[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[House]
[Pages H171-H235]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             IN THE MATTER OF REPRESENTATIVE NEWT GINGRICH

  Mrs. JOHNSON of Connecticut. Mr. Speaker, pursuant to rule IX and by 
direction of the Select Committee on Ethics, I send to the desk a 
privileged resolution (H. Res. 31) in the matter of Representative Newt 
Gingrich, and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                          House Resolution 31


             In the Matter of Representative Newt Gingrich

       Resolved, That the House adopt the report of the Select 
     Committee on Ethics dated January 17, 1997, In the Matter of 
     Representative Newt Gingrich.

  The SPEAKER pro tempore. The resolution constitutes a question of 
privilege and may be called up at any time.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore. Before we proceed, the Chair will have a 
statement about the decorum expected of the Members.
  The Chair has often reiterated that Members should refrain from 
references in debate to the conduct of other Members where such conduct 
is not the question actually pending before the House, either by way of 
a report from the Committee on Standards of Official Conduct or by way 
of another question of the privileges of the House.
  This principle is documented on pages 168 and 526 of the House Rules 
and Manual and reflects the consistent rulings of the Chair in this and 
in prior Congresses. It derives its force primarily from clause 1 of 
rule XIV which broadly prohibits engaging in personality in debate. It 
has been part of the rules of the House since 1789.
  On the other hand, the calling up of a resolution reported by the 
Committee on Standards of Official Conduct, or the offering of a 
resolution as a similar question of the privileges of the House, 
embarks the House on consideration of a proposition that admits 
references in debate to a Member's conduct. Disciplinary matters by 
their very nature involve personalities.
  Still, this exception to the general rule against engaging in 
personality--admitting references to a Member's conduct when that 
conduct is the very question under consideration by the House--is 
closely limited. This point was well stated on July 31, 1979, as 
follows: While a wide range of discussion is permitted during debate on 
a disciplinary resolution, clause 1 of rule XIV still prohibits the use 
of language which is personally abusive. This is recorded in the 
Deschler-Brown Procedure in the House of Representatives in chapter 12, 
at section 2.11.
  On the question now pending before the House, the resolution offered 
by the gentlewoman from Connecticut, Members should confine their 
remarks in debate to the merits of that precise

[[Page H172]]

question. Members should refrain from remarks that constitute 
personalities with respect to members of the Committee on Standards of 
Official Conduct or the Select Committee on Ethics or with respect to 
other sitting Members whose conduct is not the subject of the pending 
report. Finally, Members should exercise care to maintain an atmosphere 
of mutual respect.
  On January 27, 1909, the House adopted a report that stated the 
following: It is the duty of the House to require its Members in speech 
or debate to preserve that proper restraint which will permit the House 
to conduct its business in an orderly manner and without unnecessarily 
and unduly exciting animosity among its Members.
  This is recorded in Cannon's Precedents in volume 8 at section 2497.
  The report adopted on that occasion responded to improper references 
in debate to the President, but it articulated a principle that 
occupants of the Chair over many Congresses have held equally 
applicable to Members' remarks toward each other.
  The Chair asks and expects the cooperation of all Members in 
maintaining a level of decorum that properly dignifies the proceedings 
of the House.
  The gentlewoman from Connecticut [Mrs. Johnson] is recognized for 1 
hour.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I ask unanimous consent 
that debate on the resolution be extended for a half an hour.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Connecticut?
  There was no objection.
  The SPEAKER pro tempore. The gentlewoman from Connecticut [Mrs. 
Johnson] is recognized for 90 minutes.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, for purposes of debate 
only, I yield 45 minutes to the gentleman from Maryland [Mr. Cardin], 
pending which I yield myself such time as I may consume.
  Mr. Speaker, I rise as chairman of the Select Committee on Ethics to 
lay before you the committee's bipartisan recommendation for final 
action on the matter of Representative Newt Gingrich. The committee 
recommends that Representative Gingrich be reprimanded and reimburse 
the House $300,000. The penalty is tough and unprecedented. It is also 
appropriate. No one is above the rules of the House of Representatives.
  This matter centered on two key questions: whether the Speaker 
violated Federal tax law and whether he intentionally filed incorrect 
information with the Ethics Committee. While the committee investigated 
these questions extensively, its findings were inconclusive. Rather, 
the committee found that Representative Gingrich brought discredit to 
the House by failing to get appropriate legal advice to ensure that his 
actions would be in compliance with tax law and to oversee the 
development of his letters to the committee to ensure they were 
accurate in every respect.
  Each Member of Congress, especially those in positions of leadership, 
shoulders the responsibility of avoiding even the appearance of 
impropriety. Representative Gingrich failed to exercise the discipline 
and caution of his office and so is subject to penalty today.
  As I have said, the penalty recommended by the committee is tough and 
unprecedented. In past cases of this nature, the House has reprimanded 
a Member only where the Member was found to have intentionally made 
false statements to the Ethics Committee. In this case, the committee 
recommended a reprimand of Representative Gingrich even though the 
statement of alleged violations did not assert that he intentionally 
misled the committee. Likewise in past cases where the committee 
imposed monetary sanctions on a Member, the committee found that the 
Member had been personally enriched by the misconduct. The committee 
made no such finding against Representative Gingrich, yet recommends 
that a cost reimbursement of $300,000 be paid to the House by him.
  The report before us contains several hundred pages of exhibits and a 
detailed analysis of the subcommittee's findings. The allegations and 
the key facts supporting them were laid out by the special counsel 
during a public hearing on January 17. The committee's recommendations 
before you today end 2 long years of work.
  Throughout this process we never lost sight of our key goals: full 
and complete disclosure of the facts and a bipartisan recommendation. 
We accomplished both. Even though it would have been easy for 
Republicans or Democrats to walk away from the process at many stages, 
we did not, because we believed in this institution and in the ethics 
process.
  The investigative subcommittee was ably chaired by Representative 
Porter Goss. Representatives Ben Cardin, Steve Schiff, and Nancy 
Pelosi, along with Mr. Goss deserve the gratitude of this House for the 
extraordinary workload they shouldered and for their dedication to 
pursuing each issue until they reached consensus. Together with Mr. 
James Cole, the special counsel, they laid the groundwork for the 
bipartisan conclusion of this matter. I want to thank Mr. Cardin, the 
current ranking member, as well, for working with me through difficult 
times to enable the bipartisan Ethics Committee process to succeed.
  In the last 2 years the committee was forced to conduct its work 
against the backdrop of harsh political warfare. It is the first time 
ever that members of the Ethics Committee have been the target of 
coordinated partisan assaults in their districts. Coordinated political 
pressure on members of the Ethics Committee by other Members is not 
only destructive of the ethics oversight process but is beneath the 
dignity of this great institution and those who serve here.

                              {time}  1215

  Despite the pressures, we bring you today a bipartisan recommendation 
resolving the most complex charge against Representative Newt Gingrich. 
I ask for both my colleagues' rejection of the partisanship and 
animosity that has so deeply permeated the work of the House and for 
their support of the committee's resolution.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.


                announcement by the speaker pro tempore

  The SPEAKER pro tempore. The gentleman will suspend.
  The Chair notes a disturbance in the visitors' gallery in 
contravention of the laws and the rules of the House. The Doorkeepers 
and police, the Chair believes, have already acted, but shall act to 
remove from the gallery those persons participating in a disturbance.
  If there is an outburst from the visitors' gallery, the Chair will 
make this statement but will insist on order.
  The Chair recognizes the gentleman from Maryland [Mr. Cardin].
  Mr. CARDIN. Mr. Speaker, as I have said, this is a sad moment for the 
House of Representatives. One of our Members has admitted to a serious 
violation of the House rules. This process and this admission affects 
not only that Member but each Member who serves in this body. While I 
believe that is true of any ethics proceeding, it is particularly true 
and particularly troublesome in this case because the offending Member 
is the Speaker of the House, the third ranking official in our 
Government.
  We have received the report and recommendation from the special 
counsel. Mr. Gingrich has agreed with the judgment of the special 
counsel. In addition to the report, the recommendation of sanctions 
represents the bipartisan work produced by our investigative 
subcommittee. The report in the recommendation of sanctions has been 
overwhelmingly approved by the full Committee on Standards of Official 
Conduct and deserves the support of this House.
  Let me begin by saying how proud I am of the work of the 
investigative subcommittee. In my judgment, all four members of the 
subcommittee maintained their commitment to a process that was fair to 
the respondent as well as the House and its rules. I want to commend 
and compliment the work of our chairman, the gentleman from Florida 
[Mr. Goss], for the extraordinary work that he did as well as the work 
of the gentleman from New Mexico [Mr. Schiff] and the gentlewoman from 
California [Ms. Pelosi] and the work of the subcommittee. I also want 
to recognize the extraordinary service performed by Jim Cole, our 
special counsel; Kevin Wolf, his assistant; and Virginia Johnson from 
the

[[Page H173]]

Committee on Standards of Official Conduct.
  Before commenting on the substance of the resolution before us, I 
feel obligated to point out the severe problems that have plagued the 
process. The 1-year delay in 1995 in enlisting the services of the 
special counsel was wrong. We have some evidence that this delay may 
have been part of the strategy by allies of Mr. Gingrich. In sharp 
contrast to the good faith, bipartisan cooperation which governed the 
subcommittee's work, the orderly process collapsed on December 21, 
1996, after the matter was forwarded to the full committee. Ignoring 
the advice of special counsel and the subcommittee, the Republican 
leadership in the House imposed an unrealistic deadline for the 
completion of our work to coincide with the Presidential inauguration. 
The schedule agreed upon by the full Committee on Standards of Official 
Conduct for full public hearings on the subcommittee findings was 
unilaterally and improperly canceled. These partisan actions were aimed 
at shielding Mr. Gingrich from a full airing of the charges to which he 
has admitted guilt.
  During the past 5 days the gentlewoman from Connecticut [Mrs. 
Johnson] and I have worked closely together to use these days as 
effectively as possible to achieve two objectives: First, in the face 
of an unrealistic time limit, to get the broadest possible public 
release of the information contained in the subcommittee's report; and 
second, to arrive at a fair, bipartisan recommendation on sanctions. We 
have achieved both objectives, and for that I would like to express my 
appreciation to the chairwoman. The report details the reason why the 
committee has found that Mr. Gingrich has committed a serious violation 
of the House ethics rules. I urge each of my colleagues to read the 
report and the accompanying exhibits.
  I will now briefly review the findings of the special counsel's 
report. First, we must disregard the notion that this case involves a 
college professor engaged in a normal academic classroom activity. The 
respondent in this case is not Professor Gingrich, but Representative 
Gingrich, a Member of the House, minority whip and then Speaker of the 
House, who had a vision to launch a political movement to change the 
country, in his words, from a welfare state to an opportunity society.
  Second, over a 5-year period Mr. Gingrich improperly commingled 
political activities with tax exempt organizations. When GOPAC ran 
short of funds, Mr. Gingrich sought contributions from several tax 
exempt entities in order to continue his partisan political crusade.
  Third, there is ample evidence that he did so in violation of tax 
laws. Celia Roady, the tax expert retained by the committee, has 
concluded that the tax laws were violated, and it is not even a close 
call. Our special counsel agrees with that judgment. In all, almost 
$1.5 million was spent by these tax exempt organizations, costing the 
U.S. Treasury hundreds of thousands of dollars in lost tax revenues 
that should have been paid.
  Fourth, one need not reach a conclusion on the tax issues to find 
that Mr. Gingrich has violated our ethical standards. From his 
involvement in the American Campaign Academy case, Mr. Gingrich knew 
that pursuing these activities posed a risk of potential tax law 
violations. The ACA case established limits on political activities of 
tax exempt organizations.
  It is important to understand that this case involved similar facts 
and some of the same parties as the matter investigated by the 
subcommittee. In fact, in response to a question from the special 
counsel, Mr. Gingrich stated, and I quote: ``I lived through that case. 
I mean I was very well aware of what the ACA case did and what the 
ruling was.'' All experts agreed that he should have sought tax advice 
before using tax exempt organizations to pursue his political agenda.
  In the words of our special counsel Mr. Gingrich's actions suggest 
that ``either Mr. Gingrich did not seek legal advice because he is 
aware that it would not have permitted him to use a 501(c)(3) 
organization for his projects,'' or he was ``reckless in an area that 
was fraught with legal peril.''
  Finally, the House must make a judgment on the question of whether 
Mr. Gingrich deliberately misled the committee. Mr. Gingrich submitted 
two letters to the committee that he now admits contained information 
about GOPAC that was inaccurate. The facts surrounding these 
inaccuracies were well known to Mr. Gingrich. Mr. Gingrich had read the 
letters before submitting them to the committee. When the investigative 
subcommittee specifically called the contradiction in the letters to 
Mr. Gingrich's attention, he once again defended them as accurate even 
though they were clearly wrong. The misleading letters were sent with 
the express intent of persuading the Committee on Standards of Official 
Conduct to dismiss the pending charges. They had the effect of 
misleading the committee. It stretches credibility to conclude that the 
repeated misstatements were innocent mistakes.
  The linchpin of these findings is stated clearly in the report of 
special counsel: ``Of all the people involved in drafting, reviewing, 
or submitting the letters, the only person who had firsthand knowledge 
of the facts contained within them with respect to the Renewing 
American Civilization course was Mr. Gingrich.''
  The special counsel concludes: ``Either Mr. Gingrich intentionally 
made misrepresentations to the committee or he was again reckless in 
the way he provided information to the committee concerning a very 
important matter.''
  Mr. Gingrich's defense is that he has always been very sensitive to 
ethics issues and he was embarrassed by the obvious inaccurate letters. 
He said he never intended to mislead the committee. But Mr. Gingrich's 
actions with respect to the understanding reached with the Committee on 
Standards of Official Conduct belies his statement.
  Mr. Gingrich, through his attorneys, had entered into an agreement 
with the committee. That agreement provided ``Mr. Gingrich agree that 
no public comment should be made about this matter while it is still 
pending. This includes having surrogates sent out to comment on the 
matter and attempt to mischaracterize it.''
  I am sure that Members of this House are well aware of public comment 
since the release of our findings on December 21. As the special 
counsel States, ``In the opinion of the subcommittee Members and the 
special counsel, a number of press accounts indicated that Mr. Gingrich 
had violated that agreement,'' the finding of the bipartisan committee 
and our special counsel. Mr. Gingrich's violation of the no comment 
agreement raises serious questions about the extent to which he has 
deliberately sought to mislead the committee in other instances.
  Beyond the events of December 21, 1996, Republican operatives close 
to Mr. Gingrich conducted an ongoing campaign to disrupt the 
committee's work. It is relevant for this House to consider these 
circumstances in determining the degree of Mr. Gingrich's culpability 
in providing the Committee on Standards of Official Conduct information 
that was not accurate, reliable, and complete. It is up to the Members 
of this House to determine the appropriate sanction for the violations 
committed by Mr. Gingrich. This is not a vote on whether Mr. Gingrich 
should remain Speaker of the House. Members need time to become 
familiar with the factual record presented in the special counsel's 
report and to consider the seriousness of these violations that have 
just come to light during the past 4 days.
  In the days and weeks to come Mr. Gingrich and each Member of this 
House should consider how these charges bear on the question of the 
speakership. The resolution before us, the House, today is a sanction 
for Representative Gingrich for the ethics violations that he has 
committed. According to the House rules a reprimand is appropriate for 
serious violations of ethical standards. Sadly, Mr. Gingrich's conduct 
requires us to confirm that this case involves infractions of at least 
that level of seriousness. He has provided inaccurate and misleading 
information to the Committee on Standards of Official Conduct and there 
is significant evidence that he intended to do so.
  The recent history of congressional ethics sanctions indicate the 
House has imposed the sanction of reprimand when a Member has been 
found knowingly to have given false statements. But the earlier cases 
did not involve

[[Page H174]]

giving false statements to the Committee on Standards of Official 
Conduct itself in response to an inquiry from the Committee on 
Standards of Official Conduct, and Mr. Gingrich's case involves more 
than just giving false information to the committee. Mr. Gingrich has 
also admitted to directing a political empire that made extensive use 
of tax exempt entities for political fundraising purposes. As a result 
of all these actions, the reputation of the House of Representatives 
has been damaged and tax dollars have been lost.
  But there is still more. This is not the first time Mr. Gingrich has 
had ethical problems that drew critical action by the Committee on 
Standards of Official Conduct. On other occasions he has been sighted 
by this committee for violating House rules. The American public has 
not forgotten the lucrative book advance contract that the incoming 
Speaker of the House was forced to renounce under public pressure. Our 
committee concluded in regards to that book deal: ``At a minimum this 
creates the impression of exploiting one's office for personal gain. 
Such 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.''
  Because of all those factors, these violations require a penalty more 
serious than a reprimand. Considering all these matters, I urge this 
House to adopt the resolution before us. The resolution incorporates 
the recommendation of the special counsel, the investigative 
subcommittee, the full Committee on Standards of Official, and Mr. 
Gingrich. The sanction we recommend is somewhere between a reprimand 
and a censure. It provides a reprimand plus a required $300,000 
contribution by Mr. Gingrich to the cost of these proceedings. In my 
view this payment should come from his personal resources because it is 
a personal responsibility.
  Mr. Speaker, with today's vote I will have completed my service on 
the Committee on Standards of Official Conduct. Over the past 6 years 
and 1 month I have participated in many ethics matters. Among the 
issues that we had before the committee during my tenure has been not 
only this matter but the House bank and post office matters, both of 
which exposed many Members of this House, including its leadership, to 
embarrassment either for misdeeds or for mismanagement. I must say, 
however, that the matter before us today has brought a threat to the 
Committee on Standards of Official Conduct that far exceeded anything I 
have seen. The committee was subject to repeated attempts to obstruct 
its work and improperly interfere with its investigation. As I leave 
the Committee on Standards of Official Conduct, I hope that the 
incoming Members will find the process has survived and will continue 
to serve this House and the people of our Nation.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1230

  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield such time as he may 
consume to the gentleman from New Mexico [Mr. Schiff], a distinguished 
member of the subcommittee.
  Mr. SCHIFF. Mr. Speaker, I first want to join in the compliments to 
the other committee members and to our staffs and special counsel 
because, even though we had many disagreements along the way, and 
obviously still have some disagreements, I think we made the best 
possible effort to get us here today.
  I agree with the gentleman from Maryland [Mr. Cardin] this is a sad 
day. It is a sad day when any Member is here because of a 
recommendation of the Committee on Standards of Official Conduct. Last 
time I was here it was because a Democratic colleague was here on our 
recommendations. I was not happier then because it was a Democrat and 
not a Republican then. I think it is a sad day when it is a Member of 
the House.
  Nevertheless, I think the House can be proud of the fact there is 
accountability for its Members. I wish such accountability could be 
found from every area of our government.
  Second, I am sorry that in the rendition of facts I just heard, there 
were certain partisan conclusions that eliminated other conclusions 
which I guess could be stated from the other side. For example, it was 
said that there was an attempt made by our chairwoman, the gentlewoman 
from Connecticut [Mrs. Johnson] who got us here, when many people 
expected along the way we could never get here; but through her 
leadership we are here today.
  There was the accusation that our chairwoman deliberately tried to 
scuttle the information getting to the Members in order to mitigate any 
effect on Congressman Gingrich. Quite the contrary. Our chairwoman and 
the rest of us had an agreed to up to 5 days of public hearings. Those 
were changed only when our Democratic colleagues on the Committee on 
Standards of Official Conduct held a press conference in which they 
said the most important product we could produce would be a written 
report that Members could consider before they vote.
  That left our Chair, in my judgment, no alternative but to change 
directions and to postpone the public hearing, which we ultimately did 
have anyway, in favor of trying to produce the written report by this 
date which we have now accomplished.
  There has been no mention of the fact that Members on the Republican 
side particularly were subject to enormous political attack in their 
districts. If I were still a district attorney, a career I had before I 
got to Congress, I would have certain leaders arrested for attempted 
jury tampering, because I think that is what they were doing. They were 
trying to use political pressure to get a result in what is essentially 
a judicial type of deliberative body. That was their intent.
  That was one of the most unethical things I have seen since becoming 
a member of the Committee on Standards of Official Conduct.
  What I want to emphasize now is why we are here today. I want to 
point out that the statement made, that there have been many new facts 
revealed in the last several days, in my judgment is not correct. We 
are here because of a statement of alleged violation found by the 
ethics subcommittee and released publicly on December 21, 1996, to 
which the Speaker acknowledged. And those violations have not changed.
  What has changed is the reporting of those violations in the news 
media over the last several days. What I have seen in the news media in 
various forms is some significant misstatements of what the violations 
are. But I have to add that I do not believe that that was in this case 
the fault of the news media. It is their job to be critical of us, and 
it is our responsibility to respond if we think it is appropriate.
  But I want to make it very clear what I think happened was an 
unfortunate matter of timing, that on Friday of last week, our hearing 
did not begin and our written report was not available until 3 o'clock 
on Friday afternoon. Some reporters have told me there were not enough 
copies to go around. So they are trying to form deadlines for their 
programs or for their newspapers with a report that is over 200 pages 
long. I think it is entirely understandable that some errors were made 
at first.
  Nevertheless, I think some errors were made. They were made because 
Mr. Cole's report attempted to be a soup-to-nuts, beginning to end 
explanation of what we did in the ethics subcommittee to get to where 
we are today. In going through step by step, he quite properly, in my 
judgment, said we had this choice to make and we had this fact and we 
handled it as follows, and so forth. But what I have seen as reported 
as a final conclusion, certain excerpts from that report were 
intermediary at best.
  The final conclusion of the subcommittee did not change. That final 
conclusion is, first, that Mr. Gingrich should have sought competent 
legal, professional tax advice before he began his procedures that 
involved the use of a tax-exempt foundation, which under the law is 
called a 501(c)(3) organization.
  Second, that materials were sent to the Committee on Standards of 
Official Conduct in response to questions from the Committee on 
Standards of Official Conduct that the Speaker should have known were 
inaccurate. That is the final finding, if you will, of the 
subcommittee.
  The report goes through all of the events, and I heard the gentleman 
from

[[Page H175]]

