Charges Against Rep. Renzi of Ariz. Include Land Swap, Insurance Fraud

Republican U.S. Rep. Rick Renzi of Arizona has been indicted on a slew of public corruption charges and for stealing from his insurance company’s clients to fund his first campaign, federal authorities announced.

The 26-page indictment issued last Thursday culminated a lengthy federal investigation that had put the three-term congressman under a cloud for more than a year. Renzi announced Aug. 23 that he wouldn’t run for re-election in Arizona’s mostly rural 1st Congressional District.

“Congressman Renzi deprived the citizens of Arizona of his honest services as a United States elected representative,” U.S. Attorney Diane J. Humetewa said Friday while announcing the indictment.

Most of the charges allege Renzi, 49, used his congressional office to promote a land swap scam to collect on a debt owed by a former business partner.

The indictment’s 35 counts include charges of conspiracy, wire fraud, money laundering, insurance fraud and extortion.

Renzi has denied all wrongdoing, and his attorney, Kelly Kramer, on issued a brief statement saying Renzi would “fight these charges until he is vindicated and his family’s name is restored.”

However, House Minority Leader John Boehner, R-Ohio, called the charges against Renzi “completely unacceptable for a member of Congress” and said Renzi should “seriously consider whether he can continue to effectively represent his constituents under these circumstances.”

Renzi and two former business associates also charged in the indictment are to be arraigned in Tucson on March 6.

Attorneys for one of the former associates _ James W. Sandlin of Sherman, Texas _ did not immediately return a call seeking comment. The lawyer for Andrew Beardall of Rockville, Md., Lucius T. Outlaw, III, said his client looks forward to addressing the government’s allegations and is confident the facts will show he did nothing with the intent to defraud the government or injure anyone.

There was no immediate indication of what Renzi planned to do next.

If he were to step down, Arizona law calls for special primary and general elections to be held if a resignation were to come by May 4. The seat would be filled in the November election if he were to resign after May 4.

There’s already a spirited contest among candidates running for Renzi’s seat. Democrats lead in registration but many are conservatives who cross party lines to vote for Republican candidates.

Renzi had been considered in political peril ever since FBI agents raided his wife’s insurance business in the southern Arizona town of Sonoita in October 2006.

Renzi immediately stepped down from the House Intelligence Committee, and he followed that by taking a leave of absence from the House Financial Services and Natural Services committees.

Authorities previously had confirmed they were scrutinizing a land deal that benefited a Renzi associate.

The indictment accuses Renzi of using his position as a member of the Natural Resources Committee to push land deals for Sandlin. Renzi allegedly wanted Sandlin to make money so the congressman could be paid for an earlier land deal they made together.

According to the indictment, Renzi in 2005 promised to support proposed federal land exchanges sought by an unidentified company and an unidentified investment group only if they bought property owned by Sandlin in Cochise County.

The company didn’t make the purchase but the investment group did, and Renzi received $733,000 from Sandlin for helping with the sale, the indictment said.

“Renzi was having financial difficulty throughout 2005 and needed a substantial infusion of funds to keep his insurance business solvent and to maintain his personal lifestyle,” the indictment says.

The 27 counts in that part of the indictment included conspiracy, wire fraud and money laundering.

The charges stemming from the alleged insurance embezzlement to benefit Renzi’s 2002 campaign included conspiracy, extortion and insurance fraud.

Those charges accuse Renzi and Beardall of embezzling more than $400,000 in insurance premiums from Renzi’s insurance business and of making misrepresentations to customers and state insurance regulators.

As a result of the alleged embezzlement, an insurance company canceled customers’ policies for nonpayment, prompting Renzi to send letters that falsely told customers that their coverage would be provided by another insurer, the indictment said.

Renzi is one of 24 co-chairmen for John McCain’s presidential campaign in Arizona.

McCain seemed surprised when asked in Indianapolis on Friday for his reaction to the indictment, choosing his words carefully, shaking his head and speaking slowly.

“I’m sorry. I feel for the family; as you know, he has 12 children,” McCain told reporters on the presidential campaign trail. “But I don’t know enough of the details to make a judgment. These kinds of things are always very unfortunate…. I rely on our Department of Justice and system of justice to make the right outcome.”

Government watchdog group Citizens for Responsibility and Ethics in Washington applauded the Justice Department for holding Renzi “accountable given that his House colleagues refused to do so.” The group has had Renzi on its “Most Corrupt Members of Congress” list for the last three years.

“Bluster aside, this latest in a string of congressional indictments demonstrates that Congress simply will not police itself,” said CREW executive director Melanie Sloan.

The Renzi investigation began during the tenure of then-U.S. Attorney Paul Charlton, a Bush administration appointee who was forced from office as part of a Justice Department purge of U.S. attorneys around the country.

There has been speculation that the Renzi investigation figured in Charlton’s ouster, but Humetewa said her office “had tremendous support” from the Justice Department and other federal law enforcement agencies.

The U.S. Attorney’s Office said convictions for some of the charges carry maximum penalties of 20 years in prison and that others carry maximum terms of 5 or 10 years.

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Associated Press Writers Lara Jakes Jordan in Washington, Chris Kahn in Phoenix and Arthur Rotstein in Tucson contributed to this story.