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December 26, 1996

Chairman Nancy Johnson

Vice-Chairman Jim McDermott

House Committee on Standards of Official Conduct

HT-2, The Capitol

United States House of Representatives

Washington, DC 20515

RE: Sanction Hearing for House Speaker Newt Gingrich,

and Other Related Matters

Dear Chairman Johnson and Vice-Chairman McDermott:

On December 21, 1996, the Investigative Subcommittee of the House Committee on Standards of Official Conduct issued a Statement of Alleged Violation in the Matter of House Speaker Newt Gingrich (R-GA). On the same day, Speaker Gingrich admitted to the Statement of Alleged Violation.

The Ethics Committee now has several matters pending before it, including, most importantly, what level of sanction the Committee will apply to the Speaker. We believe that, at a minimum, the Speaker must be punished with censure for his long record of violations of House Rules and other improper conduct.

Other pending matters include whether the Committee will refer any charges against the Speaker to the Justice Department, and whether the Committee will release the work products of Special Counsel James Cole and the Investigative Subcommittee's tax expert. We believe that Special Counsel James Cole's report, and materials prepared by the Investigative Subcommittee's tax expert, should be made public well before any House floor vote to sanction the Speaker.

A: The Ethics Committee Should Censure or Expel Speaker Newt Gingrich

The December 21, 1996 Statement of Alleged Violation is not the first time that the Ethics Committee has criticized Speaker Newt Gingrich. When considering what level of sanction to apply to Speaker Gingrich, the Committee should bear in mind that it has repeatedly criticized Speaker Gingrich for violations of House Rules or other improper conduct. (See Appendix A).

House Speaker Newt Gingrich is a repeat offender against House Rules and basic standards of Congressional conduct. His long and dishonorable record before the House Ethics Committee shows that he holds little if any respect for the Rules of the U.S. House of Representatives.

The Statement of Alleged Violation issued on December 21, 1996 shows that the Speaker made thirteen false or misleading statements through counsel to the Ethics Committee about GOPAC and/or the "Renewing American Civilization" course. (See Appendix B).

The Statement of Alleged Violation amply documents the Speaker's misstatements and omissions. These were not trivial errors. Rather, the Speaker made false statements or critical omissions thirteen times, through counsel, about material facts at the core of the whether he had violated federal tax laws.

Furthermore, it defies credibility to argue, as the Speaker does, that these false statements were not intentional. Again, he did not make just one minor immaterial mistake in one document.

That Speaker Gingrich made thirteen false statements through counsel to the Ethics Committee constitutes thirteen serious offenses. Each offense should be punished by the Ethics Committee. Members of Congress cannot be permitted to lie -- even once -- to the Ethics Committee, or the United States Congress, without appropriate sanctions. Speaker Gingrich's offenses go to the heart of the Ethics Committee and the Congress. His actions show utter contempt for the House Committee on Standards of Official Conduct, and the United States Congress.

The Investigative Subcommittee is silent on whether the Speaker's thirteen false statements constitute obstruction of justice. The full Ethics Committee must determine whether it believes that the Speaker may have obstructed justice. If it does find that obstruction of justice may have occurred, the Ethics Committee should formally refer the matter to the Justice Department.

House Committees have on many occasions referred to the Justice Department possible false statements to House Committees. If the Committee does not formally refer Speaker Gingrich's false and misleading statements to the Justice Department, it should provide an explanation as to why there will be no formal referral.

The Speaker defends his conduct with respect to likely violations of federal tax law by arguing that he did not seek advice of counsel, and was ignorant of tax law. Even if true, surely this is a weak defense. The Internal Revenue Service has traditionally taken a dim view of taxpayers who plead ignorance of the law. Speaker Gingrich must be held to a similar standard.

B: Speaker Gingrich Has Likely Committed an Offense Against The Taxpayers

The Ethics Committee must bear in mind that the Speaker has likely committed an offense against the taxpayers by bilking them of tax monies that should have gone to the U.S. Treasury. The Los Angeles Times explained that

...six nonprofit groups shared a direct connection to GOPAC between 1985 and 1995, when Gingrich was its chairman, records show. They were run by GOPAC officers and consultants, Gingrich campaign advisors and congressional staffers. Some even worked directly out of GOPAC headquarters. The foundations generated at least $6 million combined in tax-deductible contributions that were outside the purview of federal election law.(1)

This likely offense against the taxpayers is a serious one. Members of Congress are trustees of the public purse. Their job is -- in part -- to safeguard the taxpayers' money from raids by the greedy, the selfish, and the undeserving. Speaker Gingrich has violated the taxpayers' trust by deception and dissembling.