Maryland [Mr. Cardin] make reference to a number of the events. But the 
findings did not change. All of the events would include things like we 
on the subcommittee interviewed everybody we could find who had 
anything to do with the preparation of those two letters that were 
inaccurate.
  What we found, in my judgment, if it were not so serious, and I 
recognize how serious it is, it would really be called a comedy of 
errors.
  What happened was the letters were prepared in Mr. Gingrich's law 
firm that sent the letters first to a staff member in Mr. Gingrich's 
office. The law firm thought that the staff member would correct any 
factual misstatements. The staff member thought the law firm had 
already checked out the facts. So nobody checked out the facts to see 
if they were accurate. But the most important thing is that Mr. 
Gingrich was never involved in the preparation of those letters at any 
point until the very end where he acknowledges he signed them, he 
should have read more carefully, and he is responsible for that before 
this House of Representatives.
  I would point out that in a letter of October 1996 that he prepared 
himself with his staff, he gave us entirely accurate information about 
the matters that are under consideration here. I think it is pretty 
obvious you do not give accurate information in October and then you 
can deliberately prepare information the following September and March 
that nobody would know the difference of.
  Based upon the allegation, the violations we found, the Committee on 
Standards of Official Conduct on a 7-to-1 vote, full committee now, 
entire committee, recommended the following penalty: It recommended a 
reprimand and a cost assessment of $300,000. In some meetings earlier 
with members, I have heard some members say that that is unique and 
they are concerned about that penalty being unique because, although we 
have imposed cost assessments before, we have never done so in the past 
for the cost of the investigation.
  That is basically what we did. We set $300,000 as the estimated cost 
of that portion of the investigation that dealt with clearing up the 
misstatements that we received, which may have begun to be prepared in 
Mr. Gingrich's law firm, but for which he is responsible as a Member of 
the House.
  I want to tell all Members that they do not need, in my judgment, to 
be concerned about the precedent value, because I believe everyone 
concerned understood that this is a unique penalty because the Speaker 
of the House is a unique official in our institution. In fact, that is 
the reason we decided to, on the subcommittee's part, propose a unique 
penalty, and we got word, I have to say ``got word,'' because we never 
met with the Speaker to discuss the penalty. All of the negotiations 
were by our special counsel on our behalf and the Speaker's attorney, 
Mr. Evans, on his behalf. So we got reports on it. But the report we 
got back was that Speaker Newt Gingrich agrees that because he holds a 
unique position in the House he should receive a unique penalty, so 
there is no doubt even the Speaker of the House is not above the rules.
  I would hastily add, however, two things, and conclude with this. The 
first is that I think there is room for this to be made a standing 
procedure in certain cases. For example, I saw what in my judgment were 
a number of frivolous complaints filed with the Committee on Standards 
of Official Conduct which had no other purpose than to be leaked to the 
press and create bad publicity for whomever was the target of those 
complaints. It seems to me that the precedent we have established here 
should apply to those who are found by the committee to have filed 
frivolous complaints.
  Finally, on how the funds should be paid if the House adopts the 
recommended penalty, we were deliberately silent on that. My colleague, 
the gentleman from Maryland [Mr. Cardin], is most certainly entitled to 
his opinion, but the subcommittee and the committee made no 
determination.
  Insofar as I have studied the precedents on financial remuneration to 
the Government, we have never established as a matter of law how these 
funds can be paid.
  Mr. Gingrich, if he does get this as a final penalty, understands all 
the ramifications, I am certain he does not need me to explain them to 
him or, for that matter, any of my colleagues on the other side. But 
the fact is the committee was silent deliberately on how any such funds 
should be paid. It is my understanding there are at least some 
precedents for campaign funds, for example, being used to reimburse the 
Government, and certainly we all know that the Chief Executive of the 
United States has a legal defense fund in which he raises money. So I 
am just saying that whatever the options are to Newt Gingrich as a 
Member of the House, they have not been precluded legally by the 
committee, and in my judgment they should not be.
  With that, Mr. Speaker, I just want to again commend our chairwoman, 
the gentlewoman from Connecticut [Mrs. Johnson], my fellow members of 
the committee, and say I believe we have come up with an appropriate 
penalty, which some think is too harsh, some think is too lenient. That 
tells me we are about where we ought to be. I hope the House will adopt 
it.


                announcement by the speaker pro tempore

  The SPEAKER pro tempore (Mr. Bereuter). The Chair will request that 
visitors in the gallery, in coming and going, refrain from any audible 
disruption of the proceedings.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume 
briefly to comment on some of the points raised by the gentleman from 
New Mexico [Mr. Schiff].
  Mr. Speaker, the gentleman from New Mexico [Mr. Schiff] is correct, 
we are in agreement on the recommendation. We put different emphasis on 
some of the facts. Mr. Gingrich clearly, in my view, had ample 
opportunity to know about the statements in his letters. He did 
indicate he hired an attorney in order to draft the two letters. Let me 
just read, if I might, from the transcripts as to the exchange between 
Mr. Cole and Mr. Baran, Mr. Baran being Mr. Gingrich's attorney.
  Mr. Cole: ``Would you have made sure that he had read it and approved 
it, or just the fact he read it is all you would have been interested 
in,'' referring to Mr. Gingrich?
  Mr. Baran said, ``No, I would have wanted him to be comfortable with 
this on many levels.''
  Mr. Cole: ``Were you satisfied he was comfortable with it prior to 
filing it with the committee?''
  Mr. Baran: ``Yes.''
  Let me also point out that after this, after we pointed out to Mr. 
Gingrich the inconsistency in the letters, Mr. Gingrich wrote another 
letter back to the committee. Clearly he had time to review the 
inconsistencies by that time. The October 31, 1996, letter, in that 
letter he still maintains his innocence on inconsistencies in the 
letter, even though the letters were clearly inaccurate, he knew they 
were inaccurate, and he had a chance to reread the letters and correct 
the record.
  Mr. Speaker, I yield 11\1/2\ minutes to the gentlewoman from 
California [Ms. Pelosi], my colleague on the Committee on Standards of 
Official Conduct, who was on the investigative subcommittee and who has 
made a great contribution to this process and has been an extraordinary 
member of our Committee on Standards of Official Conduct.
  Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding me time 
and for his leadership and guidance throughout this process. Clearly 
without his involvement, we would not be here today with a bipartisan 
recommendation for a sanction for the Speaker of the House.
  Mr. Speaker, as a member of the investigative subcommittee, I would 
like to take this opportunity to publicly thank the gentleman from 
Florida, Porter Goss, our Chair of the investigative subcommittee, 
again acknowledge the gentleman from Maryland, Mr. Cardin, as ranking 
member for his service there, as well as to say how much I learned from 
the gentleman from new Mexico, Mr. Schiff, in the course of our service 
there.
  Clearly, from the debate so far, you can see that we had many 
unresolved difficult issues to deal with, and under the leadership of 
the gentleman from Florida [Mr. Goss], we went through that.
  I want to also commend our special counsel, James Cole, for making us 
stick to the facts, the law, and the ethics rules as those elements 
that were

[[Page H176]]

the only matters relevant to our decisions, and many thanks to Kevin 
Wolf and Virginia Johnson for their assistance and professionalism.
  I heard my colleague, the gentleman from New Mexico [Mr. Schiff], say 
in his earlier days as a prosecutor he might entertain thoughts of 
bringing jury tampering charges. If he decides to do that, I hope that 
the gentleman will include in his package the dirty tricks memo that is 
now in the public record that is a written document about attempts to 
undermine the ethics process directly by the Republican House 
leadership.
  Let me say though we did produce a bipartisan product. I hope our 
work will serve as a foundation for a bipartisan solution to be agreed 
to today.
  Today, others have said it, is a sad day. I think it is a tragic day. 
Here in the House of Representatives we will sanction a sitting Speaker 
for the first time. It is an unwelcome task to pass judgment on any of 
our colleagues, but we have a responsibility to uphold ethical 
standards called for in the rules and expected by the American people.
  I associate myself with the gentleman from Maryland, Mr. Cardin's, 
remarks about the process. We should not have to choose to make the 
American people aware of either the hearing, a full hearing, or the 
report. But since we have a report, I urge everyone to read it. I think 
it is very instructive and gives lie to many of the 
mischaracterizations that have been made about the violations that the 
committee charged Mr. Gingrich with and those which he admitted to.

                              {time}  1245

  The last few weeks have been dreadful. But we have an opportunity to 
say today to the American people that when we come to Washington, we do 
not check our integrity at the beltway, and that power is not a license 
to ignore ethical standards. We also have an opportunity to tell the 
American people that sanity can reign in the Congress by demonstrating 
our ability to agree and disagree in a respectful way. The American 
people gave us the privilege to serve; they expect us not only to make 
the laws and to obey the laws, but also to live up to a high ethical 
standard.
  So today we are here to address the failure of Speaker Gingrich with 
regard to the laws governing charitable contributions and GOPAC, and 
his failure to respond accurately and reliably to the Committee on 
Standards of Official Conduct.
  I would like to just take a moment to refer to the book, because as I 
asked people to read it, I want to point out the statement of alleged 
violations which was originally set forth by the special counsel. This 
is on page 155.
  Based on the information described above, the special counsel 
proposed a statement of alleged violations to the subcommittee on 
December 12. The statement of alleged violations contained 3 counts: 
Mr. Gingrich's activities on behalf of ALOF in regard to AOW and ACTV, 
and the activities of others in that regard with his knowledge and 
approval, constituted a violation of ALOF's status under section 
501(c)(3).
  Second, Mr. Gingrich's activities on behalf of Kennesaw State College 
Foundation, the Progress and Freedom Foundation, and Reinhardt College 
in regard to the Renewing American Civilization course, and other 
activities in that regard, with his knowledge and approval, constituted 
a violation of those organizations' status under 501(c)(3).
  And, third, Mr. Gingrich had provided information to the committee, 
directly or through counsel, that was material to matters under 
consideration by the committee, which Mr. Gingrich knew or should have 
known was inaccurate, incomplete, and unreliable.
  These were not the alleged violations that were passed out at the 
committee because we did not come to agreement on them, but they are 
the original allegations by the special counsel. I think everyone is 
well aware that we have charged the Speaker in our statement of alleged 
violations that he did not ensure that the law was complied to in his 
activities, and that he gave information to the committee that was not 
accurate.
  Think how much easier it would be if we could all use the 501(c)(3), 
not consult a lawyer, and build our political agenda around tax 
deductible considerations. The American people in their generosity give 
the opportunity to charitable institutions to do charitable work. That 
does not include subsidizing our political activity. At the grassroots 
level we have always had to comply with the law in relationship to 
political activity and 501(c)(3). If we have to do it at the grassroots 
level, so should the Speaker of the House.
  As the counsel mentions in his statement, some members of the 
committee and the special counsel were in favor, as I mentioned before, 
of the original proposal. After much deliberation, all four of us could 
agree on a statement of alleged violations that despite, in quotes, 
``Despite significant and substantial warnings, Mr. Gingrich did not 
seek the legal advice to ensure that his conduct conformed with the 
provisions of 501(c)(3),'' with the law.
  Why did he not? Why did he not? Either because Speaker Gingrich knew 
what the answer would be no, from an attorney, ``No, you cannot do 
this,'' or he was reckless in conforming with the law. The committee 
decided that regardless of the resolution of the 501(c)(3) tax 
question, Speaker Gingrich's conduct was improper, did not reflect 
credibly on the House, and was deserving of sanction, serious sanction, 
and Speaker Gingrich agreed.
  The next issue in my view is the most serious, that of not dealing 
honestly with the Committee on Standards of Official Conduct. It is 
interesting to me that Speaker Gingrich has repeatedly stated that 
ethics are important to him. Why, then, did he say that he was too busy 
to respond to the committee accurately? Again, either he was trying to 
get complaints dismissed and an accurate answer would not achieve that 
end, or that ethics were not important enough for him to take the 
necessary time.
  As our colleague, Mr. Cardin, has pointed out, Mr. Gingrich gave one 
answer in the earlier letter in order to respond to a complaint 
regarding use of official resources for his course, so he said GOPAC 
did it. Then when we asked the question if GOPAC and 501(c)(3) cannot 
be that cozy, then he said GOPAC did not do it; and then in the third 
communication to the committee, he stood by his previous letters.
  The gentleman from New Mexico [Mr. Schiff] prefers to call it a 
comedy of errors. I think it is violating our trust that we have among 
Members. Every day that we speak to each other in this House, we refer 
to each other as the gentleman from Georgia, the gentlewoman from 
Connecticut, the gentleman from Maryland. We trust each other that we 
will deal truthfully with each other.
  Unfortunately, in terms of Speaker Gingrich's dealings with the 
committee on a number of occasions, and in his violation of the 
agreement under which we would go forward in bringing this issue to a 
conclusion, Mr. Gingrich's statements lead me to one conclusion: that 
Mr. Gingrich, in his dealings with the committee, is not to be 
believed. I conclude also that Mr. Gingrich gave these different 
answers not because it was a comedy of errors, but because he thought 
he would get away with it.
  I was particularly concerned about the ``too busy'' defense. We 
cannot say that ethics is important to us and then say we are too busy 
to answer the central question asked by the Committee on Standards of 
Official Conduct. Maintaining a high ethical standard is a decision, 
and it requires making it a priority. It is not just something we do 
when we are not too busy.
  We expect the Speaker of the House to be busy. We also expect the 
Speaker of the House to be ethical. Speaker Gingrich himself has stated 
that the Speaker must be held to a higher standard. I do not put any 
additional burden on the Speaker. I think all Members of Congress 
should be held to a higher ethical standard.
  When new Members arrive in Congress, one of the first documents they 
receive is the House Ethics Manual. And one of the first 
responsibilities impressed upon all of us is to uphold a high ethical 
standard. Clearly, Speaker Gingrich did not live up to his own 
professed ethical standards of the House, and, indeed, to the ethical 
standards in this book.
  I urge my colleagues to read this report. I think when you do, you 
will see

[[Page H177]]

that it gives lie to the mis characterizations of our Republican 
colleagues that the violations were nothing, or that they were like 
trespassing or double parking. Either our colleagues were ill-informed, 
and that is what I choose to believe, or they have a cavalier regard 
for the tragedy of the Speaker admitting bringing discredit to the 
House of Representatives which he wants to lead.
  Now we come to the penalty. As you know, we have a financial penalty 
because we believe that the inaccurate statements that the Speaker said 
to us prolonged the process. There are other reasons why there is a 
financial penalty, but that was one of them. And the subcommittee 
concluded, and I quote, ``that because these inaccurate statements were 
provided to the committee, this matter was not resolved as 
expeditiously as it could have been. This caused a controversy over the 
matter to arise and last for a substantial period of time, it disrupted 
the operations of the House, and it cost the House a substantial amount 
of money in order to determine the facts.''
  So I urge our colleagues, in light of all of that, to support the 
bipartisan recommendation of the committee. The $300,000 penalty I 
believe speaks eloquently to the American people, who may not know the 
weight of one of our sanctions or another, but they understand 
$300,000. And I hope that this money will not come from the Speaker's 
political campaign funds, because I think that will increase the 
cynicism of the American people about what goes on here in Washington.
  Whether the Speaker remains Speaker is up to the Republicans. He is 
technically eligible. I hope you will make a judgment as to whether he 
is ethically fit.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Florida [Mr. Goss), the chairman of the 
subcommittee, and I want to recognize the outstanding job that he did 
chairing that subcommittee, as I recognize the remarkable service of 
the members of that subcommittee.
  (Mr. GOSS asked and was given permission to revise and extend his 
remarks.)
  Mr. GOSS. Mr. Speaker, I thank the gentlewoman from Connecticut, the 
distinguished chair of our committee, for yielding me this time. She 
deserves our sincere gratitude for all she has endured, for her 
persistence, for her determination to bring this to a successful 
conclusion, and here we are today. It was certainly an unenviable and, 
I know, thankless task.
  Today we have a conclusion. Today the House takes the final step in 
what has been a most difficult process, I think we all would agree. It 
is not just for those intimately involved in the day-to-day twists and 
turns in this tortuous case, but also for the entire House.
  On Friday the full Committee on Standards of Official Conduct 
approved a recommendation which is today before this House, for an 
official reprimand and a $300,000 cost assessment to Mr. Gingrich as 
sanction for his violation of House rules and as partial reimbursement 
for the costs of the inquiry that ensued. This is unquestionably a 
serious sanction, but one that is also fair and appropriate, in my 
view, as evidenced by the fact that indeed Mr. Gingrich himself has 
agreed to it.
  The Committee on Standards of Official Conduct, functioning 
independently of leadership on both sides of the aisle, is supposed to 
find the truth through an investigative process. It is not designed to 
protect errant Members, nor is it designed to permit partisan zealots 
to destroy Members or to score political points.
  In this case, the committee's members were subject to frequent unfair 
and inaccurate partisan political attack. That is a matter of fact. 
Outsiders attempted to influence our activities, our deliberations, our 
schedule and our conclusions. That is truly a shame. It has caused 
harm, not just to the Members involved, but it has also brought 
discredit to this institution, in my view.
  Friday, I urged the leadership on both sides of the aisle to tone 
down the rhetoric, cut the nonsense, and get back to work in repairing 
the damage that has come to this House. I repeat that exhortation 
today.
  With regard to the matter at hand, I am very satisfied with the work 
done by our investigative subcommittee, whose recommendation was 
adopted by the full committee and is the recommendation all Members 
will consider today.
  The four of us, working with the extraordinarily talented special 
counsel, Jim Cole, functioned in a spirit of bipartisan cooperation 
that did actually grow as we went along in the case. I say we started 
with different perspectives, but we started with open minds, and I am 
grateful for the very fine service, the unbelievable commitment of time 
of the members, their cooperation. I take my hat off to the gentleman 
from Maryland [Mr. Cardin], the gentleman from New Mexico [Mr. Schiff], 
and the gentlewoman from California [Ms. Pelosi], all of whom in my 
view bring great credit to this institution.
  Contrary to what has been reported, the statement of alleged 
violations that our subcommittee developed and passed and which forms 
the basis for the sanctioned recommendation did not, I repeat not, find 
that Mr. Gingrich violated or did not violate tax law in his 
relationship with 501(c)(3) tax exempt organizations. And contrary to 
media reports, that statement of alleged violation of December 21st 
also did not charge Mr. Gingrich with intentionally deceiving our 
committee with his correspondence in this case.
  Nonetheless, I found it extraordinarily imprudent of Mr. Gingrich not 
to seek and follow a less aggressive course of action in tax areas he 
knew to be sensitive and controversial. And even more troubling, I 
found the fact that the committee was given inaccurate, unreliable, and 
incomplete information to be a very serious failure on his part.

                              {time}  1300

  Now, it is certainly true that we had more than enough facts and 
extenuating circumstances to consider. We all know a Member of Congress 
wears many hats, for our official lives, our campaign lives, our 
private lives, our business lives or whatever, and knowledge of how 
careful we must be in wearing those hats is fundamental to our job. We 
all have an extra obligation to be sure our activities are appropriate, 
no matter which hat we are wearing. That is an obligation that each of 
us signs up for when we run to serve in this institution.
  That is why the serious sanction we recommend is appropriate, in my 
view. The gentleman from Georgia [Mr. Gingrich] has recognized his 
lapses and the problems they have caused for this House. He has 
apologized, forthrightly and sincerely. He has also accepted the unique 
sanction we proposed, one that includes a clear signal to all Members 
about the importance of providing accurate and grounded information to 
the Select Committee on Ethics, whether in response to a complaint or 
in filing a complaint.
  I must point out to Members that our mission in the preliminary 
investigation was to find and examine the dark clouds. That is what 
investigations do. Mr. Cole is very good at that. He is a brilliant 
prosecutor. In his report he presented well those dark clouds. He did 
not, however, present all of the other clouds we looked at that turned 
out to be not quite so dark. So I found that his report would be well 
supplemented by reading the report of the Speaker's attorneys for 
balance, as well. I refer colleagues and interested parties to both 
reports to get the full picture.
  In the end, I agreed with my subcommittee colleagues that Mr. 
Gingrich's absence of diligence subjects him legitimately to charges of 
conduct reckless enough to constitute a violation of House rules. I 
sincerely hope with today's voting we can put this matter to rest.
  I urge this House to adopt the recommendation of the Select Committee 
on Ethics and remember, the penalty is aimed at findings in response to 
the specific work of our subcommittee, no matter what feelings any 
particular Member may personally have about Mr. Gingrich.
  Some have said this is a sad day. Indeed it is, whenever we have this 
type of a situation. I will also say it is a day of victory. We have 
proved to the American people that no matter how rough the process is, 
we can police ourselves. We do know right from wrong in this 
institution. We can take the necessary steps.

[[Page H178]]

  Mr. CARDIN. Mr. Speaker, I yield 5 minutes to the gentleman from 
Pennsylvania [Mr. Borski], a very valuable member of the Select 
Committee on Ethics, who has done yeoman's service for the House and 
for the Congress on that committee.
  (Mr. BORSKI asked and was given permission to revise and extend his 
remarks.)
  Mr. BORSKI. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I want to start by commending the members of the 
investigative subcommittee, the gentleman from Maryland, Mr. Ben 
Cardin, the gentlewoman from California, Ms. Nancy Pelosi, the 
chairman, the gentleman from Florida, Mr. Porter Goss, and, of course, 
the gentleman from New Mexico, Mr. Schiff, for the extraordinary job 
they have performed for this institution. They are all people of 
enormously high integrity, and they have done this committee and this 
House very proud.
  I also want to commend the special counsel, Mr. Cole, who under the 
most difficult and trying of circumstances came through with a report 
that, again, I would urge all Members of the House to read; but again, 
under the most difficult and trying of circumstances, he performed an 
heroic deed for this House.
  Mr. Speaker, let me state the obvious. No Member seeks or enjoys a 
position on the Ethics Committee, but the proper functioning of that 
committee is essential to the integrity of the House. It is a matter of 
personal and institutional honor that each of us has agreed to serve.
  I remember distinctly when I received the phone call that any one of 
us never wants to get; a leader of my party, Speaker Tom Foley, asked 
me to serve on the Ethics Committee. I remember distinctly saying to 
Mr. Foley that I was reminded of the fellow who was tarred and 
feathered, put on a rail and run out of town, whose retort was that if 
it weren't for the honor, he would rather walk. I am on this committee, 
but it is as a reluctant member. On more than one occasion I have 
offered to step down when the removal of a member was necessary to 
maintain the political balance of the committee. But Mr. Speaker, I 
feel very strongly that it is our constitutional duty, and it was mine, 
to respond positively to Tom Foley's request. It was, again, certainly 
not a position that I wanted.
  I hope to concentrate my efforts and energies on the work of the 
Committee on Transportation and Infrastructure, probably the most 
bipartisan committee in this House of Representatives, and where that 
bipartisan atmosphere has enabled us to turn out very important pieces 
of legislation.
  It is always a grueling and distasteful task to investigate a fellow 
Member--all the more so in the case of the Speaker. Some have suggested 
that partisan attempts were made to derail the special counsel's 
efforts and render him less effective. I might say that I agree. The 
subcommittee released its statement of alleged violation on the 
Saturday before Christmas. The counsel's report was released on Friday 
afternoon, before inaugural weekend, with the vote firmly scheduled for 
this afternoon. Despite a prior agreement which allowed for a full week 
of public hearings, we were left with only a single afternoon's 
session. Mr. Cole, along with members of the full committee and 
subcommittee were troubled by the time line insisted upon by Republican 
leadership. The special counsel insisted with consistency that he would 
be hard pressed to complete a report detailing the 2-year investigation 
before February 4. Yet, Mr. Cole was denied the time he deemed 
necessary.
  Despite these obstacles, however, the special counsel did release a 
report on Friday afternoon which included the subcommittee's 
recommended sanction of a reprimand and fine. In this report, Mr. Cole, 
along with Ms. Roady, the subcommittee's tax expert, and two members of 
the committee conclude that Mr. Gingrich has violated the tax code in 
conjunction with 501(c)(3). However, the Committee agreed that the 
focus of the investigation should be on the conduct of the Member 
rather than the resolution of issues of tax law which would best be 
left to the IRS. What the report does say about the 501(c)(3), is the 
following:
  ``* * * the subcommittee was faced with a disturbing choice. Either 
Mr. Gingrich did not seek legal advice because he was aware that it 
would not have permitted him to use a 501(c)(3) organization for his 
projects, or he was reckless in not taking care that, as a Member of 
Congress, he made sure that his conduct conformed with the law in an 
area where he had ample warning that his intended course was fraught 
with legal peril. The subcommittee decided that regardless of the 
resolution of the 501(c)(3) tax question, Mr. Gingrich's conduct in 
this regard was improper, did not reflect creditably on the House and 
was deserving of sanction.''
  With respect to the letters containing inaccurate information that 
Mr. Gingrich provided to the committee, the report goes on to say:
  ``The special counsel suggested that a good argument could be made, 
based on the record, that Mr. Gingrich did act intentionally, however 
it would be difficult to establish that with a high degree of certainty 
* * * In determining what the appropriate sanction should be in this 
matter, the subcommittee and the special counsel considered the 
seriousness of the conduct, the level of care exercised by Mr. 
Gingrich, the disruption caused to the House by the conduct, the cost 
to the House in having to pay for an extensive investigation, and the 
repetitive nature of the conduct.''
  ``The subcommittee was faced with troubling choices in each of the 
areas covered by the statement of alleged violation. Either Mr. 
Gingrich's conduct in regard to the 501(c)(3) organizations and the 
letters he submitted to the committee was intentional or it was 
reckless. Neither choice reflects creditably on the House. * * *''
  Under the rules of the committee, a reprimand is the appropriate 
sanction for a serious violation of House Rules and a censure is 
appropriate for a more serious violation of House rules. This is the 
extent to which guidelines are in place for Members to make a 
determination of sanction. According to the special counsel, it was the 
opinion of the Ethics Subcommittee, after two years of investigation 
and inquiry, that this matter fell somewhere in between. As such, both 
the subcommittee and the special counsel recommended that the 
appropriate sanction should be a reprimand and a payment reimbursing 
the House for some of the costs of the investigation in the amount of 
$300,000. Mr. Gingrich has agreed that this is the appropriate 
sanction, as has the full Ethics Committee.
  Mr. Speaker, I say to my colleagues, particularly my colleagues on 
the Democratic side of the aisle, this is not about who should be the 
Speaker of the House. Democrats have no say in who should be the 
Speaker of the House. That is up to the majority party.
  This is not about process. There were parts of this process that I 
find extremely disturbing, and parts that I think need to be dealt with 
further at an appropriate time. This is not that time.
  This is not about whether the existing tax code in question is 
arcane. I asked the special counsel, Mr. Cole, at our Friday afternoon 
public hearing whether the law was in fact arcane, and Mr. Cole 
responded in the strongest possible language that the law was not 
arcane. In fact, it is a headline issue that politics and tax-exempt 
organizations should not mix. Even Mr. Gingrich's tax attorney agreed 
with that statement.
  I also asked the special counsel to respond to the spin that we are 
all familiar with, and it goes like this: ``I saw the course, I watched 
the tape. There is nothing political about them.'' Mr. Cole's response 
was that the issue in question was not so much the content of the 
course, but, rather, the intent and the way in which it was 
distributed.
  The report states, ``Mr. Gingrich applied the ideas of the course to 
partisan political purposes.'' Mr. Speaker, this is not about 
determining the innocence or the guilt of Mr. Gingrich. He has already 
admitted that guilt, that he has brought discredit to this House. This 
is about the ability of the House of Representatives, under the most 
trying of circumstances, to judge one of its own Members, an extremely 
controversial Member, one who has led his party to the majority. It is 
our duty to determine the appropriate sanction to that Member.
  The subcommittee, aided by the special counsel, has conducted an 
investigation and made its recommendation to the full committee, which 
in turn has made that recommendation to the full House.
  Those are the processes we have adopted and those are the processes 
we have followed. We are giving every Member, independently, the 
opportunity to put aside partisan politics and follow the 
recommendation offered by the special counsel, the subcommittee, and 
the full committee upon completion of a 2-year inquiry. It is right and 
it is just. We were asked as Members of Congress to put aside our 
partisan beliefs and serve on this committee out of a sense of duty and 
honor.

