Sunday, July 14, 2024

Hallowed ground

By Edward Martin

Sensually, two women caress and sway in a darkened room. Suddenly, with a jolt, masked men brandishing Kalashnikovs storm out of a wall of flames. “Moral decay, terrorism!” an alarmed voice intones. An instant later, a somber man in suit and open collar, his temples creased after 67 years, looms into the camera’s focus, flanked by an American flag. “We need a trusted leader like Robert Pittenger to keep America safe,” croons the commercial’s narrator as a doting mother playfully tosses her toddler in the air.

That’s the half-minute political profile of Charlotte’s Republican congressman, a Texan who arrived an outsider in North Carolina in 1985. Tough on terrorists, unyielding Christian conservative, champion of traditional values.

There’s another Robert Pittenger, however. That’s the ultimate insider, the Robert Pittenger of metes and bounds, surveys and deeds. Of feasibility studies and urban plans and highway interchanges. Mixing an expertise in real-estate investment with old-fashioned country-club networking, he created a land-swapping empire by leveraging $300 million of other people’s money — in this case, a who’s who of North Carolina’s establishment including several Belk family members; Panthers owner Jerry Richardson’s wife, Rosalind; Parkdale Mills CEO Andy Warlick; McDonald’s mogul Mike Haley; some of the state’s most prominent politicians and about 1,800 others. In the process, he amassed a net worth that once topped $50 million and helped propel his political career.

As he’s become North Carolina’s wealthiest politician, Pittenger has mastered the art of melding business and religious connections into votes. He emerged from the sex-and-drugs college scene of the early 1970s as a Campus Crusade for Christ staff member who helped connect founder Bill Bright with wealthy conservative evangelicals. After a decade traveling around the world with Bright, Pittenger used similar fundraising skills on his own behalf, creating 72 partnerships to buy undeveloped tracts, then reselling the land to developers. In four counties adjoining Charlotte alone, Pittenger Land Investments LLC came to hold about 11,000 acres with an estimated value of more than $100 million.

“I became a Christian in college, and that is who I am,” Pittenger says in a telephone interview. “I don’t wear it on my sleeve, but I’m not going to deny my faith. I don’t know what a Christian businessman is. The core of my business is business.”

But in 2015, three years after his election to Congress, controversy embroiled Pittenger as disgruntled clients complained about his business practices and federal investigators studied links between his business and political interests. Members of Congress can’t engage as fiduciaries managing others’ investments because of potential conflicts of interest, so Pittenger signed over the business to his wife, Suzanne, in 2013. Pittenger won’t say if money changed hands in that transaction. In June, the business sold for $35 million, representing a 10% interest in 51 limited partnerships. The buyer, a joint venture between investors and Charlotte-based South Street Partners, paid Pittenger Land $6 million. As land is sold, payments that could be worth as much as $29 million will be distributed to the joint venture.

That same month, Pittenger won his primary re-election by 133 votes, defeating two contenders who split the anti-incumbent sentiment. Had he faced either Mark Harris, a Baptist minister in Charlotte, or Todd Johnson, a Unionville insurance agent, in a one-on-one contest, “it’s almost certain that Pittenger loses,” says Eric Heberlig, a political science professor at UNC Charlotte. Now, with a district that leans heavily Republican, he’s expected to easily win a third term in November.

Pittenger confirms that investigators at the FBI and IRS have “been at it for 15 months,” though he hadn’t been interviewed as of mid-July. “Whatever they have asked for, they got it.” His lawyer, Kenneth Bell, of Charlotte’s McGuireWoods LLP, denies any wrongdoing. Charlotte FBI spokeswoman Shelley Lynch won’t discuss the case.

The federal inquiries involve adequate disclosure to investors and potentially illegal funnelling of corporate money into his 2012 campaign in which he defeated former Mecklenburg County Sheriff Jim Pendergraph, according to people who have been interviewed by investigators for as many as eight hours. Records show Pittenger gave $1.6 million and loaned his campaign another $644,000, with thousands more coming from his wife. That campaign showed Pittenger’s willingness to play rough, particularly in a color brochure picturing a sobbing girl. “The caption above the picture said the little girl was sexually molested because Sheriff Jim Pendergraph couldn’t keep up with his sex offenders,” says Mecklenburg County’s sheriff from 1994 to 2007. “What a lie. It left my wife a basket case, but there was nothing I could do about it. He spent $2.7 million attacking me, and I had $400,000 to spend.”

