[House Prints, 111th Congress]
[From the U.S. Government Publishing Office]
111th Congress Review No.
HOUSE OF REPRESENTATIVES
1st Session 09-1022
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OFFICE OF CONGRESSIONAL ETHICS
UNITED STATES HOUSE OF
REPRESENTATIVES
------
Report and Findings
Transmitted to the
Committee on Standards of Official Conduct
February 5, 2010
and release publicly pursuant to H.Res. 895 of the
110th Congress as amended
February 2010
U.S. GOVERNMENT PRINTING OFFICE
55-496 WASHINGTON : 2009
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REPORT
Review No. 09-1022
The Board of the Office of Congressional Ethics (the
``Board''), by a vote of no less than four members, on January
28, 2010, adopted the following report and findings and ordered
them to be transmitted to the Committee on Standards of
Official Conduct of the United States House of Representatives.
SUBJECT: Representative Nathan Deal
NATURE OF THE ALLEGED VIOLATION: Representative Nathan Deal
and his business partner own Recovery Services, Inc. a/k/a
Gainesville Salvage & Disposal (``GSD''), located in
Gainesville, Georgia. GSD is a regional vehicle salvage station
that was formerly authorized by the state of Georgia to
facilitate inspections of damaged vehicles before they were
sold or driven. In 2008 and 2009, Representative Deal and a
member of his Congressional staff contacted and met with
Georgia state officials related to contemplated state action on
the vehicle inspection program.
Further, on his 2009 Financial Disclosure Statement
(covering calendar year 2008), Representative Deal listed
unearned GSD ``Dividends'' income (unearned ``Partnership
Income'' on an amended form) from $50,001 to $100,000. His 2008
tax return disclosed $75,000 in earned wages from GSD.
Representative Deal's conduct may have violated House Rules
and House Standards of Conduct.
RECOMMENDATION: The Board recommends that the Committee on
Standards of Official Conduct further review the above
allegations.
VOTES IN THE AFFIRMATIVE: 6
VOTES IN THE NEGATIVE: 0
ABSTENTIONS: 0
MEMBER OF THE BOARD OR STAFF DESIGNATED TO PRESENT THIS
REPORT TO THE STANDARDS COMMITTEE: Leo Wise, Staff Director &
Chief Counsel.
Table of Contents
I. INTRODUCTION.....................................................3
A. Summary of Allegations.............................. 3
B. Jurisdictional Statement............................ 4
C. Procedural History.................................. 4
D. Summary of Investigative Activity................... 5
II. REPRESENATIVE DEAL'S CONTACTS WITH GEORGIA STATE OFFICIALS
REGARDING THE STATE SALVAGE INSPECTION PROGRAM...................5
A. Relevant Law, Regulations, Rules or Standards of
Conduct............................................ 5
B. Representative Deal Owns a Vehicle Salvage Business
that Facilitated Vehicle Inspections Until August
2009............................................... 6
C. Representative Deal Met with Georgia State Officials
and Advocated for the Continuance of a State
Vehicle Inspection Program that the Department of
Revenue Sought to Modify........................... 6
D. Representative Deal's Chief of Staff Contacted
Georgia State Officials About Meetings on the
Vehicle Inspection Program and Attended Three
Meetings on the Program with Representative Deal... 12
III. REPRESENTATIVE DEAL'S BUSINESS INTERESTS IN GAINESVILLE SALVAGE &
DISPOSAL, INC...................................................13
A. Relevant Law, Regulations, Rules, or Standards of
Conduct............................................ 13
B. Representative Deal is a GSD Corporate Officer in
Addition to Being a ``Partner'' in the Company..... 14
C. Representative Deal Discussed GSD with His Business
Partner on a Regular Basis and Participated in Some
GSD Business Actions............................... 16
D. Representative Deal Disclosed ``Unearned'' Income
from GSD on His 2009 Financial Disclosure Statement
but Characterized the Same Amount as Wages on His
Federal Income Taxes............................... 17
IV. CONCLUSION......................................................19
V. INFORMATION THE OCE WAS UNABLE TO OBTAIN AND RECOMMNEDATIONS FOR
THE ISSUANCE OF SUBPOENAS.......................................19
FINDINGS OF FACT AND CITATIONS TO LAW
Review No. 09-1022
On January 28, 2010, the Board of the Office of
Congressional Ethics (the ``Board'' and the ``OCE'') adopted
the following findings of fact and accompanying citations to
law, regulations, rules and standards of conduct (in italics).
The Board notes that these findings do not constitute a
determination that a violation actually occurred.
I. INTRODUCTION
A. SUMMARY OF ALLEGATIONS
1. In 2008 and 2009, Representative Deal sought to preserve
a state vehicle inspection program that had generated
significant personal financial benefit for him and a business
partner. Representative Deal attended meetings on the state
inspection program with Georgia officials and told the OCE he
attended the meetings, not as a private citizen, but rather as
a ``public servant'' acting in some official capacity. Changes
to the vehicle inspection program concerned a purely state
issue and according to state officials, no other Member of
Congress from Georgia involved themselves in it. Thus, the
Board concludes that there is a substantial reason to believe
that Representative Deal may have violated House Rule 23,
clause 3 and Rule 5 of the Code of Government Service.