[[Page H179]]

Now, we are asking you to honor our recommendations with dignity.
  I ask my colleagues to honor the work of the Ethics Committee and to 
vote yes for this very strict sanction.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 3 minutes to the 
gentleman from Texas [Mr. Smith].
  (Mr. SMITH of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. SMITH of Texas. Mr. Speaker, I thank the chair of the Ethics 
Committee for yielding time to me.
  Let me say at the outset that you can clearly disagree and have great 
respect for your colleagues on the Ethics Committee, as I do, and still 
reach different conclusions, as I do.
  My conclusion is that the penalty that has been assessed by the 
Ethics Committee is way too severe when you look at the actual findings 
of the committee and when you look at the precedent that has been 
established by this House.
  Let us look at the actual findings. There have been two here. The 
first finding is that the Speaker should have consulted an attorney 
about tax laws. The second is that he submitted two inaccurate letters 
to the Ethics Committee. These are real mistakes, but they should not 
be hanging offenses, especially when we consider that there was no 
finding of any law that was broken, there was no finding of any intent 
to mislead the Ethics Committee, and there was no finding that the 
Speaker received any personal financial gain.
  The special counsel to the Ethics Committee once described it this 
way. He said that the Speaker had ``run some very yellow lights.'' But 
you do not get ticketed, or you should not, for running a very yellow 
light, no matter how close it is to becoming a red one.
  If we look at the precedents that have been established here as well, 
we see that there is no justification for this severe a penalty. The 
Ethics Committee staff has researched this issue, and there is simply 
not a single case where there has not been a finding of an intent to 
mislead the committee that has resulted in a penalty of reprimand, not 
a single case.
  In fact, all of the precedents are to the contrary. Wherever there 
has not been a finding of intent to mislead the committee, the penalty 
has always been either a Letter of Reproval, or the case has been 
dismissed against the individual involved.
  I might say here, we all know that the Speaker has agreed to the 
penalties, but that does not mean that the agreement is a fair one. It 
does not mean that that is a penalty that we have to support.
  Remember the speech by Teddy Roosevelt called the man in the arena 
speech. He said that we can either grapple in the political arena, or 
we can be one of those ``timid souls who know neither victory nor 
defeat.''
  How much better it would be for us today to have the victory of 
conscience, and vote against a penalty that we know is too severe.
  The report of counsel and article follow:

                 IN THE MATTER OF SPEAKER NEWT GINGRICH

 Committee on Standards of Official Conduct: Report of Counsel for the 
                               Respondent

       This is the Report of Counsel for the Respondent Speaker 
     Newt Gingrich. This Report is being submitted in connection 
     with the Sanction Hearing specified in Rule 20 of the Rules 
     of the Committee on Standards of Official Conduct (``Rules'') 
     regarding written submissions by counsel.\1\ The Report is 
     subject to two limitations. First, the Report has been 
     prepared without the access to all of the information 
     collected by the Investigative Subcommittee. Respondent was 
     limited to certain exhibits made available by the Committee; 
     selected transcripts made available by the Committee; and 
     public documents. Second, Respondent has not been afforded 
     the opportunity to conduct discovery or otherwise develop 
     information relating to the matter before the Committee.
---------------------------------------------------------------------------
     \1\ Footnotes at end of document.
---------------------------------------------------------------------------


                                overview

       On December 21, 1996, the Investigative Subcommittee issued 
     a Statement of Alleged Violation. The Statement was the 
     product of an investigation by the Investigative Subcommittee 
     and Special Counsel. It is important to note that the process 
     was one-sided: Witnesses were not subject to cross-
     examination; documents were not subject to pertinency or 
     admissibility standards; and traditional rules establishing 
     standards for admissibility, pertinency and reliability of 
     evidence were not applied. Respondent was not permitted to 
     participate in the examination of witnesses or documents.
       Also on December 21, 1996, Respondent submitted an Answer 
     admitting the alleged violation. Pursuant to Rule 19(c) of 
     the Rules, Respondent's admission relieved the Committee of 
     determining through an adjudicatory subcommittee at a 
     Disciplinary Hearing whether the single count in the 
     Statement of Alleged Violation was proven by clear and 
     convincing evidence. At such a Disciplinary Hearing, 
     Respondent would have been afforded the opportunity to cross-
     examine witnesses, challenge documents and obtain discovery.
       With the Statement of Alleged Violation and the Answer, the 
     next process contemplated by the Rules is a Sanction Hearing 
     pursuant to Rule 20. This process does not entail a trial on 
     the merits of the alleged violation. Instead, the process is 
     limited to determining the appropriate sanction, if any, for 
     the violation.
       This Report is submitted for that purpose. This is not a 
     report in response to the Special Counsel's Report. It does 
     not contain a fact by fact, argument by argument response to 
     the Special Counsel's Report. Respondent does not accept as 
     true the asserted factual statements and characterizations 
     thereof beyond the facts contained in the Statement of 
     Alleged Violation admitted by Respondent's Answer. It is 
     relatively easy for an attorney, such as the Special Counsel, 
     to piece together testimony and documents, free from the 
     tests of cross-examination, hearsay limits and other 
     evidentiary standards to assure accuracy, and free from the 
     boundaries of reality, to reach virtually any conclusion 
     through clinical forensic reconstruction. The Report is 
     designed to put the facts before the Committee in the context 
     of the real world so that the Committee can determine the 
     appropriate sanction, if any, for the violation, in the 
     absence of an adversary process.
       Let there be no mistake, Respondent has accepted the 
     Investigative Subcommittee's Statement of Alleged Violation. 
     In doing so, Respondent has accepted the facts contained 
     therein. This does not mean, however, that Respondent accepts 
     as true those asserted facts not contained in the Statement 
     of Alleged Violation. To assist the Committee in its 
     decision-making process, attached hereto as Appendix A is a 
     timeline of the events relating to the Renewing American 
     Civilization course. This Report is submitted to place the 
     general body of facts in the context of reality as opposed to 
     a version of the facts viewed with hindsight that could only 
     exist in a laboratory free from the dynamics of the real 
     world. For assistance in placing the facts in context, please 
     see Appendix B.


                            scope of hearing

       There have been a myriad of charges and allegations made 
     against Respondent. With the exception of the single 
     violation contained in the Statement of Alleged Violation, 
     those charges and allegations are untrue and groundless. The 
     only violation before this Committee for purposes of 
     determining the appropriate sanction, if any, is the 
     violation contained in the Statement of Alleged Violation. 
     The Statement of Alleged Violation describes conduct which 
     violates Rule 43(1) of the Rules of the Committee on 
     Standards of Official Conduct. Rule 43(1) provides as 
     follows: ``A Member, officer, or employee of the House of 
     Representatives shall conduct himself at all times in a 
     manner which shall reflect creditably on the House of 
     Representatives.'' Rules of the Committee on Standards of 
     Official Conduct, Rule 43, clause 1.
       Paragraph 52 of the Statement of Alleged Violation contains 
     the only violation found, and states that:
       ``[R]egardless of the resolution of whether the activities 
     described in paragraphs 2 through 41 constitute a violation 
     of section 501(c)(3) of the Internal Revenue Code, by failing 
     to seek and follow legal advice described in paragraphs 15 
     and 40, Mr. Gingrich failed to take appropriate steps to 
     ensure that the activities described in paragraphs 2 through 
     41 were in accordance with section 501(c)(3) of the Internal 
     Revenue Code; and on or about March 27, 1995, and on or about 
     December 8, 1994, information was transmitted to the 
     Committee by and on behalf of Mr. Gingrich that was material 
     to matters under consideration by the Committee, which 
     information, as Mr. Gingrich should have known, was 
     inaccurate, incomplete, and unreliable.'' Statement of 
     Alleged Violation, para. 52, p. 22 (emphasis added).
       The standard relating to the adoption of a Statement is 
     contained in Rule 17(d) of the Rules of the Committee on 
     Standards of Official Conduct and provides:
       ``Upon completion to the Preliminary Inquiry, an 
     investigative subcommittee, by majority vote of its members, 
     may adopt a Statement of Alleged Violation if it determines 
     that there is reason to believe that a violation has 
     occurred.'' (emphasis added). Rules of the Committee on 
     Standards of Official Conduct, Rule 17(d).
       Given the false information which has been disseminated 
     regarding the violation, it is important to note that the 
     Investigative Subcommittee:
       did not charge Respondent with any violation of U.S. tax 
     law;
       did not charge Respondent with intending to deceive the 
     Committee;
       did not charge Respondent with illegal activities or 
     criminal tax violations; and
       did not charge Respondent with money laundering.
       Indeed, based on the standard applied by the Investigative 
     Subcommittee, there is no reason to believe that any such 
     allegations

[[Page H180]]

     are true. All statements to the contrary are not only false, 
     but maliciously false, as established by the language of the 
     Statement of Alleged Violation.


                             the real world

       In the real world, Members of Congress necessarily confront 
     many issues incidental to their multiple responsibilities. 
     Chapter 9 of the House Ethics Manual itself addresses 
     ``Involvement With Official and Unofficial Organizations.'' 
     On page 307, the House Ethics Manual state: ``Members and 
     employees of the House need to distinguish carefully between 
     official and unofficial activities when they interact with 
     private organizations.''
       Also in the real world, Members interact with a variety of 
     organizations. Some are political action committees; some are 
     charitable organizations (Section 501(c)(3) entities); and 
     others are lobbying organizations (Section 501(c)(4) 
     entities.\2\ It is neither illegal nor inappropriate for 
     Members to participate as directors, officers or trustees of 
     these political action committees, charitable organizations 
     and lobbying organizations. According to The Exempt 
     Organization Tax Review, ``a review of Members' 1988 
     financial disclosure forms . . . showed that 51 Senators and 
     146 House Members were founders, officers or directors of 
     tax-exempt organizations.'' See, Exhibit A: The Exempt 
     Organization Tax Review, Dec.-Jan. 1990, p. 680. Indeed, 
     ``five candidates in the 1988 presidential contest had tax-
     exempt groups ostensibly doing research and educational 
     activities in the months preceding their campaigns.'' Id.
       The Internal Revenue Service specifically contemplated such 
     structures. As described by the IRS:
       ``A number of IRC 501(c)(3) organizations have related IRC 
     501(c)(4) organizations that conduct political campaign 
     activities, usually through a PAC (an IRC 527(f) separate 
     segregated fund). So long as the organizations are kept 
     separate (with appropriate record keeping and fair market 
     reimbursement for facilities and services), the activities 
     of the IRC 501(c)(4) organizations or of the PAC will not 
     jeopardize the IRC 501(c)(3) organization's exempt status. 
     1992 IRS CPE, at 439.''
       In addition, it is not unusual that the political action 
     committees, charitable organizations and lobbying 
     organizations share the same address and operate out of the 
     same offices. For example, the National Organization of Women 
     (a section 501(c)(4)), National Organization of Women 
     Foundation Inc. (a section 501(c)(3)), and the National 
     Organization of Women Political Action Committee (a political 
     action committee) all list as their address 1000 16th St. NW 
     700, Washington, D.C. For a further listing of multiple, 
     affiliated Political Action Committees/Section 501(c)(3) 
     entities/Section 501(c)(4) entities sharing the same address, 
     see Exhibit B and Appendix D.
       Finally, it is common for these multiple-entity 
     organizations to engage simultaneously in activities that 
     have political implications. For example, the Sierra Club 
     operates a section 501(c)(3) entity designated as Sierra Club 
     Fund; a section 501(c)(4) entity designated as Sierra Club; a 
     political action committee designated as Sierra Club 
     Committee on Political Education; and a section 501(c)(3) 
     entity designated as Sierra Club Legal Defense Fund. All of 
     the entities list as their address 730 Polk Street, San 
     Francisco, CA. The internet home page of Sierra Club reflects 
     its broad-ranging purposes, including those which are 
     political. The home page states as follows:
       ``The Sierra Club has played an increasingly active role in 
     elections in recent years. Candidates who can be counted on 
     to preserve the environment can count on our support--in the 
     form of endorsements, contributions, publicity, and volunteer 
     support. Candidates who try to deceive the public by 
     supporting efforts to eliminate or weaken our basic 
     environment safeguards will be called to account for their 
     actions. In 1996, concerned citizens have the opportunity to 
     reverse the tide of the last election. We have no choice, as 
     the 21st century nears, but to send to Washington elected 
     officials who have a genuine commitment to preserving and 
     protecting the Earth. With your help, the 1996 elections can 
     set a new course for our nation.'' See Exhibit C for other 
     similar home pages involving multiple entity organizations 
     with tax exempt affiliates.


                renewing american civilization movement

       The movement to renew American civilization had its genesis 
     in Respondent's belief that American civilization is decaying 
     and must be renewed. Respondent believes that the act of 
     renewing American civilization involves far more than 
     politics, politicians and votes. It involves what is being 
     taught in local schools and colleges, what is heard on radio 
     and television and what happens in local clubs and 
     organizations, in addition to what government and politicians 
     are doing. Respondent believes that the renewal must be 
     cultural, societal, educational, economic, governmental and 
     political. More importantly, to achieve the degree of change 
     necessary to renew American civilization, there would have to 
     be a movement that transcends any single vehicle of change.
       Looking toward the 21st Century, Respondent developed an 
     approach which he referred to as the ``five pillars'' of 
     renewing American civilization: (1) quality; (2) 
     technological advancement; (3) entrepreneurial free 
     enterprise; (4) principles of American civilization; and (5) 
     psychological strength. Based on these principles, Respondent 
     sought to initiate a movement to replace the welfare state 
     and renew American civilization to occur at every level of 
     American society. Renewal would require the accomplishment of 
     various goals including the education of the general 
     population and creation of a majority of citizens committed 
     to reform, thereby spawning activism; education of business 
     leaders; and education of the media as to the ideals and 
     concepts of renewal. In effect, Respondent sought to create a 
     national dialogue for reform and a methodology by which 
     citizen activists could accomplish the stated goals of the 
     movement.
       Respondent envisioned many methods to initiate the movement 
     through simultaneous efforts utilizing Respondent's various 
     public roles. First, as a Member of Congress and a member of 
     the Republican leadership. Respondent envisioned utilizing 
     the legislative process through speeches, such as special 
     orders presented to the House, votes and legislation. Second, 
     as an educator, Respondent envisioned refinement of his 
     message and delivering it to foster healthy debate on the 
     issues of reform. Third, as Chairman of GOPAC, Respondent 
     envisioned recruiting and training Republican candidates. 
     Respondent believes that every citizen, regardless of 
     partisan affiliation, should participate in the renewal, and 
     that, through education in the principles of civilization, 
     debate will ensue and every citizen can become a pro-
     civilization activist to ensure that American civilization 
     can be renewed.
       During a December, 1992 meeting with GOPAC contributor Owen 
     Roberts, Respondent described the movement as 
     ``articulat[ing] the vision of civilizing humanity and 
     recivilizing all Americans.'' GDC 11363. He sought to: 
     ``[d]efine, plan and begin to organize the movement for 
     civilization and the effort to transform the welfare state 
     into an opportunity society to help people achieve 
     productivity, responsibility and safety so they can achieve 
     prosperity and freedom so they can pursue happiness.'' GDC 
     11363; HAN 2123.
       Respondent further described the movement as follows: ``The 
     challenge is not Republican or Democrat, liberal or 
     conservative. The challenge is to our civilization's 
     survival.'' GDC 1066; see also, GDC 10729.
       Jeffrey Eisenach, Project Director for the Renewing 
     American Civilization course, described the movement as 
     follows: ``The potential movement to renew American 
     civilization and replace the welfare state is bigger than and 
     in some ways different from the Republican Party.'' Eisenach 
     2767.
       When questioned by Special Counsel, Respondent states as 
     follows:
       Q: ``Is that [the movement] to be conducted in a political 
     framework?
       A: ``There is a political framework within the movement. 
     The movement itself is cultural, not political.
       Q: ``Is the movement intended to be Republican identified?
       A: ``No.'' Gingrich July 17, 1996 Tr., p. 28.
       When Respondent was asked by Special Counsel whether the 
     goal of the movement was to recruit a Republican majority, he 
     answered as follows:
       A: ``No. Just the reverse. That is the movement is large. 
     You might or might not have a Republican majority within this 
     movement. If the movement succeeded without a Republican 
     majority, that would still be a success. We thought, the 
     times we talked this out, the Republican majority was the 
     most logical step in this country----
       Q: ``I understand that it may not result, but was it a 
     goal?
       A: ``It was a not a goal of this movement. It was a goal of 
     my activities.'' Gingrich July 17, 1996 tr., pp. 49-50.
       It is against that backdrop that Respondent and his 
     advisors conceived of the Renewing American Civilization 
     course, one of several tools to be utilized in initiating 
     this movement. See Exhibit D: chart illustrating, in part, 
     the dynamics of initiating the movement.


               The Renewing American Civilization course

       The Renewing American Civilization course was offered for 
     academic credit at over 20 colleges and universities across 
     the United States, including the University at Berkeley, 
     Vanderbilt University, Clemson University, Emory University, 
     the University of Mississippi, Kansas State University, 
     Colgate University, Auburn University, the University of 
     South Carolina and Penn State University. FIC 00108; FIC 
     00148-49.
       The basic format of the Renewing American Civilization 
     course consisted of ten lecture topics, discussing various 
     aspects of renewing American civilization. Some key elements 
     of those ten lectures can be summarized as follows:
       1. ``Understanding American Civilization''--America is the 
     only country in a position to lead the world into a new age, 
     and must strive to replace its welfare state with an 
     opportunity society, based on the five principles of American 
     civilization: personal strength, entrepreneurial free 
     enterprise, the spirit of invention and discovery, quality 
     and the lessons of American history.
       2. ``Personal Strength''--Personal strength is a basic 
     principal of American civilization vital to establishing 
     safety, family, work, health and learning. Existing 
     frameworks weaken personal strength by discouraging work, 
     undermining family and integrity and discouraging self-
     reliance.
       3. ``Entrepreneurial Free Enterprise''--The role of the 
     entrepreneur is vital to American civilization. Bureaucratic 
     credentialism stifles entrepreneurial free enterprise, and 
     government regulation distorts the market's ability to 
     reinforce success.

