McCAIN CAMPAIGN RELEASES NEW TV AND RADIO ADS: “WASHINGTON LOBBYIST”

FOR IMMEDIATE RELEASE:
Contact: Brian Rogers
Tuesday, June 8, 2010
(602) 604-2010

McCAIN CAMPAIGN RELEASES NEW TV AND RADIO ADS: “WASHINGTON LOBBYIST”

Phoenix, AZ – U.S. Senator John McCain’s re-election campaign today released new television and radio ads, both called “Washington Lobbyist.” The ads detail how after Arizonans voted Congressman J.D. Hayworth out of office in 2006 – in part because of his close ties to convicted felon lobbyist Jack Abramoff – Hayworth became a professional lobbyist himself, earning thousands of dollars to lobby on behalf of a Florida corporation.


**Watch the new McCain campaign television ad here**

**Listen to the new McCain campaign radio ad here**

Congressman Hayworth apparently couldn’t wait to launch his lobbying career, registering with the federal government in February 2008, just one month after his mandatory year-long ban on lobbying as a former member of Congress expired. Hayworth registered to lobby the U.S. House of Representatives on tax issues, the very
issue set he worked closely on as a member of the House Ways and Means Committee from 1997 to 2006.

While the exact details of Congressman Hayworth’s lobbying activities are still cloaked in secrecy, what is known is that Hayworth’s client, an estate planning firm called the Wealth Transfer Group, has been fighting to keep a dubious tax patent scheme. The scheme allows the company to force anyone in the country seeking to use a certain tax-saving technique to exercise one of three options:

(1) hire the Wealth Transfer Group,

(2) pay the company a fee to use the technique, or

(3) pay higher taxes to the government. Legislation has been proposed in Congress that would force the company to abandon the scheme, though none has passed to this date.

Upon release of the new television and radio ads, McCain 2010 Communications Director Brian Rogers released the following statement:

“It is stunning that Congressman Hayworth would register as a Washington lobbyist after Arizonans voted him out of office in part because of his close ties to another lobbyist – convicted felon Jack Abramoff, who is currently serving time in federal prison.
Congressman Hayworth says he’s an outsider, but a professional registered lobbyist is as inside Washington as it gets.”

– McCain 2010 Communications Director Brian Rogers

FACT CHECK: McCAIN TV AND RADIO ADS, “WASHINGTON LOBBYIST”

J.D. Hayworth Registered To Lobby The U.S. House Of Representatives In February 2008, And Earned $10,000 That Year Lobbying On Behalf Of The Wealth Transfer Group:
In February 2008, J.D. Hayworth Registered To Lobby On Behalf Of The Wealth Transfer Group Of Altamonte Springs, Florida. (J.D. Hayworth, Lobbying Registration, http://soprweb.senate.gov, Filed 2/7/08)

View Hayworth’s 2008 Lobbying Registration Document: http://www.johnmccain.com/images/uploads/lobbying_registration.pdf

Hayworth’s Registration Forms Indicated He Would Lobby On Tax And Copyright/Patent/Trademark Issues. (J.D. Hayworth, Lobbying Registration, http://soprweb.senate.gov, Filed 2/7/08)

During His Time In Congress, Hayworth Worked Closely On Tax Issues As A Member Of The House Ways And Means Committee From 1997 To 2006. (House Ways and Means Committee Website, http://waysandmeans.house.gov, Accessed 5/9/10)

In The First Quarter Of 2008, Hayworth Earned $10,000 Lobbying The U.S. House Of Representatives On Behalf Of The Wealth Transfer Group. (J.D. Hayworth, Lobbying Report, http://soprweb.senate.gov, Filed 4/18/08)

View Hayworth’s First Quarter 2008 Lobbying Report Showing $10,000 Payment For Lobbying The House For The Wealth Transfer Group: http://www.johnmccain.com/images/uploads/lobbying_payment.pdf

Hayworth Registered As A Washington Lobbyist Just One Month After His Mandatory One-Year Lobbying Ban Expired:

Former Members Of Congress Must Wait One Year After Leaving The House To Become Lobbyists. “Under an ethics law passed last year, the House and Senate for the first time must list the names of departing staffers earning $127,000 or more per year. … The new ethics law extended the lobbying ban for departing senators to two years but left it unchanged at one year for House members.” (Matt Kelley, “Third Of Top Aides Become Lobbyists,” USA Today, 12/26/08)