C: Speaker Gingrich's Use of the Abraham Lincoln Opportunity Foundation for Partisan Political Activity Was Reprehensible

The Abraham Lincoln Opportunity Foundation (ALOF) was established as a charity to assist inner city youth. Instead, Speaker Gingrich used this charitable foundation to produce and broadcast "American Citizens' Television," which was partisan political television programming.

According to the Investigative Subcommittee's tax expert, two of the three television shows "were intended to confer more than insubstantial benefits on GOPAC and Republican entities and candidates; and provided support to GOPAC." This fraudulent use of a tax-exempt organization chartered for a noble purpose is highly repugnant, and entirely inexcusable. Speaker Gingrich's conduct is reprehensible, in part, because of the sheer cynicism of it.



D: The Speaker's Defense That He Was Ignorant of Tax Law is Not Credible

In his statement on December 21, 1996, Speaker Gingrich stated that "I did not seek legal counsel when I should have in order to ensure clear compliance with all applicable laws, and that was wrong." As a member of Congress, Speaker Gingrich should have avoided even the appearance of impropriety. Ignorance of the law is not a credible defense.

Furthermore, according to Roll Call, a GOPAC lawyer warned of the possible problems regarding misuse of foundation monies by the Abraham Lincoln Opportunity Foundation for partisan political purposes.

A 1990 document written by a GOPAC attorney warned against using a tax exempt charity. "A very controversial program is being undertaken by a [section 501] (c)3, indicating that it may have involvement in the electoral process, not withstanding the express prohibition on it," wrote Gordon Strauss.(2)

Contrary to Speaker Gingrich's protestations, a GOPAC attorney did analyze the use of foundations for partisan political activity, and warned of precisely the problem that is at issue before the Ethics Committee.

The third reason for the lack of credibility of Gingrich's statement stems from the career path of Joseph Gaylord, Gingrich's top political advisor. Pollster Frank Luntz once said that "Other than his wife and family, Joe Gaylord is the most important person in Newt's world."(3)

Gaylord has been a consultant to GOPAC, and was involved in the development of the "Renewing American Civilization" course. Gaylord was in charge of organizing satellite transmission for the course. And Gaylord's name appears on many of the internal memoranda for the course.(4)

Back in 1986, Joseph Gaylord founded the American Campaign Academy, a non-profit organization devoted to teaching campaign skills. The Academy argued to the Internal Revenue Service that it was "purely educational" and "non-partisan." However, the Academy was funded entirely by the National Republican Congressional Trust, and trained exclusively Republican candidates.

In 1989, the U.S. Tax Court revoked the tax-exempt status of the Academy.(5) The Tax Court argued that the Academy "conducted its educational activities with the partisan objective of benefitting Republican candidates and entities." The IRS stated that the Academy had "sought to hide the Republican Party connection."(6)

The American Campaign Academy pattern of use of foundation monies for partisan political purposes was replicated by the Speaker in the Abraham Lincoln Opportunity Foundation, and finally, the Progress and Freedom Foundation, and the Kennesaw State College Foundation.



E: Call for Public Release of the Work Product of the Investigative Subcommittee's Tax Expert

The Investigative Subcommittee did not rule on whether Speaker Gingrich's activities on behalf of the Abraham Lincoln Opportunity Foundation, Kennesaw State College Foundation, Progress and Freedom Foundation, or Reinhardt College were in violation of section 501(c)(3) of the Internal Revenue Code. However, the tax expert hired by the Investigative Subcommittee concluded, according to the Statement of Alleged Violation, that the Speaker's activities did in fact violate section 501(c)(3) of the Internal Revenue Code.

We formally request that any written opinion prepared by the Investigative Subcommittee's tax expert be made available to the public. The Investigative Subcommittee's tax expert was hired with taxpayer dollars. The public should be able to read the tax expert's written work product to evaluate the analysis and arguments made therein.