[[Page H181]]

       4. ``Spirit of Invention and Discovery''--The welfare state 
     cripples progress through bureaucracy, litigation and 
     taxation. A pro-spirit of invention and discovery America 
     will create a better future through better ideas.
       5. ``Quality and Deming's Profound Knowledge''--With a 
     culture of quality, Americans can compete against anyone in 
     the world. Consumers define value. To improve results, you 
     must improve the process that generates them. People want to 
     do a good job. Every person is part of a larger system. 
     Continual learning is the basis for continual improvement.
       6. ``Lessons of American History''--History is a collective 
     memory and a resource to be learned from and used. America is 
     exceptional and its history teaches us how exceptional. The 
     religious and social tenets of puritanism are diffused 
     throughout American values today.
       7. ``Economic Growth & Job Creation''--The welfare state's 
     despised low-paying job is the entrepreneur's opportunity. It 
     is not who you are today, it is who you want to be tomorrow 
     that counts in America. A successful America will have the 
     highest value added jobs with the greatest productivity 
     leading to the greatest take home pay and the greatest job 
     security.
       8. ``Health and Wellness''--Our challenge is to create a 
     vision of a healthy American focusing on lower costs, higher 
     quality, more choices and greater access. The five principles 
     of American civilization should help us brainstorm a better 
     way of life.
       9. ``Saving the Inner City''--American reform movements 
     have emerged quickly and have had powerful impacts. Saving 
     the inner city can be accomplished through individual, 
     decentralized efforts. The vicious circle of the welfare 
     state should be replaced with the virtuous circle of American 
     civilization to help people create new hope and new 
     opportunities.
       10. ``Citizenship for the 21st Century''--Citizenship may 
     be defined as the duties and obligations, rights and 
     responsibilities necessary to maintain community. The genius 
     of America lies in liberating each citizen to seek community 
     and define citizenship in the broadest possible way.
       These lectures would also include a list of suggested 
     readings to allow for a more complete explanation of the 
     issues covered. These readings included works written by 
     Democrats such as Al Gore and Max Cleland, as well as works 
     by Alvin Toffler, a Futurist. During each class section, 
     Respondent would lecture for his two-hour period and the 
     faculty representative or site representative would then make 
     a presentation involving group discussion which Respondent 
     did not control.
       Respondent himself was, prior to election to Congress in 
     1978, a professor of history who served on the faculty of 
     West Georgia College for eight years. He was awarded a B.A. 
     from Emory University in 1965 and a Ph.D. in European History 
     from Tulane University in 1971.
       The course itself was taught at Kennesaw State College, a 
     senior college within the University System of Georgia, and, 
     later, at Reinhardt College, a private, accredited college 
     located in Waleska, Georgia.
       Periodically during course lectures, Respondent made 
     references to individuals, entities and companies which in 
     their own way exemplified his notion of American 
     exceptionalism. A total of 46 videotape inserts--typically 
     three to four minutes in length--were used in the course to 
     illustrate various points. GDC 2619. The inserts from the 
     ``Personal Strength'' lesson are typical of these: Former 
     Georgia Secretary of State and now U.S. Senator Max Cleland 
     on overcoming his injuries in Vietnam; Congressman John Lewis 
     about the role of personal strength in the civil rights 
     movement; Nationally-recognized teacher Marva Collins on 
     teaching personal strength; Supreme Court Justice Clarence 
     Thomas' journey from Pinpoint, Georgia to the Supreme Court; 
     and A story about the Paralympics. GDC 2619.
       During the course, Respondent also prominently featured 
     Franklin D. Roosevelt, John F. Kennedy, Rev. Martin Luther 
     King, Jr. and Jimmy Carter in his discussions and videotape 
     presentations. Respondent discussed both Democrats and 
     Republicans favorably.
       In developing the Renewing American Civilization course, 
     Respondent invited Members of Congress from both parties to 
     contribute ideas to the course. WGC 07084. Prior to the time 
     Respondent taught the course, he described his course 
     development to the Committee as follows:
       ``I expect that we will invite many people to comment on 
     the content of the course, at every stage of the four-year 
     process. Commentators will include people involved in state 
     and local government, including Congressional staff (my own 
     and others). These commentators will also include members of 
     both major political parties. (For example, I have recently 
     talked with both Pat Moynihan and John Lewis, who have agreed 
     to serve in this capacity.)'' Gingrich July 21, 1993 letter 
     to Rep. McDermott.
       Respondent later described his course development as 
     follows:
       ``I have invited many people in many backgrounds to submit 
     material for consideration and to assist in reviewing the 
     course. These include President Clinton and Secretary of 
     Labor Robert Reich.'' Gingrich September 7, 1993 letter to 
     Barry Phillips, Chairman of the Georgia Board of Regents, GDC 
     2607.
       Several prominent scholars reviewed the content of the 
     Renewing American Civilization course. David King, an 
     assistant professor of public policy at Harvard University's 
     John F. Kennedy School of Government, concluded that the 
     course is ``not partisan. . . . It touts conservative ideas, 
     but those ideas are never explicitly linked to the Republican 
     Party.'' Peter Applebome, ``Educators Divided on Course by 
     Gingrich,'' New York Times, Feb. 20, 1995 at A12. Professor 
     King also concluded it is impossible to teach a political 
     science or history course ``without someone interpreting what 
     you say in partisan terms.'' Kathy Alexander, ``Gingrich's 
     Notorious Course at End: For Now Students Praise Teachings 
     and Teacher as he Takes Two-Year Break,'' Atlanta Journal-
     Constitution, Mar. 11, 1995, at C1.
       The vast majority of those persons who attended the course, 
     or were otherwise associated with the course, found it to be 
     academic and non-partisan. For instance, Dr. Tim Mescon, dean 
     of the business school at Kennesaw State College where the 
     course was first taught, characterized the philosophical 
     approach of the Renewing American Civilization course as 
     follows:
       ``This course . . . is by no means constructed as a 
     political platform or forum for unidimensional ideologies. . 
     . . Today, citizens of the United States are immersed in 
     conversations pertaining to reform. . . . Regardless of 
     political philosophies, this country is engaged in lively 
     debate over the need to reform and the methodology required 
     to implement change. This course has been designed by 
     contributors from various political platforms, socioeconomic 
     backgrounds, and academic and professional institutions. The 
     intention is to incubate dialogue, discourse and discussion 
     all focused on renewing American civilization. . . . Kennesaw 
     State students should be encouraged to participate in pensive 
     discussions on such timely issues, and it is my intention 
     that this course create a dynamic forum for these 
     interchanges.'' July 28, 1993 Memo from Mescon to Faculty 
     Colleagues, FIC 00185.
       Many of the students who took the Renewing American 
     Civilization course for academic credit at Reinhardt College, 
     one of the host sites, were highly enthusiastic about the 
     course and regarded it as one of the most challenging classes 
     of their college careers. See Reinhardt College Student 
     Evaluation Forms, GDC 12454-12546. Some students viewed 
     Renewing American Civilization as an excellent course for 
     people with a ``true interest in history,'' while other 
     students saw it as ``really a business course.'' Id. at 
     12472. Another student commented, ``I really was ready to 
     argue political points, but I'm glad that [Respondent] stayed 
     away from those.'' Id. One student was ``disappointed'' 
     because he or she did not ``learn more about politics.'' Id. 
     at 12499. Another student wrote, ``this has not been 
     political grandstanding.'' Id. at 12517. One student wrote, 
     ``it had no politics whatsoever.'' Id. at 12487.
       Although the Renewing American Civilization course was 
     promoted among a wide array of Republican organizations, non-
     partisan or Democratic-oriented organizations were also 
     solicited, including the American Political Science 
     Association. Of the 36 contributors to the course, only 14 
     were associated with GOPAC or its efforts. GDC 2621. 
     Respondent only mentioned four of the 36 contributors in the 
     course lectures.
       One course memorandum reflected Respondent's firm desire to 
     maintain the course as a non-partisan, apolitical endeavor, 
     stating as follows:
       ``Obviously, we also need to design a process which is 
     legally appropriate and as immune as possible from criticism 
     from those who oppose what we are doing. In particular, we 
     need to ensure that Kennesaw State College and Kennesaw State 
     College Foundation resources are not used to help partisan 
     organizations (e.g., GOPAC) or political candidates (e.g., 
     Newt).'' Aug. 25, 1993 Eisenach Memorandum, WGC 07080.
       Much has been written regarding GOPAC's involvement in the 
     Renewing American Civilization course. The critical inquiry 
     in this regard is whether the Respondent took steps to 
     maintain the division of capacities between his capacities as 
     a Member, a teacher in a section 501(c)(3) setting and a 
     partisan politician in connection with a political action 
     committee. Whether those efforts were completely successful 
     necessarily depended on others. The Respondent's activities, 
     however, reflect that he attempted repeatedly to ensure that 
     his partisan and non-partisan activities were properly 
     segregated.
       For example, as reflected in the February 15, 1993 Agenda 
     to a GOPAC planning session, Respondent viewed the Renewing 
     American Civilization course as separate and apart from 
     GOPAC. On the agenda, item I. is ``General Planning/Renewing 
     American Civilization'' and item II. is ``Political/GOPAC 
     Issues.'' JR 645.
       Finally, Nancy Desmond, the Renewing American Civilization 
     Course Coordinator, stated Respondent's position succinctly 
     when she wrote to Barry Hutchison of Friends of Newt Gingrich 
     (``FONG'') on July 11, 1993:
       ``In a recent conversation with Newt, he expressed the 
     concern that my involvement in both the Congressional Club 
     and the Renewing American Civilization course at Kennesaw 
     might suggest to some that there is a possible connection 
     between the course and the campaign. As you know, Newt is 
     adamant about keeping the two separate and wants it to be 
     clear to everyone that the course is, in no way, connected to 
     his political campaign. The firmness of this resolve on his 
     part and the absolute commitment to

[[Page H182]]

     maintaining a clear and unequivocal separation between the 
     course and his campaign leave me no alternative but to 
     withdraw from my volunteer post with the Club.'' PFF 38289.
       Two tax-exempt organizations, Kennesaw State College 
     Foundation (``KSCF'') and Progress & Freedom Foundation 
     (``PFF''), collected the funding for the Renewing American 
     Civilization course at Kennesaw State College and Reinhardt 
     College, respectively. Regarding KSCF, Respondent taught the 
     course at Kennesaw. The KSCF was the funding repository for 
     activities at the Kennesaw campus, and it existed before 
     Respondent had any relationship to the college.
       In relation to PFF, Jeffrey Eisenach described Respondent's 
     lack of involvement with PFF as follows in his Attachment to 
     his 1995 Statement:
       ``[Respondent] is not and has never been a board member, 
     officer or employee of the foundation. He was not aware of 
     plans to create the foundation until after they were well 
     advanced; did not participate in key planning meeting leading 
     to its creation; has never served in any official capacity 
     with the Foundation; did not review or participate in the 
     development of its application to the IRS for tax exempt 
     status or other key founding documents; did not participate 
     in the selection of or make recommendations for membership on 
     its founding board of directors; was not consulted on the 
     naming of new board members; has not, with the exception of 
     his Renewing American Civilization project, participated in 
     fundraising activities; and, he has always understood the 
     Foundation to be an independent entity, created for the non-
     partisan research and educational purposes stated in its 
     application for tax exempt status and subsequent IRS 
     filings.'' GDC 12176.


              ``failing to seek and follow legal advice''

       The Statement of Alleged Violation alleges that, ``by 
     failing to seek and follow the legal advice'' or tax counsel 
     to ensure that the activities described in the Statement of 
     Alleged Violation ``were in accordance with section 501(c)(3) 
     of the Internal Revenue Code'', Respondent's conduct 
     constituted a violation of Rule 43(1) of the Rules of the 
     United States House of Representatives. (S.A.V., para. 52-
     53). It is important to note that, contrary to the statements 
     of some, the Investigative Subcommittee did not find that 
     Respondent's activities violated federal tax law or caused 
     the tax-exempt organizations to violate their tax exempt 
     status. The fact is that a violation of law may not, in and 
     of itself, be a violation of the Code of Official Conduct. As 
     noted on page 12 of the Ethics Manual, ``[d]uring the floor 
     debate preceding the adoption of the Code, Representative 
     Price of Illinois, Chairman of the Select Committee on 
     Standards of Official Conduct, rejected the notion that 
     violations of the law are simultaneous violations of the Code 
     . . .''
       Certainly, a knowing violation of law could constitute 
     conduct that did not reflect creditably on the House of 
     Representatives in violation of Rule 43(1). Here, there has 
     been no finding of a  knowing violation of law.\3\ In fact, 
     such a finding would be directly contradicted by the 
     findings in the Statement of Alleged Violation itself.
       The Statement of Alleged Violation notes that tax counsel 
     retained by the Investigative Subcommittee and tax counsel 
     retained by Respondent disagree regarding whether the 
     activities at issue constitute a violation of the tax-exempt 
     organizations' section 501(c)(3) status. The only clear 
     conclusion from the findings and the testimony before the 
     Investigative Subcommittee is that there is no clear answer. 
     In the absence of a clear answer, there could be no knowing 
     violation of law.
       Although there appears to be no precedent for it,\4\ the 
     issue then becomes whether there is a violation when a Member 
     is actually aware that the law is unsettled, but nonetheless 
     proceeds with the activity with knowledge that a public 
     controversy may ensue, resulting in discredit to the House of 
     Representatives. In this case, the hindsight conclusions of 
     the tax counsel who appeared before the Investigative 
     Subcommittee are that any counsel presented with the facts 
     alleged in the Statement of Alleged Violation ``would have 
     advised that it not be conducted under the auspices of an 
     organization exempt from taxation under section 501(c)(3) of 
     the Internal Revenue Code.'' (S.A.V., para. 15,40). After two 
     years of public controversy driven largely by interests 
     totally unrelated to the tax-exempt status of the 
     organizations, the tax attorney's position is a relatively 
     obvious conclusion for attorneys operating with the benefit 
     of hindsight. Respondent's conduct must, however, be 
     evaluated in the real world, real time context of what was 
     the generally accepted practice in 1993 when the course was 
     established.


    The Use of Charitable Funds in Support of Nonpartisan Political 
          Education was an Accepted Practice in 1992 and 1993

       First, the Respondent's activities were not inconsistent 
     with clear federal tax law in the opinion of all tax 
     practitioners at the relevant time. The practice in the real 
     world at the time was that the conduct engaged in by 
     Respondent was in accord with the conduct of many well-
     advised contemporary charitable educational entities, the 
     comment of legal scholars, and the practice of other Members 
     of Congress.
       Nonprofit organizations, to qualify for tax exempt status, 
     must satisfy the basic criteria established by section 
     501(c)(3) of the Internal Revenue Code (``IRC'' or ``the 
     Code''), regulations promulgated thereunder, judicial 
     interpretation of the law and its regulations, Internal 
     Revenue Service (``IRS'') Revenue Rulings, IRS Letter 
     Rulings, tax notices, and the various other means such as IRS 
     press releases and announcements by which citizens can 
     attempt to anticipate IRS interpretation of their conduct 
     under the law.


      Section 501(c)(3) and the Regulations Promulgated Thereunder

       In essence, section 501(c)(3) of the Internal Revenue Code 
     provides that entities must satisfy several basic criteria to 
     qualify for exempt status. First, the entity must be 
     ``organized and operated exclusively for'' one or more of 
     several enumerated charitable, religious or educational 
     purposes,\5\ second, ``no part'' of the net earnings of the 
     entity may inure to the benefit of any private shareholder 
     or individual; third, ``no substantial part of the 
     activities'' of that entity may be ``carrying on 
     propaganda, or otherwise attempting to influence 
     legislation''; and fourth, the entity must not 
     ``participate in, or intervene in . . ., any political 
     campaign on behalf of (or in opposition to) any candidate 
     for public office.'' IRC Sec. 501(c)(3).
       The legislative history of the campaign intervention rule 
     reflects the difficulties practitioners have encountered in 
     applying these provisions. This provision of the Code was 
     added to the federal tax law when then-Senator Lyndon B. 
     Johnson offered the provision by way of a floor amendment to 
     the Revenue Act of 1954 without congressional hearings out of 
     concern that funds provided by a charitable foundation had 
     been used to finance the campaign of a primary opponent. B. 
     Hopkins, The Law of Tax-Exempt Organizations, p. 327 (6th ed. 
     1992); Lobbying and Political Activities of Tax-Exempt 
     Organizations: Hearings before the Subcommittee on Oversight 
     of the House Committee on Ways and Means, 100th Cong., 1st 
     Sess. 19-20, 423 (1987) (Statements of Bruce Hopkins, Baker & 
     Hostetler and the United States Catholic Conference). In 
     offering the amendment, Senator Johnson stated that the 
     purpose of the amendment was to ``den[y] tax exempt status to 
     not only those people who influence legislation but also to 
     those who intervene in any public campaign on behalf of any 
     candidate for any public office.'' 100 Cong. Rec. 9604 
     (1954).
       Section 1.501(c)(3)-1 of the Income Tax Regulations (``the 
     Regulations'') marked a retreat from the ``exclusively for'' 
     language of section 501(c)(3) by providing that ``[a]n 
     organization will be regarded as `operated exclusively' for 
     one or more exempt purposes only if it engages primarily in 
     activities which accomplish one or more of such exempt 
     purposes specified in section 501(c)(3). An organization will 
     not be so regarded if more than an insubstantial part of its 
     activities is not in furtherance of an exempt purpose.'' 26 
     C.F.R. 1.501(c)(3)-1(c)(1). Thus, contrary to the language of 
     section 501(c)(3), the IRS has indicated that conduct not 
     consistent with articulated exempt purposes will not 
     jeopardize exempt status as long as such conduct constitutes 
     only an ``insubstantial part'' of its overall activities. Id.
       The Regulations further provide that an entity will not be 
     regarded as being operated exclusively for exempt purposes if 
     it satisfies the IRS' definition of an ``action'' 
     organization. 26 C.F.R. 1.501(c)(3)-1(c)(3). An ``action'' 
     organization is defined as one that devotes ``a substantial 
     part of its activities [to] attempting to influence 
     legislation by propaganda or otherwise.'' 26 C.F.R. 
     1.501(c)(3)-1(c)(3)(ii). Likewise, ``[a]n organization is an 
     `action' organization if it participates or intervenes, 
     directly or indirectly, in any political campaign on behalf 
     of or in opposition to any candidate for public office.'' 26 
     C.F.R. 1.501(c)(3)-1(c)(3)(iii).


 application of revenue rulings applying 501(c)(3) and its regulations

       In 1978, the IRS issued a Revenue Ruling revoking a prior 
     such ruling to hold that ``[c]ertain `voter education' 
     activities conducted in a nonpartisan manner by an 
     organization recognized as exempt under section 501(c)(3) of 
     the Code will not constitute prohibited political activity 
     disqualifying the organization from exemption.'' Rev. Rul. 
     78-248, 1978-1 C.B. 154. According to the IRS ruling, the 
     determination of whether an organization is participating or 
     intervening in a political campaign as proscribed by 
     regulation 1.501(c)(3)-1(c)(3)(iii) ``depends upon all of the 
     facts and circumstances of each case.'' Id. Revenue Ruling 
     78-248 then sets forth four hypothetical ``situations'' 
     describing activities which the IRS deemed to be either 
     permitted or prohibited under 501(c)(3). Ultimately, the 
     factual analysis provided by the IRS with respect to each 
     situation was whether, under the specific facts of the 
     hypothetical, the activities ``evidenced a bias or 
     preference'' with respect to the views of the entity 
     towards issues, a candidate or a group of candidates. Id.
       Two years later, the IRS applied Revenue Ruling 78-248 to 
     conclude that an entity's publication of a newsletter 
     reporting Congressional voting records did not violate the 
     entity's tax exempt status. Rev. Rul. 80-282, 1980-2 C.B. 
     178. The IRS so held, notwithstanding its conclusion, that 
     ``the format and content of the publication are not neutral, 
     since the organization reports each incumbent's votes and its 
     own views on selected legislative issues and indicates 

[[Page H183]]

     whether the incumbent supported or opposed the organization's 
     view.'' Id. The IRS based its ruling on a factual conclusion 
     that ``the organization will not widely distribute its 
     compilation of incumbents' voting records . . . [and that n]o 
     attempt will be made to target the publication toward 
     particular areas in which elections are occurring nor to time 
     the date of publication to coincide with an election 
     campaign.'' Id. Accordingly, the IRS opined, the issues 
     presented in Revenue ruling 80-282 presented sufficient 
     factual distinctions from the hypothetical prohibited 
     situations set forth in Revenue Ruling 78-248 to permit the 
     IRS to conclude that this entity's proposed activities, ``in 
     the manner described above, will not constitute participation 
     or intervention in any political campaign within the meaning 
     of section 501(c)(3).'' Id.


       Effect of the IRS' Fact-Based Analysis on Public Behavior

       As a consequence of the IRS' indications that it would 
     apply fluid, fact-specific analysis to charitable efforts to 
     educate the public on political matters, the late 80's and 
     early 90's marked a period of wide-ranging opinion among tax 
     practitioners as to the extent that political education by 
     charitable entities would be permitted by the IRS. 
     Specifically, this period marked an era when tax exempt 
     entities were being called upon by sophisticated 
     practitioners to educate and motivate the public on an ever-
     widening range of issues. As would be expected, the legal 
     literature of this period reflects the lack of guidance 
     provided by the IRS with respect to political education by 
     tax exempt entities. See e.g., Lobbying and Political 
     Activities of Tax-Exempt Organizations: Hearings before the 
     Subcommittee on Oversight of the House Committee of Ways and 
     Means, 100th Cong., 1st Sess. 6 (Opening remarks of Chairman 
     Pickle) (``I am concerned that the public sees and hears a 
     steady stream of media reports about abuses in this area, and 
     the IRS seems to be taking little or no action. The public 
     gets the impression that the Internal Revenue Service is just 
     looking the other way.''); Maxwell Glen, ``Battle Looming 
     over Partisan Activities of Tax-Exempt Nonprofit 
     Organizations,'' The National Journal, p. 2294 (Dec. 1, 1994) 
     (``In fact, since the early 1970s, when it was accused of 
     harassing Nixon Administration opponents, the IRS has seldom 
     policed the nonprofit sphere for political partisanship, tax 
     specialists say. `What you see now is a testing,' and 
     Washington lawyer Thomas A. Asher, `because the IRS has been 
     remarkably reticent on the subject of the line between 
     charity and the partisan activity of charitable 
     organizations.''); Frances R. Hill, ``Newt Gingrich and 
     Oliver Twist: Charitable Contributions and Campaign 
     Finance,'' Tax Notes, p. 237, 238 (Jan. 9, 1995) (``While 
     [the prohibition against participation in political 
     campaigns] is absolute, it is far from clear what activity it 
     prohibits short of direct endorsement of a particular 
     candidate by an official speaking on behalf of the 
     organization. In all other cases, the law offers little 
     guidance and perhaps even less restraint.'').
       Apparently, this concern among leading tax practitioners 
     regarding the lack of guidance provided by the IRS with 
     respect to political education by tax exempt entities was 
     shared by Celia Roady,\6\ the tax expert retained by the 
     Special Counsel to testify in favor of sanctioning 
     Respondent. On September 28, 1994, the Exempt 
     Organizations Committee of the American Bar Association's 
     Section on Taxation presented a memorandum to Mr. Leslie 
     B. Samuels, Assistant Secretary for Tax Policy at the 
     Department of the Treasury, suggesting clarification of 
     numerous issues facing tax practitioners under section 
     501(c)(3) for which the Exempt Organizations Committee 
     believed there ``currently is no authority, or there is 
     unclear precedential authority.'' ``ABA Tax Section 
     Members Suggest Exempt Organization Areas in Need of 
     Precedential Guidance,'' 94 Tax Notes Today, 207-14 (Oct. 
     21, 1994). Celia Roady is presented first on the list of 
     those upon whom principal authority for the preparation of 
     the memorandum rested and she is listed as the Committee's 
     ``Contact Person'' on the memorandum. Id. In that 
     memorandum to the Department of the Treasury, Ms. Roady 
     observed:
       ``During the past two decades, there has been significant 
     growth in our country's tax-exempt sector and a corresponding 
     proliferation in the number of new legal issues confronting 
     tax-exempt organizations. Signifying this development, the 
     number of tax-exempt organizations included in the Cumulative 
     List has increased from approximately 806,000 in 1974 to 
     approximately 1,083,000 in 1994. Many of these organizations 
     * * * have adopted evermore complex corporate structures, and 
     many have become involved in new investment activities made 
     possible by the evolution of financial markets. As tax-exempt 
     organizations have grown in number and ventured into new 
     areas, their activities have raised numerous federal tax law 
     questions that are not adequately addressed by existing 
     precedential authorities. Answering these questions has 
     proved very difficult because at the same time as this 
     expansion of organizations and issues has been taking place, 
     the amount of precedential guidance issued by the Internal 
     Revenue IRS has decreased dramatically.

                           *   *   *   *   *

       ``. . . Issuing precedential authority on the items 
     described below that have already been the subject of non-
     precedential IRS guidance would greatly assist tax-exempt 
     organizations in complying with the law.


              ``public charity issue--political activities

       ``One of the most important areas in which additional 
     precedential guidance is needed is clarification of the 
     prohibition on political activities by section 501(c)(3) 
     organizations. . . . Illustrative of the political activities 
     issue in the first category is the question of when will the 
     acts and statements of the religious organization's minister 
     be treated as the acts and statements of the religious 
     organization for purposes of determining whether the 
     organization has violated the prohibition against political 
     campaign activities contained in section 501(c)(3). The 
     statement issued by Jimmy Swaggart Ministries and endorsed by 
     the Service when Ministries entered into a closing agreement 
     with the Service articulated a clear and reasonable position 
     on this issue. It would be helpful to know as well whether 
     that position would apply for purposes of section 4955. As 
     noted, the Subcommittee report also addresses a number of 
     other ``Category One'' issues on which precedential guidance 
     would be quite helpful.'' Id.
       In a subsequent document submitted by Ms. Roady's A.B.A. 
     Committee on Exempt Organizations (for which Ms. Roady was 
     again designated as the ``Contact Person'') to the 
     Commissioner of the IRS on February 21, 1995, Ms. Roady and 
     the American Bar Association Section on Taxation observed:
       ``Our most serious concern is that the IRS is facing a 
     crisis of credibility with respect to the Section 501(c)(3) 
     political prohibition. Despite some publicized enforcement 
     actions, such as the Jimmy Swaggart Ministries settlement, 
     there is still widespread confusion as to what constitutes 
     `participation' or `invervention' in a political campaign. As 
     a consequence, compliance within the charitable sector is 
     highly uneven. Some organizations openly flout the rule; 
     others are reluctant to engage in legitimate educational 
     activities during an election period.

