WASHINGTON (CN) — Justice Clarence Thomas had a $267,230 loan forgiven by his wealthy health executive friend, according to a new report by the Senate Finance Committee released Wednesday.
Anthony Welters loaned Thomas the money in 1999 to buy his 40-foot luxury motor coach. By 2008, the loan had been forgiven, but there is no documentation showing Thomas actually paid it off, nor that he reported it as a forgiven debt to the Internal Revenue Service.
“Regular Americans don’t get wealthy friends to forgive huge amounts of debt so they can buy a second home,” Senate Finance Committee Chair Ron Wyden said in a statement. “Justice Thomas should inform the committee exactly how much debt was forgiven and whether he properly reported the loan forgiveness on his tax returns and paid all taxes owed.”
Wyden said the committee will share its findings with the judiciary committee to address the ethics implications of Thomas’ failure to report the loan’s forgiveness.
The Supreme Court’s public information office did not respond to a request for comment from Thomas.
After the New York Times first reported the loan’s existence in August, Welters voluntarily provided information to the finance committee. He had told The Times that Thomas “satisfied” the loan in 2008 but would not clarify whether that meant it was repaid in full.
Thomas used his Supreme Court stationery to discuss the loan with Welters in a handwritten letter dated Dec. 6, 1999. The committee also reviewed a promissory note specifying the deal between Welters, Thomas and his wife, Ginni Thomas.
The couple agreed to borrow $267,230 from Welters with an annual interest rate of 7.5%, according to the agreement. Thomas would pay interest on the loan each year but the principal would not be due until 2004. A security agreement gave Welters interest in Thomas’ 1991 Prevost Marathon Le Mirage XL to secure the amount of the loan.
When 2004 rolled around, Thomas and Welters amended their original agreement, according to another promissory note. The new agreement added a decade onto the loan’s maturity date, meaning Thomas had until 2014 to pay off the full amount.
In a 2008 handwritten note, Welters told Thomas he would no longer be accepting payments from the conservative justice. He believed Thomas’ interest payments exceeded the purchase price of the RV and didn't feel it was appropriate to continue accepting payments, regardless of the pair’s prior agreement.
Whether it's true that Thomas' interest payments actually covered the initial loan amount, however, is not clear. Welters provided the committee with an interest payment check from Thomas for $20,042, dated Dec. 21, 2000. If Thomas only had been paying interest, at $20,042 per year, he would have shelled out around $180,000 by the time Welters told him to stop sending payments.
Welters’ attorneys said there was no documentation showing Thomas made any payments on the loan above the yearly interest.
If Welters in fact forgave the RV loan in 2008, Thomas would have been required to report that information to the Internal Revenue Service, which counts any tax forgiveness as taxable income. Thomas did not disclose any loan forgiveness on his 2008 financial report.
Ethical questions also surround Thomas receiving the loan in the first place. It’s not clear Thomas could have received a similar deal with a bank at the time, and although the interest rate offered by Welters was close to what a bank could have offered, Thomas put no money down on the loan.
Thomas has faced increased scrutiny over the past year for ethics lapses. Reporting has uncovered a pattern: The justice has accepted private jet flights, luxury vacations and sports tickets from wealthy and influential individuals without reporting the gifts on his financial disclosure forms.
Watchdog groups say the new information uncovered by the finance committee marks a new low.
“Thomas has essentially gone about business as usual on the Supreme Court while skirting all ethics standards to cash in on his wealthy friends — to the tune of hundreds of thousands of dollars,” said Caroline Ciccone, president of Accountable.US, in a statement. “Justice Thomas clearly views his position on our nation’s highest court as a chance to upgrade his own lifestyle with no consequences. As becomes more clear by the day, he is unfit to serve on our high court. Justice Thomas must resign.”
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