officer in a homeowner’s association or any position of authority, including a trustee/elder/overseer for a local church.

In the Schedule E section above Major Pierce discloses his position in relation with his business, including a comment explaining his business, including the 19 years of its existence.

Schedule F & J: Agreements and Sources over $5K

Schedules F & J are usually filed together, on the same page. An agreement usually means what, post-congressional position a member (or congressional staffer) has accepted. These kinds of agreements are very rare for congressional candidates, and many candidates list this FD schedule blank.

Schedule J bears some explanation.

Whether a candidate’s position is through a law firm, an accounting firm, or a software vendor or any business that deals with multiple clients, the candidate is required to disclose the name and type of service performed for a particular client if in calendar year 2019, 2020 and filing-to-date of 2021 brought in over $5K.

The FD Instruction Guide is clear it has to be work the candidate directly performed, and the candidate must have a position high-enough in the company.

For example, at a law firm, an attorney who is a partner who’s also running for Congress must disclose the name of the client legal services they directly worked on which brought the law firm at least $5K.

But if the same candidate is an associate or Of Counsel at same law firm, that is not considered a high-enough level for employment.

Because Major Pierce disclosed his employment through Schedule C, instead of an ownership interest in Schedule A, he is not required to list clients in Schedule J.

Conclusion

The FD gives prospective voters a place to vet the congressional candidate, and learn how forthcoming they are with transparency and disclosure, which provides a foundation to how they will likely perform as a Member of Congress.

Major Pierce’s full online Financial Disclosure statement can be viewed here.

The Instruction Guide for FDs can be viewed here.

To search the FD database, click this link, and then click “Search Reports” on the left side of screen to bring the querying screen:

To search for congressional candidates, the “SEARCH CANDIDATES” tab must be clicked and entering the fields for “Election Year”, “State” and “District” will list all candidates’ listings.  Clicking the “SEARCH” button below the query screen will list candidates below the search entries (not on a separate screen).

The FDs are all in PDF format.