* Alexi Giannoulias was hit on Friday over a possibly huge tax refund for his family…
The family of Democratic U.S. Senate nominee Alexi Giannoulias stands to collect more than $10 million in federal tax refunds even if its Broadway Bank fails, which Mr. Giannoulias said this week is likely.
A $75-million loss at the struggling lender last year generated tax benefits potentially worth between $12 million and $15 million to Mr. Giannoulias, his two brothers and his mother. As the sole owners of a subchapter S corporation that controls $1.2-billion-asset Broadway, they pay the taxes on the bank’s income and reap tax deductions on its losses. […]
Asked whether he would advise his family to put the tax refunds back into the bank to help recapitalize it, Mr. Giannoulias said, “We’ll do everything we can to keep the bank going. . . .You’ll have to ask management of the bank what the best course of action is.”
The campaign says the family is filing for a return of taxes overpaid last year on capital gains in anticipation of profits that didn’t materialize. The campaign claims that the idea all along has been to use the cash to recapitalize the bank, not to enrich themselves. From a campaign website…
Like the millions of Americans who overpay their income taxes each year, the family is owed tax refunds. They are actively pursuing a refund of this money as a way to help save the bank. They would not profit in any way if the bank fails. Alexi has said repeatedly that he will do whatever he can to help save the bank, which includes using any tax refund he might receive on his 3.6% share to recapitalize the bank. If the bank does indeed fail, the Giannoulias family, who are sole shareholders, will bear the full brunt of the loss.
* Meanwhile, the Daily Herald editorial page asks some pertinent questions about how Republican congressional nominee Joe Walsh can afford to rent this $860,000 Winnetka house on what Walsh claims is an annual income of just $40,000…
The editorial also looks at some claims Walsh has made about the foreclosure on his Evanston condo and his subsequent eviction…
If Congressional candidate Joe Walsh was so hard up for money that he couldn’t fulfill his obligation on a $300,000 mortgage, why was he able to afford to rent an $860,000 colonial in Winnetka with an in-ground pool?
If he needed more room for his large family, why didn’t he look to rent a house of the same size but for half the price in, say, Wauconda or Lake Zurich? Is it possible he could have managed his mortgage payments if he had done that?
Walsh said that people have to understand the circumstances that led to the foreclosure on his Evanston condominium. He was only making $40,000, he said, and he couldn’t afford to keep paying for two homes.
Take a look at the picture above. Does that look like the house you would rent if your family was making $40,000 a year? Especially if you also owed money on another residence?
And the Northwest Herald notes another item in its latest story…
Walsh’s problems [include] a lawsuit filed by his former campaign manager for about $20,000 in unpaid services
The suit was filed just before the primary, as this Jan. 21st Barrington Courier-Review article notes…
Morton Grove-based Patrickson-Hirsch Associates filed a lawsuit today with the Circuit Court of Cook County alleging Walsh did not pay the company $20,000 for the campaign management services provided by Keith Liscio, a principal with the company who also has had a 15-year business relationship with Walsh.
According to the lawsuit, Patrickson-Hirsch provided campaign management services that required $5,000 payments bimonthly, beginning Sept. 1. The lawsuit claims that each of the first three such bills were paid past their due dates. The lawsuit then states that Walsh failed to pay any of the subsequent four installments, beginning with the Oct. 15 bill. On Dec. 4, the lawsuit states, Patrickson-Hirsh terminated its management of Walsh’s campaign, still owed $20,000.
Jim Thacker, a spokesperson for the Walsh campaign, said because of this pending litigation, Walsh will not comment on the issue. Thacker added that he has been working on campaigns for over 20 years and has “never seen anything like” having a lawsuit filed against a candidate so close to a primary election.
…Adding… Campaign roundup…
* Local officials eye probe of voting machine merger
* DuPage chairman candidates wary of revenue projections
* Oberweis hoping to end GOP infighting in new role
* Fair map supporters churn toward April 1
* Slay Illinois’ legislative district monsters
- Brennan - Monday, Mar 8, 10 @ 8:55 am:
The Crain’s story has some interesting comments from someone identified as “Peter G.”
- wordslinger - Monday, Mar 8, 10 @ 8:59 am:
On the bright side for Alexi, if you’re going to have a long-playing negative storyline, at least his pays well. Gassing puppies pays bupkus.
Those Walsh numbers are way out of whack. Did he have some expectation he could afford both homes on $40 grand? Something’s missing to the story.
- bored now - Monday, Mar 8, 10 @ 9:01 am:
i can’t wait to see the kirk sycophants arguing that people shouldn’t file for their tax refunds. then we get to explore kirk’s taxes to see if they are hypocrites (because, you know, if mark kirk had any tax refunds we’ll get to discuss the double standard therein) and argue about whether americans have a right to request monies owed to them. this ought to be fun!
- bored now - Monday, Mar 8, 10 @ 9:02 am:
wordslinger: perhaps the missing element is dishonesty. occum’s razor…
- Ravenswood Right Winger - Monday, Mar 8, 10 @ 9:03 am:
Barring Walsh dropping out, once again Bean gets re-elected. Phil Crane hung on to that seat for far too long.
- VanillaMan - Monday, Mar 8, 10 @ 9:10 am:
This is the politics of economic strife. This is the kind of sticky campaign issue that arise during bad economic times. Mr. Giannoulais and Mr. Walsh have not been preparing themselves for this, and I believe there will be more regarding them, as well as other candidates.
