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updated: 10/23/2010 9:01 PM

Walsh money woes date back to 1990s

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By Kerry Lester

Eighth Congressional candidate Joe Walsh bills himself as an average Joe who, like many, fell victim to hard times when his Evanston condominium was foreclosed upon last year.

The foreclosure, he says, is not in conflict with his platform of fiscal conservatism. If anything, it's helped voters relate better to him.

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Being hit doubly hard by a divorce and the recession, "you've got a guy like me, the last five or six years I've been hit by a perfect storm. It's made me much more attuned."

Yet, court records show Walsh had state and federal liens for unpaid taxes long before the recession began in 2007.

Walsh, who acknowledges he has "a few isolated dings like a lot of people do," says it's not a pattern.

Instead, he points to miscalculations on tax returns and a misunderstanding about taxes on a college fund.

Starting in 1992, Walsh was handed several liens for failing to pay state and federal income taxes, together totaling nearly $25,000, according to records from the Cook County Recorder of Deeds.

The first lien, in June 1992, was for failing to pay $2,239 in federal income taxes.

In June 1994, Walsh was handed a lien for failing to pay $21,566 in federal income taxes, some going as far back as 1985. Six months later, the state placed another lien for Walsh's failure to pay $778 in state income taxes. He eventually paid them off and the last lien cleared in 2001.

Walsh said Monday that his financial background has been an "open book" noting "this is what I've been talking about for the last eight months."

He says the issue of the liens comes up frequently at events, though there is little on record backing that up.

"There's been so much with me," Walsh said. "It's part of the package. That's why this tax lien stuff has never been a big deal. The foreclosure and the struggles I've had since have been a more interesting story."

Walsh's March 3 statement on the condominium foreclosure describes struggling to make payments on two different homes in 2008, but makes no mention of earlier liens.

His website, as of Monday evening, made no mention of them, either. There's no evidence that mainstream media outlets have reported on the story.

However, in an April 28 post, conservative blog Illinois Review references an 85-page anonymous report on Walsh's finances that had been distributed to various members of the media, asking Walsh's campaign for comment. According to the blog, the report came up at an 8th District town hall meeting, where Walsh reportedly shrugged the issue off as a dirty campaign tactic.

Walsh called the $2,239 and $778 tax liens, "miscalculations on taxes, as far as he and his ex-wife, Laura, can tell.

The $21,556 lien, the one that, as Walsh says, "jumps out at people," comes from failing to pay taxes on an education trust fund set up by his grandfather to pay for his college education at Grinnell College and later the University of Iowa in the 1980s.

The fifth of nine children, Walsh said his grandfather had set up similar funds for his eight siblings, but said he was the first to "get dinged" by the IRS.

"I had no idea that (money) was taxable," he said.

When, nine years later, a lien was placed on his property, he said he immediately went to a tax lawyer and filled out correct returns.

Walsh, who spent years working in the nonprofit sector before joining a Chicago investment group, pointed out a salary of $30,000 to $40,000 a year in years past.

"There is a pattern. Joe Walsh has never made a lot of money and struggled. End of story," he said.

Since the foreclosure of his Evanston condo, Walsh, his second wife Helene, and their five children have moved from a home in Winnetka to McHenry, renting a three-bedroom ranch home for $2,000 a month.

In an interview last spring shortly after news of the foreclosure broke, Walsh pointed out that financial problems should have no effect on a candidate's eligibility.

"If you think of it as a financial problem, then what's the criteria to run for Congress? Can one not be behind on certain bills? Is foreclosing on one's house a disqualifier? My answer to that would be absolutely no."

He reiterated that statement Monday.

"A conflict? Not at all. Here's the deal with me. You're seeing a lot of people rise up from the muck we all live in. Especially the last five or six years ... When stuff on the foreclosure came out in the spring, many Republicans gave me a stiff arm. The average voter wanted to put their arms around me."

Walsh's opponent, Democratic Rep. Melissa Bean, declined to comment.

The 8th District includes parts of Cook, Lake and McHenry counties.

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