Yesterday, Politico and ProPublica published a story suggesting Rep. Mike Ross (D-AR) sold his family pharmacy in Prescott, Arkansas, to a big drug store chain for above market value.
In response, Ross, who is the lead Blue Dog Dem working on the health care bill, has responded only partially to the story's substance, without denying the key issue, and has repeatedly attacked ProPublica as illegitimate and "leftist."
Meanwhile, good government group CREW today asked the Justice Department to investigate whether Ross committed "bribery and honest services fraud by selling a piece of commercial property for more than its worth to a pharmacy chain with an interest in pending legislation." Ross calls the charge baseless.
A quick summary of the Politico/ProPublica story: Ross sold his family pharmacy to USA Drug back in 2007 for $420,000. But the county assessor valued the property at just $263,000. And an outside appraiser put the price at $198,000 for ProPublica.
The Rosses were also paid $500,000 to $1 million for the pharmacy's assets (such as drugs on the shelf) and $100,001 to $250,000 to sign a non-compete agreement. Ross's wife still works behind the counter at the store. Soon after the sale, the owner of USA Drug, which has an obvious interest in the health care bill, gave Ross a $2,300 donation.
In his defense, Ross released a statement saying he "spent $316,000 in 1998 constructing the building that houses the pharmacy and sold it for $420,000 in 2007 - the annual return on investment is less than four percent." And he says he's never done a favor for the buyer. As ProPublica notes, though, Ross has failed to respond to the key issue, that he received more than fair market price on the sale.
But that's not all. Ross has lashed out at ProPublica for being, as he put it in a tweet today, a "leftist, 'news' organization."
An official press release from his office actually calls ProPublica a "leftist group."
Keep in mind the story was actually published in arch-establishmentarian Politico.
As for whether ProPublica is "leftist," peruse the menu of calm, mainstream watchdog journalism on its Web site and judge for yourself.
A Ross staffer wouldn't elaborate on the "leftist group" phrase but sent along this Slate article about ProPublica's funders as evidence.

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commie atheist
September 23, 2009 7:45 PM
Well, ProPublica must be leftist, because its founders contributed money to Democratic campaigns and (shudder) MoveOn, as well as being friendly with John Edwards. That Slate piece is pretty weak tea, actually, full of baseless speculation and demands for these billionaires to donate their money and then step aside and let the journalists do their work. Jack Shafer can be a pretty useless hack at times.
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mcc
September 23, 2009 8:11 PM
Does calling someone a "leftist group" still discredit them?
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Richardxx
September 24, 2009 1:37 AM in reply to mcc
Tell me. Has anyone done a content analysis of right-wing reporting and blogging sites to compare them to left-wing site for how often they link to other sites for conformation, and for how near the key sites reporting on the actual events are to what really happened? Historians call that looking for original sources - the logic is the same.
My experience is that left wing sites cite others as they analyze. Right wing sites very rarely link so they are providing Limbaugh-style unsupported opinion. Which one do you think is most likely to be fact-based? When the facts are verifiable, all the reader has to do is check the logic. Logic is a process that is available to most rational readers. Verified facts are harder to obtain. Opinion and propaganda is not an adequate substitute for verified facts.
Leftist fact-based analysis versus right wing opinion and propaganda --- does that discredit the leftist groups?
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xargaw
September 23, 2009 10:23 PM
Sounds like, if you can't shoot down the message, shoot down the messenger. It's pretty apparent who Ross is representing when it comes to healthcare, and it isn't his voters or the best interests of the country. This was more than a campaign contribution. This looks pretty much like an obvious illegal bribe.
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Daniel Doyle
September 24, 2009 2:02 AM
Talk Business of Little Rock has attained documents germane to this deal between Ross and USA Drug. The Talk Business editor says they were leaked to his publication from one of the parties involved, but he won't disclose which party.
The question I take away from these documents: Is it normal for the inventory of a pharmacy to be worth more than the real estate it sits on?
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trblmkr
September 24, 2009 8:00 AM in reply to Daniel Doyle
Maybe they were using "street value"!
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Justin Elliott
September 24, 2009 9:27 AM in reply to Daniel Doyle
Interesting stuff, thanks.