Hayworth’s Last Day As A Member Of Congress Was January 3, 2007. “HAYWORTH, John D., Jr., a Representative from Arizona… elected as a Republican to the One Hundred Fourth and five succeeding Congresses (January 3, 1995-January 3, 2007); unsuccessful candidate for reelection to the One Hundred Tenth Congress in 2006.” (Congressional Biographical Directory, http://bioguide.congress.gov, Accessed 5/11/10)

Hayworth Registered As A Lobbyist On February 7, 2008, Just One Month After His Lobbying Ban As A Former Member Of Congress Was Lifted. (J.D. Hayworth, Lobbying Registration, http://soprweb.senate.gov, Filed 2/7/08)

Accountants And Tax Attorneys Have Been Highly Critical Of The Wealth Transfer Group’s Patent Of A Tax Savings Technique, Which Allows The Company To Force People To Pay Higher Taxes; Federal Legislation Has Been Proposed To Address The Issue:

The Wealth Transfer Group Is An Estate Planning Firm That “Serves Only An Elite Clientele With Estates Exceeding $10,000,000.” “The Wealth Transfer Group, Inc. serves only an elite clientele with estates exceeding $10,000,000. Our approach is long term. Because we believe in careful and comprehensive planning, we take the time to understand what you want to accomplish. Only then can we guide you step by step through the process of making informed, integrated decisions.” (Wealth Transfer Group Website, www.wealth-transfer.com, Accessed 5/9/10)

In 2006, The Wealth Transfer Group Filed Suit Against John Rowe, Executive Chairman Of Aetna, “Alleging He Infringed On The Patent It Holds For A Tax Savings Technique.” “Earlier this year, a Florida company called Wealth Transfer Group filed suit against John Rowe, the executive chairman of Aetna, alleging he infringed on the patent it holds for a tax savings technique involving the transfer of stock options to a certain type of trust because he used a similar technique without paying Wealth Transfer a licensing fee.” (Jeremy Kahn, “Taxes: Patent That Loophole,” Fortune, 8/30/06)

The Lawsuit “Generated An Uproar Among Accountants And Tax Attorneys,” Who Were “Aghast” That Wealth Transfer Group Had Essentially Used A Patent To Claim “Ownership Of One Part Of The Tax Code.” “The lawsuit has generated an uproar among accountants and tax attorneys. ‘They are aghast,’ says John Dauer Jr., a patent attorney in the New York office of Pitney Hardin. These tax experts are worried about far more than just one patent. The U.S. patent office already has issued 43 patents on tax strategies, and the agency is processing applications for 62 more. According to critics, these patents would prevent taxpayers from legally reducing their tax liabilities because patent owners would have exclusive rights to the appropriate tax strategies. ‘For someone to [patent] this ... and prevent others from doing it, they are claiming ownership of one part of the tax code,’ says David Handler, a tax and estate planning attorney in the Chicago office of Kirkland & Ellis.” (Steve Seidenberg, “Taxation Innovation,” Inside Counsel, 12/06)

The Tax Savings Technique That Wealth Transfer Patented Is Considered A “Commonly Used” Estate Planning Device, And A “Run of The Mill” Strategy For Persons With Over $100,000 In Assets. “Wealth Transfer's Web site trumpets that, ‘If you own nonqualified stock options, we have a patented technique to help you increase the value your family will receive.’ This patent, No. 6,567,790, seems to cover all GRATs that are funded in part by nonqualified stock options. As a result, if anyone wants to use this type of GRAT, they must get permission from Wealth Transfer. This astonishes tax experts because GRATs are commonly used estate planning devices. ‘For anyone with an estate tax issue and more than $100 thousand in assets, it's as run of the mill as they come,’ Handler says.” (Steve Seidenberg, “Taxation Innovation,” Inside Counsel, 12/06)

Due To The Patent, A Person Can Only Use The Tax Savings Technique If They Hire The Wealth Transfer Group Or Pay The Company A Fee, Forcing Taxpayers To Either Pay Higher Legal Fees Or Pay “Higher Taxes.” “When Stanley L. Blend becomes the first San Antonio lawyer to lead the American Bar Association's tax section next week, he plans to tackle a quirky new trend that -- if unchecked -- could lead to higher taxes and legal fees for taxpayers. In an odd twist, companies have begun patenting the ways lawyers and accountants help clients avoid paying taxes. … [F]lorida-based Wealth Transfer Group sued the former chairman of Aetna insurance company for funding a trust with stock options. The Florida company had patented the long-standing practice in 2003. Now, an accountant or attorney can use that strategy only after getting permission and paying a fee, a practice that Blend calls unfair.” (Aïssatou Sidimé, “Alamo City Lawyer To Tackle Patents For Tax Strategies,” San Antonio Express-News, 8/10/07)

