Health and Science

Trump's top health-care nominee Rep. Tom Price omitted information on ethics probe, tax payments from disclosure questionnaire

Rep. Tom Price (R-GA) listens to opening remarks prior to testifying before a Senate Finance Committee confirmation hearing on his nomination to be Health and Human Services secretary on Capitol Hill in Washington, U.S., January 24, 2017.
Carlos Barria | Reuters

President Donald Trump's nominee to head the federal health department failed to disclose that he had been the subject of a congressional ethics probe, had made late tax payments and had claimed property depreciations on his taxes to which he was not entitled, according to a Senate staff memo.

The memo about Rep. Tom Price, R-Ga., also said he had not accounted for purchases of shares in a small Australian pharmaceutical company on an ethics disclosure form and that he undervalued the shares on another questionnaire.

The memo was submitted to Senate Finance Committee members on Monday, a day before Price appeared before the committee for a hearing on his nomination as secretary of the Health and Human Services Department.

Price was already under fire from Senate Democrats for his extensive trading in health-care stocks, including Innate Immunotherapeutics, the Australian biotech company.

The memo, obtained by CNBC on Tuesday and first reported by CNN, said Finance Committee staff reviewed Price's answers to a questionnaire submitted to the panel, his tax returns for 2013, 2014 and 2015, and financial disclosure statements.

The memo said that when Price was asked if he had "ever been the subject of a complaint or been investigated, disciplined, or otherwise called for breach of ethics for unprofessional conduct" by a court, agency, professional association, disciplinary committee or other professional group, Price responded "No."

But in 2010, the Office of Congressional Ethics, which is an independent office of the House of Representatives, "conducted an investigation into Dr. Price's 2009 fundraising activities," according to the memo.

The committee voted 4-0, with one abstention, to refer the case to the House Ethics Committee. After doing a second investigation, that committee "found no wrongdoing," the memo said.

Price told Senate staff, when asked about the omission, that "it was an inadvertent omission and that the majority of activities investigated related to his authorized campaign committee, rather than him personally," according to the memo.

Separately, the memo said Price bought two blocks of shares in Innate Immunotherapeutics over the past two years: a relatively small tranche in 2015, and a larger tranche of more than 400,000 shares last August, in a private placement open to so-called sophisticated investors.

Price in a filing late last month valued the first block of shares at $10,000 "at the time of the purchase." But at the actual time of that filing, the shares had a market value $15,000 to $50,000, according to the memo.

The memo also noted that Price had reported in disclosure documents the second block of shares he had purchased were valued $50,000 to $100,000, "which was based upon the purchase price."

But Senate staff wrote that an analysis done by multiplying the number of shares by the market price on Dec. 20, 2016, "demonstrates a value higher than that reported by the nominee."

Price said the amounts that he had reported to the committee "were a good faith valuation." But he "agreed to recalculate the value of the shares based on the market value at the time the Committee Questionnaire was completed." The revised value of the second tranche of shares alone was was $100,000 to $250,000 at the time of the disclosure filing, according to the memo.

Price and the staff also agreed that the tranche of more than 400,000 shares had not been accounted for on an Office of Government Ethics form, according to the memo.

Price "noted that is is unclear how information related to his holding in this stock was misstated on the published form," and "agreed to contact OGE to correct the form," the memo said.

When asked on the committee questionnaire if he had paid "all Federal, State, local, and other taxes when due for the past 10 years," Price answered "yes," according to the memo.

But tax records from Washington and Nashville, Tennessee, where Price owns property, that were reviewed by the committee led staff to determine "late tax payments had been made in relation to rental properties owned by Dr. Price, totaling $1,583.45 for late payments made over the past seven years."

When asked to explain that omission on his questionnaire, Price said that regarding the D.C. property, the "late fees and penalties" were due to "not receiving timely property tax notices."

Regarding the Tennessee property, Price "noted that notices regarding property taxes for this rental property ... were either not being received or being wrongly mailed to the tenant at the property and not reaching the nominee and his spouse," according to the memo.

The memo goes on to say that "taxpayers who own rental property are generally allowed to deduct depreciation expenses associated with the wear and tear of those buildings." But, the memo noted, "Taxpayers are not, however, allowed to include the land in the depreciable amount."

The memo says that Price, for his rental condominiums in D.C. and Nashville, "claimed depreciation expenses associated with those properties for years 2013, 2014, and 2015."

"It appears that these values included depreciation for the value of the land," the memo said. "According to property tax records, the land value of Washington, D.C., condominium was listed at $95,640, and the land value of his Nashville condominium was listed as $30,000."

"Under current tax rules, these values are not allowable for depreciation expenses," the memo said.

When committee staff asked Price for clarification. his accountant "stated that he had taken the position that the land had a fair market value of zero."

"However, given the lack of another valuation besides the property tax assessments, Dr. Price has committed to address the discrepancy by filing a Form 3115 to adjust the depreciation and account for the improper deductions on his 2016 tax returns, though adjustments may be spread out over four years," the memo said.