The biggest scandal involving former House Speaker Dennis Hastert has little to do with the one he faced in the Dirksen U.S. Courthouse in Chicago, where he pleaded not guilty to all charges this week. It has much broader implications than his earmarking some $207 million for a highway project that helped him make a $2 million profit selling land he’d acquired a few months before.
As bad as the rumors swirling around Hastert’s conduct that led to his current legal problems, as bad as his indifference to corruption among his colleagues while he was speaker, perhaps worse was his use of a vehicle known as an Illinois land trust within his profitable land deal. “Under a land trust,” the website of the state’s Department of Financial and Professional Regulation states, “the identity of the real owner is never disclosed to the public.”
For a member of Congress, obligated to file an annual personal financial disclosure listing his assets, the Illinois land trust kept the location of Hastert’s land investment, for all intents and purposes, a secret. Because he did not disclose the name of his trust, one couldn’t find the location of his land in property records. The man who was third in line to the presidency was able to hide details on his biggest investment from the public, including its location and its exact purchase and sales price, or the fact that it was miles away from a road project, the Prairie Parkway, for which he’d personally secured funding.
It took a great deal of spade work, the knowledge of local residents like Prairie Parkway opponent Jan Strasma and the patient record pulling of the Clerk’s Office of Kendall County before Sunlight pieced together the truth. But the former speaker is a petty crook in a world where corrupt officials have misappropriated tens of billions of dollars of national wealth and made use of vehicles even more impenetrable than Illinois land trusts to stash those ill-gotten gains around the world. The real scandal isn’t what Hastert did; it’s that so much U.S. law facilitates what Hastert did, and stands ready to assist others willing to take advantage of the financial secrecy the U.S. offers.
States like Delaware, Nevada and Wyoming offer the wealthy anonymity through limited liability corporations, allowing the true owner of assets or investments to be shielded by a paper entity. One example of this obscuring power was seen in the 2012 election, thanks in part to the Citizens United decision that opened the door to unlimited corporate contributions to politics. An entity called “W Spann LLC,” a Delaware corporation, sprang to life in March 2011 (an attorney specializing in tax planning for the wealthy filed the papers), contributed $1 million six weeks later to Restore Our Future, a super PAC supporting Republican presidential candidate Mitt Romney, and dissolved in July 2011. Investigative reporter Michael Isikoff, who broke the story, was unable to determine much else, including the source of the $1 million that the company contributed. In that case, the ensuing outcry led the donor, Ed Conard, to voluntarily come forward. But will the press and public react the same way if not one, but thousands of LLCs, whose owners are untraceable, contribute to super PACs?
Sadly, it’s not just our politics that are vulnerable. When an entity like Little Rock Trust 225 (the name of Hastert’s land trust) purchases property, we don’t know who the owners are. It could be a U.S. official running an end-run around our personal financial disclosure system. It could be a foreign company, evading U.S. sanctions. It could be a foreign kleptocrat, hiding his wealth on U.S. soil like a pirate of old burying his treasure. With U.S. asset records awash in meaningless names of LLCs, trusts and other pseudonyms that hide the owners of a property, it’s impossible to follow the money. And that’s the real scandal of which Hastert was one small aspect.