Identity of Edwards Home's Buyers Veiled
Identity of Edwards Home's Buyers Veiled
Assisted-Living Magnates in SEC Probe Paid Candidate $5.2 Million
By John Solomon and Lois RomanoWashington Post Staff WritersFriday, January 19, 2007; Page A01
When former North Carolina senator and Democratic presidential candidate John Edwards finally succeeded last month in selling his imposing Georgetown mansion for $5.2 million after it had languished on the market, the names of the buyers were not publicly disclosed.
At the time, Edwards's spokeswoman told reporters that the house had been sold to an unidentified corporation. In reality, the buyers were Paul and Terry Klaassen, according to several sources and confirmed by Edwards's spokeswoman yesterday.
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Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry. (By James A. Parcell -- The Washington Post)
The wealthy founders of the nation's largest assisted-living housing chain for seniors, the Klaassens are currently cooperating with a government inquiry in connection with accounting practices and stock options exercised by them and other company insiders. They are also the focus of legal complaints by some of the same labor unions whose support Edwards has been assiduously courting for his presidential bid.
The grand 18th-century house had lingered on Washington's slowing real estate market for more than 18 months. The Edwardses paid $3.8 million in 2002 for the six-bedroom Federal-style house once owned by socialite Polly Fritchey, and they did substantial renovations. The final sale price was half a million dollars below the asking price but still $1.4 million more than the Edwardses paid four years earlier.
Edwards closed the deal in late December -- the night before he announced his presidential candidacy. Edwards aide Jennifer Palmieri said he left the details to real estate agent W. Ted Gossett. Gossett declined to reveal the Klaassens' identity but said the buyer decided to purchase the mansion as a "surprise Christmas gift" for his wife.
Edwards was told the Klaassens' name "in passing" around the time the offer came in on Dec. 18, Palmieri said last night, but he did not investigate further and had no knowledge of their business until a reporter's inquiry Wednesday. Palmieri said Edwards had not delved into the Klaassens' background: "They left it to be done at arm's length, real estate agent to real estate agent."
Asked about the allegations lodged against the Klaassens by their union stockholders, she added, "He believes all CEOs should follow the law, should protect their shareholders and should protect their workers, and he expects that will happen in this case as well."
The Klaassens declined to comment on the sale.
The paperwork for the sale was handled in such a way that it kept the Klaassens' names off the public deed documents, which show that the buyer was P Street LLC. That limited-liability corporation was created Dec. 22, public records show. Palmieri said the Klaassens used it to purchase the house. Such corporations are frequently created by large real estate buyers to protect themselves from lawsuits by shielding buyers' other personal assets.
Ellen S. Miller, head of the nonpartisan Sunlight Foundation, which studies public officials' real estate deals, said presidential candidates should go the extra mile by determining who they are doing business with, especially when "a substantial amount of cash is changing hands on the eve of his campaign."
The house sale comes at a time when the Securities and Exchange Commission has opened an inquiry into allegations that the Klaassens, founders of Sunrise Senior Living, and other company insiders cashed $32 million in stock options before Sunrise announced in May an accounting problem that caused its stock to dip.
SEC insider-trading notifications show that the Klaassens withdrew $20 million from their company in the year before they bought the house. Some of that money was taken out the week before the company announced an accounting review in May.
A letter to the board from the Service Employees International Union states that after Sunrise announced the accounting change and filing delay in May the stock value plummeted 34 percent and that the cumulative impact of company restatements will reduce net income for 2003 through 2005 by 26 percent.
The Klaassens sold 600,000 shares, worth about $20 million, in 12 transactions from Dec. 19, 2005, to May 2, 2006 -- the last sales coming one week before the company's accounting troubles came to light and the company's stock plunged, according to public records confirmed by Sunrise sources.
Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry. (By James A. Parcell -- The Washington Post)
Several stockholders in Sunrise, including two large unions whose support Edwards has courted, have pressed for action.
The 1.8 million-worker SEIU alleges its pension fund lost significant money in its investment in Sunrise, and the union asked for an independent investigator to take over the internal probe of the stock trades and accounting practices. Pension funds for the United Food and Commercial Workers Union filed a class-action lawsuit against Sunrise this week, seeking to recover losses from the stock's fall.
"What went on there is totally inappropriate. It is very clear that very important insiders traded in this stock before it [the accounting problems] became known publicly and before the stock took a hit," said Stephen Abrecht, the SEIU's pension chief. "The pattern of stock-option grants seen here pretty much follows the pattern we've seen in other companies that were hit by corporate-governance issues."
Abrecht said he was unaware of the Edwards home deal and would reserve judgment on it.
Sunrise officials declined to address the house sale, saying the deal was a personal matter of the Klaassens, and said any insider trades were conducted according to securities rules. "We are cooperating fully with the SEC," company spokeswoman Meghan Lublin said yesterday.
Paul Klaassen started Sunrise in the Virginia suburbs in 1981, saying he was inspired by his visits as a child to his grandparents' nursing home in the Netherlands to try to create a more pleasant living opportunity for seniors. Today, Sunrise operates 436 senior communities in more than 37 states as well as Canada, Britain and Germany.
Before public service, Edwards was a successful trial lawyer who in 2003 reported assets between $14 million and $45 million.
Edwards has run into controversy once before on a house sale. In 2002, he reached a deal to sell a Washington house to a U.S. lobbyist for Saudi Arabia and then refused to give back the lobbyist's $100,000 earnest money when the deal collapsed. At the time of the sale, the Saudis were trying to improve their image in Congress after the Sept. 11 attacks, and Edwards was serving on the Senate intelligence committee.
Edwards said he did not know the buyer was a Saudi lobbyist until after the deal had fallen through.