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Kuyleh
September 24, 2009 12:40 PM in reply to Daniel Doyle
I have no real knowledge of land prices, so I'm not speaking with any expertise here, but with the cost of drugs nowadays, they may well be worth more than the land.
That makes a really bad statement as to our priorities as a country, though.
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aikbay
September 24, 2009 6:21 PM in reply to Daniel Doyle
I just did a google on pharmacies for sale and I'm sure CREW did much more than what I did. It is very unusual as in I didn't see one, with the inventory worth more than the land. They had a pharmacy in Nebraska that didn't have anything close to that kind of inventory and they had some what sounded like pretty big pharmacies in CA that didn't have that kind of inventory. Something fishy here.
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Daniel Doyle
September 24, 2009 2:11 AM
Having thought about it a bit more, I'm really unsure of how Talk Business got these "leaked" documents. Maybe I invented that. Because the cover letter makes it clear that it's intended to "clear up any misunderstandings the press may have about (their) transaction." Talk Business says on its blog post:
So they're carrying Ross's water? I mean, maybe ProPublica is wrong, but disclose where you got the docs. But as I was saying, maybe ProPublica ain't wrong. $450,000 for inventory? Enlighten me. Somebody.
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verite
September 24, 2009 11:03 AM in reply to Daniel Doyle
I'm curious about the $25,000 Goodwill payment under assets which is besides the $ 110,000 "no compete" agreement, a continued lease for off site storage, and retaining Ms Ross in employment as a pharmacist.
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Mrs Panstreppon
September 24, 2009 11:35 AM in reply to verite
As I described in a comment below, the sale of assets usually involves the allocation of the purchase price to assets for tax purposes. You have to consider the total purchase price compared to revenue and profitability to determine if the Rosses were paid a fair amount for their business.
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Daniel Doyle
September 24, 2009 2:29 AM
It could be that ProPublica completely overlooked the value of that inventory. I'm really curious about this. OK I'll stop commenting.
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Daniel Doyle
September 24, 2009 3:57 AM
Okay one more. The Arkansas Times editor/blogger, Max Brantley, really doesn't want to believe that Ross is out of the water either (I mean no one has proven he's not a snake), but check out what this commenter has to say:
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Mrs Panstreppon
September 24, 2009 10:31 AM in reply to Daniel Doyle
Thank you for the info which puts the sale in a different light. One, the Rosses stored inventory in a warehouse which explains why inventory was so high. Two, USA Drug valued the patient files at $155k.
I think what Politico and Pro Publica might not have considered was whether the total purchase price was reasonable in light of the pharmacy's annual revenue and profitability.
In the sale of assets, an already agreed-upon purchase price is allocated between the assets purchased based on fair market value. In reality, the allocation is usually geared towards minimizing taxes. For example, USA Drugs ascribed a value of $165k to the pharmacy's patient files which is written off over a period of time as opposed to $165k in goodwill which is not tax deductible.
Along the same line, the allocation of the purchase price to land and buildings may have been inflated for tax purposes. But that doesn't mean the total purchase price was inflated, just misallocated. Is that big deal, taxwise? Not really since these are estimated values.
Manta.com estimates the pharmacy's annual revenue is about $1.2 million. Maybe the pharmacy nets $200k in net profit. If that's true, the next question is whether the $1.4 million total purchase price was fair. A 5-6 year payback period is not unusual.
I think Politico and Pro Publica should have conducted more research before publishing the story. Some comparison to the going rate for small pharmacies in Arkansas would have been helpful.
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pablito
September 24, 2009 9:54 AM
This is great! ProPublica is unimpeachable. This mofo Ross is PISSED - back to the wall. Then again, I have no idea why he's so worried, it's not like there are going to be any negative consequences for him like losing his job or going to jail. Nancy Pelosi might disapprove though.
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ricky
September 24, 2009 11:59 AM in reply to pablito
Read the post immediately above yours.
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tmccarthy0
September 24, 2009 10:17 AM
Hey Mike Ross, your constituents want a public option, you take tons of money (900,000+) from pharma and health insurance companies, and now you don't like that all this has been brought out in the light of the day. Hahahahahaha, you sir are no democrat, and what we need is a democrat for your district, since you can't pull your head out, you will be living with MoveOn and FDL breathing down your neck, you don't like it, well I guess you should have stayed out of politics, especially since it seems like you are easily bribed.
