FBI Eyes California Congressman's Real Estate Dealings

WASHINGTON – Rep. Gary Miller grew up poor. Even though he's now worth more than $13 million, he says he's still worried about his family's financial security.

So, while federal authorities investigate some of his real estate transactions, he says he'll keep on making deals.

Miller, a fifth-term Republican representing conservative inland Southern California, said in an interview that he had put his real estate investment activities on hold upon entering politics, only to find that "I was worth less money every year."

"Some people are arguing I shouldn't have the opportunity to make an investment that every other American citizen has an opportunity to make," he said. "I've got kids, I've got grandkids, and it'd be nice, when I get ready to go, when they're older, if I can help them."

Miller, 58, who makes $165,200 as a congressman, is being scrutinized for the millions he made selling properties to two Southern California communities outside his district. FBI agents have interviewed officials in both towns.

Miller also faces accusations of using his staff for personal errands and pursuing federal funding for projects beneficial to properties that he and his campaign contributors owned.

He's denied any wrongdoing, and calls media reports about his activities "lies" and "trash." He said he has turned over documentation of his deals to the House Ethics Committee, and he defended himself at a meeting of House Republicans earlier this month.

An FBI spokeswoman declined on Thursday to comment on any aspect of the investigation.

At the heart of the Miller probe is the 2002 sale of 165 acres to Monrovia, a town of 40,000 northeast of Los Angeles. Miller contended he was forced to sell the property when the city threatened to take it by eminent domain.

Under IRS code, that allowed Miller to defer capital gains taxes on his profit if he reinvested it in other property within two years. With a tax rate of more than 20 percent on a profit of at least $10 million, the deferment involved more than $2 million.

Miller used the proceeds from the Monrovia sale to purchase properties in Fontana from a campaign contributor in December 2004. He then sold the land to the city at a profit of $12,400, he said. He filed tax forms with the city describing the sales as forced, which gave him the right to again delay paying taxes.

Miller's spokesman, Scott Toussaint, said the congressman did not take advantage of the tax deferment on the Fontana deal and has now completed paying taxes on the transactions. Miller will not say how much he paid or release tax returns that would prove it, Toussaint said, because that goes beyond what he should have to disclose.

To Miller's defenders, the whole controversy amounts to a bum rap.

"Any good businessman's going to push the envelope from time to time," said Frank Williams, executive officer of the Baldy View Chapter of the Building Industry Association in California. "That's part of dealmaking. It's not illegal."

Miller is one of three California Republicans being investigated by the Justice Department. Rep. John Doolittle has drawn attention in the corruption investigation centered on jailed GOP lobbyist Jack Abramoff, and Rep. Jerry Lewis is being investigated over his ties to a different lobbyist.

After the Los Angeles Times and others published reports on the Monrovia deal and quoted city officials saying Miller was a willing seller, the congressman made public two letters from Monrovia officials describing the transaction as "eminent domain" and "friendly condemnation." His attorney sent a letter to city officials warning of "damages for which the city could be held accountable" if they did not stop making "misstatements."

Monrovia officials subsequently posted a detailed narrative on the city Web site explaining that eminent domain was never used in the sale but the threat did exist.

Miller's business dealings have drawn scrutiny before.

In the early 1990s, as a member of the Diamond Bar City Council, Miller faced a recall drive. Critics alleged that he lied about owning a company with business before the council and opposed a subdivision because the developer refused to hold a fundraiser for a council ally.

Miller denied the accusations and filed a libel lawsuit. The recall fell short of getting on the ballot, and Miller's suit was dismissed.

Hard feelings linger in Diamond Bar, the town 30 miles east of Los Angeles where Miller still lives. Eileen Ansari, a Democrat and former city councilwoman who challenged Miller in his first race for Congress, contends that Miller clocks little time in Washington and can claim few legislative accomplishments.

"It looks like he's in there for his own benefit. That's my disappointment in him," Ansari said.

Miller said being a congressman has hurt his business rather than helped, because of the time spent in Washington and the glare of public life. He said he'd rather be home in his district, where he said he can help constituents, and routinely takes the first plane home each weekend when House votes are over.

"I'm not a Washington politician," he said.

Miller, tall with thick, neatly combed red hair, has a consistently conservative voting record. He served three years in the California Assembly before running for Congress in 1998. He replaced GOP incumbent Jay Kim, who had pleaded guilty to taking illegal campaign contributions.

Miller got into politics, he said, because he wanted to do something about government regulation on businesses. He founded G. Miller Development Co. in his early 20s and now runs it with his wife, Cathleen.

Rep. Barney Frank of Massachusetts, one of Congress' most liberal members, praised Miller for his work on affordable housing on the Financial Services Committee that Frank chairs.

"I think he would personally like to stamp out every endangered species known to man," Frank said. "But he does care a lot about housing and helping build housing."

The accomplishment of which Miller is most proud has nothing to do with business. A Civil War buff who made a cameo appearance as a Confederate general in the movie "Gods and Generals," he sponsored legislation to preserve Civil War battle sites that was ultimately signed into law by President Bush.