Heath Shuler, HRSE, and Back Taxes

Ouch.

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AP: Shuler-Linked Firm Pays Back Taxes

Saturday September 23, 2006 2:31 AM



By TIM WHITMIRE

Associated Press Writer

CHARLOTTE, N.C. (AP) - A real estate brokerage house associated with Democratic House candidate Heath Shuler belatedly paid over $69,000 in unpaid taxes Friday after The Associated Press raised questions with the campaign.

Shuler, a former star quarterback at the University of Tennessee, has a 20 percent stake in the Knoxville-based business, Heath Shuler Real Estate, which he founded with his brother, Benjie, in 1998. They sold it in 2003 to four men who formed HSRE and HSRE Properties but kept the football player's name.

A recent AP review of tax records in Knoxville and surrounding Knox County found the businesses had been chronically delinquent in paying their local taxes. The AP presented the information to the Shuler campaign this week.

Jason Rudd, a lawyer for Shuler in Jackson, Tenn., said he threatened the three principal owners - Robert Browder, Charlie Hicks and Jack Cornett - with legal action on Shuler's behalf if they did not pay the delinquent taxes immediately. Late Friday, Shuler's attorneys filed a lawsuit asking a judge to stop HSRE and HSRE Properties from using the name ``Heath Shuler.''

The complaint said the defendants have operated the business in a way that ``brings into question the reputation, ethics and/or morals of'' Shuler. Rudd said Friday he expects Shuler will give up his minority ownership stake, but needs to remain involved to ensure enforcement of a contract provision allowing him to remove his name.

Fred Sisk, chief deputy trustee for Knox County, confirmed Friday that HSRE and HSRE Properties had paid their county tax bills. A city spokesman, Randy Kenner, said just over $1,400 of the money owed the city was paid Thursday, but the later payment likely wouldn't show up until Monday.

Shuler is running for the House in western North Carolina's 11th Congressional District, seeking to unseat eight-term Republican Rep. Charles Taylor. The race is among those Democrats have high hopes of winning as they push to regain control of the House.

Rudd said Shuler, a former NFL quarterback, has not been involved in day-to-day management of the brokerage since 2003. But his name is prominently tied to the business throughout Knoxville, where Shuler played football in the early 1990s. The Heath Shuler Real Estate logo, seen throughout town on billboards and signs, features the distinctive orange-and-white checkerboard painted in the end zones of Tennessee's Neyland Stadium.

``I have been assured twice in the last six months that these past due taxes would be paid,'' Rudd wrote in an e-mail Thursday to Browder. ``HSREs ongoing refusal to operate its business in accordance with the law is causing extreme embarrassment to Heath.''

In an initial e-mail response to Rudd, Browder said the company did not have the money to pay its 2005 tax bills. However, he told Rudd late Friday morning that all overdue bills had been paid.

The AP review found:

- HSRE Properties had owed the City of Knoxville $38,896.89 in overdue property taxes and penalties for the 2004 and 2005 tax years for the company's 1.84-acre headquarters site in Knoxville. That debt was listed on a roster of delinquent tax payments issued earlier this month by the city.

- The city had been owed an additional $8,122.72 in tangible personal property taxes and penalties for tax years 2004 and 2005 on a pair of Heath Shuler Real Estate offices. Such taxes cover office equipment and other property owned by a business.

- HSRE Properties had owed the county $17,183.14 in unpaid 2005 property taxes, as well as $5,048.12 on overdue taxes on tangible personal property.

``Ninety-six percent of Knox County taxpayers paid their taxes on time last year,'' said Sisk, the Knox County tax official, before the taxes were paid. ``Some people just don't have the money to pay. For those people, you feel sorry. These people can pay, they just choose not to pay.''

In June, Rudd wrote to Browder and expressed Shuler's concerns ``about the business, and about the continued use of his name having an adverse affect on his reputation in the community.'' In that letter, a copy of which Rudd provided to the AP, Rudd said Shuler wanted to exercise his right to remove his name from the business.

But after receiving assurances that the problems were being dealt with and that the taxes would be paid, Rudd said, ``we kind of backed off to give them a chance'' to straighten things out.

The AP's review also uncovered two unresolved tax liens held by the state of Tennessee on now-dissolved Shuler-owned companies, Heath Shuler Real Estate Commercial and Heath Shuler Auctioning. Shuler created both companies in the late 1990s with the intention of using them for spin-offs from the main real estate business, but never did anything with them, Rudd said. They were administratively dissolved by the state of Tennessee after the companies failed to file annual reports.

However, because the state never received a 1999 corporate franchise and excise tax payment for the two companies, it eventually filed liens seeking the money in 2002, Rudd said. The liens total $883.65 each. Rudd said Shuler authorized him Thursday to pay those bills after the AP contacted the campaign.

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The Guardian.

Commentary

Heath, this is directed at you. Willingness to throw others under the bus, especially business partners is very revealing about your character. I don't believe this situation is entirely your fault, but your response is.

I am also interested in seeing how your supporters respond to this embarassing situation.