2. In addition, Representative Deal was accompanied by his
Chief of Staff at meetings on the vehicle inspection program
and directed the Chief of Staff to use a House email account to
send emails related to the meetings. Thus, there is substantial
reason to believe Representative Deal violated the House Ethics
Manual's prohibition on using House equipment and resources for
personal business purposes.
3. Representative Deal disclosed $50,001 to $100,000 in
unearned ``Dividends'' income (and unearned ``Partnership
Income'' on an amended form) from GSD on his 2009 Financial
Disclosure Statement (covering calendar year 2008). However,
the same income was described as earned wages on his 2008
personal income tax forms. Specifically, Representative Deal's
2008 tax documents show $75,000 in GSD wages; in addition,
Representative Deal received a W-2 from GSD in 2006, 2007, and
2008. Thus, there is a substantial reason to believe
Representative Deal violated the House Ethics Manual's
directive to disclose all earned income.
4. Further, Representative Deal rendered some degree of
service to GSD in 2008 and 2009 and his 2008 taxes show $75,000
in GSD wages. Thus, there is substantial reason to believe
Representative Deal violated the earned income limitation,
House Rule 25, Clause 1.
5. Representative Deal is the GSD corporate secretary. His
2008 taxes show $75,000 in GSD wages. Thus, there is
substantial reason to believe Representative Deal violated the
prohibition on receiving compensation as a corporate officer,
House Rule 25, Clause 2.
6. Representative Deal also failed to disclose his status
as the GSD corporate secretary on his financial disclosure
forms. Thus, there is substantial reason to believe
Representative Deal violated the House Ethics Manual's
directive to disclose all nongovernmental positions held.
B. JURISDICTIONAL STATEMENT
7. The OCE has jurisdiction to review any alleged violation
by a Member, officer, or employee of the House of any law,
rule, regulation, or other standard of conduct applicable to
the conduct of such Member, officer, or employee in the
performance of his duties or the discharge of his
responsibilities.\1\ The allegations that are the subject of
this review concern Representative Deal, a Member of the United
States House of Representatives from Georgia. The Resolution
the United States House of Representatives adopted creating the
OCE directs that, ``[n]o review shall be undertaken . . . by
the board of any alleged violation that occurred before the
date of adoption of this resolution.'' \2\ The House adopted
this Resolution on March 11, 2008. Because the conduct under
review occurred or relates to actions taken after March 11,
2008, review by the OCE is in accordance with the Resolution.
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\1\ H. Res 895, 110th Cong. (2008) (``the Resolution'').
\2\ Id. at Sec. 1(e) (2008).
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C. PROCEDURAL HISTORY
8. The OCE received a written request for a preliminary
review in this matter signed by at least two members of the
Board on October 5, 2009. The preliminary review commenced on
October 6, 2009.\3\ The preliminary review was scheduled to end
on November 4, 2009.
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\3\ A preliminary review is ``requested'' in writing by members of
the Board of the OCE. The request for a preliminary review is
``received'' by the OCE on a date certain. According to the Resolution,
the timeframe for conducting a preliminary review is 30 days from the
date of receipt of the Board's request.
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9. At least three members of the Board voted to initiate a
second-phase review in this matter on November 3, 2009. The
second phase review commenced on November 5, 2009.\4\ The
second-phase review was scheduled to end on December 19, 2009.
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\4\ According to the Resolution, the Board must vote (as opposed
to making a written authorization) on whether to conduct a second-phase
review in a matter before the expiration of the 30-day preliminary
review. If the Board votes for a second-phase, the second-phase
commences the day after the preliminary review ends.
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10. The Board voted to extend the 45-day second-phase
review by an additional 14 days on December 18, 2009, as
provided for under the Resolution.\5\ Following the extension,
the second-phase review was scheduled to end on January 2,
2010.\6\
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\5\ Id. at Sec. 1(c)(2)(A)(ii) (2008).
\6\ The 14-day extension expires after the 45-day second-phase
review ends. The 14-day extension does not begin on the date of the
Board vote.
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11. The Board voted to refer the matter to the Committee on
Standards of Official Conduct for further review and adopted
these findings on January 28, 2010. Representative Deal also
submitted a statement to the Board.\7\
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\7\ See Exhibit 14 at 09-1022--70.
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12. This report and findings in this matter were
transmitted to the Committee on Standards of Official Conduct
on February 5, 2010.
D. SUMMARY OF INVESTIGATIVE ACTIVITY
13. The OCE requested and received documentary, and in some
cases testimonial, information from the following sources:
(1) Representative Deal;
(2) Representative Deal's Chief of Staff;
(3) Representative Deal's Business Partner;
(4) A Georgia State Legislator;
(5) The Georgia Revenue Commissioner;
(6) The Georgia Deputy Revenue Commissioner.
14. The OCE requested, but was unable to conduct,
interviews with the Georgia Lieutenant Governor, former members
of his staff, and current members of his staff because the
Lieutenant Governor refused to cooperate with the OCE
investigation.\8\
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\8\ See section V of the Findings of Fact and Citations to Law.
