FBI probing Rep. Miller’s land sales

The FBI is investigating Rep. Gary Miller (R-Diamond Bar) for a series of land transactions in which he avoided paying capital gains taxes after saying he had been forced to sell under eminent domain in Monrovia and Fontana.

The federal investigation was initiated after The Times reported in August that officials in both cities denied that they had acquired Miller’s property using eminent domain, which enables governments to buy land for certain purposes even if owners do not want to sell.

After a land sale in Monrovia in 2002 and two subsequent sales in Fontana in 2005 and 2006, Miller claimed an exemption under Internal Revenue Code Section 1033, which grants those forced to sell property through eminent domain at least two years to reinvest the profits without paying capital gains taxes.

Miller’s repeated use of the forced-sale exemption has enabled deferment of capital gains taxes through at least 2009.

Dick Singer, a spokesman for Monrovia, said federal agents had interviewed city officials and requested a videotape from a City Council meeting in 2000 cited by The Times in which Miller asked city officials four times to buy his land.

Glen Owens, a Monrovia planning commissioner quoted by The Times, said he was interviewed by two FBI agents in person. “They were asking mostly about the Monrovia deal and what kind of person he was,” Owens said.

Since that time, the FBI has interviewed several other current and former city officials from Monrovia and Fontana, officials said.

The FBI declined to comment Tuesday.

Miller’s spokesman said he had not been contacted by the FBI. “Congressman Miller is tired of all the rumor and innuendo that has been in the press regarding his past real estate transactions,” spokesman Scott Toussaint said in an e-mail to The Times.

The investigation was first reported in Tuesday’s San Gabriel Valley Tribune.

Citizens for Ethics and Responsibility in Washington, a nonpartisan government watchdog group, filed a complaint in August after The Times’ story was published. The complaint asked the IRS to investigate and alleged that Miller had violated federal law by invoking the eminent domain provision to avoid paying taxes.

“It looks like this is not casual; it seems like quite a concerted effort,” said Melanie Sloan, the group’s executive director. “Miller has clearly acted illegally. The idea of running into eminent domain three times is absolutely ludicrous.”

Toussaint said Miller had asked, after The Times’ story in August, that the House Ethics Committee review the land deals and determine whether he had committed any infractions. A review by the committee would be unrelated to the FBI investigation.

“He voluntarily delivered all relevant documents to the Ethics Committee, as well as all newspaper articles on the subject, and asked for an investigation and opinion,” Toussaint said.

When Miller sold 165 acres to the city of Monrovia in 2002, he made more than $10 million, according to a financial disclosure form he filed in Congress.

State and federal taxes would have taken up to 31% out of that profit, but Miller claimed an exemption under Section 1033. He said Monrovia had forced him to sell his land, even though the city bought it from him with state money that specifically prohibited the city from using eminent domain.

He then reinvested some of those profits into land in Fontana and Rancho Cucamonga. When he sold some of the land in Fontana in 2005, again he claimed that he had been forced to sell the land because of eminent domain. When he sold more of the land in 2006, he made the claim a third time.

In Fontana, he asked that the city manager write him a letter saying that eminent domain could be used in the case of his land sale. The city did so but noted that it would have to amend its rules to use eminent domain.

“We do not have the power of eminent domain in that area, and we have no plans of amending the plan to get the power of eminent domain,” Kenneth Hunt, the city manager, told The Times in August. “You’ll have to talk to him about why he asked for a letter.”

Hunt told The Times initially that the city wrote those types of letters regularly.

But when The Times requested copies of all letters mentioning eminent domain, city officials conceded that they had written letters only for Miller and a property owner who owned land near the congressman’s.

City Councilman Frank Scialdone said Tuesday that council members were concerned about the letters and asked Hunt to make sure that he didn’t write letters like that again.

“The whole thing didn’t look right, and we wanted to make sure that we as a city are not in that position again,” Scialdone said. “You will not see letters like that coming from us in the future.”

The Times reported in December that while Miller was urging the city of Monrovia to buy his property, he tried to secure an appointment for one of Monrovia’s City Council members, Robert Hammond, to the National Park System Advisory Board, a prestigious panel that makes policy recommendations. But there were no open positions on the board at the time.

Hammond told The Times in December that he had not been contacted by the FBI. On Tuesday, he did not return calls for comment.

*