The US supreme court justice Clarence Thomas received a “sweetheart deal” to borrow more than $267,000 to buy a luxury motorhome, a Prevost Marathon Le Mirage XL, a Senate committee found.
The existence of the $267,230 loan, made by the businessman Anthony Welters in 1999 and forgiven in 2008, was first reported by the New York Times.
Yesterday, the Times quoted Michael Hamersley, a tax lawyer and congressional expert witness, as saying: “‘This was, in short, a sweetheart deal’ that made no logical sense from a business perspective”.
(loan, that was forgiven? That's simply avoiding the gift tax, and the legalities of gifts to judges)
The Senate finance committee said it has now seen documents that showed an annual interest rate of 7.5% and only annual interest payments of $20,042. The committee also said it had seen a note from Thomas promising to abide by the terms.
“None of the documents reviewed by committee staff indicated that Thomas ever made payments to Welters in excess of the annual interest on the loan,” the panel said.
As described by the Times, when the loan came due, in 2004, Welters granted an extension, then, in late 2008, Mr Welters simply forgave the balance of the loan, according to the committee’s report.
A contemporaneous note, the committee said, showed Welters saying Thomas’s “interest only” payments exceeded the value of the RV. But evidence did not back up this claim, with Welters having given investigators only one copy of a canceled check from Thomas, for the annual interest amount. (paying about 8 years, at 20k, leaves about 100k in debt forgiveness)
Hamersley said the Internal Revenue Service would treat any such gift as taxable income.
Ron Wyden, the Democratic chair of the Senate finance committee, said: “Now we know that Justice Thomas had up to $267,230 in debt forgiven and never reported it on his ethics forms.