Several lawmakers had to answer for well-timed stock trades amid the 2020 pandemic, but newly elected Rep. Mike Garcia (R-CA) was not one of them—until now.
On Wednesday, watchdog group Citizens for Responsibility and Ethics in Washington filed a complaint with the Office of Congressional Ethics, accusing Garcia of breaking disclosure laws and the STOCK Act when he failed to properly report multiple transactions in the run-up to the 2020 election—including the sale of Boeing stock weeks before a committee he sat on released a damning report about the firm’s role in deadly crashes involving its 737 MAX airliner.
The CREW filing is the second complaint against Garcia in a week, prompted by The Daily Beast’s reporting on the transactions last Wednesday, following a complaint from Democratic transparency advocacy organization End Citizens United last Friday, alleging that Garcia broke multiple ethics rules, violated the STOCK Act, and potentially engaged in insider trading with the Boeing sale.
CREW communications director Jordan Libowitz told The Daily Beast that Garcia’s actions “are exactly what our laws are meant to prevent.”
“Rep. Garcia sold Boeing stock that he did not disclose he owned, and then he chose not to disclose that sale until after he barely won his election,” Libowitz said. “This is why Americans are losing confidence in their members of Congress and it’s exactly what our laws are meant to prevent. Congress needs to ban stock ownership, or this is going to keep happening.”
Both complaints ask the OCE to investigate multiple potential violations highlighted in The Daily Beast’s report. That report found that Garcia appears to have committed a number of violations related to his 2020 financial disclosures. For instance, Garcia failed to report the Boeing sale in time, blowing the 45-day deadline by more than two months and only disclosing the transaction after declaring victory in an election he won by just 333 votes.
The same filing included delayed disclosures about two other transactions, and The Daily Beast highlighted other apparent violations, like Garcia’s failure to disclose other assets and stock options on his annual report. The End Citizens United complaint was first reported by Spectrum1, in Santa Monica, California—Garcia’s home district.
The CREW complaint calls the Boeing delay a “clear violation” that “deprived the voting public of crucial information when it may have needed it the most.”
“Only after his reelection was secured by a mere 333 votes did he disclose that sale, along with a number of other transactions—some involving other companies overseen by the Transportation Committee—that should have been disclosed before election day,” the CREW filing reads. The complaint notes that Garcia has still not fully disclosed how much money he made from his Boeing investments, which he did not report on his annual disclosures.
“By failing to disclose these trades, and in particular his trade of Boeing stock while it was under investigation, Rep. Garcia deprived his constituents of an opportunity to regulate any conflicts of interest through the electoral process,” the complaint reads. “For these reasons, we respectfully request that OCE investigate the facts and circumstances around Rep. Garcia’s trades and disclosure failures.”
House Homeland Security Committee member Rep. Mike Garcia (D-CA) listens to testimony from FBI Director Christopher Wray.
Chip Somodevilla/Reuters
The ECU complaint takes the additional step of alleging that Garcia may have engaged in insider trading with the Boeing sale. That complaint says Garcia, a former Raytheon executive, may have acted on inside information gleaned from potential knowledge of material nonpublic information from the Transportation Committee’s ongoing investigation into the company’s safety protocols. (The CREW complaint stops short of that allegation, but observes that Garcia’s committee was preparing a report that was “highly critical of Boeing and cited voluminous nonpublic information obtained from Boeing.”)
The Daily Beast has reached out to Garcia’s office for comment. The office did not reply to The Daily Beast’s comment request ahead of the report last week, but in response to the ECU complaint, Anderson told Spectrum1 that Garcia “was not aware of the content of the [Boeing] report until it was released,” and “engaged in no meetings or hearings on the subject.”
“This makes claims of insider trading an impossibility. In short, he was not privy to any information that wasn’t public domain,” Anderson said.
Anderson also claimed that Garcia had “immediately rectified the accidental late filing,” but it’s unclear what he was referencing. None of Garcia’s filings explain or acknowledge the delayed disclosure. The two-month delay—with disclosure only coming after an election in a year where congressional stock trades were a political lightning rod—kept the transaction a secret from voters in the crucial weeks before Garcia’s election, and may have impacted the results of a 50-50 nailbiter that he nosed out by fewer than 400 votes.
New members like Garcia could be forgiven for not understanding the disclosure requirements. But Garcia had previously demonstrated his knowledge of those rules, filing his first stock transaction report two months before the August Boeing sale. That filing listed sales of Boeing shares as well, The Daily Beast reported. Those stock dumps came days before the company published data showing lagging sales and order cancellations for the 737 Max.
“That Rep. Garcia’s undisclosed trades may have been relevant to one of the closest elections in the country makes his failure to disclose all the more dubious,” the CREW complaint says. “Fidelity to federal law and ethics rules involving public disclosures should be at its greatest precisely when one’s constituents are in a position to act by exercising their voting rights.”
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