Watchdog seeks probe into sale of Ross drugstore

[September 24, 2009]  PRESCOTT, Ark. (AP) -- A watchdog group asked the Justice Department on Wednesday to look into the 2007 sale of a drug store owned by a congressman who is a key figure in the national health care debate after reports he may have profited excessively from the sale.

The group Citizens for Responsibility and Ethics in Washington questioned in a complaint whether the $420,000 that USA Drug paid Rep. Mike Ross for his family-owned Holly's Health Mart in Prescott was a fair price. The deal was first reported this week by the Web site ProPublica.

Documents show that, after the sale, the Nevada County assessor valued the property at $263,700. An appraiser hired by ProPublica valued it recently at $198,000.

Ross on Wednesday called the complaint a "bogus ... political stunt" and has said there was nothing improper about the sale. He said the $420,000 transaction reflected a 4 percent annual return on a $316,000 investment he made in 1998.

Late Wednesday, Ross' office released a letter from USA Drug CEO and President Joe Courtright that showed owner Stephen L. LaFrance also paid Ross and Ross' wife, Holly, $724,420 for the pharmacy's assets. According to the letter provided to The Associated Press, Holly Ross was paid $108,000 to not compete with the new owners. The congressman and Ross Pharmacy Inc. were each paid $1,000 as part of the non-compete agreement, according to the letter.

Campaign finance reports show LaFrance also gave Ross a $2,300 campaign donation two weeks after the sale and another $500 last November.

The letter from Courtright was released after Ross asked the drug store chain to waive a confidentiality agreement that he said prevented him from providing additional details about the sale. Financial disclosure documents filed by the congressman had listed ranges, but not the specific amounts paid.

"I have nothing to hide," Ross wrote to the company.

Courtright also said in the letter that the company leases a 2,300-square-foot warehouse in Prescott from Ross for $330.75 a month. Courtright said the company's initial monthly rent was $300, but there is a 5 percent increase on June 1 of every year.

USA Drug earlier Wednesday referred calls to Courtright, who did not return a telephone message left with his voice-mail system.

Ross is the chairman of the health care task force for the fiscally conservative Blue Dog Democrats, whose support is critical for health care reform. Pharmacies have an interest in how the health care debate turns out because of its potential impact on drug prices.

In a statement, Ross accused ProPublica of engaging in "gotcha politics."

"Outside groups are trying to taint a completely legal and respected small business that my wife and I worked hard for 14 years to establish," Ross said. "The buyer did not just buy brick and mortar; he bought a successful, trusted, centrally located and profitable pharmacy in my hometown," Ross said.

[Associated Press; By ANDREW DeMILLO]

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