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Floor Speech
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Mr. WHITEHOUSE. Madam President, let me start by thanking our Finance Committee chairman, Chairman Wyden, for his strong leadership. Chairman Wyden was able to secure the cooperation of the wealthy donor who gave Justice Thomas the $\1/4\ million-plus RV loan. The chairman doggedly followed the facts to get the truth for the American people, which takes guts, particularly when you consider the many special interests rooting for this investigation to go away.
And while I am thanking the chairman, let me also thank Chairman Durbin for his persistent and dogged pursuit of the truth through the Judiciary Committee. Both the Judiciary and Finance Committees are working to get to the bottom of this.
Keep in mind, in all the ethics mess engulfing Justice Thomas, that for every ethics issue, there is also likely a tax issue; perhaps, two sides of the same coin. If a Justice isn't reporting income on his legally required financial disclosure, there is a good chance that something is amiss with his tax reporting as well.
When a Justice receives something of value from a benefactor, the presumption is that it needs to be disclosed under the ethics law either as income or as a gift. Generally speaking, if it is income, the Justice must also report it as income for income tax purposes; and if it is a gift, the donor needs to report it for gift tax purposes--which is why when you are looking at possible ethics violations in situations like this, it is important to know if that income showed up on the tax side or if that gift report showed up on the tax side. That is why Chairman Wyden's leadership here is so essential.
If this went unreported, that could be a tax law violation. Again, if it is a gift, the Justice needs to disclose it under the ethics law unless it falls under a narrow definition for ``personal hospitality''--spending Christmas with your in-laws, for instance, or going on a trip with your college roommates. So either way, the tax question becomes for donors, for gifts, did the benefactor or did the donor report it for gift tax purposes? So you have the income tax reporting issue, the gift tax reporting issue. And then you have a third issue, which is that these tax filings can also test the veracity of what Justices claim.
Justices Thomas and Alito claim they didn't have to report free jet and yacht travel gifted by billionaires because those gifts, they claimed, were personal hospitality. There were no college roommates or in-laws involved. It is a heck of a stretch to call this personal hospitality. But one of the ways you could test whether it is personal hospitality would be by looking at how the donor of the hospitality treated it on their taxes. It would be a pretty good tell that all that hospitality those Justices received was not so personal if the yacht and jet travel gifted to Justices Thomas and Alito was written off by these billionaires as a tax expense--as a business expense. So there is a lot to be learned from tax filing.
Two other reminders as we go through this. One, it is a crime. It is a crime under 18 U.S. Code section 1001 to file a false sworn statement with the Federal Government. Both judicial disclosures and tax filings are filed under oath.
No. 2, the law requires the Judicial Conference, if there is any question about whether an improper judicial disclosure filing might have been willful, to refer the question of willfulness to the Attorney General for investigation. It is not under the law of the Judicial Conference's job to decide the question of willfulness; it is only to decide if there is a question of willfulness and then refer that to the Attorney General for investigation.
So this can get serious fast, which brings us to Justice Thomas and his RV. When it comes to ethics requirements, there is no question about what the law required here. If part of Justice Thomas's debt was forgiven, he had to report it. The state of the facts based on the documents the Finance Committee has obtained and reviewed is that Justice Thomas never paid back a dollar of principal on $\1/4\ million loan and that the donor long ago stopped collecting even interest on that loan.
So let's take a look at the law. Justice Thomas likely didn't have to report the loan itself. Justices don't need to report loans secured by a personal vehicle as long as the value of the loan isn't worth more than the vehicle itself.
If Justice Thomas put up the RV as collateral for his loan and didn't obtain more money than the RV was worth, there was no need for him to disclose the loan. But all that changes if any part of the loan was forgiven later on. As the chairman has said, when you collect not $1 of principal and stop collecting interest, that sure looks like forgiveness of a loan. And a loan you don't pay back is a form of income.
The law requires officials to disclose any income they receive outside of their government salaries, which makes sense if you are trying to expose or prevent corruption. Under the law, if you receive more than $200 of income from any one person in a year, you have to disclose that.
Here are the regulations on financial disclosure. These are regs adopted pursuant to law, and they say that income ``includes but is not limited to'' income from ``discharge of indebtedness.'' And down here, it further says that you must report ``discharge of indebtedness.''
And if you go to the Tax Code--specifically 26 U.S. Code, section 21, which defines income for tax purposes, subsection 11(a) describes that ``income from discharge of indebtedness counts as income.'' Income from discharge of indebtedness--it is the identical language in the Tax Code and in the judicial reporting regulations.
So a loan whose principal is not repaid is reportable income both under judicial ethics law and under tax law. And the law is crystal clear on this point.
Even Justices are told what the law is on this point. So if you go to the ``Filing Instructions for Judicial Officers''--this is what the judge gets that tells them how to comply with their filing requirements regarding these disclosures. Here is what it tells them:
Income . . . The disclosure of the gross amount and the type of income--dividends, rent, interest, or income from discharge of indebtedness--is required.
Disclosure of income from discharge of indebtedness is required.
There is nothing very subtle or complicated about that. It couldn't be more straightforward.
If Justice Thomas failed to report a loan that was no longer being collected with a big balance still due and hence was, as a practical matter, forgiven, he likely violated these requirements.
If he failed to file his taxes accordingly, he also likely violated our tax laws. Either of these--either the tax filing or the filing under the judicial disclosure rules--could amount to a false statement under the Criminal Code.
In the first instance, as to the judicial disclosure filings, the law requires the Judicial Conference to determine if there is reason to believe that Justice Thomas's violation may have been willful, in which case it has a legal obligation to report him to the Attorney General for further investigation to settle the question of willfulness.
I have asked the Judicial Conference to consider exactly these facts, and I hope they will do so. It looks like they are. As they do so, here are some things they should consider:
First, this is not Justice Thomas's first brush with this law. A previous episode of yacht and jet travel gifts to him from Harlan Crow actually went to the Judicial Conference for investigation years ago.
In my subcommittee on the Judiciary Committee, we held a hearing about this with a judge who served on the Judicial Conference at the time and could relate to us what transpired back then with the Crow to Thomas yacht and jet travel undisclosed gifts.
That episode I would describe as a decent burial, but it is not clear now that, with Thomas back as a repeat offender with the same types of gifts from the same billionaire, that he will get the same courtesies from his fellow judges as he did in episode one of Crow to Thomas yacht and jet travel gifts. Indeed, the latest report from the Judicial Conference--they put out two reports a year. This is their report of proceedings for this past fall; i.e., this is their most recent report of proceedings, dated September 12 of last year. It has this rather Delphic sentence in it:
The Committee was also updated on the status of the ongoing review of public written allegations of errors or omissions in a filer's financial disclosure reports that were referred to it since the Conference's last session.
I don't know of any other judge or Justice who has received public written allegations of errors or omissions in that filer's financial disclosure reports other than Justice Thomas. So although there is no name mentioned here, it looks very much like the Thomas investigation is alive and well in the Judicial Conference. If they should determine that there is a question of willfulness in his failure to file, particularly to the extent that it may involve similar failures in tax filings, it is their legal obligation to present that question to the Attorney General.
So it appears that the matter remains under active review, and I would conclude by saying that this is to be continued.
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