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II. REPRESENATIVE DEAL'S CONTACTS WITH GEORGIA STATE OFFICIALS
REGARDING THE STATE SALVAGE INSPECTION PROGRAM
A. RELEVANT LAW, REGULATIONS, RULES OR STANDARDS OF CONDUCT
15. House Rule 23, Cl. 1 states that Members ``shall behave
at all times in a manner that shall reflect creditably on the
House.''
16. House Rule 23, Cl. 3 states that ``[a] Member,
Delegate, Resident Commissioner, officer, or employee of the
House may not receive compensation and may not permit
compensation to accrue to his beneficial interest from any
source, the receipt of which would occur by virtue of influence
improperly exerted from his position in Congress.''
17. The Code of Government Service rule 5 states that a
person in government should ``[n]ever discriminate unfairly by
the dispensing of special favors or privileges to anyone,
whether for remuneration or not; and never accept, for himself
or his family, favors or benefits under circumstances which
might be construed by reasonable persons as influencing the
performance of his governmental duties.''
18. The House Ethics Manual states that ``[a] provision of
the rules issued by the House Administration Committee allows
minor, incidental personal use of House equipment and supplies.
However, the Standards Committee understands that this
provision allows such use of those resources for personal
purposes only, and does not allow their use for outside
employment or business purposes.'' \9\
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\9\ House Ethics Manual (2008) at 197.
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B. REPRESENTATIVE DEAL OWNS A VEHICLE SALVAGE BUSINESS THAT FACILITATED
VEHICLE INSPECTIONS UNTIL AUGUST 2009
19. In 1988, Representative Deal and his business partner
opened a vehicle salvage company in Gainesville, Georgia.\10\
Currently, this company conducts business under the name
``GSD,'' and is a ``C corporation.'' \11\ GSD has always been a
C corporation \12\ and is owned, 50 percent each, by
Representative Deal and his business partner.\13\
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\10\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 2).
\11\ A corporation taxed under 26 U.S.C. Sec. 11 and Subchapter C
(26 U.S.C. Sec. 301 et seq.) of Chapter 1 of the Internal Revenue
Code.
\12\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 3).
\13\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--12 para. 2).
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20. GSD's salvage service assists automobile insurance
companies in the disposal of damaged vehicles.\14\ GSD acts as
a broker and facilitates the auction of salvaged cars; GSD then
bills the insurance companies for conducting the auction.\15\
According to Representative Deal, this service generates most
of GSD's revenue.\16\ GSD employs 10 clerical workers, 5 full-
time yard workers, 15 drivers, and Representative Dea's
business partner.\17\ Representative Deal is the corporate
secretary.\18\
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\14\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 4).
\15\ Id.
\16\ Id.
\17\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--12 para. 3).
\18\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 10).
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21. Beginning sometime in 1990, GSD began facilitating on-
site inspections of rebuilt, salvaged vehicles.\19\ This
inspection service lasted for approximately 20 years; GSD
stopped providing this service in August of 2009.\20\
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\19\ Id. at para. 5.
\20\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--12 para. 3).
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C. REPRESENTATIVE DEAL MET WITH GEORGIA STATE OFFICIALS AND ADVOCATED
FOR THE CONTINUANCE OF A STATE VEHICLE INSPECTION PROGRAM THAT THE
DEPARTMENT OF REVENUE SOUGHT TO MODIFY
22. According to the Georgia Department of Revenue, the
Georgia state Salvage Inspection Program, as it existed in 2008
and part of 2009, authorized 5-6 \21\ privately owned stations
throughout the state of Georgia to facilitate inspections of
damaged vehicles before these vehicles could return to the
road. These stations had exclusive jurisdiction within their
designated region to facilitate inspections which were
conducted by authorized state-employed inspectors. In exchange
for this service, owners of salvaged cars paid a fee to both
the state of Georgia and to the inspection station. State
inspectors travelled between the regional stations, on a
rotating basis (visiting each station twice per month) and
granted titles to salvaged cars in addition to conducting some
level of safety inspection.\22\ Under the program, if a
proposed new inspection station applied for state
authorization, its designated geographical region would not be
placed anywhere within the regional jurisdiction of an already-
established station.\23\ GSD, the station owned in part by
Representative Deal, participated in the Salvage Inspection
Program from 1990 to August 2009.\24\
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\21\ Initially, six stations were established until 2009, when
inspections ceased at one of the stations. GSD was one of the five
remaining stations.
\22\ The level of safety inspection is a disputed fact between
witnesses interviewed by the OCE. Representative Deal's business
partner stated that the state inspectors are typically former body shop
workers who have a working knowledge of vehicle safety specifications
and thoroughly inspect the vehicles. See Memorandum of Interview of
Representative Deal's business partner (October 30, 2009) (Exhibit 3 at
09-1022--13 para.17). Representative Deal stated that state inspectors
checked for safety of airbags and brakes among other items. Memorandum
of Interview of Representative Deal (December 16, 2009) (Exhibit 1 at
09-1022--4 para. 22). The Revenue Commissioner stated that the
inspections have never included a safety check and focus almost
exclusively on inspections of titles. Memorandum of Interview of the
Georgia Revenue Commissioner (October 30, 2009) (Exhibit 4 at 09-1022--
17 para.15).
\23\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 5); Memorandum of Interview of
Representative Deal's business partner (October 30, 2009) (Exhibit 3 at
09-1022--12 para. 3).
