Catastrophe (20 page)

Despite the voluminous evidence against him, Thomas Dodd did not go quietly. He denied all wrongdoing and at times pointed a finger back at his accusers. Dodd unsuccessfully accused his own employees of forging thirty-nine checks written to a D.C. liquor store. He sued former employees for invasion of privacy (he lost) and in a number of cases tried to blame his own improper spending of campaign funds on them! It was not a pretty picture.

Surprisingly, Thomas Dodd never actually denied he had received the money in question. His unusual defense was that the donors to the testimonial receptions actually thought they were making tax-free gifts to him, not political contributions to his campaign. This was contradicted by the text in the written invitations and the understanding of most of the organizers.

Apparently Senator Thomas Dodd had large debts—including an overdue tax bill of about $13,000 (about $89,000 in 2009 dollars). To put it into perspective, consider that the annual salary for senators from 1955 to 1965 was $22,000.
²⁸²
In 1965, it increased to $30,000.
²⁸³
So in 1963 and 1964 Dodd owed more than half of his annual salary in back taxes.

According to Pearson and Anderson, Dodd was frantically trying to raise money to pay back his personal creditors—as well as the IRS—and was willing to trade political favors for some of the loans he received. Pearson and Anderson described his relationship with one local businessman:

Pearson and Anderson further described the symbiotic Dodd-Bomstein connection:

In June 1967, after the investigating committee’s unanimous ruling, the U.S. Senate voted to censure Senator Thomas Dodd by a vote of 94–5. Only four of his colleagues joined him in voting against the measure.

But that was not the end of the Dodd family relationship with Mr. Bomstein.

THE DODD HOUSE ON E STREET

When Chris Dodd came to Washington with his first wife, Susan Mooney Dodd, they bought a town house at 508 E Street, SE.

But there was something unusual about the Dodds’ acquisition of the house on E Street. A review of the transaction on the D.C. land records shows that the Dodds had two surprising partners in the sale. Guess who? A blast from the past. The names of Sanford Bomstein and his wife, Doris Bomstein, appear on the deed filed on the property records in Washington.

What was Chris Dodd thinking? Only a few years after his father had been mortified by the censure by his Senate colleagues—effectively destroyed both personally and politically—his son involved himself in a financial deal with a man who had shown just how far he would go to suck up to a politician who might help him. Bomstein had been a key player in the evidence in the Dodd case. There were published reports about Bomstein’s loans, fund-raising, and interest in federal legislation before Tom Dodd’s subcommittee.

With all that baggage in tow, wouldn’t anyone in Chris Dodd’s position run away screaming from Bomstein? Even without it, any reasonable member of Congress would turn down a handout from the likes of Bomstein—out of ethics, caution, or common sense. Yet somehow Chris Dodd ended up in partnership with Mr. and Mrs. Bomstein.

Dodd has disclosed no particulars about this unconventional arrangement with his father’s former chum, who had a keen interest in congressional actions about the drinking age in D.C. He recently told the
Hartford Courant
that he had “received help in the down payment from a family friend who had been tangled in a campaign-finance scandal with Dodd’s father.”
²⁸⁶
That appears to be the first time that Dodd admitted that he was given financial help on his first D.C. house.

In fact, Dodd was not legally required to disclose any information about his personal residences in the annual financial disclosures filed in the House and Senate. That’s one of the serious loopholes in the disclosure requirements for members of Congress: they can keep their personal residence real estate transactions to themselves and don’t have to account for them. That’s a big mistake. The logic behind it seems to be that a home is not a business investment and need not be disclosed. But the people of Connecticut had a right to know that Chris Dodd was accepting the largesse of a character like Sanford Bomstein. Dodd’s conduct regarding this and another property in D.C. show just how badly reform is needed in that area. All members of Congress should be required to disclose information about their ownership and partners in any property, regardless of whether they live in it.

Still Dodd went ahead with the dubious partnership, confident that he could keep it quiet—and for more than thirty years no one reported on it. We don’t know exactly how the Bomstein deal was structured, but from
what we know about Dodd’s subsequent property partnerships, it’s fair to assume that Bomstein didn’t make any money for the “help” he gave Dodd.