F: Call for Public Release of the Findings and Report of the Special Counsel

Special Counsel James Cole was hired by the Ethics Committee on January 3, 1996 to investigate the Speaker pursuant to the Committee's Resolution of Preliminary Inquiry. In a September 26, 1996 Interim Report, the Investigative Subcommittee indicated that:

To date the Preliminary Inquiry has involved, among other things, the interviewing of 40 witnesses and review of documents produced in response to 52 subpoenas or requests for documents. This activity was substantially completed by August 13, 1996.

On August 18, 1996, The New York Times indicated that the Special Counsel had filed a report with the Investigative Subcommittee.

Although the Investigative Subcommittee has issued its Statement of Alleged Violation, it has not released the work product of Special Counsel James Cole. The Committee should release Special Counsel Cole's report, and any other of his findings, to the public. Otherwise, the public cannot evaluate the work of the Special Counsel or of the Investigative Subcommittee.

Public review of the Special Counsel's and Investigative Subcommittee's work is critical to a fair, thorough, and credible ethics process. Speaker Gingrich himself has argued for this public accountability regarding the matter of then-Speaker Jim Wright:

The rules normally applied by the Ethics Committee to an investigation of a typical member are insufficient in an investigation of the Speaker of the House, a position which is third in the line of succession to the Presidency and the second most powerful elected position in America. Clearly, this investigation has to meet a higher standard of public accountability and integrity.(7)



G: Speaker Gingrich's Sanction Hearing Before the Ethics Committee Should be Public, Not Secret

The Speaker's sanction hearing should be public because a public sanction hearing is necessary for a credible ethics process. To date, the secrecy of the ethics process has already undermined the result of the ethics process in the Gingrich case. If the Speaker's sanction hearing is held in secret, it will further undermine the legitimacy and credibility of the sanction approved by the Committee.

Furthermore, there is no compelling reason why the sanction hearing should be closed to the public. Ethics Committee rules allow for the sanction hearing to be public. No Ethics Committee rule prevents a public sanction hearing.



H: Speaker Gingrich's Claim that He Did Not Seek Personal Gain Is Questionable

On December 21, Speaker Gingrich claimed that he "did not seek personal gain" as a part of his unseemly conduct. This claim is questionable. Speaker Gingrich likely reaped intangible personal benefit by the activities of the foundations associated with his 'Renewing American Civilization" college course. Frances Hill, a respected tax expert and associate professor at the University of Miami Law School, has written that Gingrich may have derived

an impermissible private benefit [from the Renewing American Civilization course] in the form of financial support for the dissemination of his ideas. A private benefit analysis is not defeated by Gingrich's having forgone any salary for giving his lectures. The intangible benefit of disseminating his ideas, especially with the presumption of scholarly legitimacy and academic respectability that at least some might accord the course because of its particular packaging could constitute a private benefit.(8)



I: Conclusion

Incredibly, the Ethics Committee has yet to punish Speaker Gingrich, even though he bears a long record of violations of House Rules and other improper conduct. The Ethics Committee has, thus far, ignored the cumulative impact that establishes a pattern of wrongdoing.

The Ethics Committee must act with an eye toward the incentives it establishes. If the Committee punishes the Speaker with censure or expulsion for his pattern of violations of House Rules, it will likely deter other members of Congress from committing such long strings of blameworthy conduct in the future. But if the Committee merely slaps the Speaker on the wrist, then it will invite other members of Congress to violate House Rules, because they will understand that they act with impunity, without fear of rebuke from the House Ethics Committee.

The Ethics Committee must act with the conscious knowledge of the effect of its decisions upon the public, and particularly upon the younger generation of Americans. Failure to punish the Speaker would send a signal that one can repeatedly run afoul of important rules and not suffer adverse consequences. This would be the wrong signal to send.

House Speaker Newt Gingrich is the third highest constitutional officer in the federal government. Because he holds one of the most powerful elective offices in the United States, his conduct requires a higher level of accountability. The American people and the House of Representatives have placed great trust in him; they have elected him Speaker. But the Speaker has repeatedly, and admittedly, violated this trust. He must be held accountable for his actions. Following this Statement of Alleged Violation, the Speaker must, at a minimum, be forced from the Speaker's Chair, if not expelled from the House of Representatives entirely.

