Lawmaker facing spending probe benefited from donor projects

WASHINGTON (AP) - Illinois Rep. Aaron Schock, under scrutiny for lavishly redecorating his Capitol Hill office and flying aboard private planes owned by donors, has built his personal wealth off extensive business dealings with campaign contributors since entering politics more than a decade ago.

Donors built, financed and later purchased a house Schock owned as an investment in a suburb of Peoria, Illinois. Schock owns a stake in a Peoria apartment complex involving other contributors. And he pushed for a federal appropriation that would have benefited a donor's development project, an Associated Press review found.

Schock, a 33-year-old rising Republican star named senior deputy whip last year, has disclosed personal wealth estimated at between $1 million and $2 million, mostly in real estate holdings. He's made precocious business acumen a part of his appeal since joining Congress in 2009, sometimes calling himself a real estate developer.

Amid ethics complaints concerning his taxpayer-funded expenses and reliance on donors' aircraft, news of Schock's dependence on his backers in several projects raises questions about the overlap between his personal finances and their business and political interests. There is no law banning a politician from investing or profiting with donors as long as the terms are commercially reasonable.

Schock declined through a spokesman to discuss his finances with the AP. He told a newspaper late Wednesday that his real estate investments occurred at arm's length from donors.

"It's no different from when I see an opportunity," he told the Peoria Journal Star, noting that the transactions were disclosed in his public financial statements. "I've been buying real estate since I was 18 years old."

A watchdog group has called for an ethics investigation amid revelations he used congressional money to redesign his office in the style of the TV show "Downton Abbey." He also billed taxpayers or his campaigns tens of thousands of dollars in private air travel on donors' planes. His office said it's reviewing those charges and has paid back some already.

Schock's business career began early. In high school, he bought 107 acres of farmland near Peoria - property he sold to the local sewage district two years later for more than $100,000 in profit. As a college student, he bought three rental properties across the street from Bradley University, selling them to the school a few years later for a profit of more than $120,000.

Running for political office put Schock's real estate career on hold, and he earned a salary of $56,000 after he was elected as an Illinois state legislator. But donors soon helped get him back into the real estate game.

In 2007, Peoria businessman Samuel Hoerr obtained permits to build a home on a Schock-owned vacant lot in the luxury golf course development called Augusta Estates. Schock and Hoerr - himself a financial contributor - have been both listed as owners in varying local real estate records. Sam Hoerr did not respond to a telephone message left at his business. Members of the Hoerr family - a prominent Peoria family with interests in real estate and construction - have donated nearly $80,000 to Schock's campaign and supporting political committees since 2007. Schock's sister and campaign manager, Tania Hoerr, married into the family.

In 2008, according to financial records, Schock took out a loan worth between $500,000 and $1 million from Better Banks, a local banking chain controlled by Schock campaign contributor Steve Backlund. Schock told the Peoria Journal Star late that year that the loan actually was for $720,000. The property sold in late 2012 for $925,000 to a Peoria couple who also donated to Schock's House races.

His financial records show that Schock also earns between $50,000 and $100,000 each year in rental income from a Peoria apartment complex, once owned by an advocacy group that supports many conservative causes like opposing gay marriage. The National Christian Foundation received the stake in the apartments as a donation from a Schock contributor, then sold the investment to Schock and Hoerr family investments in 2007, according to tax filings reviewed by the AP. The foundation declined to comment on its role in the transaction.

Schock emerged from the deal with a 16 percent stake in the apartments, his share valued at $684,000 based on the purchase price. Financial disclosures show he borrowed more than $500,000 to pay for the apartment investments. Schock then switched that loan to Backlund's bank as well.

A year later, Schock was elected to Congress.

Backlund is active in Community Bankers Association of Illinois, which has repeatedly praised Schock for co-sponsoring legislation aiding small Illinois bankers. It's spent more than $1 million lobbying since 2010 to soften Obama administration banking regulations that the group said would hurt member banks.

In May 2010, two weeks after more than 50 Illinois bankers went to Washington to press their case to legislators and federal officials, Schock publicly backed a key association concern, warning constituents about a proposed Dodd-Frank banking regulation opposed by the association.

Backlund did not immediately respond to several telephone messages left at his Peoria office by the AP. David Schroeder, a vice president of government relations for the group, said Schock "has been a strong supporter of community banking issues, but beyond that we have no comment."

Schock has also sought to advance a donor's interests through legislation. He pushed for a legislative "earmark" beneficial to a real estate project owned by donor Alexis Khazzam, who hired Schock as a business-development consultant during Schock's time in the Illinois state legislature. Khazzam's business, Junction City Ventures, referred requests for comment to its chief executive, Chuck Hollis, who did not respond to a phone message.

Schock proposed a $1.8 million plan in 2010 to build a bicycle trail along an old railroad line in Peoria. Had the tracks stayed in place, they would have hampered plans by Khazzam to build condos and restaurants on land closer to the tracks.

"If there were railroad cars passing by in the day it would alter our investment by as much as 50 percent less," Khazzam said in a local television interview in 2010.

Schock's proposed earmark for the trail never got a vote in Congress.

In addition to Schock's investment in the Old Orchard apartments and the property at Augusta Estates, his financial disclosures also list an investment worth between $250,000 and $500,000 in a Delaware shell company, Aurelia Properties LLC, which owns land with rental properties under construction in Peoria. On Wednesday Schock disclosed the specific property it has invested in, a development called Woodsage Apartments.

"It's a group of investors, and the same thing with Old Orchard Apartments," he said.

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Associated Press writers Jack Gillum and Kerry Lester contributed to this report.