The election continued a pattern in which Pittenger mixes piety, personal wealth and a well-laid pipeline to the wealthy to overcome business and political obstacles. That’s not rare in politics, of course. But in North Carolina, Pittenger stands out because his average net worth was an estimated $55 million in 2012, according to the Center for Responsive Politics, a Washington, D.C.-based nonprofit that tracks Congress. Two years later, with Pittenger Land transferred to his wife, his net worth was $14 million. He still ranks as the 43rd richest member of the 535 House and Senate members, according to Santa Barbara, Calif.-based InsideGov, a research company. Among North Carolina’s delegation, Sen. Thom Tillis is second, with a net worth of at least $9 million. “With real estate you don’t know the value until it’s sold,” Pittenger says. “I wouldn’t contest the real numbers.”

Pittenger’s wealth stems from a creative approach on land development that has divided appreciative investors, such as former Gov. Jim Martin, and skeptical ones, including a few who have publicly criticized Pittenger’s tactics. “He’s very thoughtful,” says Martin, who invested with Pittenger after his term ended in 1993 and is a golfing buddy. He also praises the congressman’s “high level of moral character,” while describing disgruntled investors as whiners who misunderstood the long-term nature of real-estate development.

Among Pittenger’s critics is Frederick Becker, mayor of Mineral Springs, a small Union County town. In the early 2000s, Becker, mayor since 1999, and other town officials unsuccessfully opposed plans enabling nearby Waxhaw to annex Pittenger-owned land. The annexation, which required approval by state lawmakers, permitted more housing units per acre than Mineral Springs favored, stunting its hopes for growth while increasing property values by at least 25%. Pittenger’s companies had acquired land before he was elected a state senator in 2002, and he lobbied for the annexation and then supported it while serving in Raleigh. “It might not be illegal for him to vote on a bill that made him an extra $10 million, but the word that comes to mind is unethical,” Becker says. “It stinks to high heaven.”

At a public hearing to discuss the zoning issues in 2000, Becker recalls a confrontation with Pittenger. “We were all rookie council members and he started in on us,” he says. “He was just plain nasty. He said, ‘Do you know who I am?’ I said, ‘Well, who are you?’” According to Becker, Pittenger responded, “I’m a landowner, a big one, and maybe when you all get some sophistication and education, you might realize how far off base you are.”

Pittenger says he doesn’t remember Becker and that his companies never bought land in Mineral Springs. The annexation “was our business, [Waxhaw’s] and none of his.”

Texas roots 

Robert Pittenger learned the business ropes early. His family is remembered in Austin, Texas, particularly at the University Christian Church on the University of Texas campus where his late father, Bill, was a revered member through his death in 2006 at age 91. Pittenger’s grandfather, Chester, moved his family to Texas from Ohio during the Depression. By the 1940s, Bill was practicing law and married to a fellow UT graduate, Doris. The couple had four children, including Robert, born in 1948. “I was five years younger than my youngest sister, so I was with my mom and dad a lot,” Pittenger says. “When they went out with their friends, I’d tag along with them. I learned how to be responsible.”

By Robert’s grade-school years, Bill Pittenger was president of a company that made school textbook covers, though he later returned to practicing law. He helped start the city’s Headliners Club, a private venue overlooking downtown. The Pittengers belonged to the Austin Country Club, mixing with future professional golfers Ben Crenshaw and Tom Kite and their families. Robert Pittenger told his friend John Fraley Jr., a Gaston County real-estate agent, that he once defeated Crenshaw in a junior golf competition. Fraley thought he was joking.

In 2003, Pittenger joined his father, then in failing health, and Fraley at the Masters tournament in Augusta, Ga. “Me and Robert and Mr. Pittenger were on the second floor of the clubhouse having lunch when Ben Crenshaw walked up the steps,” Fraley says. “He’d just finished playing his 18 holes. He looked over and said, ‘Why, Mr. Pittenger!’ and ‘Hello, Robert,’” Fraley adds. “He came over and gave Mr. Pittenger a big man hug. We realized then that Robert hadn’t been lying about beating Ben Crenshaw.”

His father’s conventional world contrasted with the late 1960s campus where Robert was majoring in government. When Pittenger graduated in 1972, defiant counterculture bands such as Commander Cody and His Lost Planet Airmen and redneck-turned-hippie Willie Nelson were Pied Pipers to pot-smoking UT students. The city earned its “Keep Austin Weird” sobriquet in that era.

Pittenger took a different path. While in college, he sold men’s clothing and engraved invitations and worked as a legislative aide. Always a church member, he says he became a devout believer as a senior when a Kappa Alpha fraternity brother introduced him to Campus Crusade, started by Bright in the 1950s. He helped the group organize a Christian music festival in 1972, called Godstock, a play on 1969’s Woodstock rock festival in New York. It attracted 85,000.