\24\ The full chart is Exhibit 6 at 09-1022--23.
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23. The Board notes that GSD, represented on the Department
of Revenue chart \25\ below as ``Hall County,'' facilitated the
most inspections, assessed the highest fee ($100), and
generated the most revenue ($288,500) out of the six stations
operating in Georgia in 2008.
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\25\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--17 para. 9); see also 2005
Department of Revenue Memorandum discussing the inspection program
history in Georgia at Exhibit 5 09-1022--20.
[GRAPHIC] [TIFF OMITTED] T5496.001
24. The Revenue Commissioner's 2008 plan would have
eliminated state inspector positions and permitted qualified
individuals to conduct private inspections.\26\ Private
inspectors would become certified through a standardized
program.\27\ The plan would also ask for proposals from anyone
in Georgia who wished to open an inspection station, regardless
of proximity to an existing station.\28\ The changes would also
place no limitation, per station, on the number of cars that
could be inspected because each station would hire its own
private inspectors, as opposed to waiting for rotating state
inspectors.\29\ The Revenue Commissioner believed that the
private sector could best administer the inspection program for
the state of Georgia and described his plan as effectively
terminating what he described as ``regional monopolies.'' \30\
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\26\ Id. at para. 11.
\27\ Id. at para. 16.
\28\ Id. at para. 11.
\29\ Id. at para. 11.
\30\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--17 para.s 8 & 11). In 2009,
the Revenue Commissioner administratively implemented his changes. He
also stated that as of the date of the interview, he believed the
amount of inspection station applications had increased, especially
within GSD's Atlanta-region. Id. at para. 10.
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25. The Revenue Commissioner stated that he met with
Representative Deal and others on three occasions in 2008 and
2009 to discuss the Salvage Inspection Program.\31\
Representative Deal, his business partner, and his Chief of
Staff confirmed this information.\32\
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\31\ Id. at para. 12. The Revenue Commissioner also stated that no
other Congressman or Senator from Georgia contacted him about the
vehicle inspection program. Memorandum of Interview of the Georgia
Revenue Commissioner (October 30, 2009) (Exhibit 4 at 09-1022--18 para.
26).
\32\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--12 para.s 7-13);
Memorandum of Interview of Representative Deal's Chief of Staff
(October 30, 2009) (Exhibit 7 at 09-1022--27 para. 10); Memorandum of
Interview of Representative Deal (December 16, 2009) (Exhibit 1 at 09-
1022--3 para.s 12-25).
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26. The Revenue Commissioner described the subject of the
three meetings as follows.\33\
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\33\ See Exhibit 8 at 09-1022--30.
[GRAPHIC] [TIFF OMITTED] T5496.002
[GRAPHIC] [TIFF OMITTED] T5496.003
27. The Board notes that Representative Deal is listed as
``U.S. Representative Nathan Deal'' in the ``attendees''
column.
28. According to the Revenue Commissioner, the first
meeting on January 28, 2008, concerned a proposed program named
GRATIS (Georgia Registration and Title Information System).\34\
GRATIS sought to streamline the sharing of title information
between insurance companies and the state.\35\
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\34\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--17 para. 13).
\35\ Id.; Memorandum of Interview of Representative Deal (December
16, 2009) (Exhibit 1 at 09-1022--4 para. 15).
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29. The Revenue Commissioner stated that the purpose of the
second meeting on June 30, 2008, was to discuss a request by
Representative Deal and his business partner to keep a
permanent state inspector at GSD.\36\ The Lieutenant Governor
also supported this request.\37\ The Revenue Commissioner
explained to Representative Deal and his business partner that
he felt the request was inappropriate and created a conflict
because no other station received such treatment.\38\
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\36\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--17 para. 17).
\37\ Id. at para. 18.
\38\ Id. at para. 19.
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30. Representative Deal and his business partner told the
OCE that the first meeting on January 28, 2008 was to discuss
the GRATIS program and that the second meeting on June 30, 2008
occurred as a ``follow-up'' to the first meeting.\39\
Representative Deal stated that he did not recall any other
issues discussed at the second meeting besides a follow-up on
the GRATIS issue.\40\
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\39\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--12 para. 7);
Memorandum of Interview of Representative Deal (December 16, 2009)
(Exhibit 1 at 09-1022--2 para. 17).
\40\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 17).
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31. The January 28, 2008 and June 30, 2008 meetings were
initiated by the Chief of Staff at Representative Deal's
direction.\41\ Representative Deal stated that he asked for the
meetings because auto insurance companies had contacted his
business partner about the GRATIS issue and he felt that the
GRATIS program would save the state money.\42\
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\41\ Id. at para. 14.
\42\ Id. at para. 16.
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32. Both Representative Deal's business partner and his
Chief of Staff stated that the Revenue Commissioner randomly
and abruptly brought up the issue of privatization at the
second meeting, which prompted the request for the third
meeting.\43\ In addition, the Chief of Staff stated that
Representative Deal had received constituent calls about the
status of the inspection program.\44\ Representative Deal and
his business partner stated that individuals involved with the
inspection program (e.g., state employee inspectors and
inspection station owners) could not obtain information on the
status of the program, despite attempts to contact the
Department of Revenue, which prompted the request for the third
meeting.\45\ The Deputy Revenue Commissioner stated that his
office attempts to provide information to anyone who requests
it.\46\
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\43\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--3 para. 9);
Memorandum of Interview of Representative Deal's Chief of Staff
(October 30, 2009) (Exhibit 7 at 09-1022--27 para. 13).