Sincerely,





Gary Ruskin

Director











Appendix A

The Ethics Committee Has Repeatedly Criticized Speaker Gingrich for Violations of House Rules and Other Blameworthy Conduct:

The Committee concludes that your conduct of allowing the routine presence in your office of Mr. Jones demonstrates a continuing pattern of lax administration and poor judgement that has concerned this committee in the past. Accordingly, the Committee directs that you take immediate steps not only to prevent the recurrence of similar incidents and ensure compliance with applicable standards, but also to guard against even the appearance of impropriety.(9)

Based on this Committee's construction of House Rule 45, Mr. Jones' participation in your office as an "informal advisor" did not comply with applicable guidelines issued by this Committee governing interns or volunteers.(10)

...the Committee strongly questions the appropriateness of what some could describe as an attempt by you to capitalize on your office. As recent events demonstrate, existing rules permit a Member to reap significant and immediate financial benefit which appears to be based primarily on his or her position. At a minimum, this creates the impression of exploiting one's office for personal gain. Such a perception is especially troubling when it pertains to the office of the Speaker of the House, a constitutional office requiring the highest standards of ethical behavior.(11)

...the Committee has found that your use of Mr. Joseph Gaylord was in violation of House Rule 45, which prohibits the use of unofficial resources for official purposes.(12)

...the Committee has found a misuse of the House Floor....The House Floor should not be used for commercial purposes, and since a caller to this number was offered only the option of buying a set of tapes, the Committee finds the use of a 1-800 number to be an improper solicitation. (13)

...the Committee has found a similar violation in your references on the House Floor in 1990 regarding a nationwide town meeting sponsored by GOPAC.(14)

The Committee concludes that you were remiss in your oversight and administration of your congressional office, which gave rise to the improper correspondence cited in the complaint. Accordingly, you are directed to immediately take steps to preclude recurrence of the type of improper activity here involved. You are further placed on notice that a future recurrence of improper use of mail and resources may result in more severe Committee action.(15)

The Committee has also determined that the acquisition of certain real estate with your daughter, as well as the underlying liability you incurred, should have been reported on your Financial Disclosure Statements for the appropriate calendar years.(16)

Appendix B

House Speaker Gingrich Made Thirteen False or Misleading Statements Through Counsel to the Ethics Committee.

The primary issue before the Investigative Subcommittee was whether the Speaker Gingrich violated Section 501(c)(3) of the Internal Revenue Code by misusing tax-exempt monies for partisan political purposes. On December 6, 1995, the Committee approved a Resolution of Preliminary Inquiry to

determine if there is reason to believe that Representative Gingrich's activities in relation to the college course "Renewing American Civilization" were in violation of section 501(c)(3) or whether any foundation qualified under section 501(c)(3), with respect to the course, violated its status with the knowledge and approval of Representative Gingrich...

On September 26, 1996, the Committee expanded the investigation to include, among other things, whether the Speaker had provided "accurate, reliable, and complete information" to the Committee. Some of the results of that expanded inquiry have now been made public.

The Statement of Alleged Violation issued on December 21, 1996 shows that the Speaker made at least thirteen false or misleading statements through counsel to the Ethics Committee about GOPAC and/or the "Renewing American Civilization" course. In his December 8, 1994 letter to the Committee, the Speaker made at least seven false or misleading statements.

  1. [The course] was, by design and application, completely non-partisan. It was and remains about ideas, not politics. (Page 2).

  1. The idea to teach "Renewing American Civilization" arose wholly independent of GOPAC, because the course, unlike the committee, is non-partisan and apolitical. My motivations for teaching these ideas arose not as a politician, but rather as a former educator and concerned American citizen....(Page 4.)


  2. The fact is "Renewing American Civilization" and GOPAC have never had any official relationship. (Page 4).


  3. GOPAC...is a political organization whose interests are not directly advanced by this non-partisan educational endeavor. (Page 5).


  4. As a political action committee, GOPAC never participated in the administration of "Renewing American Civilization." (Page 4).


  5. Where employees of GOPAC simultaneously assisted the project, they did so as private, civic-minded individuals contributing time and effort to a 501(c)(3) organization. (Page 4).