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011802077.html
Assisted-Living Magnates in SEC Probe Paid Candidate $5.2 Million
By John Solomon and Lois RomanoWashington Post Staff WritersFriday, January 19, 2007; Page A01
When former North Carolina senator and Democratic presidential candidate John Edwards finally succeeded last month in selling his imposing Georgetown mansion for $5.2 million after it had languished on the market, the names of the buyers were not publicly disclosed.
At the time, Edwards's spokeswoman told reporters that the house had been sold to an unidentified corporation. In reality, the buyers were Paul and Terry Klaassen, according to several sources and confirmed by Edwards's spokeswoman yesterday.
Buy This Photo
Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry. (By James A. Parcell -- The Washington Post)
The wealthy founders of the nation's largest assisted-living housing chain for seniors, the Klaassens are currently cooperating with a government inquiry in connection with accounting practices and stock options exercised by them and other company insiders. They are also the focus of legal complaints by some of the same labor unions whose support Edwards has been assiduously courting for his presidential bid.
The grand 18th-century house had lingered on Washington's slowing real estate market for more than 18 months. The Edwardses paid $3.8 million in 2002 for the six-bedroom Federal-style house once owned by socialite Polly Fritchey, and they did substantial renovations. The final sale price was half a million dollars below the asking price but still $1.4 million more than the Edwardses paid four years earlier.
Edwards closed the deal in late December -- the night before he announced his presidential candidacy. Edwards aide Jennifer Palmieri said he left the details to real estate agent W. Ted Gossett. Gossett declined to reveal the Klaassens' identity but said the buyer decided to purchase the mansion as a "surprise Christmas gift" for his wife.
Edwards was told the Klaassens' name "in passing" around the time the offer came in on Dec. 18, Palmieri said last night, but he did not investigate further and had no knowledge of their business until a reporter's inquiry Wednesday. Palmieri said Edwards had not delved into the Klaassens' background: "They left it to be done at arm's length, real estate agent to real estate agent."
Asked about the allegations lodged against the Klaassens by their union stockholders, she added, "He believes all CEOs should follow the law, should protect their shareholders and should protect their workers, and he expects that will happen in this case as well."
The Klaassens declined to comment on the sale.
The paperwork for the sale was handled in such a way that it kept the Klaassens' names off the public deed documents, which show that the buyer was P Street LLC. That limited-liability corporation was created Dec. 22, public records show. Palmieri said the Klaassens used it to purchase the house. Such corporations are frequently created by large real estate buyers to protect themselves from lawsuits by shielding buyers' other personal assets.
Ellen S. Miller, head of the nonpartisan Sunlight Foundation, which studies public officials' real estate deals, said presidential candidates should go the extra mile by determining who they are doing business with, especially when "a substantial amount of cash is changing hands on the eve of his campaign."
The house sale comes at a time when the Securities and Exchange Commission has opened an inquiry into allegations that the Klaassens, founders of Sunrise Senior Living, and other company insiders cashed $32 million in stock options before Sunrise announced in May an accounting problem that caused its stock to dip.
SEC insider-trading notifications show that the Klaassens withdrew $20 million from their company in the year before they bought the house. Some of that money was taken out the week before the company announced an accounting review in May.
A letter to the board from the Service Employees International Union states that after Sunrise announced the accounting change and filing delay in May the stock value plummeted 34 percent and that the cumulative impact of company restatements will reduce net income for 2003 through 2005 by 26 percent.
The Klaassens sold 600,000 shares, worth about $20 million, in 12 transactions from Dec. 19, 2005, to May 2, 2006 -- the last sales coming one week before the company's accounting troubles came to light and the company's stock plunged, according to public records confirmed by Sunrise sources.
Edwards, a contender for the Democratic presidential nomination, sold his Georgetown house in December to a couple cooperating with an SEC inquiry. (By James A. Parcell -- The Washington Post)
Several stockholders in Sunrise, including two large unions whose support Edwards has courted, have pressed for action.
The 1.8 million-worker SEIU alleges its pension fund lost significant money in its investment in Sunrise, and the union asked for an independent investigator to take over the internal probe of the stock trades and accounting practices. Pension funds for the United Food and Commercial Workers Union filed a class-action lawsuit against Sunrise this week, seeking to recover losses from the stock's fall.
"What went on there is totally inappropriate. It is very clear that very important insiders traded in this stock before it [the accounting problems] became known publicly and before the stock took a hit," said Stephen Abrecht, the SEIU's pension chief. "The pattern of stock-option grants seen here pretty much follows the pattern we've seen in other companies that were hit by corporate-governance issues."
Abrecht said he was unaware of the Edwards home deal and would reserve judgment on it.
Sunrise officials declined to address the house sale, saying the deal was a personal matter of the Klaassens, and said any insider trades were conducted according to securities rules. "We are cooperating fully with the SEC," company spokeswoman Meghan Lublin said yesterday.
Paul Klaassen started Sunrise in the Virginia suburbs in 1981, saying he was inspired by his visits as a child to his grandparents' nursing home in the Netherlands to try to create a more pleasant living opportunity for seniors. Today, Sunrise operates 436 senior communities in more than 37 states as well as Canada, Britain and Germany.
Before public service, Edwards was a successful trial lawyer who in 2003 reported assets between $14 million and $45 million.
Edwards has run into controversy once before on a house sale. In 2002, he reached a deal to sell a Washington house to a U.S. lobbyist for Saudi Arabia and then refused to give back the lobbyist's $100,000 earnest money when the deal collapsed. At the time of the sale, the Saudis were trying to improve their image in Congress after the Sept. 11 attacks, and Edwards was serving on the Senate intelligence committee.
Edwards said he did not know the buyer was a Saudi lobbyist until after the deal had fallen through.
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011802077.html
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