An Election-Eve Corruption Story

The scandal of U.S. Rep. James Moran is a civics lesson in abuse of power.


Mark Twain famously quipped that America has no indigenous criminal class, save Congress. That's certainly been my personal experience. Jim McDermott (D-WA), who trafficked in an illegally-obtained recording of his political opponents' cell phone conversation, was my guy in Washington when I lived in the other Washington. And when I lived just over the Potomac from DC, it was Rep. Jim Moran (D) who looked after my interests.

By many accounts the last couple of years have been tough on Moran. In June 1999, his wife called the cops on him during an argument in which she claims the former boxer grabbed her. Moran, who told police he was only trying to restrain his wife, avoided arrest and no charges were ultimately filed in criminal court. But his wife filed for divorce the following day. That's when the real trouble began.

Divorce documents showed that poor Jim, while not technically poor on his annual congressional salary of $136,700, was in fact broke. Although he was a stockbroker for the seven years before he came come to Congress in 1990, the man who now sits on the Budget and Appropriations committees has had problems in the financial markets. In 1995 and 1996, he lost more than $120,000 trading options and futures contracts. After disastrous trades that cost the congressman $75,000 in 1996, he sold his car. He didn't walk, bike, or metro to work. Instead, his campaign leased him an automobile, a nice trick.

Perhaps it was the stress of being in the top 5 percent of income earners, yet broke, that caused him to freak out while visiting an after-school center in Alexandria, Virginia last April. Moran, at this time driving a 1999 Toyota Avalon paid for with campaign contributions, was accused of inappropriately handling an eight-year- old, who he collared and brought to justice after the little tyke tried to carjack Moran. Moran said he feared the bulge in the boy's pocket was a gun—how was he to know it was actually a baby bottle full of candy?—and that the kid threatened to shoot him if Moran didn't hand over the car keys. Moran challenged the child's parenting in the press. The kid's mom challenged Moran's judgment.

But by far the smelliest odor to emerge from this so-called public servant was captured by the Washington Post in a front-page story on October 31. Five days before signing on in June of 1999 to co-sponsor an ultimately unsuccessful bill to extend Schering-Plough Corp.'s patent on Claritin, he took an unsecured $25,000 loan from Terry Lierman, an outside lobbyist for the company. Lierman loaned his longtime friend the dough at 8 percent. The note set no repayment schedule, but it was callable anytime, effectively making Moran a puppet on Lierman's string.

"He'd be unlikely to get those terms at a bank," Keith Leggett, senior economist at the American Bankers Association told the Post. At the time, banks were making similar loans at 12.5 percent. No matter. $25,000 is chump change to Lierman, who's currently running for Congress in Maryland. In 1999, he pulled $1.2 million in salary from the lobbing firm he founded. And the patent extension on the more than $1-a-pop pill that makes life livable in allergy season, meant big bucks to Lierman's client– specifically, $7.3 billion, according to a University of Minnesota study.

Moran, who defends the loan even as he promises to pay it back with yet more money borrowed from family members, obviously wasn't proud of it at the time. At least he wasn't proud enough to it to clear it through the Committee on Standards of Official Conduct, a house requirement for gifts of more than $250.

House rules allow members to take personal loans, so long as they are "on commercially reasonable terms, including requirements for repayment and a reasonable rate of interest." It's doubtful if Moran's loan met either standard. And members are not allowed to take gifts "in return for being influenced in the performance of an official act."

Lierman's loan to Moran seems like a gift, at least something unavailable to ordinary Americans who don't pull the levers of power. (Next time you're dead broke and maxed out on credit cards in the middle of an expensive divorce, try getting a loan for 4.5 percent below market rates from a legitimate institution.) Moran seemed to have exhausted legitimate resources, having already refinanced his two homes and run his credit card balances up to $45,000. Heck, he had even sold his car. As for the influence, Moran says Lierman never lobbied him on the Claritin bill. Lierman told the Post, "[I] probably did lobby Jim," on the Claritin bill, but he denied there was any connection to the loan. At any rate, on July 23, Moran sent a letter to his Democratic colleagues seeking support for the bill.

Official outrage of money in politics is usually directed at the campaign finance system, in which private interests finance much political advocacy. Sen. John McCain likes to say it has a corrupting influence. McCain's adversaries have responded that you can't have corruption without corrupt people, and asked McCain to name one. Well he certainly can now. But like Rostenkowski's stamp graft, the massive interest-free bank overdrafts at the House bank, and former House speaker Jim Wright's (D-Texas) book deal, the corruption isn't over campaign finance, but personal finance.

Despite the negative press, Moran is on a glide path to reelection, with his Republican Party, Green Party, and Libertarian Party challengers unlikely to capitalize on his latest scandal. Lierman is more likely to pay a political price by losing his close race against Rep. Connie Morella (R).

At least the sordid spectacle allows Americans to see how things often work inside the beltway, where the folks running the country have a hard time getting by on $137,000 a year but make up for it with a little help from their friends—and their power.