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Chris Dodd: A Few Real Estate Deals Among Friends: THE DETAILS FROM DODD
[March 15, 2009]

Chris Dodd: A Few Real Estate Deals Among Friends: THE DETAILS FROM DODD

(Hartford Courant, The (CT) Via Acquire Media NewsEdge) Mar. 15--On a bright day in the late 1980s, a weary Sen. Christopher Dodd stepped off a plane at Shannon Airport, picked up a rental car and drove into the rolling Irish countryside to clear his head of the pressures of Connecticut politics. He rumbled through the green hills of County Galway, decided to cross a rickety causeway onto sparsely populated Inishnee island, and stopped, quite by accident, outside the gates of a beautiful cottage.

"I'm just standing there, just kind of taking it in," Dodd recalled last week. "And this woman comes out of the house -- a full head of white hair, bib overalls on, I'll never forget it. She walks up to the gate, she looks at me, and she says: 'Sen. Dodd, what are you doing here? I'm from Ridgefield, Conn.'" That chance meeting with Rita Beck, a sculptor who spent summers on Inishnee, turned into a friendship that led Beck, years later, to contact Dodd when she had decided to sell. The cottage became available in 1994, and Dodd was interested.

Fifteen years later, critics have raised pointed questions about the financial details of that purchase, and about the possible involvement of a longtime Dodd friend who was convicted of securities fraud -- until Dodd helped him receive a presidential pardon.

The suggestions of wrongdoing -- principally in two recent articles by Courant columnist Kevin Rennie -- have put an uncomfortable spotlight on Dodd at a time when the chair of the Senate Banking Committee already has been battered by reports that he received favorable loan terms from mortgage giant Countrywide Financial.

Dodd and other government officials deemed to be "Friends of Angelo" -- a reference to former Countrywide CEO Angelo Mozilo -- received discounted rates and fees, according to a former Countrywide employee. Dodd, who refinanced two mortgages with Countrywide in 2003, has said that he was unaware of any favorable treatment and that his loans were not out of line with mortgage rates available at the time.

After the Countrywide story broke last June, Dodd spent months deflecting calls that he release documents and fully explain his interaction with the mortgage company. But last week, he consented to a lengthy interview and released documents about all of his real estate deals in hopes of countering the latest political punch.

"I'm not going to make that mistake I did last summer on this stuff," Dodd said. "People are interested and I understand why. ... Look, I want to get beyond this." The records released by Dodd go back 30 years, to his purchase of a small townhouse in Washington for which he received help with the down payment from a family friend who had been tangled in a campaign-finance scandal with Dodd's father.

They include his purchase of a Washington condominium with Edward R. Downe Jr., a millionaire Long Island socialite who later would orchestrate one of the biggest insider trading scams in Wall Street history.

And they cover the cottage, purchased in 1994 after Dodd once again took on a partner, this time a low-profile Kansas City businessman named William Kessinger, whom Dodd had befriended after they were introduced by Downe.

The purchase price for the three-bedroom cottage was $160,000, records show. Dodd said that he contributed $12,000 toward the down payment and that he owned one-third of the cottage, while Kessinger owned two-thirds. Dodd said he brought Kessinger on board in part because, financially, "it would have been tight" to purchase it solo. But he said he did not remember why he and Kessinger did not split the purchase fifty-fifty.

Dodd said Kessinger had visited Ireland several times and had long believed that owning property in the country would be a good investment. "We thought that we would use it occasionally, let family and friends use it and then rent it out," Dodd said.

Downe's signature appears on the land records as a witness, but Dodd said he is not a silent partner in the deal, had no financial role in the purchase and has never stayed at the cottage, although he has visited several times.

Dodd said a couple from Dublin is now renting the cottage for the entire year, although it typically attracts renters only for weekends or during the summer because it does not have a central heating system, relying instead on plug-in electric radiators during the winter.

In 1999, Dodd married Jackie Clegg, and after the birth of their daughter Grace in September 2001, Dodd said he and Clegg began talking about buying Kessinger out.

A 2002 appraisal valued the property at about $190,000 -- which, adjusted for currency fluctuations, was about a 65 percent jump in value over what Dodd and Kessinger had paid eight years earlier. According to the Irish Department of Environment, Heritage and Local Government, the price of existing homes throughout Ireland increased about 150 percent during those years. But Dodd defended the valuation, saying it was an independent appraisal ordered by a bank. He said for most of the time he and Kessinger owned the property, the causeway bridge from the mainland was a one-lane road in disrepair that was ill-equipped for heavy loads, which might explain why property values grew more slowly on the island.

"There were places ... that had a bit of a heyday," Dodd said. "The assumption somehow because it spiked at that point, that this was a consistent climb at every spot all over the place, regardless of what the circumstances were, is just really not the case." Based on the 2002 appraisal, Kessinger's share of the cottage was worth about $127,000, and Dodd said he paid Kessinger the full amount for his share. Dodd said he also used his own money to pay off the existing mortgage -- including Kessinger's share -- which amounted to a gift to Kessinger of more than $50,000."Candidly, our thinking was at the time, Jackie and I: Let's be more conservative on this in case anybody should ever raise a question about whether or not this is somehow an enrichment or taking advantage of the situation," Dodd said.

The appraisal includes a cover sheet giving a value for the property on Jan. 28, 2002, and the determination of Kessinger's share was based on the exchange rate on that day. But the handwritten appraiser's notes are dated "9/07/02" -- likely a reference to July 9 -- and the deal did not close until January 2003. Based on the growing value of the dollar, Kessinger's share of the cottage on those later dates would have been worth between $145,000 and $160,000.

An aide to Dodd said the discrepancy in the dates, and the long time frame between appraisal and closing, were the result of legal delays in completing the transfer, caused by peculiarities in Irish law that make it difficult to resolve fractional ownership of property.