                           *   *   *   *   *

       ``Up to now, it appears that the IRS has been using a 
     ``smell'' test to determine whether prohibited political 
     activities have occurred. This has created a string of 
     precedents applying the general rule to particular fact 
     patterns, without any unifying principle being stated. We 
     believe that it will be significantly simpler for 
     practitioners to advise clients about, and for organizations 
     to comply with, the statutory rule if the IRS develops a 
     concrete, unifying definition for political intervention, 
     just as it has done for direct and grass roots lobbying 
     activities.'' ABA Committee on Exempt Organizations 
     Recommends ``Reasonable Person'' Standard for Determining 
     Whether a Charity Participates in Political Activities, 95 
     Tax Notes Today 53-11, Mar. 17, 1995.
       Not surprisingly, therefore, in light of this recognized 
     lack of guidance from the IRS, the public record is replete 
     with examples, in the time period leading up to the 
     organization of the renewing American civilization course of 
     charitable entities--entities that are well represented and 
     advised as to the current state of the law--participating in 
     the political arena unmolested by the IRS. For example, in 
     1986 and 1987, the IRS conducted a ten-month review of a tax 
     exempt educational entity known as ``Project Vote,'' a 
     national voter registration campaign that enrolled more than 
     500,000 potential voters. Critics of Project Vote's 
     activities alleged that the entity's true objective was to 
     accomplish the partisan objective of increasing the 
     Democratic vote. After reviewing Project Vote's 
     activities, however, the IRS concluded that the 
     organization complied with the nonpartisan requirements of 
     its tax-exempt status. ``Raising Money to Register More 
     Voters,'' The Exempt Organization Tax Review, p. 679 
     (Dec.-Jan. 1990); \7\ see also, ``Old Softie: Alan 
     Cranston's Soft Money Machine; Campaign Fund Ethics,'' The 
     New Republic, p. 17 (Dec. 11, 1989) (``Though Project Vote 
     mixed contributions from labor, corporations, foundations, 
     and individuals, some of which may have been motivated by 
     partisan goals, the IRS found its voter registration 
     activities to be perfectly legal.''). Thus, it is not 
     surprising that, as early as 1984, charitable institutions 
     which consulted with tax counsel abandoned 501(c)(4) 
     affiliates (which are expressly permitted by the Code to 
     adopt partisan political positions) by merging those 
     affiliates' activities into 501(c)(3) entities as a means 
     of reducing 501(c)(4) record keeping requirements. See 
     e.g., Glen, at p. 2294 (Dec. 1, 1994) (```I've had more 
     than one client get rid of its C-4 [affiliate] by merging 
     it into [the client's] C-3,' said Gail Harmon, an attorney 
     who represents about 30 nonprofit organizations, including 
     NARAL. `The fact of having to keep separate records does 
     discourage' having both.'').
       Historically, the IRS' reticence to conclude that political 
     activity does not violate the political intervention doctrine 
     is not limited to political education activities. See, e.g., 
     Wimmer, ``Curtailing the Political Influence of Section 
     501(c)(3) Tax Exempt Machines,'' 11 Va. Tax Rev. 605, 606 
     (1992) (``Many of the groups that successfully opposed [Judge 
     Robert] Bork's nomination to the high court were section 
     501(c)(3) tax-exempt organizations, entities prohibited from 
     intervening in any political campaign and prohibited from 
     carrying on substantial activities designed to influence 
     legislation. These organizations took full advantage of the 
     `particularly murky' rules governing how tax-exempt 
     organizations could influence the Senate's confirmation of 
     judicial nominations.'').

[[Page H184]]

       As a consequence of the IRS' lack of guidance in this 
     arena, participation in charitable education activities by 
     Members of Congress was commonplace in the time leading up to 
     the organization and formation of the renewing American 
     civilization course. For example, a National Journal review 
     of Members' 1988 financial disclosure form revealed that 51 
     Senators and 146 House Members were founders, officers or 
     directors of tax-exempt organizations. The Exempt 
     Organization Tax Review, p. 680, Dec.-Jan. 1990; see also 
     ``Members of Congress Insist Foundations Aid Causes, Not 
     Politics,'' Washington Post, February 22, 1990, at A21 
     (identifying tax exempt groups associated with Members of 
     Congress). In 1993 Financial Disclosure Forms, at least 93 
     Members of Congress were founders, directors, officers or 
     trustees of at least 210 tax-exempt organizations, including 
     at least 109 section 501(c)(3) entities. See, Financial 
     Disclosure Reports of Members of the United States House of 
     Representatives of the 105th Congress. Likewise, five 
     candidates in the 1988 Presidential election contest employed 
     tax-exempt groups to perform research and educational 
     activities in the months preceding their campaigns. The 
     Exempt Organization Tax Review, p. 680 (Dec.-Jan. 1990).
       The prevailing attitude among tax specialists in the early 
     90's is encapsulated in the comments of Washington fund-
     raiser Jan Scott Brown as reported in the National Journal: 
     ``Every nonprofit puts a Congressman on their committee. 
     That's the first thing I think of with a nonprofit client--
     how can I work in some political angle? That's the name of 
     the game in town.'' Maxwell Glen, ``Battle Looming over 
     Partisan Activities of Tax-Exempt Nonprofit 
     Organizations,'' The National Journal, p. 2294 (Dec. 1, 
     1994)
       Indeed, the criticism of the Special Counsel's tax expert, 
     Ms. Roady, of Respondent's activities on this issue appears 
     disingenuous at best. In February of 1995, the Exempt 
     Organizations Committee of the American Bar Association--for 
     which Ms. Roady was identified as the Committee's ``Contact 
     Person''--requested that the Internal Revenue Service 
     formally approve of activity under existing precedent 
     virtually identical to Respondent's Renewing American 
     Civilization course; the only difference being that Ms. 
     Roady's expressed preference would be that it be only 
     ``politically disadvantaged groups,'' rather than the 
     American citizenry as a whole, that is encouraged to 
     participate more actively in the grass-roots political 
     process:
       ``One could argue that the general rule we propose appears 
     to be overbroad, since it states that a 501(c)(3) 
     organization cannot intentionally help ANY group of people to 
     seek public office. What if the group is an indefinite class 
     of persons that has been systematically under-represented in 
     elective office, such as African-Americans or people with 
     disabilities? Why couldn't a charity operate a campaign 
     training school to assist, for instance, Spanish-speaking 
     people to become effective campaign operatives or even 
     candidates themselves?
       ``It is clear that the IRS has been willing to permit 
     VOTER-ORIENTED activities such as registration drives, get-
     out-the-vote, and voter education, where a certain group of 
     voters is encouraged to participate more actively in the 
     political life of the country. For instance, the IRS 
     concluded in PLR 9223050 that voter registration of homeless 
     people, coupled with education about the electoral process, 
     was a valid, nonpartisan, charitable activity that did not 
     violate Section 501(c)(3). This is consistent with the 
     position generally taken by the IRS that charities may engage 
     in activities to increase the levels of voter participation 
     among minorities, low-income people, or other politically 
     disadvantaged groups.
       ``However, those rulings do not appear to contemplate 
     activities benefiting an under-represented group of POTENTIAL 
     CANDIDATES. As a consequence, it is not clear whether a 
     charity which runs an educational program to train 
     individuals in political campaign skills must offer it to the 
     general public, rather than to any limited group. Our 
     impression is that such a program must be conducted in a 
     thoroughly nonpartisan manner with respect to recruitment of 
     instructors and students, curriculum, placement of graduates, 
     and all other aspects of operation. Existing precedents, such 
     as the American Campaign Academy decision, speak more to what 
     is prohibited than to what is permitted, and thus offer 
     little helpful guidance on this score.
       ``We urge the IRS to state explicitly that charitable 
     organizations are permitted to organize and operate certain 
     types of campaign schools that serve indeterminate groups of 
     persons who have been under-represented in the political life 
     of our society. This would be consistent with the current IRS 
     position on nonpartisan, voter-oriented educational 
     activities.
       ``We think that IRS approval of candidate campaign schools 
     benefiting politically disadvantaged groups, like its long-
     standing approval of voter participation activities directed 
     at a variety of charitable and other diverse groups, would be 
     consistent with the general definition we propose. In 
     essence, the IRS has embraced voter registration and similar 
     activities as a valuable public service, recognizing that low 
     voter participation rates seriously undermine the functioning 
     of our democracy. Therefore, a charity should be able to 
     develop a voter education program directed at under-
     represented sectors of our society without violating the 
     political prohibition, so long as it makes no suggestion to 
     anyone on how to vote or what office to seek. In other words, 
     voter participation programs (and, we believe, disadvantaged-
     candidate education programs) have an inherent educational 
     value (``some other reasonable explanation'') that outweighs 
     any implication that they were undertaken for a prohibited 
     political purpose (``to improve or diminish'' someone's 
     chances of getting elected). So long as the program is not 
     a disguised effort to promote a candidate, party, or other 
     private interest (as in the American Campaign Academy 
     case), simply providing people with the tools to 
     participate in the political process should not violate 
     the Section 501(c)(3) prohibition.'' ABA Committee on 
     Exempt Organizations Recommends ``Reasonable Person'' 
     Standard for Determining Whether a Charity Participates in 
     Political Activities, 95 Tax Notes Today 53-11, Mar. 17, 
     1995.


           abraham lincoln opportunity foundation (``alof'')

       In 1984, Colorado Republican Party Chairman Howard ``Bo'' 
     Callaway received tax-exempt status from the IRS for ALOF, an 
     entity organized to conduct oratory contests throughout 
     Colorado secondary schools, lend care and assistance to the 
     needy ``and to provide educational services to the public.'' 
     ALOF's officers consisted of Howard ``Bo'' Callaway, who was 
     the Chairman of GOPAC, and Kay Riddle, Executive Director of 
     GOPAC. Upon Mr. Callaway's resignation from the Colorado 
     Republican Party, ALOF entered a period of dormancy in June 
     of 1988. As described in a January 2, 1997 letter from Mr. 
     Callaway to the Honorable Christopher Shays and distributed 
     by Mr. Shays to other Members of Congress (attached hereto as 
     Exhibit F and referred to as ``Callaway Letter''), in the 
     Spring of 1990, Mr. Callaway revived ALOF as a means of 
     sponsoring the American Citizens' Television (``ACTV'') 
     program. At the time, there was only $486.08 in the ALOF bank 
     account. Recognizing that ACTV's goal of increasing community 
     involvement and citizen understanding of government and 
     democracy presented a logical extension of ALOF's original 
     educational mandate to motivate people and get them involved 
     in their community, Mr. Callaway offered ALOF as ACTV's 
     sponsor. Callaway Letter, p. 1-2.
       ACTV, like a project previously run by GOPAC known as 
     ``American Opportunities Workshop'' (``AOW''), was a self-
     described non-partisan project ``based on the three tenants 
     [sic] of Basic American Values, Entrepreneurial Free 
     Enterprise, and Technological Progress and involved the 
     recruiting of activists to set up local workshops around the 
     broadcast to recruit people to the citizens' movement.'' 
     (S.A.V., para.9). Respondent participated in two ACTV 
     broadcasts produced by ALOF; aired on July 21, 1990 and 
     September 29, 1990. Id., para.10.
       Mr. Callaway has several times expressly stated that ``Dan 
     Swillenger [sic], our attorney, approved ACT as an 
     appropriate activity for a 501 c) 3) foundation and in accord 
     with the ALOF charter. I gave explicit instructions that 
     there be no politics involved in the ACT programs and to the 
     best of my knowledge there was none.'' Callaway Letter, p. 2-
     3.
       The statements made in the Callaway Letter were repeated in 
     an interview that Mr. Callaway gave to the Boston Globe. 
     According to that article,
       ``Callaway stressed that he and Gingrich had been told by a 
     lawyer that it was legal because the shows were 
     ``educational,'' not political.

                           *   *   *   *   *

       ``According to Callaway, Gingrich and his associates looked 
     to a nonprofit corporation that could accept tax-deductible 
     donations. In contrast, contributions to political action 
     committees are not deductible.
       ``Callaway thought it would take too long to get IRS 
     approval to set up a new nonprofit corporation to fund 
     Gingrich's television shows, so he revived the Lincoln 
     Foundation, which had been dormant for years.
       ``Callaway said Daniel Swillinger, a GOPAC lawyer, told 
     them the foundation's charter allowed it to pay for 
     Gingrich's television show.'' Ex-foundation Director Says 
     Gingrich OK'd Use of Funds, The Boston Globe, Nov. 22, 
     1996, at A1.
       Of the two tax experts to appear for the purposes of 
     Preliminary Inquiry before the Subcommittee, one opined that 
     the described activity would not violate ALOF's status under 
     section 501(c)(3). The expert, retained by the Special 
     Counsel, opined to the contrary. That same expert, Celia 
     Roady, is the same attorney who prepared a memorandum \8\ to 
     the Department of the Treasury bemoaning the IRS's lack of 
     guidance available to practitioners called upon to provide 
     counsel to non-lawyers, such as Respondent, who desire to use 
     tax exempt charities for the purpose of providing political 
     education to the public.
       There are several important facts which should be noted 
     regarding ALOF. First, Respondent was not at any time a 
     member of the Board of Directors or an officer of ALOF. 
     Second, contributors to ALOF always knew the purpose of their 
     donations. ALOF began to pay for the ACTV programs in June of 
     1990. On May 30, 1990, there was only $486.08 in the ALOF 
     bank account. With the exception of this small sum, which was 
     used just to keep the bank account open, all of the money 
     used to produce ACTV was raised specifically for ACTV with 
     money contributed

[[Page H185]]

     from people who knew what their money was going to be used 
     for and who fully supported the ACTV programs. Third, the 
     Articles of Incorporation of ALOF, submitted to the IRS when 
     ALOF applied for tax exemption stated in part that the 
     purposes of ALOF were:'' ``. . . to provide educational 
     services to the public. . . .'' The Bylaws passed pursuant to 
     the Articles of Incorporation stated that the purposes of 
     ALOF, in part are to: ``. . . provide education services to 
     the public, and to engage in any and all lawful activities 
     incidental to the forgoing purposes. . . .'' The Bylaws 
     further stated that ``The purposes of the Corporation are 
     promoted and developed through public discussion groups, 
     panels, lectures, conferences, projects, publications and 
     program. . . .'' Fourth, money given to ALOF was kept 
     separate from and not commingled with GOPAC funds. Consistent 
     with IRS rules and common practice, ALOF's expenses were 
     separately allocated and paid. Anyone who worked on both 
     projects had salary allocated based on the time spent on 
     each.
       Within this context, Respondent has admitted the violation 
     contained in the Statement of Alleged Violation. 
     Notwithstanding the common practice at the time, it was 
     incumbent on the Respondent to engage qualified tax attorneys 
     to assure that his activities in the furtherance of a 
     movement would not jeopardize the tax-exempt status of the 
     organizations involved and would not unnecessarily engender 
     public controversy that would bring discredit on the House. 
     This is true as to both the Renewing American Civilization 
     course and the Abraham Lincoln Opportunity Foundation.


       The Absence of Precedent Mitigates in Favor of Respondent

       The Committee is urged to consider, as a mitigating 
     circumstance, the unprecedented nature of the charge relating 
     to the creation of a ``public controversy.'' No Member of 
     Congress could reasonably have known that such a standard 
     might be imposed. As early as November 15, 1994, 
     Representative Bob Michel wrote a letter to Representatives 
     McDermott and Grandy indicating his strong belief that the 
     information requested by the Committee on October 31, 1994 
     regarding tax-exempt entities was beyond the Committee's 
     jurisdiction to sanction. Specifically, Representative Michel 
     commented: ``. . . [T]he information you request goes to the 
     legal status of a 501(c)(3) entity, an entity that I believe 
     is outside of the jurisdiction of the Committee on Standards. 
     To my knowledge, there is no precedent for such an inquiry. 
     The Committee has never launched a formal or informal 
     investigation of such an entity. The Internal Revenue 
     Service might be interested in the tax status of this 
     particular group but it appears outside of your 
     jurisdiction.'' (Letter of Rep. Bob Michel to Reps. Jim 
     McDermott and Fred Grandy, November 15, 1994 at 1).
       Indeed, this view was echoed by a Member of the Committee's 
     own legal counsel's office, David McCarthy, when Respondent 
     and his staff first consulted with McCarthy in June of 1993 
     regarding the Renewing American Civilization course. (See 
     Letter of David J. McCarthy to Rep. David Hobson, December 1, 
     1994). The sound policy reasons for placing such matters 
     outside the Committee's jurisdiction have been borne out by 
     the present proceeding which has been costly not only in 
     financial terms, but also in terms of the integrity of the 
     House ethics process.
       The power of both Houses of Congress to discipline their 
     Members for ``disorderly Behavior'' is recognized by the 
     Constitution itself.\9\ House precedent recognizes the power 
     of this body to discipline its Members for ``conduct unworthy 
     of a representative of the people''\10\ or other conduct 
     which creates an appearance of impropriety. Such a standard 
     is currently embodied in House Rule 43(1), which provides: 
     ``A Member, officer, or employee of the House of 
     Representatives shall conduct himself at all times in a 
     manner which shall reflect creditably on the House of 
     Representatives.'' However, the application of this standard 
     is limited, or should be, to those cases where the conduct is 
     wrong in and of itself or where a violation of the law has 
     already been found by a proper adjudicatory body.\11\ The 
     House Ethics Manual observes that ``[a] review of these cases 
     indicates that the Committee has historically viewed clause 1 
     as encompassing violations of law and abuses of official 
     position.'' House Ethics Manual at 14 (footnote omitted). In 
     such cases, Members are well-placed to pass on the conduct of 
     their colleagues, as, indeed, is any citizen, as such conduct 
     so clearly transgresses the acceptable bounds placed on 
     individuals in our society.
       By contrast, the basis for the investigation in the present 
     proceeding relates to a complex and difficult question of tax 
     law relating to the permissible activities of tax-exempt 
     entities. Such questions should not form the basis for a 
     finding that a Member has violated the Code of Official 
     Conduct unless a properly constituted administrative or 
     judicial authority has previously found that the Member has 
     in fact committed acts prohibited by the tax code. To punish 
     a Member for creating a public controversy involving the 
     legality of a Member's involvement with organizations exempt 
     from taxation under section 501(c)(3) of the Internal Revenue 
     Code without any violation of the law having been found by 
     the Internal Revenue Service or this Committee is not only 
     unprecedented, but unwise.
       In establishing a bright-line rule to distinguish between 
     those matters properly governed by the standard set forth in 
     House Rule 43(1), it is helpful to refer to the long-
     recognized distinction between and mala in se (literally, 
     ``wrongs in themselves'') and mala prohibita (``prohibited 
     wrongs''). See, Morisette v. United States, 342 U.S. 246 
     (1952); United States v. Park, 421 U.S. 658 (1975). Mala in 
     se are aggravated wrongs and injuries in derogation of public 
     morals and decency.  Examples include killing and stealing. 
     While such offenses may or may not violate a specific law, 
     we all know that such acts are inherently wrong and we 
     punish those who commit such offenses. The Committee on 
     Standards of Official Conduct can, and should, recommend 
     appropriate punishment for the commission of mala in se 
     even if the Committee finds that there has been no 
     violation of the law.
       Mala prohibita, on the other hand, are acts that are wrong 
     only in the sense that they are specifically prohibited by 
     the state. In many instances, determining whether a malum 
     prohibitum has been committed requires the application of 
     specialized expertise as to the state's technical 
     prohibition. If it is found, by a properly constituted 
     administrative or judicial tribunal with the expertise to 
     comprehend and adjudicate the alleged violation, that a 
     Member has violated such a law then sanctioning the Member 
     pursuant to Rule 43(1) is perfectly appropriate as such 
     conduct does not reflect creditably on the House. In the 
     absence of such a finding, however, the Committee should 
     abstain from becoming involved in investigating and 
     attempting to resolve such questions.
       The Committee's investigation of Respondent in the present 
     case has attempted to apply Rule 43(1), in an unprecedented 
     manner. The conduct being investigated in this proceeding--
     using charitable funds for educational or allegedly partisan 
     political activities--is not a wrong in and of itself. It is 
     only wrong if the conduct in question violates the technical 
     parameters set out by the Internal Revenue Code. Furthermore, 
     this is not even a case in which it is alleged that a Member 
     violated the law; but rather it is one step further removed. 
     This is a case in which a Member is alleged to have failed to 
     appreciate fully his need for technical guidance so as to 
     avoid the controversy generated by the divergence of expert 
     opinion with respect to his conduct.
       The dangers of such a precedent lie in the fact that: 
     ``appearance'' standards are so vague as to have little 
     content, thus providing scant guidance to members and their 
     staffs in shaping their conduct and, at the same time, 
     exposing them to the possibility of manipulable complaints 
     and prosecution. In the words of the ABA Committee on 
     Government Standards, ``beyond [an] initial role in rule 
     formation, `appearance of impropriety' is too vague and 
     contestable a concept to function effectively as an 
     independent benchmark in a system of ethics regulations.'' 
     \12\
       Such a precedent would undoubtedly have a chilling effect 
     on Member participation in charitable or educational 
     organizations now expressly permitted by the Committee.\13\
       The subcommittee has created a new wrong not heretofore 
     known to law: conduct which creates a ``public controversy.'' 
     Let us be clear that this new hybrid is substantially 
     different from sanctioning a member for the commission of a 
     malum in se involving infamy for clearly immoral or unjust 
     conduct. Furthermore, the subcommittee seeks to punish 
     Respondent for failing to engage counsel to avoid such 
     controversy. Yet the practical implications of this newly-
     created offense make it difficult to understand how 
     engagement of counsel would serve as a defense as the 
     subcommittee's Statement of Alleged Violation suggests. Is it 
     a ``public controversy'' if experts disagree and there is 
     little or no media attention, or is it only a ``public 
     controversy'' if experts disagree and there is substantial 
     media attention? Is it a perfect defense to have consulted 
     counsel? What if counsel is diligent but mistaken? What if 
     counsel renders incorrect advice? Does the Member have to 
     seek Board certified counsel? These and a panoply of other 
     practical problems present themselves if a sanction is 
     predicated upon this as yet untrodden minefield.
       The policy reasons for declining to create such a precedent 
     are numerous. First, allowing the mere allegation of 
     violations of the law to become a basis for ethics charges 
     will encourage political opponents to use the law and the 
     ethics process as tools of political strategy. The 
     controversy surrounding the Federal Election Commission's 
     complaint against GOPAC filed in the Federal District Court 
     for the District of Columbia provides a case in point. See, 
     Federal Election Comm'n v. GOPAC, Inc., 917 F.Supp. 851 
     (D.D.C. 1996). In April, 1994, the FEC filed a civil action 
     against GOPAC alleging that, in 1989 and 1990, GOPAC had 
     failed to register as a ``political committee'' as required 
     by the Federal Election Campaign Act, 2 U.S.C. 
     Sec. Sec. 433(a) and 434(a). One of the primary contentions 
     made by the FEC was that GOPAC funds to support Respondent as 
     chairman of GOPAC were utilized by Respondent's election 
     campaign. The filing of the case prompted great speculation 
     among the press and generated headlines such as ``Another 
     Ethical Problem for Newt,'' \14\ ``FEC Says GOPAC Aided 
     Gingrich Race Despite Law; Group Barred From Federal 
     Campaigns in 1990'' \15\ and ``GOPAC secretly aided Gingrich 
     in 1990, election officials charge.'' \16\ However, the FEC's 
     complaint was disposed of by the district court on summary 
     judgment. The parallels to the present case are apparent. 
     Despite the vast

