Rep. Grace Napolitano (D-CA) has bagged at least $294,245 since 1998 by loaning her congressional campaign money at interest rates up to 18%–a scheme that effectively funneled campaign contributor donations directly into her personal bank account.
The self-loan ruse was exposed Sunday night during a joint investigation by 60 Minutes and Government Accountability Institute (GAI) President Peter Schweizer based on Schweizer’s forthcoming book, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets.
After numerous attempts to interview Napolitano, Kroft finally confronted her outside a Hispanic Caucus meeting.
“She told us that as a woman and a minority, banks wouldn’t lend her money, so she had to withdraw $150,000 from an investment account to lend it to her campaign,” said Kroft.
Kroft then questioned why she would charge 18% interest. “That’s what the Mafia gets,” said Kroft.
“It isn’t like I’ve really profited,” said Napolitano. “I still live in the same house. I drive a small car. I am not a billionaire, or a millionaire, for that matter.”
Schweizer exposes Napolitano’s self-loan money extraction technique in Extortion.
In 1998, Rep. Grace Napolitano (D-CA) loaned her congressional campaign $150,000 at a staggering 18% interest. Napolitano then let the loan linger unpaid for 20 years. In the first decade of the loan, Napolitano bagged $200,000 in interest payments. Then in 2006, Napolitano lowered the interest rate to 10% and kept drawing interest checks. In the 2008 and 2010 elections, the California Democrat pocketed another $94,245 in interest.
Presently, Schweizer, who appeared Monday morning on CBS Early Show, says the self-loan scheme is legal under congressional rules. The only stipulation is that lawmakers must charge a “commercially reasonable” interest rate on the loans they make to their campaigns–a term of art that is undefined and almost never enforced.
“Napolitano is a longtime member of the House Committee on Natural Resources and the House Transportation Committee, which means that donations from industries in those areas were not only donating to her campaign but also putting money in her pocket,” said Schweizer in Extortion.
The publisher of Schweizer’s book, Houghton Mifflin, says the book contains myriad revelations and never-before-published documents on top Democrats, Republicans, President Barack Obama, and Attorney General Eric Holder.