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Businesses linked to McCaskill’s husband get $131 million in federal dollars

A new report from the Kansas City Star sheds further light on just how Claire McCaskill funds her lavish lifestyle today, revealing that businesses owned by her husband, Joseph Shepard, have been awarded more than $131 million in federal subsidies since McCaskill took office.

This is just the latest in a series of stories on McCaskill and her husband that details how they have gamed the system to make themselves even richer during McCaskill’s time in the Senate. Previous reports showed that McCaskill and Shepard made millions from a hedge fund based in the Cayman Islands, a favorite tax haven for the wealthy elite, and utilized controversial conservation easements to take advantage of $2.25 million in tax breaks.

“It sure is good to be the McCaskill family,” said NRSC Spokesman Bob Salera. “From $131 million in federal subsidies to shady Cayman Islands hedge funds, Claire McCaskill has been getting even richer at the expense of taxpayers. McCaskill is supposed to be looking out for Missouri families, but it’s clear she’s been putting her own lavish lifestyle first since she came to Washington.”

In case you missed it…

Businesses linked to McCaskill’s husband get $131 million in federal dollars
Kansas City Star
Kelsey Ryan and Lindsay Wise
July 24, 2018
www.kansascity.com/latest-news/article215234680.html

WASHINGTON – Businesses tied to U.S. Sen. Claire McCaskill’s husband have been awarded more than $131 million in federal subsidies since the Missouri Democrat took office in 2007, an analysis by The Kansas City Star found.

Joseph Shepard’s personal income from his investments in those businesses has grown exponentially during his wife’s two terms in the Senate.

The federal payments don’t go directly into Shepard’s pocket. Most of the money goes toward operating costs for government-subsidized housing projects Shepard is invested in. Those companies then distribute the profits to Shepard and other investors.

In 2006, the year before McCaskill entered the Senate, her husband’s personal income from those investments was between $1,608 and $16,731, according to the senator’s financial disclosure forms.

In 2017, five years into McCaskill’s second term, Shepard personally earned between $365,374 and $1,118,158 from investments in housing projects that received federal subsidies, the disclosure forms show. Disclosure forms only provide ranges of income.

There’s no evidence that McCaskill played any part in directing federal funds to businesses affiliated with her husband.

The senator does not sit on committees that oversee the U.S. Department of Housing and Urban Development or the U.S. Department of Agriculture, the agencies that award affordable housing contracts and loans to developers and pay out the subsidies.

She has voted for some massive government spending bills that would have benefited affordable housing programs, but she also voted against others.

Asked to explain why federal payments to businesses affiliated with her husband — and his share of the profits — went up during her time in office, McCaskill’s campaign responded that the senator has nothing to do with her husband’s business investments or how the money is awarded.

“Her only concern when doing her job in the Senate is what is best for the people of Missouri,” said Meira Bernstein, McCaskill’s campaign spokeswoman.

Bernstein noted that McCaskill’s husband is a limited partner in the vast majority of the housing projects that receive federal funds, meaning that he isn’t responsible for day-to-day operations and has no say in the distribution of profits, which is limited by law.

Shepard’s investment in affordable housing projects dates back to the 1970s, long predating his relationship with McCaskill, who he married in 2002.

The Star analyzed McCaskill’s personal financial disclosure forms for 2006-2017 and cross-referenced them with federal awards data for entities of the same name and federal identification numbers.

The analysis showed that businesses Shepard is invested in are getting more federal awards, a fraction of which Shepard receives as personal income. Projects affiliated with Shepard were awarded $62 million in McCaskill’s first term and $69 million in her second term, for a total of more than $131 million.

Based on the data, it appears that a growing percentage of Shepard’s personal earnings come from new businesses he has invested in that are receiving federal awards, primarily rural rental assistance through the USDA. The federal payments are meant to make up the difference between the rent low-income residents can pay and market rates for comparable housing in the area.

Tony Wyche, a spokesman for Shepard’s company Sugar Creek, declined to pinpoint the exact amounts within those ranges that Shepard earned from his investments in affordable housing projects.

Wyche provided data to show Shepard is far less involved in government housing projects than he was before he met McCaskill in 2001.

The total number of government housing projects that Shepard’s company Sugar Creek listed in 1999 was 285, Wyche said.