If you are running for a public office this year, ensure that there is nothing bogus in your personal finances. Don’t go around in an expensive car and flash your bling. Don’t hang with rich people when someone is taking pictures. Eat hot dogs. Appear to be frugal.
Voters are angry. Illinois is bankrupt. Anyone interested in public office will have a tough time getting elected if they pretend otherwise.
This is the politics environment when governments go bust and turn their hungry eyes towards voter’s wallets. This is the political environment when voters know this, and hate their government’s representatives.
- Pat Collins - Monday, Mar 8, 10 @ 9:27 am:
Walsh finances
Yet another case of a candidate (Maria R, and others) not doing due diligence. At least in the case of Maria R, I know one elected official in McHenry who offered her help in that area, was totally ignored.
You ought NOT to run if you dont plan to at least run hard…
- Chicago Cynic - Monday, Mar 8, 10 @ 10:27 am:
“If the bank does indeed fail, the Giannoulias family, who are sole shareholders, will bear the full brunt of the loss.”
Umm, sorry Alexi spokesperson, but unless they are in this statement committing to make depositors whole themselves, this just ain’t true. The FDIC will most likely be the one to bear the brunt. The family will have to bear the law suits that will inevitably follow.
- Responsa - Monday, Mar 8, 10 @ 10:58 am:
Let’s conjecture for a minute that Alexi does get elected. It seems that in the likely event Alexi’s family bank is taken over by the FDIC and scrutiny continues on the money that was taken out by the family in dividends, and now with this tax “refund” situation– there might be a number of important issues before the Senate on which Alexi would need to recuse himself from voting. (Banking regulation, and tax reform for instance). Also, it was always implied that Alexi’s background would get him placed on banking or budget committees. This certainly cannot be possible now.
- bored now - Monday, Mar 8, 10 @ 1:13 pm:
responsa: it appears you may be unfamiliar with how the u.s. senate organizes itself. but no worries, do you think that when alexi is elected and if broadway doesn’t go under, would you imagine that he would have to recuse himself from voting on banking or budget issues when he could be a direct beneficiary (given your thinking, again, this hypothetical is based on your assumptions and not what the senate actually demands from its members) of his votes?
taking your tortured logic to its extreme, how could any senator vote on any policy issue that effected the entire nation? wouldn’t that be a conflict of interest, per your thinking on this? mark kirk, for example, couldn’t vote on military issues, etc, as long as he was in the reserves. but i’m sure you’d make an exception for him.
of course, the caveat is that the senate already has fairly direct policies about potential conflicts of interest. neither kirk nor giannoulias would be prohibited from voting due to your thinking….
- A.B, - Monday, Mar 8, 10 @ 2:07 pm:
Ok, it’s rare, but I do agree with bored’s comments regarding if Giannoulias wins and voting on banking legislation as well as the tax returns. That being said, if the Giannoulias clan doesn’t dedicate those dollars to saving the bank, it will be much more further damage to Alexi’s campaign.
On the Walsh topic, I live in the 8th and I am BEGGING the Republican’s to let this clown’s campaign die on the vine. Don’t give him money, don’t give him a voice, let his campaign wither and fail. Talk about poor decision making. If anyone has seen Walsh’s release after this story, he points his finger at the media, instead of being an adult and living up to his past mistakes… If he is given a voice, all he can do is hurt other R’s on the ticket.
- Angry Chicagoan - Monday, Mar 8, 10 @ 2:44 pm:
I’m curious as to how hopeless the situation at Broadway Bank is. If it’s not completely hopeless, bailing out the bank would save the family business, show some class and earn Alexi G a lot of props in the campaign. If it is completely hopeless and even an eight figure tax refund can’t save it, WHY THE HECK DID HE RUN?
As for Walsh, I’m assuming he’s using his entire post-tax income on rent, and getting an allowance from his Mummy and his Daddy for everything else.
- bored now - Monday, Mar 8, 10 @ 3:18 pm:
ab, i’d have to agree with you on your conclusion that if they don’t devote their tax return money to broadway’s recovery it will look bad…
- sucka free - Monday, Mar 8, 10 @ 4:06 pm:
I still dont fully get how the broadway bank failure is such a major “gotcha” moment.
FDIC is funded entirely by fees paid by the banks - no taxpayer money.
All depositors are covered by the FDIC.
Broadway turned down TARP money, so no federal losses there.
The only shareholders are the G. family, so no one hurt there other than them.
Who then is hurt by a once successful family business failing?
And who, Chicago Cynic, is going to be filing all those supposedly inevitable lawsuits?
- A.B, - Monday, Mar 8, 10 @ 4:26 pm:
Sucka - I think you are overlooking the trend of poor decision making for Alexi. Between the admitted 9% of bad loans (which we are only taking the G’s word for) and the Bright Start fiasco, those are pretty tough to have on your record when looking for a promotion.
- Brennan - Monday, Mar 8, 10 @ 4:51 pm:
=Broadway turned down TARP money, so no federal losses there.=
They did?
- Chicago Cynic - Tuesday, Mar 9, 10 @ 12:37 am:
Sucka,
The FDIC will be filing the lawsuit to claw back the excessive dividends paid to the family as the bank was sinking. It’s pretty common practice.