IRS Audit Is Standard, Delaney’s Camp Says

HAGERSTOWN, Md. (AP) — The congressional campaign of Montgomery County businessman John Delaney said that an Internal Revenue Service audit of his company is “fairly standard.”

CapitalSource Inc. mentioned the audit in a Securities and Exchange Commission filing last month. It was publicized Thursday by the campaign of state Sen. Rob Garagiola, Delaney’s opponent for the 6th District Democratic nomination.

Delaney’s campaign points out that the financial company has regularly mentioned the audit in SEC filings since 2009.

CapitalSource is being audited for the tax years 2006 through 2008, when it operated as a real-estate investment trust. The company says its senior management had limited experience with the tax rules for those organizations and it can’t assure investors it met the requirements.

Garagiola’s camp said both the business and Delaney’s campaign are based on fraud.

Delaney campaign manager Justin Schall said in an emailed statement Thursday that’s not true.

“This is another example of Annapolis politician Rob Garagiola looking at forms he clearly doesn’t understand and making desperate and inaccurate accusations,” Schall said. “It is a lie to say that John Delaney is under investigation. … It’s a shame, because when Garagiola hides the truth and misrepresents facts, it’s the voters in Maryland who lose.”

(Copyright 2012 by The Associated Press.  All Rights Reserved.)

  • true

    If they find any wrong doing . He’ll be elected by a large margin. After all this is md.

  • MDvoter

    If the company had limited experience with the tax rules for REITs, why in the world would senior management authorize conversion of the corporation to a REIT?  Oh yeah, right, to avoid paying income tax — REITs pay much less than corporations in income tax.  Delaney could then turn around and use money that was not rightfully his to engage in his much vaunted (by him) philanthropy.  Goldman Sachs had a nice foundation going too, while it was acting improperly in 2008.  And  it is pretty facile of Delaney in discussing the company’s election of REIT status in its SEC filings to state that it “can’t assure investors it met REIT qualification rules. ” John is a lawyer, and ignorance of the law is no excuse.  It is rich indeed that in discussing his company forcing certain debtors (American businesses providing real jobs to Americans) into bankruptcy, Delaney stated “When I think people have broken the rules I get very upset.” The whole thing stinks.  Delaney is just another banker who bent the rules for his own personal gain.  He is part of the problem, not someone whose conduct should be rewarded with election to Federal office. 

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