  6. Anticipating media or political attempts to link the Course to [GOPAC], "Renewing American Civilization" organizers went out of their way to avoid even the appearances of improper associations with GOPAC. Before we raised the first dollar or sent out the first brochure, Course Project Director Jeff Eisenach resigned his position at GOPAC. (Page 4).


The Statement of Alleged Violation indicates that "According to testimony before the Subcommittee, the six page December 8, 1994 letter was prepared by Mr. Gingrich's attorney and submitted to Mr. Gingrich for review during the transition following the 1994 election." The Statement of Alleged Violation declares that "Mr. Gingrich, however, remained ultimately responsible for fully, fairly, and accurately responding to the Committee."

The March 27, 1995 letter to the Committee contains six additional false or misleading statements:

  1. As Ex. 13 demonstrates, the course solicitation...materials are completely non-partisan. (Page 19, footnote 1).


  2. GOPAC did not become involved in the Speaker's academic affairs because it is a political organization whose interests are not advanced by this non-partisan educational endeavor. (Page 35).


  1. The Renewing American Civilization course and GOPAC have never had any relationship, official or otherwise. (Page 35).


  2. As noted previously, GOPAC has had absolutely no role in funding, promoting, or administering Renewing American Civilization. (Pages 34-35).


  3. GOPAC has not been involved in course fundraising and has never contributed any money or services to the course. (Page 28).


  4. Anticipating media or political attempts to link the course to GOPAC, course organizers went out of their way to avoid even the appearance of associating with GOPAC. Prior to becoming Course Project Director, Jeffrey Eisenach resigned his position at GOPAC and has not returned. (Page 36).


The Statement of Alleged Violation indicates that "Prior to the letter from Mr. Gingrich's attorney being delivered to the Committee, Mr. Gingrich reviewed it and approved its submission to the Committee. The ultimate responsibility for the accuracy of information submitted to the Committee remained with Mr. Gingrich."

Endnotes

1. Glenn F. Bunting, "Gingrich's Politics Got Boost From Nonprofits; Foundations: The GOP Leader's Use of 6 Tax-Exempt Agencies Raises Questions By Legal Experts, Special Counsel." Los Angeles Times, June 25, 1996.

2. Damon Chappie, "Tax Returns Suggest Charity Was a 'Conduit' for GOPAC." Roll Call, May 2, 1996.

3. Phil Kuntz, "Joseph Gaylord, Newt Gingrich's 'Eyes and Ears' Is Expected to Play a Major Role in Washington." Wall Street Journal, December 8, 1994.

4. Glenn R. Simpson, "New Addition to the Gingrich Family Tree: The Progress and Freedom Foundation." Roll Call, September 12, 1994.

5. American Campaign Academy v. Commissioner of Internal Revenue, 92 T.C. 1053 (1989).

6. Glenn F. Bunting, "Gingrich's Politics Got Boost From Nonprofits; Foundations: The GOP Leader's Use of 6 Tax-Exempt Agencies Raises Questions By Legal Experts, Special Counsel." Los Angeles Times, June 25, 1996.

7. Representative Newt Gingrich, News Release, "Gingrich Insists on Thorough Investigation." July 28, 1988, p. 3.

8. Frances R. Hill, "Newt Gingrich and Oliver Twist: Charitable Contributions and Campaign Finance." Tax Notes Today, January 12, 1995.

9. Correspondence from House Committee on Standards of Official Conduct Chairman Nancy L. Johnson and Ranking Democratic Member Jim McDermott to The Honorable Newt Gingrich, September 19, 1996.

10. Correspondence from House Committee on Standards of Official Conduct Chairman Nancy L. Johnson and Ranking Democratic Member Jim McDermott to Speaker Newt Gingrich, March 29, 1996.

11. Correspondence from House Committee on Standards of Official Conduct Chairman Nancy L. Johnson and Ranking Democratic Member Jim McDermott to Speaker Newt Gingrich, December 6, 1995.

12. Ibid.

13. Ibid.

14. Ibid.

15. Correspondence from House Committee on Standards of Official Conduct Chairman Julian C. Dixon and Ranking Minority Member John T. Myers to Representative Newt Gingrich, March 8, 1990.

16. Ibid.