EPA

Pruitt flipped vacant lot to contributor, made $70K

Shortly after becoming Oklahoma's attorney general in 2011, EPA Administrator Scott Pruitt netted $70,000 in a Tulsa land deal with a campaign contributor who is now running for Congress.

The campaign contributor, Kevin Hern, owns a string of McDonald's franchises in the Tulsa area. Last year, he announced he would run for the Republican nomination to replace Rep. Jim Bridenstine (R-Okla.), who was not seeking another term and was confirmed last week as NASA administrator. Hern also attended Pruitt's Senate confirmation hearings in Washington.

Hern said in an interview last year that he didn't know Pruitt well until years later and hadn't known he had bought the land from Pruitt. But he had previously contributed $2,500 to Pruitt's 2010 election campaign.

"I'm friends with Scott, but I never knew he owned that," Hern told E&E News.

E&E News has repeatedly asked Pruitt's representatives at EPA about the transaction in recent weeks, but the agency has not responded.

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Pruitt's real estate transactions have come under scrutiny in recent weeks after it was revealed he'd stayed in a lobbyist's Capitol Hill townhouse for $50 a night after President Trump picked him to run EPA. The New York Times reported Sunday that when he was a state legislator, Pruitt purchased a home near the state Capitol with help from two Tulsa businessmen whom he has since appointed to top jobs at EPA.

In addition, both Democrats and Republicans in Congress have questioned Pruitt's first-class travel and expanded security. Democrats also have put forward a resolution in the House and the Senate calling on Pruitt to resign, with 170 lawmakers signing on.

Flipped

The Tulsa land deal occurred about seven months after Pruitt became attorney general in 2011. He bought the vacant lot in tony midtown Tulsa for $415,000. He got a loan for slightly more than the full sale price. The mortgage document did not list the terms. He posted an investment account as collateral.

He sold it four months later to Hern and Tulsa developer Julius Puma for $485,000. Hern and Puma had set up a limited liability company, KNJ Construction LLC, two days before the sale.

Less than a month after flipping the lot to Hern and Puma, Pruitt and his wife bought a house a few blocks away in Tulsa for $1.18 million. They moved there from the Tulsa suburb of Broken Arrow.

Hern and Puma's company built a house on the lot and sold it in 2013 for nearly $1.2 million more than they paid. Puma did not return several calls seeking comment.

A few months later, Pruitt sold the family residence in Broken Arrow for $62,000 less than he'd paid eight years earlier.

When Pruitt bought the lot, it was the subject of litigation. A report from the Center for Media and Democracy (CMD) published earlier this month in Salon said Pruitt and his wife bought it "just days before a court ruled that it had been fraudulently transferred by a Las Vegas developer who was on the hook for a $3.6 million loan default."

Owner Pamela Rooks, a fitness model, told E&E News last year she hadn't realized she'd sold her house to the attorney general of the state.

No relationship

Hern said in the interview last year with E&E News that he didn't know that he'd bought property from Pruitt.

"The guy that built my house found a piece of property that was for sale," Hern said. "He said, 'Hey, I found this piece of property; would you help me finance it?' And I said, 'Sure.' That's the extent of it. He built the house, [then] sold the house."

Told that Pruitt had made $70,000 on the deal, Hern said, "Oh, he did? That's interesting."

Hern said he didn't come to know Pruitt well until a few years later, when their children attended the same school.

Earlier this month, Hern's campaign spokesman described a more expansive role for Hern in the deal. The Tulsa World had followed up with the Hern campaign after the CMD report ran in Salon. The spokesman, Johnny Moyer, dismissed any suggestion the transaction was arranged for Pruitt's benefit.

"[Hern] bought it and developed it," the spokesman, Johnny Moyer, told the World. "Everyone's trying to [find] something on Pruitt, and they came up with this."

Hern bought two McDonald's restaurants in 1999, using "every dime that he had to his name," according to his campaign biography. He now owns 10 McDondald's restaurants that employ 400 people in the Tulsa area.

He served for a time as the finance chairman for the Oklahoma Republican Party. He announced his candidacy for Congress in March 2017 and has put at least $500,000 of his own money into the campaign. He has a commanding fundraising lead over the other four Republicans seeking the nomination. The primary is June 26.

Hern also served on the Oklahoma Turnpike Authority with Albert "Kell" Kelly, a former Tulsa-area banker and longtime friend of Pruitt. Kelly's family bank, SpiritBank, financed Pruitt's home purchase in Broken Arrow and provided the mortgage for the house near the Capitol in Oklahoma City. SpiritBank also loaned money to Pruitt to buy a stake in Oklahoma City's minor league baseball team (Energywire, Feb. 28).

Pruitt brought Kelly with him to EPA. He is a senior adviser charged with streamlining the agency's Superfund site cleanup program. About two weeks after Kelly joined EPA, he was banned from banking by federal banking regulators (Energywire, Feb. 22). The ban reportedly stemmed from a development deal unrelated to Pruitt (Energywire, Feb. 6).

Twitter: @MikeSoraghan Email: msoraghan@eenews.net

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