\44\ Memorandum of Interview of Representative Deal's Chief of
Staff (October 30, 2009) (Exhibit 7 at 09-1022--27 para. 7).
\45\ Memorandum of Interview of Representative Deal's business
partner (October 30, 2009) (Exhibit 3 at 09-1022--13 para. 11);
Memorandum of Interview of Representative Deal (December 16, 2009)
(Exhibit 1 at 09-1022--4 para. 18).
\46\ Memorandum of Interview of the Georgia Deputy Revenue
Commissioner (October 30, 2009) (Exhibit 9 at 09-1022--33 para. 6).
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33. The third meeting was initiated by Representative
Deal's Chief of Staff who contacted the Lieutenant Governor's
office and also the Deputy Revenue Commissioner.\47\ When asked
how he got the third meeting, Representative Deal stated that
``probably the Lieutenant Governor'' helped get the
meeting.\48\
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\47\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 14); Memorandum of Interview of
Representative Deal's Chief of Staff (October 30, 2009) (Exhibit 7 at
09-1022--27 para. 14).
\48\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--4 para. 23).
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34. At the third meeting on March 27, 2009, the Revenue
Commissioner stated that Representative Deal and Representative
Deal's business partner advocated against the changes in the
Salvage Inspection Program that the Revenue Commissioner had
proposed.\49\ The Revenue Commissioner also told the OCE that
he would characterize interactions at the last meeting as
contentious.\50\ Representative Deal's Chief of Staff
characterized the meeting as ``hostile.'' \51\
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\49\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--18 para. 23).
\50\ Id. at para. 21.
\51\ Memorandum of Interview of Representative Deal's Chief of
Staff (October 30, 2009) (Exhibit 7 at 09-1022--27 para. 15).
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35. The Revenue Commissioner stated that at the third
meeting, the Georgia State Legislator accompanying
Representative Deal and his business partner ``hotboxed'' him
and treated him as if he were a witness under cross-
examination.\52\ When asked about why the State Legislator
attended the meeting, Representative Deal stated that he did
not know but speculated that either the business partner or his
Chief of Staff asked for his attendance.\53\ The Chief of Staff
stated that the State Legislator attended because he is
Representative Deal's and the business partner's representative
in the state legislature.\54\ The State Legislator confirmed
this assertion by the Chief of Staff.\55\ The State Legislator
also stated that no other constituents came to him with
concerns over changes to the inspection program.\56\
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\52\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--18 para. 22).
\53\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--4 para. 20).
\54\ Memorandum of Interview of Representative Deal's Chief of
Staff (October 30, 2009) (Exhibit 7 at 09-1022--28 para. 19).
\55\ Memorandum of Interview of the Georgia State Legislator
(October 30, 2009) (Exhibit 10 at 09-1022--37 para. 14).
\56\ Id. at para. 18.
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36. Representative Deal and his business partner maintain
that although it was not in their financial interest to do so,
at the third meeting they expressed to the Revenue Commissioner
that the program should not be changed.\57\ They argued that
any inspection should be conducted by state-employed and
authorized inspectors to ensure the safety of drivers on
Georgia roads.\58\ Representative Deal and his business partner
stated that state inspectors are often former body shop workers
or law enforcement personnel who have experience with vehicle
safety specifications.\59\ They explained that they were
concerned that inexperienced, private inspectors would
jeopardize vehicle safety.\60\
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\57\ Statement of Representative Deal (Exhibit 14 at 09-1022--70);
Memorandum of Interview of Representative Deal (December 16, 2009)
(Exhibit 1 at 09-1022--3 para.s 6 & 22); Memorandum of Interview of
Representative Deal's business partner (December 16, 2009) (Exhibit 3
at 09-1022--13 para.s 16 & 20).
\58\ Id.
\59\ Id.
\60\ Id.
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37. The Revenue Commissioner stated that the vehicle
inspection program never covered the safety of vehicles.\61\ He
stated that the state inspectors' only role was to grant title
to salvaged cars; thus, their position was named ``Salvage
Title Inspectors.'' \62\ These ``Salvage Title Inspectors''
examined the title of the vehicle, with a limited examination
of the physical vehicle itself, to make proper title
assessments.\63\ He further stated that his proposed
elimination of state employed inspectors would not decrease
vehicle safety because private inspectors would be required to
receive accreditation from a ``worldwide collision repair
training'' program and may, as a result, be even more qualified
than previous inspectors.\64\
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\61\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--17 para.s 15 & 23).
\62\ Id. at para. 15.
\63\ Id.
\64\ Id. at para.16; http://www.i-car.com/index--us.shtml.
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38. When asked in what capacity he attended the meetings,
Representative Deal stated that he attended them as someone
with ``personal knowledge'' that was trying to ``get
information'' from the Revenue Commissioner because nobody else
could.\65\
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\65\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--4 para. 25).