Experts Say That The Tax Strategy Wealth Transfer “Claims To Have Invented” Is “Not At All Original.” “Wealth Transfer certainly didn't invent GRATs. The company filed for its patent Dec. 1, 1999, but GRATs were around long before that. In 1990, for instance, Congress amended the tax law to approve their use. Wealth Transfer apparently claims to have invented the method of funding a GRAT with nonqualified stock options, but many tax attorneys assert there's nothing inventive about this. If clients want to transfer some assets to their families, tax advisers routinely consider putting the available assets--including stock options--into a GRAT. ‘It's not at all original,’ says Soraya Tabibi Aguirre, an estate planning attorney at Hale Lane in Nevada. She adds that tax advisers and taxpayers were funding GRATs this way prior to 1999.” (Steve Seidenberg, “Taxation Innovation,” Inside Counsel, 12/06)

Critics Of Wealth Transfer Claim The Only Reason The Company Was Able To Obtain The Patent In The First Place Was “That The Patent Office Didn't Know What It Was Doing.” “So how did Wealth Transfer manage to obtain this patent? The answer, critics say, is that the patent office didn't know what it was doing.” (Steve Seidenberg, “Taxation Innovation,” Inside Counsel, 12/06)

Some Experts Warned Of “Dire Consequences” If The Court Sided With Wealth Transfer, Arguing That Patenting Legal Advice Such As A Tax Savings Technique Was A Slippery Slope. “Some are warning of dire consequences if the court sides with Wealth Transfer. ‘If you can patent an interpretation of the tax law, why not patent anyone's legal advice?’ asks Carol Harrington, a lawyer with the firm McDermott Will & Emery in Chicago. ‘Then you could say people being prosecuted for murder can't use a certain defense without paying a licensing fee. Something is seriously wrong with that in my view.’” (Jeremy Kahn, “Taxes: Patent That Loop", Fortune, 8/30/06)

In March 2007, Rowe And Wealth Transfer Settled The Suit, Without The Court Deciding Whether The Patent Was Valid. “The SOGRAT is a type of GRAT that is funded with non-qualified stock options. The patent holder, Wealth Transfer Group LLC, sued Aetna CEO John W. Rowe for infringement. The suit was settled in March 2007 without the court deciding whether the patent was valid. However, without a holding that the patent is invalid, there is a presumption of validity.” (“Tax Patents: Until Legislation Banning Patents Is Certain, Cpas Should Be Prepared,” California CPA, 9/07)

Opponents Of Patenting Tax Strategies Have Pushed Congress To Reform Patent Law “By Either Restricting The Issuance Of Patents For Tax Strategies Or Providing Tax Preparers And Taxpayers Protection From Patent Infringement Liability.” “In spite of the arguments for tax strategy patents, many in the accounting and legal professions, as well as regulatory agencies, have serious concerns and are currently seeking solutions. Because patents are established by laws, only an act by Congress can change the patentability of tax strategies. The AICPA, the American Association of Attomey-CPAs (AAA-CPA), the American Bar Association Section of Taxation, and some state accounting and legal associations have expressed their concerns in letters to the House and Senate judiciary and tax committees. In February 2007, the AICPA proposed that Congress eliminate the consequences of tax strategy patents by either restricting the issuance of patents for tax strategies or providing tax preparers and taxpayers protection from patent infringement liability.” (Evelyn A. McDowell, “Tax Strategy Patents: Truth And Consequences,” The CPA Journal, 2/08)

During The Time Hayworth Was Registered To Lobby, “A Number Of Bills” Were Introduced To Address The Tax Patent Problem, But None Were Signed Into Law. “More than a decade ago, business method patents, including the patenting of tax strategies, were ruled legitimate by a federal appeals court. Nevertheless, most practitioners are not in the habit of checking existing patents before tailoring a program for their particular clients. … Though a number of bills were introduced during the last Congress to remedy the tax patent problem, none of them were signed into law. More recently, legislation was introduced by Reps. Rick Boucher, D-Va., and Bob Goodlatte, R-Va., which would prohibit patents on tax strategies.” (Roger Russell, “The Fight Against Tax Patents,” Accounting Today, 7/20/09)