After a brief post-college foray into Texas land sales, Pittenger returned to Campus Crusade and became Bright’s administrative assistant, helping raise money from Christian donors globally, says George Turner, a George Mason University professor who authored a book on the evangelist. It was his “biggest learning curve,” Pittenger says. At the ministry, Pittenger met a crusade staffer who attended Gardner-Webb University in Boiling Springs. After three dates, Suzanne Bahakel and Pittenger got married in 1978. In 1985, he left Campus Crusade and moved to Charlotte, where Suzanne’s late father, Cy Bahakel, ran a company of more than a dozen radio and television stations and served in the N.C. Senate from 1972-76. In his late 30s, Pittenger formed Pittenger Land Investments Inc. to create real-estate partnerships. With his Bahakel connection, doors opened to members of power centers such as Quail Hollow Country Club and Charlotte Country Club.

Cy Bahakel never invested with Pittenger, who has said he didn’t ask him for money, according to two people familiar with the broadcaster and his family. But he urged the developer to join the secretive Council for National Policy, which included U.S. Sen. Jesse Helms, Marine Corps lieutenant colonel and political commentator Oliver North, and the Rev. Jerry Falwell, co-founder of the Moral Majority movement. The group helped Pittenger boost his political credentials with conservatives. “Robert was as conservative as you could want,” says Carter Wrenn, Helms’ key fundraiser. Pittenger’s aggressive style rubbed some politicians “the wrong way, but I thought he always tried to do the right thing. I know whenever I needed something in a political campaign or whatever, he always tried to help.”

Pittenger lost a bid for the N.C. Senate in 1992. But his interest in politics didn’t wane, says Jesse Helms Center President John Dodd, who recalls Pittenger as among his first contacts when he joined the Wingate-based nonprofit in 1994. “Sen. Helms told me he had a guy he was friends with, and he could be helpful.” Pittenger was a board member at the center, which promotes free-enterprise policies, from 2000-09. By 2002, when he defeated incumbent Fountain Odom for an N.C. Senate seat, his imprint on politics and commerce was solid.

Table conversation

In the Queen City, Pittenger raised his profile by founding the Charlotte Foreign Policy Forum, which attracted speakers including former Presidents Gerald Ford and Ronald Reagan and former British Prime Minister Margaret Thatcher. Some received more than $70,000 to speak to a few hundred people, typically at Quail Hollow Country Club, with tickets priced as high as $400. While table subscriptions covered most costs, Pittenger “took the lead risk and people appreciated it,” Martin says.

Pittenger’s ambitions caused a stir in 2007 when U.S. Rep. Sue Myrick kicked him off her finance committee. First elected in 1994, she had accused him of spreading a lie that she’d cut a deal to not seek re-election in 2008 and would endorse Pittenger as her successor. Myrick was re-elected in 2008 and 2010, then retired. She endorsed Pittenger’s opponents in 2012 and this year. Myrick’s opposition contrasts with support from Sen. Richard Burr, Rep. Patrick McHenry and Martin, Pittenger says.

By the time he ran for Congress, Pittenger had a strong network of supporters, aided by his friend Fraley, who played a key role for Pittenger Land. Fraley’s father was chief executive officer at Cherryville-based Carolina Freight Carriers, one of the largest U.S. truckers before its sale in 1995 to Arkansas Best Corp. Fraley says he encouraged about 400 people to invest about $50 million in Pittenger Land between 1999 and 2014. In Charlotte, Pittenger cultivated high-powered friends such as Quail Hollow neighbor Felix Sabates, an entrepreneur who hosted a $10,000-per-person fundraiser for the congressman this year. But it was another iconic Tar Heel businessman who had particularly helped Pittenger’s business blossom.

Belk ties 

On slow drives through the Carolinas countryside in the early 1980s, Pittenger and William Wilson would discuss real estate and patient money. Wilson, now retired, was the top real-estate executive at Belk Inc. and an investment adviser of the late John Belk, chairman of the largest privately held department store chain. “When Robert first started in business, John said, ‘I wouldn’t mind investing some money in some of those projects he’s working on.’” Wilson says. “I never invested on my own, but I’d get with Robert, and we’d ride out and take a look at the property and the prospectus, and then John would tell me how much to invest.”

Wilson recommended three or four Pittenger-related deals, probably in the $50,000 to $200,000 range, and each panned out well, he says. “If we put $50,000 in and five years later, the return was $125,000, we felt pretty good about it.”

Suddenly, Pittenger’s pitches became irresistible to many wealthy North Carolinians. Belk “wrote some letters on my behalf. It opened a lot of doors,” Pittenger says. “I will always be grateful for that. Nobody had the stature of John Belk.”

As growth escalated in Charlotte, the land deals paid off for some investors. A marketing pitch in 2007 said “our success in determining future paths of progress in land development within the Southeast earned annual returns on average of 18%,” including fees. The brochure included testimonials from investors and UNC Charlotte economist John Connaughton, who praised the company’s due diligence and “outstanding investment returns.” Connaughton consulted with Pittenger for 18 years, according to the document. He declined to discuss his work, citing “the investigation.” Asked about the 18% estimate, Martin says some partnerships’ returns were in the 12%-plus range, “with little or no risk.”