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The Old Grouch
September 24, 2009 10:30 AM in reply to tmccarthy0
I suspect that's why he got into politics in the first place.
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Walter Mitty
September 24, 2009 10:29 AM
I wonder how much his wife gets paid for working for the lobbyist. I mean would Ross vote for something that could cost his wife her job?
Ross, like Bayh and McCaskill are married to the Health Care Industry.
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ricky
September 24, 2009 12:16 PM in reply to Walter Mitty
I wonder how you came up with the question you asked. What lobbyist? She is a pharmacist. She works for the company that bought the pharmacy she once owns and is paid the same hourly rate as the other pharmacist who works there.
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izzatxeaux
September 24, 2009 10:30 AM
hmmmmm
http://www.southernstudies.org/2009/07/meet-rep-mike-ross.html
the principle reporter on the PP story is Marcus Stern, the guy who broke the Duke Cunningham scandal. anyone familiar with how he did it is all but assured the Politico story is just the beginning of problems for the distinguished gentleman from Arkansas
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Mrs Panstreppon
September 24, 2009 10:41 AM in reply to izzatxeaux
If you read his personal finance disclosure report for 2008, ross Pharmacy Inc. is the entity that sold the assets and received the proceeds from the sale. For tax purposes, Ross Pharamcy Inc. declares a dividend each year so the Rosses can draw their profit out over time. Nothing sinister here.
As I wrote in a previous comment here, Politico and Pro Publica do not appear to have evaluated the totoal purchase price of the pharmacy for reasonableness.
Mike Ross is wrong on healthcare but I don't think he is a corrupt politician based on the evidence presented so far.
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izzatxeaux
September 24, 2009 10:46 AM in reply to Mrs Panstreppon
thanks
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Docb
September 24, 2009 10:33 AM
Ross is just one of the many that will be caught pandering to HC Corporations...At whoprofits they have a whole list of the $$ paid to Congress by all lobbyists.
http://www.projectcensored.org/top-stories/articles/6-lobbyists-buy-congress/
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ricky
September 24, 2009 12:06 PM
You state: "As ProPublica notes, though, Ross has failed to respond to the key issue, that he received more than fair market price on the sale."
He has indeed done so.He cited an article in the Arkansas Democrat Gazette which quotes a third party contacted by that paper which indicates the price was not out of line. You ignore that. And you now have documents linked in this very comments section which indicate that fair market prices may have been paid. But you "failed to respond."
It is one thing to dislike Ross's poltics. It is another to ignore the obvious.
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ched
September 24, 2009 12:30 PM
Should be easy enough to clear up whether Ross pulled a Cunningham or not: simply compare the purchase of the Ross business to the purchase of other comparable drug stores by US Drug. If the terms of the Ross purchase are more favorable, he's a scumbag. And if there are no other purchases (that is, if US Drug built the rest of their 150 or so stores from scratch), well, then he's a scumbag.
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bmags
September 24, 2009 12:39 PM in reply to ched
You can't do it like that. US Drug buying a store in an area with higher population/higher property value means the purchasing price would be higher there. The best way to do it, as said, is to look at surrounding, comparable areas.
Kudos to the job of TPM commenter Mrs. P and Ricky. I'm all for illuminating any dirty deeds of those in the pockets of health care, but to latch onto, what seems to be, not thoroughly reported scandal piece is not something I'll stand behind.
For it's part though, when I researched ProPublica, they do a thorough job of separating the foundation which funds it and the reporting, much like German paper Frankfurter Allgemeine Zeitung. But here seems to be a classic case of a reporter who got more excited about his hypothesis appearing to be true than actually being supported.
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DQKennard
September 24, 2009 2:13 PM
Setting aside the truth of the allegations (and it's probably not out of line, or at least not provably so), I do like the very idea that somebody would claim that a piece in Politico or ProPublica could conceivably be considered a leftist attack.
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notthatstupid
September 24, 2009 3:56 PM
I wish he would switch parties. He is republican material.
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