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Last night, Brahm Resnik, KPNX Channel 12 reporter and host of the political roundtable show “Sunday Square Off”, tweeted that Arizona Congressman David Schweikert filed a report with the FEC showing he contributed $130,000 on August 22, 2012 to his CD-6 race vs incumbent Ben Quayle.
Curious move for a guy who routinely reports that he's 17 - 30 points up on Quayle.
Hat tip to Resnik from Politico Mafioso. Resnik’s perfectly timed Tweet makes all the pieces of the Schweikert cash flow puzzle fit together very well. Our friend, KTVK CH-3 political reporter and Politics Unplugged co-host Dennis Welch, also reported on the story.
Wednesday’s $130,000 gift to his campaign may be part of a much bigger fiscal fiasco for Schweikert and Metro Phoenix Bank.
PM has discovered that within the last two years, Schweikert received $375,000 in four seriously over-appraised “line of credit” loans on rental homes, from his campaign depository bank, Metro Phoenix Bank. Members of its current and former board of directors have made campaign donations to Schweikert in the last few years but none to Ben Quayle.
Each slushy MPB "line of credit" loan used a low end Sheridan Equities owned rental property as collateral. In all cases, the rentals had been recently purchased for bargain basement prices between $26,000 - $44,000. Each rental home is also located in a sketchy, crime ridden neighborhood.
[Sheridan Equities is Schweikert’s personal real estate investment transaction company.]
The addresses with links to deed of trust:
Glendale, AZ 85301
Phoenix, AZ 85008
Glendale, AZ 85301
Phoenix, AZ 85033
It appears Schweikert’s well timed “now that I’m a congressman” loan scam with Metro Phoenix Bank pays much better rates of return than any other real estate market or hedge fund. Schweikert more than doubled and in one case more than tripled the original financial investment, solely because of irrational appraisals of the run down homes and plenty of MPB available cash for a United States congressman.
In August 2010, during Schweikert’s CD-5 primary election, MPB wrote three identical $75,000 “line of credit” loans, each secured by an assignment of rents document should Schweikert default on his loans. That $225,000 sum was cash on hand going into the last month of his 2010 primary. The 2010 value of the three homes used to secure Schweikert's $225,00 in loans was no more than $105,000.
In February 2011, Schweikert went calling on MPB once again and received a whopping $154,000 “line of credit” loan on a 60 year old small rental property near Grand Ave and Myrtle Lane. That home was worth approximately $45,000 at the time Schweikert's received $154,000 for it.
That home had been recently transferred from Schweikert’s bulldog investor machine, Swartz & Brough (who bought the property for under $50,000) to Sheridan Equities. Schweikert holds the power of attorney for S&B and is able to act and sign independent of the other principals in the Texas firm.
That home had been recently transferred from Schweikert’s bulldog investor machine, Swartz & Brough (who bought the property for under $50,000) to Sheridan Equities. Schweikert holds the power of attorney for S&B and is able to act and sign independent of the other principals in the Texas firm.
Just two months later in April 2011, Schweikert filed documents with the Arizona Department of Real Estate placing Sheridan Equities and David-Joyce Schweikert’s real estate licenses in an inactive status. All three remain inactive as of today.
[The Maricopa County Assessor never caught up with MPB's more than generous appraisals of Schweikert's properties. The MCA uses valuations for property tax calculations and appraises the four properties between $29,700 and $42,500 for tax year 2013.]
As Schweikert had new cash on hand of $154,000 for essentially a $45,000 property, he went into his reelection announcement in late 2011 confidently. So confidently, in fact, that in November of 2011 he filed an amended report with the FEC making the over-appraising, big money loan-maker, Metro Phoenix Bank, his official Arizona campaign bank depository.
Some of the MPB bank officials donated to Schweikert following the transfers of hundreds of thousands of campaign dollars. One brave soul, Vice-Chairman James Barrons, recently even donated $500 to National Horizon, Schweikert’s homegrown independent expenditure group, run by former chief-of-staff and campaign manager Oliver Schwab.
It’s possible Schweikert’s recent $130,000 contribution to his own campaign came from saving that $154,000 cash MPB loaned him on a shabby one bathroom home worth only one third of the loan. It’s also possible Schweikert may have found the money while walking his dog in the desert.
Then again, it’s possible that Schweikert and his new friends at Metro Phoenix Bank are financing an off-the-books shadow campaign fund for Schweikert.
With portfolios of hundreds and hundreds of rental properties in the Valley worth millions, Schweikert has a limitless supply of collateral MPB can foreclose on in case he cannot pay back any of his mega-loans. If Schweikert defaulted, MPB would be the proud owner of $150,000 in low end rentals with $375,000 worth of "bad paper" as Schweikert would say.
With portfolios of hundreds and hundreds of rental properties in the Valley worth millions, Schweikert has a limitless supply of collateral MPB can foreclose on in case he cannot pay back any of his mega-loans. If Schweikert defaulted, MPB would be the proud owner of $150,000 in low end rentals with $375,000 worth of "bad paper" as Schweikert would say.
Don’t be surprised if Metro Phoenix Bank fails, if this is the way its board conducts business. Newsflash to local MPB investors: Cash in now, the way Schweikert has. The gravy train can’t last forever.
For those MPB officials who are culpable in this scam, the Federal Reserve has published a new brochure about using homes as collateral for loans. According to Ben Bernanke's office, the officials at Metro Phoenix Bank aren't using the same math and loan-to-value calculations that normal banks do. Read it.
When Schweikert returns to Congress in September, the banking lobby will be waiting for him to push their bills while he gets more 3-to-1 loan-to-value kickbacks from his friends at Metro Phoenix Bank.
When Schweikert returns to Congress in September, the banking lobby will be waiting for him to push their bills while he gets more 3-to-1 loan-to-value kickbacks from his friends at Metro Phoenix Bank.
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