[[Page H186]]

     number of allegations regarding Respondent's violations of 
     federal election laws in the press, when a ``controversial'' 
     claim was exposed to rigorous examination in proper a 
     judicial forum the claim was found insufficient to survive a 
     motion for summary judgment. Yet if allegations alone that 
     ``controversy'' had been generated provided a sufficient 
     basis for an investigation and discipline under Rule 43(l), 
     Respondent might have been once again forced to expend great 
     amounts of effort and money in defense and the Committee 
     might have been forced to consume a great deal of its time in 
     investigating claims that proved to be baseless when 
     subjected to judicial scrutiny. For this reason, cases 
     involving mala prohibita such as violations of federal 
     elections law or the tax code ought to be left to regulators 
     and the courts who are ultimately better equipped to address 
     technical aspects of the law.
       Not only is this Committee ill-equipped to address 
     allegations that such laws have been violated, but to do so 
     ultimately undermines the administrative enforcement process 
     of many of these laws that Congress itself created and 
     creates, in effect, a highly politicized system parallel to 
     the enforcement mechanisms of the FEC and IRS that is 
     applicable only to Members of the House. Under such a system, 
     Members may be investigated for alleged violations of highly 
     technical laws and forced to endure great time and expense 
     only to reach a conclusion that the Committee simply is not 
     qualified to resolve such questions.
       In discussing the merits and benefits of a disclosure-based 
     ethics system for Members of Congress, one commentator 
     highlighted the unique concerns presented by claims that a 
     Member has violated a highly technical prohibition and the 
     need for particularized expertise to make such a 
     determination. Specifically, ``disclosure is not the most 
     effective tool to employ against conduct that violates 
     highly technical regulations or is itself composed of a 
     complex or highly nuanced series of events. In such 
     circumstances, it seems that the risk of manipulation and/
     or voter misunderstanding would be high; accordingly, 
     entrusting an entity such as the Federal Election 
     Commission with the responsibility to police such areas as 
     technical campaign regulations might be preferable. In 
     this regard, it is important to recognize that the 
     question of whether a violation has occurred can be 
     separated from the question of whether a sanction should 
     be imposed. \17\
       From a policy standpoint, it would be far preferable for 
     the Committee to take action with respect to allegations of 
     this nature only after it has been found that a Member has 
     violated the law by an administrative agency or court subject 
     to judicial review. Indeed, this Committee has on several 
     occasions deferred action pursuant to a request from the 
     Department of Justice. \18\ Such an approach in no way 
     diminishes the authority of this Committee to regulate the 
     conduct of Members on behalf of the House as once a violation 
     has been found by a competent tribunal as House precedent 
     clearly establishes that the Committee may investigate or 
     sanction the Member for conduct which does not reflect 
     creditably on the House. \19\
       Yet to expand dramatically this Committee's jurisdiction to 
     consider technical violations of statutes not governing mala 
     in se is to open a Pandora's box which it may be impossible 
     to close again. If this path is taken, this Committee will 
     become a special tribunal which tries to hear and decide, 
     without right of appeal, every conceivable allegation that 
     might be levied against a Member regardless of whether it is 
     malum prohibitum or malum in se. Such an action is neither an 
     efficient nor a wise use of the resources of this great body. 
     While the Committee should not engage in deciding whether 
     Members have committed mala prohibita, it should continue its 
     traditional and proper role of disciplining Members for 
     committing mala in se. For such offenses the House is, and 
     should be, the court of last resort.
       These arguments are not a challenge to this Committee's 
     jurisdiction for that time has passed. Rather, the Committee 
     should carefully consider the lack of guidance available to 
     Members, including Respondent, during the period in question 
     as a mitigating factor in considering its recommendation to 
     the Full House. In addition, the Committee should carefully 
     consider the troubling concerns raised by this application of 
     Rule 43(1) as other members attempt to conform their conduct 
     to the Code of Official Conduct.


              DECEMBER 8, 1994 AND MARCH 27, 1995 LETTERS

       As background, it is important to note that the Respondent 
     has been proactive, as opposed to reactive, with the 
     Committee in connection with the Renewing American 
     Civilization course and any potential ethics issues which it 
     might present. Respondent has waived attorney-client 
     privileges, produced thousands of documents and met with the 
     Investigative Subcommittee at its convenience. The proactive 
     involvement began with his letter dated May 12, 1993 in which 
     he specifically inquired if ``the committee [had] any 
     concerns about this project.'' Then, in June of 
     1993, Respondent, Jeffrey Eisenach, Annette Meeks and 
     Linda Nave met with then Committee counsel David J. 
     McCarthy. (See Letter of Speaker Gingrich to Reps. Goss 
     and Cardin, October 31, 1996 with attachments (including 
     Letter of David J. McCarthy to Rep. Hobson, December 1, 
     1994)). During the course of that meeting, Mr. McCarthy 
     recalls that:
       ``The discussion eventually turned to fundraising for the 
     course. Jeff Eisenach began to volunteer details of how he 
     contemplated fundraising, and I interrupted his explanation 
     with a question, ``are you on the House payroll?'' When he 
     answered that he was not, never had been, and did not ever 
     expect to be I shifted the focus of the discussion by 
     explaining that I was not interested in what Eisenach was 
     planning to do, I was only interested in what Mr. Gingrich 
     and any House employees were going to do * * *.

                           *   *   *   *   *

       ``Then Mr. Gingrich again brought up Eisenach and asked 
     whether he should not get the Committee's written advice that 
     Eisenach would be permitted to engage in the fundraising. His 
     concern seemed to be that Eisenach's identity with GOPAC, 
     along with his fundraising for the course through the college 
     foundation, could open him to criticism that the motivation 
     for the course was political. I replied that, in my judgment, 
     Mr. Gingrich should not ask the Committee to pass on the 
     activity of Eisenach.
       ``First, I explained that because Eisenach was not a 
     Member, officer or employee of the House his activity was 
     really outside of the Committee's jurisdiction. Secondly, I 
     told him that, to my knowledge of tax law, the issue of 
     whether the contributions in support of the course would keep 
     their tax-deductible status would turn not on who did the 
     fundraising but on how the funds were spent, and that the 
     educational nature of the course spoke for itself. I told him 
     that I was aware of no law or IRS regulation that would 
     prevent Eisenach from raising charitable contributions, even 
     at the same time that he was raising political contributions. 
     In any event, I advised him, I expected the Committee to 
     stick by its advisory opinion in the Ethics Manual and not 
     get into second-guessing the IRS on its determination of tax-
     exempt status,
       ``I also felt that because the Committee's written answer 
     might decline to offer advice on Eisenach's fundraising 
     activity--it being outside the Committee's purview--he might 
     be just as well off not to raise the question in his letter. 
     My experience was that Members found it annoying when the 
     Committee in a written advisory opinion would explicitly 
     decline to answer a question. I believe that there was some 
     brief discussion about Eisenach leaving GOPAC, in any event, 
     to focus on the course fundraising.'' (Letter of David J. 
     McCarthy to Rep. David Hobson, December 1, 1994 at 1-2).
       The significance of these passages from McCarthy's letter 
     is twofold. First, they demonstrate that Respondent expressly 
     referenced GOPAC and the involvement of Eisenach in course 
     fundraising in his consultations with Committee counsel.\20\ 
     Secondly, these passages explain that Respondent did not make 
     reference to GOPAC involvement in the course in his letter of 
     July 21, 1993 providing additional information to 
     Representative McDermott as Committee Chairman on the express 
     advice of Committee counsel. (See Letter to Rep. Jim 
     McDermott, July 21, 1993; see also, Letter from Committee to 
     Speaker Gingrich, October 31, 1994 at 2).
       Then, on September 7, 1994, Ben Jones, Respondent's 
     electoral opponent, filed his first ethics complaint against 
     Respondent. Respondent's initial responsive submission to the 
     Committee dated October 4, 1994, prepared by a member of 
     Respondent's staff, expressly refers to GOPAC's involvement 
     in the course. In particular, the letter states:
       ``I would like to make it abundantly clear that those who 
     were paid for course preparation were paid by either the 
     Kennesaw State Foundation [sic], the Progress and Freedom 
     Foundation or GOPAC . . . Those persons paid by one of the 
     aforementioned groups include: Dr. Jeffrey Eisenach, Mike 
     DuGally, Jana Rogers, Patty Stechschultez [sic], Pamla 
     Prochnow, Dr. Steve Hanser, Joe Gaylord and Nancy Desmond.'' 
     (Letter to Rep. Jim McDermott, October 4, 1994 at 2). 
     (emphasis added.)
       As the above-quoted passage indicates, Respondent expressly 
     referred in correspondence with the Committee to the 
     involvement of GOPAC in the course and the use of GOPAC funds 
     to pay individuals for course preparation. Indeed, there is 
     no question that the Committee was aware of involvement by 
     GOPAC. This knowledge was confirmed in the Committee's letter 
     dated October 31, 1994 to Respondent. Significantly, the 
     Committee's letter notes that Respondent's October 4, 1994 
     letter ``sufficiently answer[ed] most of the allegations 
     raised in Mr. Jones' complaint.''
       Eliminating any issue regarding the Committee's awareness 
     of GOPAC' involvement, however, the Committee's October 31, 
     1994 letter went on to state: ``A number of documents reflect 
     the involvement of GOPAC and GOPAC employees in developing 
     and raising funds for the course.'' The letter continues: 
     ``In addition to the above, various other documents related 
     to the course were sent out on GOPAC letterhead, were sent 
     from GOPAC's fax machine, used GOPAC's address as a place to 
     mail materials related to the course, and referred to 
     registration materials being included in GOPAC Farmteam 
     mailings.'' In all, the Committee's October 31, 1994 letter 
     makes reference to GOPAC no less than 46 times and cites 
     extensive documentation referring to GOPAC. (See, Letter from 
     Committee to Speaker Gingrich, October 31, 1994). 
     Interestingly, from the original complaint to the October 31, 
     1994 Committee correspondence, GOPAC is mentioned by name 92 
     times in correspondence to and from the Committee.

[[Page H187]]

                        december 8, 1994 letter

       As reflected above, the Committee's request for information 
     was dated October 31, 1994. On November 8, 1994, election 
     day, Republicans captured a majority of seats in the U.S. 
     House of Representatives. The process of transition began 
     immediately. In the context of these events Respondent 
     retained counsel on November 15, 1994 to represent him in 
     connection with the ethics investigation.
       Counsel began preparation of the response. An associate was 
     assigned to prepare an initial draft of the response. The 
     attorneys coordinated their efforts with a member of 
     Respondent's staff. Subsequently, the December 8, 1994 letter 
     was presented to Respondent for review and signature. It does 
     not appear that there was any communication between the 
     attorneys and the Respondent until after December 8, 1994.
       Regarding the response, Respondent testified that he would 
     have turned and said ``I want this done. . . .'' (Gingrich 
     Tr., 11/13/96, at p. 28) Respondent testified that, in 
     November, ``we, in effect, had decided to go from [the staff 
     member] being in charge to [the staff member] coordinating 
     with the law firm and the law firm being in charge.'' 
     Respondent testified that it was his understanding that the 
     law firm was primarily responsible for drafting the December 
     8th letter. (Gingrich Tr. 11/13/96, at 28).
       The firm partner recalls that his role and that of his firm 
     in the preparation of the December 8, 1994 letter was to 
     prepare a response working with the staff member. (Baran Tr. 
     at 6-7). The partner assigned responsibility for preparing an 
     initial draft to an associate at the firm. (Baran Tr. at 9-
     10; Mehlman Tr. at 15). The associate testified that in 
     preparing the draft response to the October 31, 1994 letter, 
     he relied upon ``various correspondence'' between Respondent 
     and the Committee including the October 4, 1994 letter, the 
     course book, a pamphlet on the course, and the Jones' 
     complaint with exhibits and the videotapes of the course. 
     (Mehlman Tr. at 15-16). The associate further testified that 
     it was his understanding that he did not need to go beyond 
     these materials in drafting the response. (Mehlman Tr. at 
     19). The associate testified that, in preparing the draft, he 
     never contacted anyone at GOPAC (Mehlman Tr. at 18, 28), nor 
     did he contact Dr. Eisenach (Mehlman Tr. at 28) or Respondent 
     (Mehlman Tr. at 27) to confirm any of the information 
     contained in the December 8, 1994 letter. The associate then 
     met with the partner to review the draft and some editorial 
     changes were made. (Mehlman Tr. at 18).
       The partner testified that his review was limited to the 
     October 31, 1994 letter from the Committee, the Jones 
     Complaint with exhibits and telephone conversations, and that 
     otherwise ``[he] didn't have any other independent factual 
     gathering.'' (Baran Tr. at 13). The partner further indicated 
     that he had no contact with the Kennesaw State College 
     Foundation (KSCF), Kennesaw State College or Reinhardt 
     College in preparing the December 8th letter. (Baran Tr. at 
     18). The partner further testified that his first contact 
     with Respondent during this time period was on December 9, 
     1994, and that he had no recollection of having discussed the 
     letter at all and that he had no contact with Respondent 
     concerning the matter prior to that time. (Baran Tr. at 18, 
     33).
       Turning then to the involvement of Respondent and his staff 
     in the December 8, 1994 letter, the partner indicated that 
     the letter ``eventually went from our office to [the staff 
     member.].'' (Baran Tr. at 14). Respondent's testimony 
     confirms that it was his understanding that the law firm 
     would be responsible for preparing the response in 
     coordination with his staff member. (Gingrich Tr., 11/13/96, 
     at 28). Respondent indicated that, in assigning this task, 
     ``[the staff member] would have been acting with my authority 
     to conduct what we thought at the time was a thorough 
     investigation.'' (Gingrich Tr., 11/13/96, at 15-16). However, 
     the testimony makes apparent that the staff member 
     believed that the partner attorney was checking the 
     factual basis of the statements for accuracy while the 
     partner attorney was under the misimpression that the 
     staff member was doing so.\21\ This miscommunication 
     extended not only to the research into the factual bases 
     for the statements but to the communication of these 
     findings to Respondent. As noted above, the partner 
     attorney testified that he did not discuss the contents of 
     the letter with Respondent prior to submission. (Baran Tr. 
     at 18, 33) nor does Respondent recall such a meeting. 
     (Gingrich Tr., 11/13/96, at 30). Nor apparently did anyone 
     on Respondent's staff confirm the facts contained in the 
     letter with Respondent prior to its submission in any 
     systematic fashion. The staff member's recollection is 
     that she did not even see Respondent during the signing 
     process, but forwarded the letter to Respondent for 
     signature through the executive assistant. (Meeks Tr. 15 
     76-77).


                         March 27, 1995, letter

       Turning then to the letter to the Committee of March 27, 
     1995, similar miscues appear to have resulted in inaccuracies 
     in statements made to the Committee. Again the attorneys had 
     responsibility for the preparation of the submission on 
     Respondent's behalf, and on this occasion, the responsibility 
     for the initial drafting fell to the associate as well as to 
     a more senior associate. The senior associate testified that, 
     in drafting the facts section of the March 27 response, he 
     relied upon the October 4 letter, the attachments to the 
     amended complaint, the original Jones complaint and its 
     exhibits, the December 8 letter, all of the exhibits included 
     with the March 27 submission and conversations with the 
     Respondent's staff member. (Toner Tr. at 19, 29-30, 34). The 
     senior associate further indicated that he made no contact 
     with anyone at GOPAC, the Progress & Freedom Foundation, 
     Reinhardt College, Kennesaw State College or the Kennesaw 
     State College Foundation in preparing the March 27, 1995, 
     letter. (Toner Tr. at 19-20; 26-27; see also, Baran Tr. at 27 
     (no contact with GOPAC)). The junior associate similarly 
     testified that he had relied upon the correspondence and 
     materials he had from the December 8 submission as well as 
     having reviewed other responses by the senior associate and 
     the partner. (Mehlman Tr. 15 38).
       Both associates indicated that they were not personally 
     aware of efforts to check the factual accuracy of the March 
     27, 1995, submission. (Toner Tr. at 38-39; Mehlman Tr. at 
     53). The senior associate testified that he was similarly 
     unaware of any contacts with people outside the firm, other 
     than Respondent's staff member, to confirm the factual basis 
     for statements contained in the submission (Toner Tr. at 56), 
     and that he was not aware of any changes made to the document 
     based on comments from anyone associated with the Respondent. 
     (Toner Tr. at 60-61). The junior associate indicated that he 
     did not recall contacting any outside persons to confirm such 
     facts. (Mehlman Tr. at 38). The partner additionally 
     confirmed that, while he reviewed the drafts and edits with 
     the associate, he did not recall making any outside inquiries 
     of anyone regarding the Renewing American Civilization course 
     with one possible exception. (Baran Tr. at 28).
       Asked if he was aware of any additional factual inquiry 
     done in preparation for the March 27, 1995, submission in 
     addition to that previously done for the December 8, 1994, 
     submission, the partner replied: ``Factual inquiry--none that 
     I recall--no.'' (Baran Tr. at 30-31). The partner's testimony 
     was that after drafting and editing the March 27, 1995, 
     document ``at some point we would have sent a draft that we 
     felt comfortable with over to the Speaker's office.'' (Baran 
     Tr. at 28). The partner testified that he did not recall any 
     discussions with the Respondent prior to the submission of 
     the March 27, 1995 letter over the partner's signature. 
     (Baran Tr. at 32). The firm's billing records reflect that 
     the submission was filed on March 27, 1995 at 6:05 and 
     delivered to Tony Blankley of Respondent's staff at 6:35 
     that same evening. (WFP 00224).
       The purpose of this extended review of the testimony 
     offered in this proceeding regarding the process of preparing 
     these submissions to the Committee is not an attempt to shift 
     the ultimate responsibility for submitting these statements 
     from Respondent to others, but only to demonstrate that the 
     testimony of record in this matter clearly supports the 
     conclusion that any inaccuracies contained in these 
     submissions were the result of regrettable errors rather than 
     of any intent to mislead this Committee. In their testimony 
     before this Committee, the staff members as well as the 
     attorneys repeatedly testified that they were never told, 
     directly or indirectly, by Respondent, or anyone on his 
     behalf, to provide anything other than accurate information 
     to the Committee.
       ``Mr. Goss. For the record, you may want to respond to 
     this. I will try and make it as clearly as I can. Do you have 
     any personal knowledge of whether the Speaker either directly 
     or through his attorney Mr. Baran deliberately provided 
     anything other than accurate, reliable or complete 
     information to this committee regarding his response related 
     to the complaints with regard to the letters that we have 
     talked about today?
       ``The Witness. Do I have any knowledge that any of the 
     information was false? Is that the question?
       ``Mr. Goss. Was deliberately provided, that was other than 
     accurate, reliable or complete.
       ``The Witness. No.
       ``Mr. Goss. Do you know if Mr. Gingrich at any time tried 
     to forward or intended to forward to us incomplete, 
     inaccurate or unreliable information?
       ``The Witness. If I may editorialize on my answer for a 
     second, we really--in the two replies that I was involved in, 
     we really, in our estimation, tried to comply as fully, 
     completely, honestly, straightforward, and promptly as we 
     were able.
       ``Mr. Schiff. The question is did Mr. Gingrich ever suggest 
     to you in any way, shape, or form, that you do other than 
     that?
       ``The Witness. Oh, goodness, no.'' (Meeks Tr. at 85-86).
       ``Mr. Goss. Do you have any knowledge that Mr. Gingrich was 
     aware that any of the information contained in the letters 
     that we have talked about at the time that those letters were 
     submitted were incomplete, misleading, or inaccurate?
       ``The Witness. No.'' (Baran Tr. at 60).
       ``Mr. Schiff. Could I ask you two questions on that; 
     actually, I may be leaping ahead, but a general question? Was 
     there anything told to you that you heard either directly or 
     indirectly, that indicated that it was the purpose of either 
     the speaker or of Mr. Baran or of anyone else connected with 
     this case, to deceive this committee and to provide anything 
     but accurate information?
       ``The Witness. No.
       ``Mr. Schiff. Your assumption, then, is you are supposed to 
     put together a correct statement of the facts and submit it 
     to us?