NO DOWN(E) PAYMENT

By 1986, it was time for Dodd to move on. Maybe he wanted a nicer place. Maybe Bomstein wanted to get out of the town house deal. We may never find out what happened. In any event, several months after the release on the E Street property was filed, Dodd moved into yet another unconventional financial partnership. On May 2, 1986, Senator Chris Dodd and his friend and benefactor, the businessman Edward R. Downe, Jr., jointly purchased a $180,000, two-bedroom, two-bath condominium apartment in an elegant prewar building at 2153 California Avenue in the tony Kalorama Park area of Washington, D.C. According to information recently disclosed by Senator Dodd, he approached Ed Downe about a joint investment:

Once more Dodd was living off other people’s money. Why? Because “it would have been expensive to do it on my own.”
²⁸⁸

QUESTION: What do most people do when they can’t afford to buy a house? When it would be expensive to do it on their own?

ANSWER: They don’t buy it. They suck it up and find a place they can afford.

Unless they’re a senator, in which case they get other people to pay for it.

Dodd apparently turned to the right person for his handout. According to the
New York Times
, “Mr. Downe doled out loans and gifts almost
willy-nilly, sometimes getting himself into binds…. Friends confirm that Mr. Downe did spray around a lot of his own money. Almost anyone with a hard-luck case would get a loan, not always repaying it.”
²⁸⁹

It seems that Downe was made for Dodd! He didn’t deny his influential friend’s request to pick up half the tab for his D.C. home. Dodd now claims that he and Downe had an agreement that allowed Downe to use the apartment in D.C. whenever he was in Washington. Dodd mentioned that they were both divorced at the time, suggesting that they liked to go out together. But anyone who has ever known Downe or seen him in his own setting, would seriously doubt that Downe would have ever wanted to crash at Dodd’s apartment. The penthouse at the Ritz-Carlton or the Four Seasons would have been more his style. And Downe’s carefree bachelor days with Dodd hardly overlapped the purchase of the apartment. Downe married Charlotte Ford just four months later. With their twin apartments on Sutton Place in Manhattan and their twin mansions in Southampton, the Downe-Fords didn’t need Dodd’s hospitality. And given his Democratic politics and involvement in the New York City art world and social and philanthropic scene, the Reagan-Bush Washington of the late 1980s probably wasn’t high on Downe’s travel list. So Dodd would have had the run of the apartment.

What’s truly amazing is that Dodd seems not to have seen any problem with such an unorthodox arrangement—a U.S. senator living off a successful businessman who had serious financial interests that were regulated by the federal government. Downe was a wealthy entrepreneur who, in 1985, began to sit on the boards of both the investment banking firm Bear Sterns and the Kidde Corporation. Dodd has been a recipient of big bucks from Bear Sterns, receiving more than $350,000 since 1989.
²⁹⁰
In the summer of 1992, Downe pled guilty to federal charges stemming from insider trading based on the confidential information that he had access to as a director. He was accused of regularly passing along information he learned in board meetings to a large number of family and friends, who also traded on his advice.

Dodd claims he “contacted” the Senate Ethics Committee before he made the deal with Downe and was told that he did not have to disclose it. That is correct—again, by Senate rules, Dodd had no obligation to disclose the details of his personal residence—but that’s not the same as saying that
the Ethics Committee affirmatively approved the Dodd-Downe deal. (That would be hard to imagine, even for that useless, self-serving body.) And Dodd certainly knew himself that this was not an appropriate deal to make. Regardless of whether the exact language of the rules required him to disclose the transaction, he should have done so. His partner in the property was not a spouse or relative but a well-connected businessman. He should have disclosed it. Even Chris Dodd could figure that out. (By the way, did Dodd also contact the House Ethics Committee before he made the deal with Bomstein on his first house?)

A few years after the purchase, Downe told Dodd he was under federal investigation for insider trading. Once he learned that, Dodd claims, he terminated the financial relationship. He told the
Hartford Courant:

Dodd claims that in 1990, he took out a new mortgage for $180,000 and paid Downe $41,000 for his share of the expenses.
²⁹²
End of story.

His salary in 1986, when he purchased half of the D.C. apartment valued at $180,000, was only $75,000. He also had $194,000 in mortgages on his home in charming East Haddam, Connecticut (which weren’t subject to disclosure either).
²⁹³
That’s $284,000 in mortgage debt. Assuming that Dodd was making a take-home salary of $50,000, he couldn’t have had much left after paying the mortgages, condo fees, insurance, and taxes.

Downe, of course, made nothing on the four-year investment. Dodd, on the other hand, later sold the property for a substantial profit—but doesn’t seem to have shared it with Downe.

But Dodd gave as good as he got, maybe even better. Years later, he managed to save Downe from the consequences of what turned out to be major crimes. That was worth a lot more than anything Downe could have given Dodd.