Democratic senator Claire McCaskill accused of 'clever tax avoidance' as her husband makes huge profit from offshore hedge funds she targeted for crackdown

  • Missouri Democratic senator Claire McCaskill sponsored 2009 legislation to crack down on the use of offshore tax funds 
  • But her husband Joseph Shepard disclosed that he invested $1 million in one and made a profit of between $230,000 and $2.1 million
  • Republicans claimed her family was involved in 'clever tax avoidance' while McCaskill said she and her millionaire husband file taxes separately 
  • Senator was mocked by Donald Trump when it turned out she used her husband's private plane during what she said was three-day campaign in her RV

Four years after Democratic Sen. Claire McCaskill co-sponsored legislation targeting tax havens such as the Cayman Islands, her husband began investing in a hedge fund tied to the Caribbean nation - an investment that has paid off handsomely.

The Kansas City Star reported Wednesday that Joseph Shepard has invested $1 million in Matrix Capital Management and that it has earned him between $230,000 and $2.1 million in income. The Star cited McCaskill's financial disclosure forms, which only show a range of income.

Shepard declined the newspaper's request for comment. He and McCaskill file their taxes separately.

Rich: Claire McCaskill co-sponsored legislation targeting tax havens such as the Cayman Islands - but her husband Joseph Shepard has invested $1 million in Matrix Capital Management a hedge fund which uses the islands, earning between $230,000 and $2.1 million in income

Rich: Claire McCaskill co-sponsored legislation targeting tax havens such as the Cayman Islands - but her husband Joseph Shepard has invested $1 million in Matrix Capital Management a hedge fund which uses the islands, earning between $230,000 and $2.1 million in income

McCaskill is running for re-election this year. Campaign spokeswoman Meira Bernstein said the senator has no involvement in her husband's investments.

'Claire does not make decisions on public policy based on what's best for her husband; she makes decisions based on what is best for the people of Missouri,' Bernstein said in a statement. 

'That's why she voted against the recent tax bill that primarily benefited large corporations and the wealthy. And it's why she supported the Stop Tax Haven Abuse Act.'

If Shepard declares his investment on his taxes, the earnings would be subject to capital gains tax in the U.S., though the capital gains rate is lower than the income tax most working Americans have to pay.

But the National Republican Senate Committee said in a statement that while McCaskill's family 'uses clever tax avoidance schemes to lower their own bill, the Senator continues to champion higher taxes for Missourians,' citing her opposition to last year's tax cut bill.

Hedge funds are unregulated funds from wealthy investors and trade in everything from commodities to real estate and complex derivative investments. The private investment funds use sophisticated techniques to try to achieve higher returns than the stock market.

McCaskill co-sponsored the unsuccessful 2009 Stop Tax Haven Abuse Act. The measure targeted the Cayman Islands among several countries identified as tax havens 'engaged in economic warfare against the United States, and honest, hardworking Americans.'

Had it passed, the legislation would have affected hedge funds located in the Caymans but managed and controlled from the United States.

McCaskill's financial disclosure forms identify Matrix Capital Management's location as Waltham, Massachusetts. The U.S.-based fund feeds into a 'master fund' located in the Caymans, which makes the actual investments.

The structure is legal and common for hedge funds. President Donald Trump has investments in hedge funds that have similar structures, according to a personal financial disclosure form filed in 2015 during his presidential campaign.

Trump himself mocked McCaskill as he endorsed her Republican rival earlier this month, after it was revealed that she flew on her own private aircraft rather than ride a campaign RV during a three-day tour of her state.

'Senator Claire McCaskill of the GREAT State of Missouri flew around in a luxurious private jet during her RV tour of the state. RV's are not for her,' the president tweeted.

'People are really upset, so phony! Josh Hawley should win big, and has my full endorsement.'

The Republican National Committee had been flooding reporters' in-boxeswith emails calling McCaskill 'Air Claire.'

The Democrat confirmed she used her own aircraft, a small turboprop, for parts of the May campaign swing, an admission that is likely to cause political headaches in her tough reelection battle.

She said her campaign was 'hitting the road' in an RV to tour the state, but crowdsourced flight information indicated her million-dollar private plane followed the same campaign route, the Washington Free Beacon reported. 

Sen. Claire McCaskill and her campaign heavily promoted a Missouri-wide RV tour on social media but she wasn't on the bus for the entire three-day campaign swing

Sen. Claire McCaskill and her campaign heavily promoted a Missouri-wide RV tour on social media but she wasn't on the bus for the entire three-day campaign swing

McCaskill owns a single-engine turboprop plane like this one (file photo), and it flew the same route as the RV

McCaskill owns a single-engine turboprop plane like this one (file photo), and it flew the same route as the RV

President Donald Trump blasted McCaskill on Wednesday and endorsed her opponent, Republican Josh Hawley

President Donald Trump blasted McCaskill on Wednesday and endorsed her opponent, Republican Josh Hawley

The senator said while she made a few legs of the trip on the plane, she took the RV so much a 'broken drawer drove me crazy.'

'I added some stops with the use of the plane, but I was on the RV so much that the broken drawer drove me crazy,' McCaskill told Politico, adding that 'I even lost an iPad around a corner on the RV.' 

 She disputed the notion that the use of the plane allowed her to 'pretend' that she was using an RV on her three-day campaign blitz.

'I spent two-plus days on the RV,' McCaskill said, and the plane 'picked me up at the end of one day, after I spent all day on the RV' before being used to add 'some stops.'

The RV wasn't used during that added portion of the tour, she said.

'Anybody could have followed me. They could have seen when I got off the RV and when I went and got on the airplane,' she continued, describing the report as 'election-year silliness.' 

The aircraft is a single-engine turboprop valued on McCaskill's Senate financial disclosure forms at more than $1 million.

McCaskill has taken steps to hide the use of her plane, the Washington Free Bacon said.

In a 2017 email obtained by the Washington Free Beacon, McCaskill asked the Federal Aviation Administration to block radar tracking information on her plane from being publicly broadcast on the internet.  

But websites such as ADS-B Exchange use a different type of data transmission to make tracking information available to the public.

The GPS-based data transmitted by McCaskill's plane for the days of her RV tour indicates that it was used to travel between campaign stops.

All indications from the McCaskill campaign were that she was traveling on the RV. 

The campaign noted 'Big Blue' - as they nicknamed it - traveled 700 miles and also made fundraising appeals to fuel it complaining, 'gas is expensive.'

'It costs us $200 just to fill up the RV and with the number of places we plan on going—that adds up fast,' the campaign wrote. 'Will you pitch in just $5 today to help fund our RV tour and power us to a victory in November?'

McCaskill has gotten into trouble in the past for using taxpayer money to fund her private plane travel. This year she has been paying its operating costs out of her own pocket. 

Campaign filings from 2017 showed she was spending about $7,000 per month to use it.

In her 2012 race, McCaskill reimbursed the federal government for all of her flights on the plane – close to $90,00.

She and her husband, wealthy St. Louis businessman Joseph Shepard, also had to pay back personal property taxes on the aircraft - forking over roughly $320,000 in back taxes and penalties.

Later the family 'sold the damn plane' as McCaskill called the problem vehicle.

However, in December 2013 her office announced her husband's company had purchased another small aircraft.

'Claire may occasionally use the plane, but will always do so at her own expense. Even if she uses the plane for Senate travel, Claire will never seek reimbursement from the Senate,' the statement said.