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39. The Board notes that the OCE specifically asked
Representative Deal again whether he attended these meetings as
a Member of Congress or as a salvage station owner and he
responded that he attended as a ``public servant.'' \66\
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\66\ Id.
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40. The Board also notes that Representative Deal submitted
that others could not get meetings with the Department of
Revenue and that his contact with the Lieutenant Governor aided
him in getting the March 2009 meeting.
41. During his interview with the OCE, the Revenue
Commissioner stated that he and Representative Deal had a
private discussion at one of the meetings but that he could not
disclose the nature of the conversation without being
subpoenaed on the advice of the Georgia Attorney General.\67\
He stated that the information is a tax-related matter and for
confidentiality reasons, he could not discuss the matter
without being compelled to do so.\68\
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\67\ Memorandum of Interview of the Georgia Revenue Commissioner
(October 30, 2009) (Exhibit 4 at 09-1022--18 para. 25).
\68\ Id.
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42. When asked about this private conversation,
Representative Deal stated that he recalled talking to the
Revenue Commissioner about the Commissioner's preference that
Representative Deal's Chief of Staff refrain from contacting
Department of Revenue staff.\69\
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\69\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--4 para. 26).
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D. REPRESENTATIVE DEAL'S CHIEF OF STAFF CONTACTED GEORGIA STATE
OFFICIALS ABOUT MEETINGS ON THE VEHICLE INSPECTION PROGRAM AND ATTENDED
THREE MEETINGS ON THE PROGRAM WITH REPRESENTATIVE DEAL
43. Representative Deal's Chief of Staff attended all three
meetings with the Department of Revenue.\70\ When asked why he
would attend the meetings, the Chief of Staff stated that he
rarely allows Representative Deal to go anywhere without him,
unless it is a family matter.\71\
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\70\ Memorandum of Interview of Representative Deal's Chief of
Staff (October 30, 2009) (Exhibit 7 at 09-1022--27 para. 16).
\71\ Id. at para. 11.
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44. Roughly twenty emails were sent from Representative
Deal's Chief of Staff to employees of the Georgia Department of
Revenue and the Lieutenant Governor's Office regarding meetings
on vehicle inspection program. These emails were sent from the
Chief of Staff's U.S. House of Representatives email account.
45. For example, a February 27, 2009 email from the
Representative Deal's Chief of Staff requested a meeting with
the Revenue Commissioner on the topic of vehicle
inspections.\72\ The Board notes that ``Congressman Nathan
Deal, GA-9'' appears at the bottom of the email.
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\72\ See Exhibit 11 at 09-1022--40 for additional emails.
[GRAPHIC] [TIFF OMITTED] T5496.004
46. As stated above, Representative Deal, his Chief of
Staff, and his business partner maintain that any contact with
Georgia state officials on the vehicle inspection program
concerned the safety of Georgia citizens that, in their view,
would be affected by a change in the state program.\73\ Thus,
Representative Deal and his Chief of Staff assert that the use
of house emails was a constituent-related issue.
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\73\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para.s 5-6); Memorandum of Interview of
Representative Deal's business partner (October 30, 2009) (Exhibit 3 at
09-1022--14 para. 20); Memorandum of Interview of Representative Deal's
Chief of Staff (October 30, 2009) (Exhibit 7 at 09-1022--26 para. 17).
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47. However, the Board notes that the Ethics Manual's
prohibition on the use of staff for personal business does not
create an exception for matters affecting both personal
financial interests and constituent interests.
III. REPRESENTATIVE DEAL'S BUSINESS INTERESTS IN GAINESVILLE SALVAGE &
DISPOSAL, INC.
A. RELEVANT LAW, REGULATIONS, RULES, OR STANDARDS OF CONDUCT
48. House Rule 25, Cl. 1(a)(1) states that ``[e]xcept as
provided by paragraph (b), a Member, Delegate, Resident
Commissioner, officer, or employee of the House may not--(1)
have outside earned income attributable to a calendar year that
exceeds 15 percent of the annual rate of basic pay for level II
of the Executive Schedule under section 5313 of title 5, United
States Code, as of January 1 of that calendar year . . .''
49. The House Ethics Manual states that the outside earned
income limit for calendar year 2008 was $25,830.\74\
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\74\ House Ethics Manual (2008) at 214.
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50. The House Ethics Manual states that ``[t]he annual
limitation applies to compensation for personal services
(termed ``earned income''), but not to moneys received from
ownership or other investments of equity (so-called ``unearned
income''). In this regard, Advisory Opinion No. 13 emphasizes
that the ``real facts'' of a particular case would control as
to whether moneys received would be deemed earned income:
[T]he label or characterization placed on a
transaction, arrangement or payment by the parties may
be disregarded for purposes of the Rule. Thus, if
amounts received or to be received by a Member,
officer, or employee are in fact attributable to any
significant extent to services rendered by the Member,
officer, or employee the characterization of such
amounts as partnership distributive share, dividends,
rent, interest, payment for a capital asset, or the
like, will not serve to prevent the application of Rule
25 to such amounts. . . .
For purposes of this Opinion, there are two types of
income--earned and unearned. If the compensation
received is essentially a return on equity, then it
would generally not be considered to be earned income.