Other investors say those returns are exaggerated and don’t take into account partnership holdings that never sold. Many Pittenger investors knew little about real-estate and how quickly their investments would pay off, says a veteran N.C. developer, who asked to remain anonymous. “Robert came to me and said, ‘I need you in my deals,’ and ‘I’ll make you a special deal,’ which I thought was highly unethical. And he’d send me his deals unsolicited and call me up saying, ‘Let’s play golf.’ I always said no.” Pittenger says no one received any special treatment.

Pittenger’s business model was relatively simple: Chart the course of development, usually linked to potential highway construction plans, then acquire land in hopes of being in the path of progress. He had seen growth spurred by freeway expansions in Dallas in the 1980s, he says, so news of an outer belt ringing Charlotte spurred him to action.

The key is acquiring the land before development plans are announced, which escalates prices. Attaining insider knowledge is a hallmark of real-estate investing, but it gets murky when politicians and zoning boards with potential conflicts of interest get involved. Pittenger has denied that his companies used any illegal means of attaining insider knowledge.

Typically, a Pittenger-related entity would buy land, then sell it for at least 10% higher to a limited partnership. In a Chatham County transaction, Pittenger’s Vanguard Properties of the Carolinas LLC paid $5.4 million for a property, then sold it to partners for $6.7 million, according to county property records. The practice is rarely used in land development, according to three veteran Charlotte developers who asked to remain anonymous. Pittenger disclosed the fee to investors as necessary to compensate Pittenger Land for lawyers, economists and real-estate analysts. The company also retained a 10% stake and collected management and brokerage fees. “You could read the language in the early investment summaries, but only with a telescope or a microscope, it was so fine-printed,” says a person familiar with the company, who asked to remain anonymous. “Even though I know Robert is a Christian and a man of faith, his business ethics and Christianity don’t equalize each other.”

Pittenger scoffs at criticism of markups, comparing it to a silk scarf that costs $15 in China and $500 at Charlotte’s SouthPark mall. “Am I to go back to the SouthPark store and say, ‘I don’t like your markup?’ That’s part of real estate.”

Most investors didn’t mind, as land values kept rising. Many undeveloped tracts acquired by Pittenger’s partnerships now bustle with shoppers running errands or children riding bikes through well-manicured subdivisions. But the worst real-estate downturn since the Depression struck in 2008, affecting Pittenger and almost everyone else. “What got Robert was when the recession hit and people quit building and buying land,” Wilson says. “He was a victim of circumstances.”

Because there was no debt, the partnerships’ properties weren’t taken over by bank lenders, as happened to many developers. Martin recalls investing in an unrelated “project that was heavily leveraged, with visions of sugar plums in my head. But when the market turned sour, I lost it all when the loans were called.” Unfortunately for investors, plans to sell property at escalated values haven’t panned out as quickly as expected. Some land in partnerships created more than 15 years ago remains undeveloped, with limited partners paying annual property taxes and other expenses.

While Wilson, Martin and some others say they are pleased with their long-term returns, at least 50 have complained that Pittenger Land didn’t disclose markups that ran as high as 70% and that sales have lagged, despite improving real-estate prices. With legal pressure mounting, they pushed for a settlement.

In June, management of the company was transferred to South Street Partners, a 7-year-old Charlotte firm led by Patrick Melton, a UNC Chapel Hill graduate with experience in resort properties. In 2013, South Street acquired a company that owned hundreds of acres and two golf courses at Kiawah Island and Johns Island, near Charleston, S.C., along with the Doonbeg Golf Club in Ireland. It sold Doonbeg to Donald Trump a year later.

The deal with South Square “represents a win-win for all parties involved,” Suzanne Pittenger said in a statement. She is now seeking to sell the family’s remaining interests, according to people familiar with the matter. It may not be the outcome Robert Pittenger envisioned more than three decades earlier, but he’s moved on.

“I love what I do,” he says of his work in Congress. Stopping the money flow to terrorists, who he says extort, rob, loot and plunder to pay for their horrific acts, is now his priority. So is restoring global faith in the United States, perhaps echoing his early career at Campus Crusade. “We’ve lost the trust the world has in our moral authority.” The business career that made him rich is over, he says.

At a spring fundraiser, glasses clinked as friends toasted Pittenger at Quail Hollow, hosted by Jim Hance, a former Bank of America vice chairman. William Wilson was there. “I hadn’t seen Robert for years,” he says. “We talked about the good ol’ days.”

Previous article
Next article
For 40 years, sharing the stories of North Carolina's dynamic business community.

Related Articles