[[Page H188]]

       ``The Witness. Absolutely.'' (Toner Tr. at 28).
       Representative Goss summarized the testimony on this point 
     most succinctly observing:
       ``Mr. Goss. Okay. I have only one little thought. We seem 
     to have gotten into a situation where we know we have some 
     information that is not everything we desired it to be, and 
     we are trying to track down why and how we got into that 
     position. It seems that Mr. Gingrich was relying on you 
     [Baran] and some other people to do the December 8th letter, 
     or his December 8th letter was given to somebody else and 
     they were supplemented by your firm, and your firm in turn, 
     by your testimony, you were relying pretty much on what that 
     individual, who would be Ms. Meeks, was doing and you were 
     just checking for legalities rather than substance, would be 
     sort of the way I read your testimony, and therefore the 
     problem started on December 8th was further compounded on 
     March 27th on that letter because you used some of the 
     material from the December 8th letter. Is that correct?
       ``The Witness [the partner attorney]: Yes. I would agree 
     with that characterization.'' (Baran Tr. at 59).
       Respondent's own testimony before this Committee similarly 
     endorses this version of events:
       ``. . . After reviewing my testimony, my counsel's 
     testimony, and the testimony of his two associates, the ball 
     appears to have been dropped between my staff and my counsel 
     regarding the investigation and verification of the responses 
     submitted to the committee.
       ``As I testified, I erroneously, it turns out, relied on 
     others to verify the accuracy of the statements and 
     responses. This did not happen. As my counsel's testimony 
     indicates, there was no detailed discussion with me 
     regarding the submissions before they were sent to the 
     committee. Nonetheless, I bear responsibility for them, 
     and I again apologize to the committee for what was an 
     inadvertent and embarrassing breakdown.'' (Gingrich Tr., 
     12/10/96, at 5-6).
       Upon realizing that errors were made, Speaker Gingrich has 
     openly and publicly accepted responsibility for these errors 
     and has offered his sincere apologies to this Committee and 
     the House.
       Notwithstanding these circumstances, the bottom line is 
     that inaccurate, incomplete and unreliable information was 
     submitted to the Committee. There are no circumstances which 
     can justify the submission of inaccurate, incomplete or 
     unreliable information to the Committee. The information 
     submitted was submitted on Respondent's behalf. Respondent 
     has accepted full responsibility.
       Respectfully submitted, this 16th day of January, 1997.
     J. Randolph Evans,
       Counsel for Respondent.
     Ed Bethune,
       Co-Counsel for Respondent.
                                                                    ____



                               FOOTNOTES

     \1\ Contributing to the preparation of this report were 
     Anthony W. Morris, Esq. and Stefan C. Passantino, Esq. of 
     Arnall, Golden & Gregory, L.L.P. and Shannon H. Ratliff, Esq. 
     of Bracewell & Patterson, L.L.P.
     \2\ Charitable, religious and educational entities organized 
     under section 501(c)(3) and lobbying entities organized under 
     section 501(c)(4) are exempt from taxation under the tax 
     code. IRC Sec. 501(a).
     \3\ In fact, qualified tax experts in the field have 
     concluded that there has been no violation of federal tax 
     law. Highly regarded 501(c)(3) expert William J. Lehrfeld 
     concluded there is no violation of federal tax laws. See, 
     Exhibit E. James P. Holden of the law firm of Steptoe & 
     Johnson reached the same conclusion. See, Appendix C.
     \4\ See, infra p. 35-43.
     \5\ IRC section 501(c)(3) identifies these qualifying 
     entities as: ``[c]orporations, and any community chest, fund, 
     or foundation, organized and operated exclusively for 
     religious, charitable, scientific, testing for public safety, 
     literary, or educational purposes, or to foster national or 
     international amateur sports competition (but only if no part 
     of its activities involve the provision of athletic 
     facilities or equipment), or for the prevention of cruelty to 
     children or animals, . . .'' IRC Sec. 501(c)(3).
     \6\ FEC records reflect that Ms. Roady, a registered 
     Democrat, has made political contributions totaling $1,550 to 
     Emily's List, The Rangel for Congress Committee, and the 
     Democratic National Committee.
     \7\ The IRS has similarly refused to revoke the tax exempt 
     status of a voter registration organization promoted by then-
     Senator Alan Cranston and run by his son, Kim Cranston. ``Old 
     Softie: Alan Cranston's Soft Money Machine; Campaign Fund 
     Ethics,'' The New Republic, p. 17 (Dec. 11, 1989); ``Raising 
     Money to Register More Voters,'' The Exempt Organization Tax 
     Review, p. 697 (Dec.-Jan. 1990). Indeed, ``[i]n 1984, . . ., 
     several foundations attempted to use their tax-free assets to 
     increase turnout by targeted groups and thus increase the 
     Democratic vote in the presidential election, according to 
     election experts.'' ``Raising Money to Register More 
     Voters'', p. 679.
     \8\ See, supra, p. 30.
     \9\ Art. I, Sec. 5, cl. 2 provides: ``Each House may 
     determine the Rules of its Proceedings, punish its Members 
     for disorderly Behavior, and, with the Concurrence of two 
     thirds, expel a Member.''
     \10\ See, In re Rep. Edward D. Holbrook (ID), II Hinds 
     Sec. 1305 (1869); In re Rep. John T. Deweese (NC), II Hinds 
     Sec. 1239 (1870).
     \11\ See, House Ethics Manual, 102nd Cong., 2nd Sess., April 
     1992 at 13-14 (collecting cases in which Rule 43(1) has been 
     invoked in investigating or disciplining Members ).
     \12\ Theresa A. Gabaldon, ``The Self-Regulation of 
     Congressional Ethics: Substance and Structure,'' 48 Admin. L. 
     Rev. 39, 54-55 (1996) (quoting ABA Committee on Government 
     Standards (Cynthia Farina Reporter), ``Keeping Faith: 
     Government Ethics and Government Ethics Regulation,'' 45 
     Admin. L. Rev. 287, 297 (1993)).
     \13\ The House Ethics Manual relied upon for guidance by 
     Members provides: ``The Committee has granted a blanket 
     exception to [5 U.S.C.] section 7353 to allow Members and 
     employees of the House to solicit funds on behalf of 
     charitable organizations, provided that no official resources 
     are used, no official endorsements is implied, and no direct 
     personal benefit results. ``House Ethics Manual at 319 
     (footnote omitted).
     \14\ ``Another Ethical Problem for Newt, The News Tribune, 
     December 2, 1995, at A9.
     \15\ ``FEC Says GOPAC Aided Gingrich Race Despite Law; Group 
     Barred From Federal Campaigns in 1990,'' Washington Post, 
     November 30, 1995, at A1.
     \16\ ``GOPAC secretly aided Gingrich in 1990, election 
     officials charge,'' The Commercial Appeal (Memphis), November 
     30, 1995, at 1A.
     \17\ Gabaldon, supra, at 57.
     \18\ See, In re Del. Fofo I.F. Sunia (Am. Sam.) and aide 
     Matthew K. Iuli, See, Summary of Activities of 100th Cong., 
     H. Rep. No. 100-1125, at 15-16 (1989); In re Rep. Frederick 
     W. Richmond (NY), See, Summary of Activities, 97th Cong., H. 
     Rep. No. 97-1004 (1982).
     \19\ See, e.g., In re Del. Fofo I.F. Sunia (Am. Sam.) and 
     aide Matthew K. Iuli, See Summary of Activities, 100th Cong., 
     H. Rep. No. 100-1125, at 15-16 (1989) (disciplinary hearing 
     scheduled after Member and aide pleaded guilty to conspiracy 
     to defraud government, although both resigned before hearings 
     held); In re Rep. Mario Biaggi (NY), H. Rep. No. 100-506, 
     100th Cong., 2d Sess. (disciplinary hearing held after 
     conviction for accepting illegal gratuities).
     \20\ ``I would also ask the committee to place this error in 
     the context of our proactive effort in 1993 to seek the 
     committee's advice and approval and the letter from the 
     former committee counsel, Dave McCarthy, confirming that I 
     had aggressively sought to explore any complications that 
     would involve GOPAC. At no time did I intend to deceive the 
     committee or in any way be less than forthright.'' (Gingrich 
     Tr. at 6-7).
     \21\ The staff member's repeated testimony in this regard was 
     as follows:
     Q. Did you look over the document to check it for accuracy?
     A. Yes.
     Q. Factual accuracy?
     A. Primarily I would have been looking at this document for 
     typographical errors, misspelled words.
     Q. Did you have any knowledge of the facts that are contained 
     in this document, the December 8, 1994, letter?
     A. This was prepared by our counsel. I trust that he had----
     Q. My question is, very specifically, did you have any 
     knowledge of the facts, personal knowledge of the facts, that 
     are contained in the letter?
     A. I would have, yes. I would have looked to Dave McCarthy, 
     which characterized a conversation that Linda Nave and I had 
     with Mr. McCarthy, to verify Jan's characterization of that 
     conversion.
     I verified Clerk's report which I had provided a copy of and 
     the termination papers that I had provided and also the Dave 
     McCarthy conversation about GOPAC staff simultaneously 
     working for the course and for GOPAC.
     Q. Anything else?
     A. No. (Meeks Tr. at 45).
     Q. No, I am now asking the letter itself, did you ever 
     indicate to Mr. Baran that you had provided the December 8th 
     letter prior to its going to the committee to anyone for the 
     purpose of checking its accuracy?
     A. No, that would not have been--no. (Meeks Tr. 87).
     Mr. Goss. So your answer, as of the December 8 letter, would 
     be that all of the information that came from outside came 
     from Mr. Baran?
     The Witness. Yes, sir. (Meeks Tr. at 67).
     However, the partner testified as follows:
     Q. And again, I'm trying to understand exactly the level of 
     factual inquiry that was made aside from the materials that 
     were submitted with the complaint, some of which were also 
     submitted with the October 31st letter. Aside from that and 
     Mr. Eisenach talking to you, perhaps Mr. Gaylord, and looking 
     at the tapes, was there any factual inquiry that you know of 
     done by you or anyone at your office to prepare the portions 
     of the letters concerning the course?
     A. Well, whatever review occurred subsequently by others.
     Q. But you don't know what that was?
     A. That is correct. I cannot confirm that today. (Baran Tr. 
     at 48).

   The Gingrich Ethics Case: Excerpts From the Counsel for the House 
                                Speaker

    [From the Washington Post, Jan. 18, 1997--Federal News Service]

       Following are excerpts from the statement to the House 
     ethics committee of J. Randolph Evans, counsel for House 
     Speaker Newt Gingrich (R. Ga).
       Let me begin by saying that we recognize and the speaker 
     recognizes the serious nature of the charges that are 
     contained in the Statement of Alleged Violation, and 
     recognizes the seriousness of his admission to the violation 
     contained in the Statement of Alleged Violation. Any charge 
     against a member of Congress is a serious matter. Any charge 
     involving the speaker of the Congress is indeed a serious 
     matter, especially when it is leveled against a member who 
     has so consistently over the years proactively involved 
     himself in the issue of ethics, including pursuing sanctions 
     against members of his own party where he deemed appropriate.
       Nonetheless, we do recognize and the speaker recognizes how 
     serious this issue is. In fact, in connection with this 
     process, the speaker has cooperated fully and completely with 
     the investigative subcommittee in all phases, including 
     waiving privileges with his counsel, producing thousands of 
     documents, attending meetings with the subcommittee at the 
     subcommittee's convenience, and directing his staff and 
     counsel to cooperate with the subcommittee at every phase.
       Indeed, the speaker himself has apologized to the 
     subcommittee, to the House, and to the American people for 
     the public controversy that has ensued from the activities 
     that are described in the Statement of Alleged Violation. . . 
     .
       In addition, the speaker has agreed to the recommended 
     level of sanction which Mr. Cole has described. In connection 
     with that, [co-counsel] Ed Bethune and I . . . have spent a 
     great deal of time reviewing the various information that has 
     been made available to us. . . . And our recommendation is 
     the same

[[Page H189]]

     recommendation as the recommendation of the special counsel.
       I should note that our recommendation is premised in part 
     on the significant and important message that it sends in two 
     respects: First, the submission of inaccurate, incomplete and 
     unreliable information in the course of any ethics 
     investigation, regardless of the circumstances surrounding 
     the submission, is serious and should be addressed in a 
     serious way. Second, the speaker feels strongly that when 
     information, which is inaccurate, incomplete or 
     unreliable, causes the committee to expend resources, then 
     the party submitting the information should bear some 
     responsibility for reimbursing the committee for some of 
     the cost in addressing that information. . . .
       We recommended the sanction be reprimand, a sanction which 
     is relegated to serious violations.
       Speaker Gingrich has voluntarily agreed that the committee 
     will be reimbursed $300,000 for costs incurred in connection 
     with the investigation of the inaccurate, incomplete and 
     unreliable information submitted to the committee. We have 
     recommended that this reimbursement be included in any 
     sanction that is recommended by the committee to the full 
     House. . . .


                            Not a Rehashing

       I should note that I agree with [Rep. Benjamin L.] Cardin 
     [D-Md.] that the purpose of this hearing is not a rehashing 
     of all the facts that are contained in the special counsel's 
     report. . . . [However] I disagree with some of the 
     conclusions and analysis that are contained from those facts. 
     . . .
       [W]hile certainly the facts are carefully stated in the 
     special counsel's report, I think that they are often stated 
     in a way which ignores the realities and the context in which 
     the events that are being described was occurring. . . .
       [The] Statement of Alleged Violation essentially consists 
     of two parts. The first part consists of an alleged violation 
     that the speaker failed to seek and follow the legal advice 
     that is described within the Statement of Alleged Violation. 
     Second, the Statement of Alleged Violation refers to 
     information that was transmitted to the committee on the 
     speaker's behalf on two separate occasions.
       I would like to emphasize . . . the speaker was not charged 
     with violation of U.S. tax laws. The speaker was not charged 
     with intending to deceive the committee. The speaker was not 
     charged with illegal activities or criminal tax violations. 
     The speaker was not charged with money laundering. . . . We 
     can only conclude that not only did the Statement of Alleged 
     Violation not charge any of those items, but there was no 
     reason to believe that illegal or criminal or other such 
     activities occurred.
       Second, I think it is important to place this in the 
     context of what was happening in 1991 and 1992 and 1993. . . 
     . [T]he House Ethics Manual specifically contemplates 
     multiple capacities involving . . . members of Congress. It 
     specifically talks about the difference between office 
     accounts, official and unofficial organizations and similar 
     distinctions involving multiple capacities. . . .
       I would note that the Internal Revenue Service itself has 
     recognized on repeated occasions that a number of 501(c)(3) 
     organizations have related 501(c)(4) organizations that can 
     [conduct] political campaign activities, usually through a 
     [political action committee]. . . .
       I would even note for the committee that in the continuing-
     education handbook that is provided to IRS field agents, they 
     specifically acknowledge that two organizations, such as a 
     501(c)(3) and a 501(c)(4), can include two organizations that 
     share the same staff, the same facilities and other expenses. 
     They can conduct joint activities as long as there is an 
     allocation of the income and expenses. This is not a new 
     concept that has just simply arose in connection with this 
     particular case. . . .
       The idea that somehow what was occurring in 1992 and 1993 
     by the speaker in connection with multiple entities was 
     unusual or extraordinary or subject to serious question by 
     the Internal Revenue Service, all of those which do not 
     relate to the facts that the committee has found but relate 
     to the environment and the context of what was occurring in 
     the United States in 1992 and 1993, would reflect that those 
     were consistent with what at least 51 senators and 146 other 
     House members were doing at the same time in connection with 
     multiple entities.
       The speaker developed a movement. I think in that regard it 
     is important to note at the outset . . ., if you notice on 
     Slide 32, that he made it clear that the challenge involved 
     was not Republican or Democrat, liberal or conservative; the 
     challenge was to civilization's survival. . . . What happened 
     in 1992 and 1993 and relating back as early as 1990, is 
     Speaker Gingrich developed ideas on what he saw as necessary 
     to renew American civilization. It extended well beyond the 
     concept--extended well beyond the concept of any partisan 
     political gain, but instead . . . extends to a fundamental 
     concern about whether American civilization indeed is in 
     decay and decline. . . .


                       changing cultural decline

       [T]o change cultural decline, there had to be a cultural, 
     economic, political, governmental movement that transcended 
     any government, any business, any educational institutions, 
     specifically including the Congress. . . . As part of the 
     government, he was convinced that it required . . . that 
     there be a majority committed to reform. . . . In connection 
     with that there were three things that occurred. There was 
     the whip's office; and his congressional office; there was 
     the 501 (c)(3) organizations; and then there was GOPAC. . . . 
     All three served distinct purposes.
       The purpose of the whip's office was through votes and 
     legislation, to cause the movement to occur. Through the 501 
     (c)(3), there was the focus to educate and reform ideas 
     necessary for a movement to occur. And through GOPAC was to 
     recruit and train Republican candidates. All of these then 
     were to cause a movement to occur. . . .
       It is not without question that both achieved Renewing 
     American Civilization, but it is not inconsistent that they 
     would have the same goal, the only difference being that 
     while the movement itself would presuppose a majority 
     considered--committed--to reform, that GOPAC would want that 
     majority to be Republican.
       Those are not inconsistent, and I'd think even Mr. Cole 
     would concede . . . that it is not inappropriate . . . for a 
     political action committee to in fact use and disseminate 
     information that has been developed by a 501(c)(3). . . . It 
     is important that that context of that movement be put in the 
     perspective of the same thing that occurs on a daily basis 
     involving any number of 501(c)(3)'s, 501(c)(4)'s and PACs in 
     Washington, D.C., or across America. . . .
       [O]ne issue that appears to be in significant dispute is 
     the issue of whether the goal of what all was occurring in 
     1991, 1992, and 1993 was a Republican majority, of which the 
     movement was a part, or was the goal the movement, of which a 
     Republican majority was a part. . . .
       I would ask that in that context, that you would 
     specifically take a look . . . at the materials relating to 
     the vision, and I would ask that you would specifically take 
     a look at the degree to which the movement always operated as 
     an overall umbrella under which the other activities always 
     fit. I do not believe that there is any document that 
     reflects a Republican majority as the overall umbrella of the 
     goal in which then, on the flip side, the movement was a part 
     leading to the majority. . . .
       As far as his violation of the tax law goes, there are two 
     possibilities that largely exist. One . . . is that there was 
     a violation of the law, which the committee specifically did 
     not find, and that indeed the speaker, at the time that he 
     engaged in this conduct, knew that it was a violation of law 
     and thus acted improperly. That is an impossible conclusion 
     under this record. At best, the area of the law is unsettled. 
     The committee's own tax counsel, in her reports to the 
     [American Bar Association], indicates that it is unsettled 
     and that the IRS precedent provides little guidance.
       But more importantly, if you assume for a moment that the 
     tax-law issue was clear to the subcommittee's tax counsel, it 
     is equally clear that the speaker's tax counsel reached the 
     opposite conclusion. The best that you can say is, from all 
     of the writing in the articles that existed at the time, is 
     that the law was unclear. And if the law was unclear, there 
     is no way in which the speaker could have understood what the 
     law was and intended to violate it.
       The other possibility is that the speaker was put on notice 
     that there was a serious potential problem, and nonetheless, 
     chose to ignore it. . . . In addition to 51 senators and 146 
     congressmen engaging in this kind of multiple-capacity 
     structures, that the legal writings at the time seemed to 
     suggest that the course, specifically Gingrich's course, fit 
     within acceptable parameters at the time. . . .
       [Y]ou will see . . . citations that equally make it clear 
     that the writings at the time, the legal periodicals at the 
     time, reflected the multiple-structure process.
       I would also note to consider in connection with deciding 
     the appropriate level of sanction, that the speaker 
     specifically addressed the issue of GOPAC involvement and 
     fund-raising in a meeting with David McCarthy who was 
     committee counsel to the ethics committee. You will note that 
     . . . Mr. McCarthy . . . pretty much articulated standards 
     that . . . the tax-deductible status would turn not . . . on 
     who did the fund-raising, but on how the funds were stacked, 
     and that the educational nature of the course spoke for 
     itself. . . .
       It is in that context that I ask you to place the 
     activities surrounding Renewing American Civilization and the 
     American Opportunities Workshop.


                          issue of the letters

       If I could now turn my attention to the issue of the 
     letters that were submitted to the committee. . . .
       In May 1993, the speaker delivered to the committee a 
     letter regarding participation in the formulation of the 
     course. He attached his January 25, 1993, special order, in 
     which he outlined his vision for Renewing American 
     Civilization. Any suggestion that the committee at the time 
     was not aware of the vision of Renewing American Civilization 
     as it extended, is simply incorrect, given that the one hour 
     special order speech was specifically attached to the letter.
       In the spring of 1993, the speaker's staff met with David 
     McCarthy, counsel for the committee, in which there are 
     references to [executive director Jeffrey] Eisenach's 
     identity with GOPAC, and . . . the 501(c)(3) issues.

[[Page H190]]

       It is important to note that in the connection with that 
     letter, that Mr. McCarthy made it very clear . . . that the 
     issue of GOPAC's involvement and the issue of the tax-
     deductible status was not something within the committee's 
     jurisdiction and . . . of which the committee would not be 
     particularly interested; that he said that he thought the 
     committee would stick by its position and not get involved in 
     second-guessing the IRS on its tax determinations of tax-
     exempt status.
       I think it's important to note that in fact he discouraged 
     . . . involvement of the ethics committee in connection with 
     the relationship of GOPAC and 501(c)(3) status so that the 
     focus of the committee counsel's interest was on the 
     distinction between office accounts and unofficial 
     activities. So it's against that backdrop that we then 
     measure the responses that were being submitted later.
       On July 21, there was a letter to the committee that noted 
     the involvement of the 501(c)(3). I would again commend to 
     you to read specifically the letter that references the 
     Kennesaw State Foundation and the fact that it was a 
     501(c)(3) entity.
       On August 3, the committee issued its letter noting its 
     position in granting approval to the course as outlined in 
     the correspondence that had been submitted by the speaker and 
     the information that had been submitted.
       On September 7, 1994, the complaint was filed by Speaker 
     Gingrich's opponent [Ben Jones] in the general election. It 
     references at length GOPAC and its involvement and its 
     relationship to 501(c)(3).
       On October 4, Speaker Gingrich sent a letter to the 
     committee addressing the complaint. . . . [I]t says, ``I 
     would like to make it abundantly clear that those who were 
     paid for the course preparation were paid by either the 
     Kennesaw State Foundation, the Progress and Freedom 
     Foundation, or GOPAC. . . .''
       [T]here was no concealment that GOPAC was participating in 
     connection with the preparation of the course and funding for 
     the course. [T]hen there's the October 31, 1994, letter from 
     the committee, which indicates that the October 4th letter 
     sufficiently answered most of allegations raised in Mr. 
     Jones's complaint but then went on to note that there were 
     a number of documents that reflect the involvement of 
     GOPAC and GOPAC employees in developing and raising the 
     funds for the course. . . . [T]his is a shift that occurs 
     if you read the letters in succession. Prior to this 
     point, the focus of the committee has squarely been on 
     official and unofficial activities by a member of 
     Congress. At this point, the issue then becomes raised 
     relating to other issues. And if you put it in that 
     context, you can see how the letters fit together. I will 
     note that that letter specifically referenced the 
     involvement of GOPAC personnel, GOPAC fax machine, 
     letterhead, addresses and other materials. . . . Any 
     suggestion that there was an effort to conceal, or that 
     the committee was unaware and the speaker was trying to 
     take advantage of that ignorance of GOPAC's involvement, 
     is simply directly refuted and belied by the 
     correspondence that exists in connection with this matter. 
     GOPAC's involvement was clearly unequivocally known 
     throughout the process, being referenced by name some 92 
     times.
       If you then look at the time-line, you will see that then 
     followed Election Day, which was November 8, 1994, at which 
     the Republicans captured a majority of the seats in the 
     Congress. The following day, the speaker began the process of 
     transition, a hectic time. On November 15, 1994, he retained 
     attorneys to begin the process of assuming responsibility for 
     the preparation of the responses to the committee's inquiry 
     of October 31, 1994. He began the process of a series of 
     nonstop meetings--steering committee meetings and other 
     meetings--to begin the transition process that followed the 
     November election.
       In this regard, I find the conclusions of the special 
     counsel's reports, the characterizations to be somewhat in 
     error. . . .