Shepard was the general partner in nearly all of the projects he was involved in back then, seeking investors and overseeing the design, construction and daily property management.

As of 2017, Shepard had become a limited partner in most of the 164 housing projects he was involved in, serving only as an investor, according to Wyche.

“Joseph Shepard’s work with federal affordable housing projects has decreased almost 40 percent since he met Claire in 2001, years before she was elected to the United States Senate,” Wyche said in a statement. “He is now a limited partner in the vast majority of these investments, meaning that he has absolutely no say in how the projects are run and any money that he receives is limited by law.”

McCaskill is one of the wealthiest members of Congress, a fact that Republicans are quick to remind voters as McCaskill battles for a third Senate term representing a state President Donald Trump won by nearly 19 percentage points in 2016. GOP-funded ads trying to paint her as out of touch with ordinary Missourians have attacked McCaskill for buying a $2.7 million D.C. condo and for using her husband’s private plane on the campaign trail.

McCaskill, in turn, reminds voters that she worked as a waitress while attending college and law school at the University of Missouri and was a single working mom of three before marrying Shepard.

She and Shepard reported a net worth of between about $31 million and $37.5 million in 2017. That’s grown since Forbes reported their net worth in 2006 as between $13 million and $29 million.

Shepard’s wealth first became a campaign issue when McCaskill ran for Missouri governor in 2004. Her Democratic primary opponent, Bob Holden, filed an ethics complaint that a $875,000 loan from McCaskill’s family to her campaign was really an illegal campaign donation.

McCaskill dismissed the complaint as a cheap shot.

“My husband and I are a team,” she told the St. Louis Post-Dispatch at the time. “We are married, and we share everything — assets, children and a house. The money I’ve loaned to my campaign is my money. My family is supportive of my efforts. Some have implied that the assets of my family don’t belong to me. That notion is pretty archaic.’”

In 2012, McCaskill’s Republican opponent, Todd Akin, accused the senator of a conflict of interest and a breach of trust after the Associated Press reported that that businesses connected to Shepard had received tens of millions in federal subsidies for low-income housing projects during her first five years in office.

Last week, the conservative Club for Growth Action began airing an ad in Missouri attacking Shepard and McCaskill for allegedly using her position in the Senate for financial gain.

The group plans to spend millions to aid Missouri Attorney General Josh Hawley, the GOP’s top recruit to unseat McCaskill.

“While Sen. McCaskill has voted over and over against policies that will help workers and families keep more of their hard-earned money, she and her husband have made millions off of insider deals to secure government contracts and subsidies,” said Jeff Roe, the group’s strategist for Missouri, in a statement.

McCaskill’s campaign said it’s outrageous that Hawley’s backers are trying to distort and demonize Shepard’s business success while celebrating Trump’s business record and wealth.

“It is the definition of hypocrisy,” said Bernstein, McCaskill’s campaign spokeswoman.

The businesses Shepard is invested in are participating in affordable housing programs through HUD and USDA.

The USDA program that provides the bulk of the payments to businesses linked to Shepard provides affordable multi-family rental housing in rural areas by financing projects geared for low-income, elderly and disabled individuals and families as well as domestic farm laborers.

Federal payments go to property owners on behalf of low-income tenants who can’t afford to pay the full rent. To qualify, the projects must have been financed by USDA through guaranteed or direct loans awarded as part of a competitive process.

More than $1.3 billion was budgeted for the agriculture department’s rural rental assistance program in fiscal year 2018.

Under the HUD program, private landlords or developers sign contracts with the agency for one to 20 years and reserve some or all of the units as “affordable.” The subsidy pays a portion of the rent and the tenant pays the rest.

The program paid out approximately $11 billion to building owners across the country last year.

“The subsidy itself is an incentive,” said Brian Sullivan, a HUD spokesman. “If you’re a landlord with a vacancy problem, you don’t get paid when people don’t live in your housing. … It provides a certain amount of certainty for the landlord.”

Tax credits provide another incentive for developers, who can sell the credits. The developers use the money from sales of the credits to build equity in their projects. Investors — often insurance companies or financial institutions — buy the credits to reduce their tax bills.

Having shifted away from developing and managing government-subsidized housing projects, Shepard has in recent years acted as a middleman between developers and investors looking to buy credits.