Photo: Michael Reynolds

By: Brody Mullins, Wall Street Journal, 12/13/15

WASHINGTON—Sen. Bob Corker failed to properly disclose millions of dollars in income from real estate, hedge funds and other investments since entering the Senate in 2007, according to new financial reports filed by the Tennessee Republican.

Mr. Corker late Friday filed a series of amendments showing that his personal financial reports as originally filed included dozens of errors and omissions. The new filings came after The Wall Street Journal asked the senator’s office about some irregularities in his prior financial reports.

The senator is the third-ranking Republican on the Senate Banking Committee, which oversees the real-estate and financial-services sectors.

The new forms show that Mr. Corker had failed to properly disclose at least $2 million in income from investments in three small hedge funds based in his home state. He also didn’t properly report millions of dollars in income from commercial real-estate investments due to an accounting error. And he didn’t disclose millions of dollars in other assets and income from other financial transactions.

A letter sent to the secretary of the Senate along with the new financial reports acknowledged that the senator’s previous reports didn’t comply with Senate rules.

“I am extremely disappointed in the filing errors that were made in earlier financial disclosure reports,” Mr. Corker said in a statement to the Journal. After the Journal raised questions about the prior reports, Mr. Corker hired an accounting firm to review all of his transactions.

“After completing a full, third-party review, we have corrected this oversight,” Mr. Corker said in his statement.

Under ethics rules for Congress, lawmakers are allowed to invest in just about anything, as long as they properly disclose their personal investments to the public. The purpose of the rules is to allow the public to determine whether a lawmaker has a conflict of interest. The rules don’t prevent members of Congress from voting on legislation that may affect their personal finances.

Senators often file amendments to correct small mistakes and oversights in their financial-disclosure forms, but it is unusual for a member of Congress to amend all of their financial reports in one sweep.

There are no penalties for filing amendments, in part because Congress doesn’t want to punish lawmakers for fixing prior mistakes.

“This is not a situation calling for punishment or admonition by the Ethics Committee,” said Robert Walker, a former chief counsel for the Senate ethics panel. However, the committee could use the episode as a “teaching moment” for lawmakers to “make sure they fully understand these requirements before filing their annual forms,” he said.

Others say there should be some punishment for filing inaccurate financial reports.

“You can’t just disclose once you get caught,” said Anne Weismann, president of the Campaign for Accountability, a nonpartisan organization in Washington that seeks tougher ethics rules. Filing new financial reports “doesn’t change the fact that he failed to disclose properly the first time,” she said.

Ms. Weismann said she would likely file an ethics complaint against Mr. Corker. She had previously filed a complaint against the senator, asking the ethics panel to review his stock trading in a Chattanooga-based real-estate investment fund. It is unclear if congressional investigators looked into her complaint. Mr. Corker worked with the ethics committee to prepare his amendments, his office said.

In several instances, Mr. Corker failed to properly disclose investments in and income from the three hedge funds in Tennessee.

His report for 2014 didn’t include a gain of between $304,000 and $1.4 million in hedge fund Gerber/Taylor.

In 2013, he failed to disclose a gain of between $100,001 and $1 million in hedge fund TSW II. And in 2012, he made a gain of $1.2 million in Pointer (QP) LP, though his previous statement reported income of $100,001 to $1 million from the hedge fund.

The amendments also show that he failed to disclose a 2014 investment in Gerber/Taylor of between $500,001 and $1 million and a 2013 investment in Pointer of between $1 million and $5 million.

In one instance, Mr. Corker significantly overreported income from an investment.

The new financial forms indicate that Mr. Corker was using an incorrect methodology to account for annual gains from the hedge funds. Mr. Corker’s office said the income was properly reported when he sold the assets.

The senator also underreported rental income from his commercial real-estate investments in Corker Properties, a company he founded years before being elected to the Senate. The forms show he reported his investment income after expenses, though Senate rules require lawmakers to disclose gross income before expenses are paid.

As a result of the accounting error, Mr. Corker’s new forms show additional income of at least $3.8 million between 2007 and 2014 from his commercial real-estate holdings.

The Journal’s calculations were made using a very conservative methodology using the low end of the numerical ranges in which senators are required to disclose their finances. The actual numbers are likely higher.