If the income is not a return on equity, then such
income would generally be considered to be earned
income and subject to the limitation.'' \75\
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\75\ Id. at 231.
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51. House Rule 25, Cl. 2(d) states that ``[a] Member,
Delegate, Resident Commissioner, officer, or employee of the
House may not--(d) serve for compensation as an officer or
member of the board of an association, corporation, or other
entity. . . .''
52. The House Ethics Manual states that ``[a]ll Members of
the House . . . must file a Financial Disclosure Statement by
May 15 of each year.'' \76\ This Statement must disclose all
income ``earned'' and ``unearned'' over $200.\77\ Further, the
House Ethics Manual states that ``[i]ndividuals must disclose
any nongovernmental positions, whether or not compensated, that
they hold, unless the Statement is the first one filed with the
House . . . Included are such positions as officer, director,
trustee, partner, proprietor, representative, employee, or
consultant of any corporation, company, firm, partnership, or
other business enterprise, any nonprofit organization, any
labor organization, or any educational or other institution.''
\78\
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\76\ Id. at 252.
\77\ Id. at 254.
\78\ Id. at 260.
B. REPRESENTATIVE DEAL IS A GSD CORPORATE OFFICER IN ADDITION TO BEING
A ``PARTNER'' IN THE COMPANY
53. Representative Deal stated that he is the ``Secretary/
Treasurer'' at GSD.\79\ Further, the Georgia Secretary of State
lists Representative Deal as the GSD corporate secretary under
the classification of ``Officers.'' \80\
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\79\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--2 para. 10).
\80\ ``Recovery Services, Inc.'' is the official corporate name;
the company does business as ``Gainesville Salvage & Disposal.'' See
Memorandum of Interview of Representative Deal (December 16, 2009)
(Exhibit 1 at 09-1022--2 para. 3).
[GRAPHIC] [TIFF OMITTED] T5496.005
54. The Board notes that on his amended 2009 U.S. House of
Representatives Financial Disclosure Statement, covering
calendar year 2008, schedule VIII (``Positions'')
Representative Deal lists himself as a ``member/partner/owner''
of GSD but does not disclose that he is also the corporate
secretary.\81\
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\81\ Represented Deal also filed an amended Financial Disclosure
Statement on January 22, 2010, but did not list any additional
positions held. See Exhibit 14 at 09-1022--81.
[GRAPHIC] [TIFF OMITTED] T5496.006
C. REPRESENTATIVE DEAL DISCUSSED GSD WITH HIS BUSINESS PARTNER ON A
REGULAR BASIS AND PARTICIPATED IN SOME GSD BUSINESS ACTIONS
55. Representative Deal stated that he talks with his
business partner several times a week because they are close
friends.\82\ Representative Deal estimated that GSD is
discussed with his business partner once a week.\83\
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\82\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 9).
\83\ Id.
---------------------------------------------------------------------------
56. Representative Deal stated that his business partner
hires and fires employees, sets schedules, and buys
equipment.\84\ Representative Deal stated further that he has
no day-to-day role in GSD operations and does not make business
judgments; a statement corroborated by his business
partner.\85\
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\84\ Id. at para. 10.
\85\ Id.; Memorandum of Interview of Representative Deal's business
partner (December 16, 2009) (Exhibit 3 at 09-1022--12 para. 2).
---------------------------------------------------------------------------
57. Representative Deal does, however, sign bank notes for
the purchase of new equipment.\86\
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\86\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 10).
---------------------------------------------------------------------------
58. Representative Deal does not provide any legal advice
to GSD; one of the partners at his former law firm provides
this service to GSD.\87\
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\87\ Id.
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59. The Board notes that Representative Deal's Chief of
Staff stated that because he is so close to Representative
Deal, he is ``very familiar'' with GSD.\88\ The Chief of Staff
stated that Representative Deal and his business partner speak
daily but could not state with certainty whether these
discussions involved GSD business matters.\89\ He further
stated that Representative Deal is a ``good attorney'' and
assists his business partner with business decisions.\90\
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\88\ Memorandum of Interview of Representative Deal's Chief of
Staff (December 16, 2009) (Exhibit 7 at 09-1022--26 para. 6).
\89\ Id.
\90\ Id.
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60. Representative Deal stated that as a general rule, he
does not visit the GSD facilities but may occasionally stop by
on the way to the airport.\91\
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\91\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 11).
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D. REPRESENTATIVE DEAL DISCLOSED ``UNEARNED'' INCOME FROM GSD ON HIS
2009 FINANCIAL DISCLOSURE STATEMENT BUT CHARACTERIZED THE SAME AMOUNT
AS WAGES ON HIS FEDERAL INCOME TAXES
61. On his 2009 U.S. House of Representatives Financial
Disclosure Statement schedule III (``Assets and 'Unearned'
Income''), reporting for calendar year 2008 and filed on May
13, 2009, Representative Deal listed GSD's ``Rent'' income at
$15,001 to $50,000 and ``Dividends'' income from $50,001 to
$100,000.
[GRAPHIC] [TIFF OMITTED] T5496.007
62. On his amended 2009 Financial Disclosure Statement
(covering calendar year 2008), filed January 22, 2010,
Representative Deal changed the GSD income from ``Dividends''
to ``Partnership Income.''
