CEDAR RAPIDS, Iowa — Iowa Secretary of State Paul Pate did not disclose his role in a new corporation that has recently spent around $2 million to open a storage rental business and purchase a strip mall, a review by The Associated Press shows.
In an annual ethics filing last week, Pate affirmed that the only outside business in which he engaged during 2017 was the eastern Iowa asphalt paving company he has long owned. But business and government records show that another company Pate formed days before the 2016 presidential election, PRG Group LLC, worked throughout 2017 to open a new mini-storage business in Cedar Rapids. In a February filing, Pate called himself the "managing partner" of the corporation after closing on a $1.5 million mortgage to purchase a Hiawatha strip mall.
In a statement Tuesday evening, Pate said that he was confident his form was accurate. He said he didn't have to list the corporation because he mentioned elsewhere in the form that he had received rental income from unspecified real estate properties.
Knowingly filing a false or incomplete ethics disclosure is illegal, but penalties are seldom sought by regulators, who typically give officials the option of revising forms if they are questioned. Responding to AP's findings, Iowa Ethics and Campaign Disclosure Board director Megan Tooker said she planned to speak with Pate to learn more about his role with PRG Group and whether it should have been disclosed.
The form requires hundreds of top Iowa government officials to list "each business, occupation, or profession in which you were engaged during the covered year and the nature of that business." The goal is to ensure that they do not have conflicts of interest or commitment. Yet voters who reviewed Pate's disclosure would not know about his role in multiple business ventures while serving as Iowa's top elections administrator.
Pate, 59, a Republican, is running for re-election after successfully working with lawmakers to pass a law requiring voters to show an official identification at the polls starting next year. Democrats Deidre DeJear and Jim Mowrer are competing in a June 5 primary to challenge Pate in the November election.
DeJear said that Pate, as administrator of elections, has a special duty to be "honest and transparent" about his activities, calling the lack of disclosure unfortunate.
"Days before the 2016 election, Paul Pate should've been doing his job instead of creating a business. This is part of a pattern of him failing Iowans," Mowrer said.
Pate was criticized by Democrats last year for a spotty in-person attendance record at meetings of the Iowa Executive Council in Des Moines after AP reported he had participated by phone or was absent for the majority of them over a nearly three-year period. Pate defended his record, saying electronic participation was allowed.
During the same period, his business holdings in the Cedar Rapids area have expanded and been challenging to manage at times, records show.
Pate and a brother with whom he has a strained relationship became co-managers of the City Center strip mall when their mother died in February 2016 and passed the property to them.
Last year, the family's trusts sought court intervention to resolve a management stalemate between the brothers over the retail property, which included disagreements over what repairs and improvements to make to attract more tenants. Attorneys for Paul Pate blamed the brother's noncooperation for "the loss of tenants, a decline in income from the property, and the deterioration of the condition and value of the property," court records show.
A judge removed the brothers as co-managers and appointed a bank, which agreed to sell the property back to Pate for $1.41 million. Pate used PRG Group to obtain a commercial mortgage in February to buy the property, which includes tenants such as a diner and an appliance parts store and several vacant storefronts.
Pate filed paperwork with his office to organize the PRG Group on Nov. 4, 2016, listing himself as the registered agent and a corporate address that his asphalt company uses. At that moment, the secretary of state's office was busy administering the Nov. 8 presidential election.
The PRG Group soon spent $255,000 to buy a vacant property in Cedar Rapids, where Pate served as mayor from 2002 to 2006. It petitioned the city for a series of permit and zoning approvals to build 50 self-service storage units and obtained a $630,000 line of credit for the project. The business, Noelridge Storage , opened in December. Pate is also an owner of the PEP Group, which runs another Cedar Rapids storage business and also wasn't listed on his disclosure.
The Iowa Ethics and Campaign Disclosure Board doesn't audit disclosure forms. In a rare sanction in January, the board fined a state regulator $250 for failing to list a consulting business that had done work as a foreign agent of Saudi Arabia.