The Irish cottage was not the first property Dodd bought with a friend's help.

Eight years before buying the cottage, Dodd had his eye on a $160,000 condominium in a turn-of-the-century Beaux-Arts building in Kalorama Heights, one of Washington's nicest residential neighborhoods. Then, too, he wasn't sure he could swing the cost, so he turned to Downe, a friend more accustomed to sipping cocktails with Southampton socialites than financing modest condo deals.

Dodd said he met Downe at a dinner party in New York in the late 1970s and they became good friends. By the mid-'80s, both men were divorced, and Dodd had a proposition.

"He came down from time to time. We were friends. I was single at the time. He was single at the time," Dodd said. "It would have been expensive for me to do it on my own. It wasn't the only reason, but [I asked] him if he wanted to kind of go in on it with me." Downe, who had made a fortune in publishing before amassing a vast collection of American art, agreed to cover half the down payment, half the monthly condo fees and half the $128,000 mortgage on the condominium, records released by Dodd show.

The two men seemed unlikely partners. Downe, 57, was known for extravagant parties at his Long Island mansion, hobnobbed on yachts with celebrities and titans of industry, and was about to marry automobile heiress Charlotte Ford, the granddaughter of Henry Ford. The 41-year-old Dodd, meanwhile, was getting by on his Senate salary and -- despite a brief relationship with Bianca Jagger -- was hardly a full-fledged member of the jet set.

Dodd did not pay Downe any rent for using his half of the property, but he did cover utilities and other day-to-day expenses, and, according to a written agreement released by Dodd, Downe had access to the apartment if he visited Washington.

That arrangement passed muster with the Senate Select Committee on Ethics, which ruled that Dodd could exclude the condominium from his financial disclosure forms. "He was an outside board member of Bear Stearns, so that's what provoked the call ... with the ethics committee to inquire about whether this was appropriate," Dodd said.

The condominium had two bedrooms and two baths. Dodd said Downe would use the apartment "from time to time" -- sometimes three or four times in a six-month period, sometimes going six months without a visit.

About a year after the condo purchase, Downe was at his estate in Southampton when a chance conversation sparked the beginning of his epic downfall. Downe at the time was on the board of directors of Kidde Inc., a consumer product company perhaps best known for its fire extinguishers and smoke detectors. In June 1987, according to the Securities and Exchange Commission, Downe heard from Kidde's chief executive that the company was a takeover target.

A takeover bid would likely send the stock price sharply higher, and is just the sort of information corporate insiders are bound by law to keep secret. Instead, the SEC charged, Downe shared the information with his guests that day, in a lapse that cascaded into years of sophisticated transactions in which Downe and his friends made money trading lucrative information they gleaned from the boardroom. The SEC said Downe made millions.

A year or two later, Dodd said, Downe confided that he was the subject of a federal investigation into insider trading. And Dodd said he knew the condo deal had to end.

"Having a relationship financially -- it was obviously not something that I thought was appropriate," Dodd said. "So we severed the relationship financially; did not sever the friendship." Downe also continued to contribute to Dodd's political campaigns.

Dodd had the property appraised, and bought out Downe's share by paying off their joint mortgage and giving Downe a check for about $41,000, according to documents he released.

Dodd covered those costs by taking out a new $180,000 mortgage on the condominium, land records show. And for the first time since his election to Congress 15 years earlier, Dodd lived in a place of his own in D.C.

But that was not the end of his dealings with Downe.

Downe pleaded guilty to securities and tax fraud charges in 1992, and at his sentencing the following year, he avoided jail time, receiving a sentence of three years' probation and an order to perform 3,000 hours of community service.

After the sentencing, Downe received celebratory embraces from supporters in the courtroom -- including Chris Dodd.

"I'm a great believer: You deplore the sin, embrace the sinner," Dodd said last week. "Ed did something wrong. He broke the law and he stood up and [pleaded] guilty. He paid a price. ... I didn't walk away from my friend at a dark moment for him." In 2001, Dodd proved the depth of that friendship by typing a letter on his Senate stationery in the final days of the Clinton presidency.

"Dear Mr. President," Dodd wrote, "I want to tell you about my friend, Ed Downe, and why I believe a Presidential pardon is warranted." Dodd wrote that he and Downe speak almost every day. "He is a very fine person who, through his generosity and kindness, has helped people when there seemed to be no hope," Dodd wrote.

Downe served his community service by teaching writing courses and advising the student newspaper at Long Island University. Dodd wrote that Downe had completed his 3,000 hours years earlier, but continued to volunteer at the school because he found the experience so rewarding.

"Ed made a mistake a number of years ago, for which he has accepted full responsibility," the letter continued. "Over the years, Ed has expressed to me, his family and friends his deep remorse for his actions." The letter was effective. On Jan. 20, 2001, the last day of the Clinton administration, Downe was pardoned and is no longer a convicted felon.

"It's not ancient history but it's been plowed over," Dodd said of the controversy of his seeking Downe's pardon. "This is a guy who was a friend who made a dreadful mistake, paid a price, and showed that he was a reformer and anxious to change his life and did." Dodd said his support for Downe's pardon was covered extensively when he wrote the letter eight years ago. He said his ownership of the cottage has never been a secret. And he said he contacted the Senate's ethics committee before buying the condo with Downe.

"These were pretty transparent. They've been reported widely in the press, particularly the Irish cottage," Dodd said. "It's fairly routine and non-controversial in my mind." But he recognizes that not everyone in the body politic feels the same way. And he knows he's taken a beating in opinion polls.

"It used to be there were political seasons, and I know the Republican National Committee is targeting me and I'm more than familiar with the polling numbers and this stuff hurts," Dodd said.

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