[GRAPHIC] [TIFF OMITTED] T5496.008
63. Representative Deal stated that the reported
``Dividend'' income from $50,001 to $100,000 on the statement,
reflected $75,000 received from GSD during 2008.\92\
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\92\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--4 para. 27). Represented Deal also filed
an amended 2009 Financial Disclosure Statement on January 22, 2010
where he classifies GSD income as unearned ``Partnership Income.'' See
Exhibit 14 at 09-1022--81.
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64. However, on his 2008 tax return, Representative Deal
disclosed wages of $75,000 from GSD. Further, a W-2 was issued
to Representative Deal, from GSD, acknowledging $75,000 in
wages and compensation.\93\ Representative Deal told the OCE
that the $75,000 in wages listed on his tax return is the same
income he described as ``Dividends'' (and then subsequently
``Partnership Income'') on his 2009 Financial Disclosure
Statement (covering 2008).\94\
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\93\ Pursuant to an agreement between the OCE and Representative
Deal, screenshots of tax returns are not displayed in these findings of
fact.
\94\ Memorandum of Interview of Representative Deal (December 16,
2009) (Exhibit 1 at 09-1022--3 para. 27).
---------------------------------------------------------------------------
65. When asked about the $75,000 amount reported as wages
from GSD on his income taxes, Representative Deal stated that
the amount actually reflected ``equity'' in the business and
not earned income.\95\ The $75,000 amount is issued to
Representative Deal each year, in monthly installments, and is
based on an oral agreement with his business partner.\96\
---------------------------------------------------------------------------
\95\ Id.
\96\ Id. at para. 13.
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66. The Board notes that Representative Deal's accountant
signed an October 26, 2009 letter stating that ``due to an
ethics investigation'' and ``based on various discussions,''
the $75,000 Representative Deal received from GSD was
mistakenly reported as GSD income for the last three years.
67. The Board also notes that as of December 16, 2009, the
tax form in the OCE's possession had not been amended or
corrected, and when interviewed, Representative Deal did not
tell the OCE that he had filed an amended form.
IV. CONCLUSION
68. Representative Deal asserts that his interest in
meeting with Georgia officials on the topic of vehicle salvage
and inspections involved state safety and budget concerns. He
argues that he took action as a public servant concerned with
issues affecting the public. In contrast, the Georgia Revenue
Commissioner asserts that he sought to open up state vehicle
inspections to privatization and marketplace competition,
thereby potentially decreasing the amount of vehicles inspected
by existing stations.
69. The OCE does not take a position on Representative
Deal's motivations for inserting himself into discussions of
potential modifications to a state vehicle inspection program.
However, during operation of the previous vehicle inspection
system, Representative Deal received a significant financial
benefit as a GSD partner and corporate officer. It is
undisputed that as a ``public servant,'' Representative Deal
took active steps to preserve a purely state program, one that
had generated financial benefit for Representative Deal and his
business partner. Further, while taking these steps,
Representative Deal used resources of the House of
Representatives.
70. The OCE reviews the facts as presented at the time of
review and does not take a position on whether Representative
Deal's income from GSD was mistakenly reported as earned income
since 2006 on his federal income taxes. The evidence before the
Board is that Representative Deal characterized his income from
GSD as wages on his tax return and, by contrast, as unearned
``Dividends'' or unearned ``Partnership Income'' on his
Financial Disclosure Statements. This inconsistency, as of the
end of the second-phase review and Board vote, has not been
resolved.
71. The $75,000 reported as earned income on the tax return
exceeded the limit on outside earned income and prohibition on
receiving any income while serving as a corporate officer.
Further, Representative Deal did not disclose that he was the
GSD corporate secretary on his 2009 Financial Disclosure
Statement (covering calendar year 2008).
72. For all the reasons stated above, the OCE Board
recommends further review by the Committee on Standards of
Official Conduct.
V. INFORMATION THE OCE WAS UNABLE TO OBTAIN AND RECOMMNEDATIONS FOR THE
ISSUANCE OF SUBPOENAS
73. The OCE requested an interview with the Georgia
Lieutenant Governor and a former member of his staff. The
Lieutenant Governor's Office would not cooperate with the OCE's
requests for interviews \97\ but did produce some information
concerning the Lieutenant Governor's presence at meetings
discussed above concerning vehicle inspections. Thus, the OCE
recommends that the Committee on Standards of Official subpoena
the Georgia Lieutenant Governor.
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\97\ The Lieutenant Governor's Office responded to the OCE that
because the Lieutenant Governor is a member of the Georgia State
Legislature, any meeting relating to his legislative branch duties
would not be discussed due to restrictions under the Georgia
Constitution and Georgia state law. Citations by Legislative Counsel to
the Lieutenant Governor: Georgia Constitution Art. 3 Section IV; OCGA
50-14-1; OCGA 50-18-70.
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74. The OCE was unable to access any information,
testimonial or otherwise, concerning the matter discussed by
the Georgia Revenue Commissioner during his interview with the
OCE. The Revenue Commissioner stated that he would release
information if subpoenaed. Thus, the OCE recommends that the
Committee on Standards of Official Conduct subpoena the Georgia
Revenue Commissioner.