Jared Kushner "enriched himself" by not revealing his ownership of a real estate tech business that raised millions of dollars while he served in the government, said a member of the House Judiciary Committee, calling it part of a pattern of unethical behavior that he believes should cause the White House Senior Adviser to be stripped of his security clearance.
Congressman Ted Lieu told Newsweek that Kushner's failure to list a company called Cadre on his initial financial disclosure forms—an oversight that could mean millions for the president’s son-in-law—is an ethical lapse that should have severe ramifications.
"It appears [Kushner] ended up being the beneficiary of that omission," said Lieu, a California Democrat. "He enriched himself by failing to disclose the asset."
Kushner’s lawyer has said that her client’s failure to list Cadre on the initial filing in March was merely an "administrative error." But that "error" allowed Kushner to maintain a stake in the start-up at a time when the three-year-old business doubled its venture funding from rich private investors.
Kushner's failure to cite Cadre on his financial disclosure form came as the Office of Government Ethics was deciding whether to grant him a Certificate of Divestiture, which requires incoming government employees to divest "100% of all financial interests" from listed companies so they don't violate conflict-of-interest laws. It also allows those government employees to sell their assets without paying heavy capital gains taxes.
The timeline suggests more than just an inadvertent oversight, but an effort by Kushner to hold onto Cadre rather than be forced to divest his interests in the emerging company, according to ethics experts.
On March 9, Kushner submitted his original financial disclosure form to the Office of Government Ethics. It did not specifically list Cadre as one of Kushner's assets, though he co-founded the company with his brother, Joshua Kushner and his Harvard classmate Ryan Williams, who remains Cadre CEO.
The company was already attracting attention in New York's real estate and tech circles because of its promise to disrupt both industries by allowing investors to buy shares in real estate developments much like they would buy shares of companies on the stock market.
Kushner’s lawyer says Cadre was not specifically cited on the March 9 form because his holding company, BFPS Ventures, acquired his interest in Cadre on February 17. That transaction appears to be noted on his financial records as a $100,000 to $250,000 sale.
But that amount does not match subsequent disclosures. When Kushner finally amended his financial disclosure form on July 21, he valued his interest in Cadre from $5 million to $25 million.
That disclosure came after Cadre had raised $65 million more in venture funding from major donors including Andreessen Horowitz, adding to a list of prominent venture capitalists such as Democratic donor George Soros and tech entrepreneur Peter Thiel.
The disclosure form suggests that Kushner has not fully divested from Cadre. Indeed, a representative for the start-up told Newsweek that Kushner maintains "a small, passive investment," but has "no operational or advisory role," describing the cofounder as "an early investor in the company."
Government watchdogs have a problem with Kushner’s continued ownership of Cadre.
"Mr. Kushner co-founded Cadre and continues to own a significant part of it," the nonprofit Citizens for Responsibility and Ethics in Washington wrote to then-Ethics Office Director Walter Shaub on July 6. "As a result [the Ethics Office] appears to have granted the certificate of divestiture based on incomplete information."
Shaub, who resigned on July 19 from the ethics office complaining of the Trump administration's disregard for conflict-of-interest guidelines, never signed off on Kushner’s Certificate of Divestiture. Instead, it was approved by the office's general counsel, David Apol on July 20, the day after Shaub quit. Apol replaced Shaub the next day. The New York Times described Apol as having "a much more cordial relationship with the White House" than Shaub.
Kushner's failure to include the full value of Cadre in his initial filing likely allowed him to hold onto most of his interest rather than be forced to divest, Citizens for Responsibility and Ethics in Washington says. And had Kushner revealed his ownership in Cadre, the company might not have been as attractive to investors, who would obviously be keen on putting money into a company so closely linked to a person inside the White House. A Kushner representative admitted that investors would certainly have known about Kushner’s holdings in Cadre from publicly available information, which concerns ethics experts.
"(Kushner) could potentially have been wanting to not disclose this asset as the latest round of funding was happening," Elana Fine, executive director of the Dingman Center for Entrepreneurship at the University of Maryland, College Park, said. "When a venture capitalist like Jared Kushner invests in a company, they’re always expecting a return on that investment."
The type of business Cadre does is also noteworthy because it sits at the nexus of Kushner’s two power bases: real estate and, now, politics.
Cadre operates as an online platform, connecting wealthy investors like Soros, for example, to emerging real estate properties in which they can buy partial ownership. The billionaire was one of Cadre's initial key investors, opening up a $250 million line of credit between his family offices and Kushner’s start-up.
But ethics experts think the real estate investing platform may allow foreign investors to hide their identities to the public, though not to Cadre insiders.
"It's a novel kind of business," said Virginia Canter, who is executive branch ethics counsel for Citizens for Responsibility and Ethics in Washington. "Because of the real estate interests that can be traded on the platform, and who can be buying and selling that real estate, [Kushner’s] financial interest in Cadre concerns me … You can have foreign governments or other individuals who have significant interests before Jared Kushner. This is the man responsible for Middle East peace talks and the American Innovation office.
"The point is, Cadre could result in a benefit to him and there’s no way for us to have any insight or to hold him accountable," she added. "In any other administration, he’d be required to divest of this asset. You line this up with [Kushner's] failures on his security forms … and it’s a lot to just say it was an inadvertent failure. It looks like it’s a systemic problem and, in some cases, more than that."