                          the ball got dropped

       [I]t is simply an example of a situation where, as the 
     speaker put it, the ball got dropped between the staff and 
     between the attorneys, about verifying the accuracy of 
     information. This is especially true given that the 
     information that is inaccurate relates to information which 
     was already in the committee's possession and which had 
     already been referred to some 92 times.
       That brings us to the March 27 letter, which was a letter 
     that was signed by counsel, and for which there is no real 
     indication of involvement by the speaker himself in 
     connection with it. . . . I would note to you that if I take 
     the testimony at face value, and that is that there were 
     these erroneous statements in the document, it should be put 
     in some context. This was a 52-page letter.
       It had 31 exhibits. It had 235 pages. It was prepared by an 
     attorney after 140 hours. It consisted of 1,131 lines, of 
     which 18 are at issue. It was submitted to the speaker during 
     the last week of the . . . [first] 100 days [of the new 
     Republican-majority Congress]. The suggestion being that the 
     speaker should have caught the . . . errors made by attorneys 
     retained by him after 140 hours of a 52-page letter with 31 
     exhibits. Context is important in understanding the nature of 
     the allegations that have been made. . . . [T]he speaker 
     himself was not involved, and in fact no effort was made to 
     investigate the statements by the attorneys at the time the 
     letter was prepared.
       I would note that I think there is a very good summary by 
     [subcommittee Chairman Porter J.] Goss [R-Fla.]: ``Okay, I 
     have only one little thought. We seem to have gotten in a 
     situation where we know we have some information that is not 
     everything we desired it to be, and we are trying to track 
     down why and how we got to that position. It seems that Mr. 
     Gingrich was relying on you and some other people to do the 
     December 8 letter, or his December 8 letter was given to 
     somebody else and they were to be supplemented by your firm. 
     And your firm in turn, by your testimony, you were relying 
     pretty much on what that individual . . . was doing, and you 
     were just checking it for legalities rather than substance, 
     would be sort of the way I read your testimony; and that, 
     therefore, the problem started on December 8 was further 
     compounded on December 27 in that letter because you used 
     some of the material from the December 8 letter. Is that 
     correct?''
       ``Yes, I agree with that characterization, which is, simply 
     stated, is that the attorneys became involved, they limited 
     it to the universe of the information that they reviewed; the 
     December 8 letter was prepared; it was erroneous; and then 
     the problem was exacerbated when the March 27 letter was 
     submitted, since no further investigation was done regarding 
     it.''
       I think [Rep. Steven] Schiff's [R-N.M.] questions relating 
     to this issue are particularly important given . . . the 
     innuendos that . . . there was something further at issue 
     here in terms of an intent or scheme or plan to deceive.
       Mr. Schiff asked this question: ``Was there anything told 
     to you that you heard directly or indirectly, that indicated 
     that it was the purpose of either the speaker or [Gingrich 
     counsel Jan] Baran or anyone else connected with this case to 
     deceive the committee or to provide anything but accurate 
     information?''
       Answer by the associate: ``No.''
       ``Your assumption, then, is that you were supposed to put 
     together a correct statement of the facts and submit it to 
     us?''
       Answer: ``Absolutely. . . .''
       Question: ``Well, did Mr. Gingrich ever ask you to provide 
     us any information that was less than complete or that was 
     misleading?''
       Answer: ``Absolutely not, although I have to hesitate to 
     use the word `absolutely.' ''
       Mr. Goss: ``Do you have any knowledge that Mr. Gingrich was 
     aware that any of the information . . . that we have talked 
     about, at the time those letters were submitted, were 
     incomplete, misleading or inaccurate?''
       Answer: ``No.''
       The testimony is consistent on this point. There is no 
     evidence from any testimony from any witness who in any way 
     touched any of the letters that there was any intent or 
     attempt to submit inaccurate information. . . .
       I noted in reading the report, the conclusions of the 
     report, that there are words which are . . . cleverly 
     juxtaposed against each other to lead to a conclusion 
     which is somewhat different than what the testimony itself 
     is.
       I do not dispute the facts surrounding the letters. I don't 
     dispute the testimony that surrounds the letters. Most 
     importantly, the speaker does not attempt in any way to offer 
     excuses relating to the letters, and it has been his 
     consistent position, as opposed to that of mine of being the 
     attorney here, to put things in context for you, that the 
     letters were his responsibility. They were submitted on his 
     behalf. They are inaccurate. That is wrong.
       It is wrong to submit inaccurate information to the 
     committee. He has accepted the complete responsibility for 
     that and has agreed to a serious sanction, that being of a 
     reprimand with a reimbursement of $300,000.
       The only thing I point out to you is from my perspective as 
     the counsel that has reviewed this, is that notwithstanding 
     his position, it is important to put that into context of 
     what was actually transpiring at the time those letters were 
     prepared. . . .
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Ohio [Mr. Hobson].
  (Mr. HOBSON asked and was given permission to revise and extend his 
remarks.)
  Mr. HOBSON. Mr. Speaker, there has been a lot of heated rhetoric and 
partisanship in this case, as it has progressed. I think it is 
important that we step back and focus on the case, examine the specific 
charges contained in the statement of alleged violations.
  The first charge is that the Speaker should have sought legal advice 
in his dealings with 501(c)3 organizations. The second is that he gave 
inaccurate information to the Select Committee on Ethics. Those are the 
charges; no more, no less.
  I turn to the Speaker's response to these charges. He accepted the 
subcommittee's findings. He acknowledged that he should have consulted 
a lawyer, and that some of the information he gave was incorrect. Since 
the Speaker has accepted the alleged violations, it was the job of the 
full committee to determine an appropriate sanction.

[[Page H191]]

  While the committee attempted to work through this process there was 
all kinds of rhetoric flying, from all sides, of those not involved in 
the process. Some called for the expulsion of the Speaker, and may 
still do that, while others called for a letter of reproval or even 
less. That may happen also.
  In the end, the special counsel submitted his report to the full 
committee, and the committee supported and voted out an unprecedented 
sanction, since there is no evidence that the Speaker engaged in 
misconduct that resulted in personal financial gain to him.
  I would like to take a few moments to discuss the counsel's report. 
Mr. Cole was hired by the Select Committee on Ethics as an investigator 
to lay out the facts of the Speaker's case. As a member of the Select 
Committee on Ethics, I understood that Mr. Cole was not hired to be a 
judge, nor a 501(c)3 tax expert. In either case, it was my 
understanding he had no prior experience. Rather, the resolution of 
preliminary inquiry authorizing Mr. Cole's employment specified that he 
was appointed to assist the subcommittee.
  I am submitting for the Record the biography of B. John Williams, who 
served as a judge on the U.S. Tax Court, and currently is in the 
Washington law firm of Morgan, Lewis, and Bockius, the very same law 
firm as Mr. Cole's hired tax expert.
  I am also submitting for the Record a statement written by Mr. 
Williams concerning the potential significance of the American Campaign 
Academy case, which he provided when he was interviewed by the 
committee for the position of special counsel.
  I am going to read just a little bit from that, but I have submitted 
the entire statement as I have it for the Record.
  Mr. Williams' quote:

       * * * there is an adage taught in the first year of law 
     school that ``hard cases make bad law.'' American Campaign 
     Academy seems to be a good example of that adage. While the 
     case reached the right result because of the integral 
     closeness of the Academy and the Republican Party sponsorship 
     and direction, the reasoning of the case reaches the result 
     by focusing heavily on a vague term that the Court called 
     ``secondary benefit.'' The ``secondary benefit'' of the 
     Academy's program was the benefit to employers--Republican 
     candidates--of the training period acquired by academy 
     graduates.
       The court found the secondary benefit disproportionately 
     benefited Republicans as they were the only ones hiring the 
     graduates. The court's reasoning really plows uncharted 
     waters and leaves only ill-defined notions of how to access 
     whether recipients of the secondary benefits serve the 
     organization's exempt educational purposes.

                              {time}  1315

  My purpose for submitting Mr. Williams' statement is not to point out 
who is right or who is wrong but, rather, to point out that 
knowledgeable people on tax issues can and will have different 
interpretations about the law in this area, even two tax experts from 
the same law firm. These different interpretations may give some 
justification for Mr. Gingrich's actions, although I still believe and 
I believe now that he should have consulted a tax lawyer.
  After reviewing the Speaker's case and examining House precedents on 
sanctions, I believe the sanction was more harsh than the charges in 
the case warrant. For the Record, I am submitting a memo which outlines 
the rules and precedents on disciplinary sanctions. I believe a careful 
reading of this memo supports my conclusion.
  But the Speaker accepted the charges and the sanction against him. I 
believe that it demonstrates to all of us and to the American public 
that he truly regretted his actions and sends a message that the 
Speaker's conduct should be held to a particularly high standard, as 
should every other Member's.
  But there is another message in this for all of us as Members. The 
reimbursement of $300,000 sets a new standard for the ethics process. 
Some may disagree with that. It says that those who create additional 
and unnecessary work for the committee are going to pay a price. This 
should also alert those Members who trump up charge after charge and 
file frivolous complaints with the Select Committee on Ethics that they 
may be held to a similar monetary standard.
  There have been numerous allegations and charges filed against Mr. 
Gingrich over the past few years, and they have been investigated by 
the Select Committee on Ethics and at an enormous cost to the 
taxpayers. All of these cases have either been deemed minor or 
dismissed except for the current issue.
  This leads me to believe that there is an orchestrated effort by 
certain opposition forces, some even involving tax exempt organizations 
to attack the Speaker. And the attacks did not stop with the Speaker. 
For the first time in my career on the committee, there has been a 
relentless attack on members who serve on the Select Committee on 
Ethics, including myself. I have served on the Select Committee on 
Ethics for 6 long years. It was not until we handled the Speaker's case 
that I experienced and saw the attacks on members of the Select 
Committee on Ethics from other Members and outside groups which, I 
might my add, by the way also included certain tax exempt groups.
  Intense political pressure was brought to bear on the members purely 
for the reason that they served on the Select Committee on Ethics. 
These and other distractions were detrimental to the entire process. 
Had these actions and certain other committee problems not occurred, 
this case could have been resolved much earlier and been far less 
disruptive to the House and the American people. Fortunately that is 
all behind us and we are here today.
  This has been a long and difficult case and would have been completed 
much earlier had it not been for these disruptions. But fortunately, 
due to the leadership of the Chair of the Select Committee on Ethics 
and the work of the subcommittee, we are here. For the past 2 years, 
Nancy Johnson forced the committee to do its job. Rather than referring 
the tough issues to others to decide, she kept the committee on track 
and kept the pressure on the commit to resolve cases. Nancy Johnson, 
more than any other Member, has paid a heavy political price for her 
determined service to the Select Committee on Ethics. This, in my 
opinion, is absolutely totally unfair and her constituents should 
understand the extent of the partisan political forces working against 
her.
  Despite the enormous pressures brought to bear against the Chair, the 
Chair endured and pressed on to resolve this most difficult and 
contentious case.
  After 6 years, I am today leaving the Select Committee on Ethics with 
mixed emotions, as Mr. Cardin also said. I think most of us getting off 
agree. It troubles me that this case brought out the worst partisan 
rancor and resulted in inappropriate actions of certain Members, but at 
the same time I am pleased that this case has been resolved in 
a bipartisan manner and we can move forward in the House and do the 
work that the people sent us here to do.

  In closing, as I stated earlier, I believe the committee sanction was 
more harsh than the charges warranted but I will vote for the 
resolution because it was the bipartisan decision reached by the 
committee and agreed to by Mr. Gingrich.
  The material referred to follows:

                         B. John Williams, Jr.

       B. John Williams, Jr. is a partner in the Tax Section 
     resident in the Washington, D.C., office. His practice 
     focuses on federal tax controversies and litigation before 
     the U.S. Tax Court, U.S. Court of Federal Claims, U.S. 
     District Court, and the U.S. Circuit Courts of Appeal. He 
     also represents clients before the Internal Revenue Service 
     and the Treasury Department on rulings and regulations.
       Mr. Williams, who is vice-chairman of the Tax Section, 
     represented and continues to represent clients in a variety 
     of fields, including the oil, coal, newspaper, consumer 
     products and construction industries.
       From 1981 through 1984, Mr. Williams served as Special 
     Assistant to the Chief Counsel of the Internal Revenue 
     Service, and as Deputy Assistant Attorney General, Tax 
     Division, in the Department of Justice (supervising five 
     civil trial sections, the Office of Legislation and Policy, 
     and the Review Section).
       In 1985, Mr. Williams, then a partner at Morgan Lewis was 
     appointed by President Ronald Reagan to the U.S. Tax Court. 
     He served with distinction on the bench where he wrote many 
     important opinions and tried several highly complex factual 
     cases involving hundreds of millions of dollars in dispute 
     and where he served on the Court's Rules Committee. In March, 
     1990, he resigned from the Tax Court and re-entered the 
     practice of law as a partner with Morgan Lewis.
       Mr. Williams speaks regularly before business and bar 
     groups on litigating large tax

[[Page H192]]

     cases. He has served as a panel member of the ALI-ABA Course 
     of Study, ``How to Handle a Tax Controversy at the IRS and in 
     Court;'' the Georgetown CLE program, ``The Perfect Trial of a 
     Tax Court Case;'' and the Tax Executives Institute's seminar 
     on ``Strategies for Success: How to Handle an IRS Audit.''
       Mr. Williams is a member of the District of Columbia and 
     Pennsylvania bars, the American Law Institute and the 
     American Bar Association. He served as a member of the 
     Advisory Committee to the U.S. Court of Appeals for the 
     Federal Circuit (1992-96). Mr. Williams is noted in Who's Who 
     in America, Who's Who in American Law and Best Lawyers in 
     America. He is a Fellow of the American College of Tax 
     Counsel.
       He received his undergraduate degree from George Washington 
     University with distinction and university honors and with 
     departmental honors in history; he is a member of Phi Beta 
     Kappa and Omicron Delta Kappa.
       Mr. Williams received his law degree with distinction from 
     George Washington University where he was a member of the law 
     review. He served for two years as a law clerk for the late 
     Judge Bruce M. Forrester of the U.S. Tax Court.
       In examining the relationship between GOPAC funding and the 
     course taught by Mr. Gingrich at tax exempt colleges, and 
     taped for later broadcast distribution, the Committee has 
     asked about the potential significance of American Campaign 
     Academy, 92 T.C. 1053 (1989). In my view this case offers 
     uncertain guidance to the Committee at best.
       First, the task before the Committee is to judge the 
     propriety of Mr. Gingrich's behavior, whereas the case has 
     direct application only to an issue about the exempt status 
     of the colleges at which he taught his course. The case 
     simply does not articulate any principle that would condemn 
     or exonerate the presentation of Mr. Gingrich's course 
     content. Further, the case does not provide any standard for 
     determining the propriety of Mr. Gingrich's teaching a 
     course, even if partisan in content, at a tax exempt 
     institution of higher learning. Finally, the case does not 
     provide standards for condemning or exonerating the funding 
     of the course by GOPAC. Assuming Mr. Gingrich's course was 
     partisan, and designed to be so, and further assuming that 
     GOPAC provided funds for the course, American Campaign 
     Academy would apply, if at all, only to determining whether 
     ``no more than an insubstantial part'' of the colleges' 
     activities furthered a ``nonexempt purpose.'' In this 
     exercise, which seems inappropriate for the Committee, the 
     issue would require an examination of the colleges' 
     educational operations and a determination that any private 
     benefits conferred were more than an incidental part of the 
     colleges' activities and purposes.
       Second, there is an adage taught in the first year of law 
     school that ``hard cases make bad law.'' American Campaign 
     Academy seems to be a good example of that adage. While the 
     case reached the right result because of the integral 
     closeness of the Academy and Republican Party sponsorship and 
     direction, the reasoning of the case reaches the result by 
     focussing heavily on a vague term that the Court called 
     ``secondary benefit''. The ``secondary benefit'' of the 
     Academy's program was the benefit to employers (Republican 
     candidates) of the training acquired by Academy graduates. 
     The Court found the ``secondary benefit'' disproportionately 
     benefited Republicans (they were the only ones hiring the 
     graduates). The Court's reasoning really plows uncharted 
     waters, and it leaves only ill-defined notions of how to 
     assess the whether recipients of the ``secondary benefits'' 
     serve the organization's exempt educational purposes.
       If this Committee were to investigate whether the colleges' 
     exempt purposes were served, delicate issues arise which the 
     Committee will most likely not be in a position to assess, 
     e.g., whether ``conservative'' or ``liberal'' viewpoints can 
     be equated with partisan positions, whether the self-
     selection of an audience can constitute a cognizable group 
     that can be said to receive a private benefit (or whether the 
     possibility that some in the audidence will be motivated to 
     join conservative or liberal causes entails a private benefit 
     to a political party), or whether a tax exempt institution of 
     higher learning with an established educational program loses 
     its exempt status by presenting a political figure who offers 
     definite views and is funded by designated contributions. 
     These issues were not the subject of American Campaign 
     Academy and to apply that case as if it were applicable 
     precedent will not, in my view, answer the questions before 
     the Committee or serve its best interests.

                              [Memorandum]

     To: Members of the House of Representatives.
     From: David L. Hobson, Member of Congress.
     Date: January 21, 1997.
     Subject: Rules and Precedents Regarding Disciplinary 
         Sanctions.


          i. legal authority to impose disciplinary sanctions

       The U.S. Constitution expressly authorizes the House to 
     discipline its Members. Section 5, Clause 2 of Article I 
     states that each House ``may punish its Members for 
     disorderly Behavior, and, with the concurrence of two thirds, 
     expel a Member.'' House Rule X, Clause 4(e), authorizes the 
     Committee on Standards of Official Conduct to investigate any 
     alleged violation by a Member of ``the Code of Official 
     Conduct or of any law, rule, regulation, or other standard of 
     conduct applicable to the conduct of such Member. . . .'' 
     House Rule X, Clause 4(e) also authorizes the Committee ``to 
     recommend to the House from time to time such administrative 
     actions as it may deem appropriate to establish or enforce 
     standards of official conduct for Members. . . .''
       Committee Rule 20(e) states:
       With respect to any proved counts against a Member of the 
     House of Representatives, the Committee may recommend to the 
     House one or more of the following sanctions:
       (1) Expulsion from the House of Representatives.
       (2) Censure.
       (3) Reprimand.
       (4) Fine.
       (5) Denial or limitation of any right, power, privilege, or 
     immunity of the Member if under the Constitution the House of 
     Representatives may impose such denial or limitation.
       (6) Any other sanction determined by the Committee to be 
     appropriate.
       Alternatively, the Committee may issue a Letter of Reproval 
     without obtaining the approval of the House if, pursuant to 
     Committee Rule 20(d), it determines that such a letter 
     ``constitutes sufficient action. . . .''
       Committee Rule 20(g) provides the following guidance 
     regarding the appropriateness of the different types of 
     sanctions:
       A reprimand is appropriate for ``serious violations.''
       Censure is appropriate for ``more serious violations.''
       Expulsion is appropriate for ``the most serious 
     violations.''
       A monetary fine is ``appropriate in a case in which it is 
     likely that the violation was committed to secure a personal 
     financial benefit.''
       A denial or limitation of a right, power, privilege, or 
     immunity is appropriate ``when the violation bears upon the 
     exercise or holding of such right, power, privilege, or 
     immunity.''
       Rule 20(g) also states that the above standards comprise 
     only ``general guidelines'' and do ``not limit the authority 
     of the Committee to recommend other sanctions.''


                   ii. precedent regarding sanctions

       Outlined below, in escalating categories of severity, are 
     precedents regarding sanctions recommendations by the 
     Committee since 1967, when the Committee on Standards of 
     Official Conduct was established as a standing committee of 
     the House. Pursuant to House Rules, the memorandum omits 
     mention of any case concerning a current House member.

                         A. Letter of reproval

       1. In re Rep. Jim Bates, H. Rep. No. 101-293, 101st Cong., 
     1st Sess. (1989).
       In connection with allegations that Member sexually 
     harassed female staff in violation of House Rule XLIII, 
     Clause 9, Committee issued public letter of reproval 
     directing Member to apologize to former staff. (The House 
     took no action.)
       2. In re Rep. Charlie G. Rose, III, H. Rep. No. 101-526, 
     100th Cong., 2d Sess. (1988).
       In connection with allegations that Member borrowed 
     campaign funds for personal use in violation of House Rule 
     XLIII, Clause 6, and filed an inadequate Financial Disclosure 
     Statement in violation of House Rule XLIV, the Committee 
     adopted a Statement of Alleged Violation and issued a public 
     letter of reproval. (The Member subsequently repaid the funds 
     and amended his Financial Disclosure Statement.)
       3. In re Rep. Richard H. Stallings, H. Rep. No. 100-382, 
     100th Cong., 1st Sess. (1987).
       In connection with allegations that Member borrowed from 
     his campaign fund for himself and a member of his staff, the 
     Committee investigated and issued a public letter of 
     reproval.

                              B. Reprimand

       1. In re Rep. Austin J. Murphy, H. Rep. No. 100-485, 100th 
     Cong., 1st Sess. (1987).
       Following an investigation and disciplinary hearing, 
     Committee recommended reprimand regarding allegations that 
     Member: allowed another person to cast his House vote in 
     violation of House Rule VIII, Clause 1; permitted his former 
     law firm access to official resources in violation of 31 
     U.S.C. Sec. 1301(a), and Paragraph 5 of the Code of Ethics 
     for Government Service; and maintained an employee on a 
     committee payroll who was not performing duties commensurate 
     with the employer's pay, in violation of House Rule XLIII, 
     Clause 8. The House reprimanded the Member.
       2. In re Rep. George Hansen, H. Rep. No. 98-891, 98th 
     Cong., 2d Sess. (1984).
       Following a criminal conviction for making false statements 
     on Financial Disclosure Statement in violation of 18 U.S.C. 
     Sec. 1001, Committee held inquiry and disciplinary proceeding 
     regarding violation of House Rule XLIV. Committee recommended 
     reprimand, and the House concurred.
       4. In re Rep. Daniel B. Crane, H. Rep. No. 98-296, 98th 
     Cong., 1st Sess. (1983).
       In connection with allegations that Member had an improper 
     sexual relationship with a House page in violation of House 
     Rule XLIII, Clause 1, the Committee conducted an 
     investigation and recommended a reprimand. The House voted to 
     censure the Member.
       5. In re Rep. Gerry E. Studds, H. Rep. No. 98-295, 98th 
     Cong., 1st Sess. (1983).
       Committee recommended reprimand following investigation of 
     allegations that Member had an improper sexual relationship 
     with a House page in violation of House Rule XLIII, Clause 1. 
     The House voted to censure the Member.

[[Page H193]]

       6. In re Rep. John J. McFall, H. Rep. No. 95-1742, 95th 
     Cong., 2d Sess. (1978).
       Committee adopted Statement of Alleged Violation, held a 
     public investigative hearing, and recommended reprimand 
     concerning allegations that Member failed to report campaign 
     contribution by Tongsun Park in violation of House Rule 
     XLIII, Clause 1. The House reprimanded the Member.
       7. In re Rep. Charles H. Wilson, H. Rep. No. 95-1741, 95th 
     Cong., 2d Sess. (1978).
       In connection with allegation that Member made a false 
     statement to the Committee concerning the receipt of funds 
     from Tongsun Park, the Committee filed a Statement of Alleged 
     Violation, held a hearing, and recommended a reprimand. The 
     House voted to reprimand the Member. (See discussion below.)
       8. In re Rep. Robert L. F. Sikes, H. Rep. No. 94-1364, 94th 
     Cong., 2d Sess. (1976).
       Committee recommended reprimand concerning allegations that 
     Member used his office to further his personal financial 
     interests in violation of Paragraph 5 of the Code of Ethics 
     for Government Service and failed to disclose stock holdings 
     in violation of House Rule XVIV. The House voted to reprimand 
     the Member.

                               C. Censure

       As indicated above, the House voted for censure in two 1983 
     cases (concerning Representatives Crane and Studds) in which 
     the Committee recommended a reprimand. Other cases resulting 
     in censure are outlined below.
       1. In re Rep. Charles H. Wilson, H. Rep. No. 96-930, 96th 
     Cong., 2d Sess. (1980).
       Committee adopted Statement of Alleged Violation and 
     recommended censure in connection with allegations that 
     Member: accepted gifts from a person with a direct interest 
     in legislation, in violation of House Rule XLIII, Clauses 1 
     and 4; and made personal use of campaign funds, in violation 
     of House Rule XLIII, Clause 6. The Member was censured by the 
     House.
       2. In re Rep. Charles Diggs, H. Rep. No. 96-351, 96th 
     Cong., 1st Sess. (1979).
       Following criminal convictions for mail fraud (18 U.S.C. 
     Sec. 1341) and making false statements (18 U.S.C. Sec. 1001), 
     the Committee adopted Statement of Alleged Violation and 
     recommended censure concerning allegations that Member 
     inflated staff salaries to enable him to pay his personal and 
     congressional expenses. (Member apologized and agreed to make 
     restitution.) The House unanimously voted to censure the 
     Member.
       3. In re Rep. Edward J. Roybal, H. Rep. No. 95-1743, 95th 
     Cong., 2d Sess. (1978).
       Committee adopted Statement of Alleged Violation, held 
     public investigative hearing, and recommended censure in 
     connection with allegations that Member: failed to report 
     campaign contributions in violation of House Rule XVIII, 
     Clause 1; converted campaign funds to personal use in 
     violation of House Rule XVIII, Clause 6; and made a false 
     statement to the Committee in violation of House Rule XVIII, 
     Clause 1. The House subsequently voted to reprimand the 
     Member. (See discussion below.)
       4. In re Rep. Adam Clayton Powell, H. Rep. No. 27, 90th 
     Cong., 1st Sess. (1967).
       Special Select Committee considered allegations that Member 
     used committee travel funds for personal travel, improperly 
     authorized clerk hire payments to his wife, and committed 
     contempt of court by failing to comply with New York state 
     court orders.
       Special Select Committee recommended that Member be seated 
     but deprived of his seniority, that he pay restitution for 
     improperly authorizing the expenditure of official funds, and 
     that he be censured by the House.
       House voted to exclude Member, imposed a fine, and denied 
     him seniority. U.S. Supreme Court subsequently found that 
     Member's expulsion was unconstitutional.

                              D. Expulsion

       1. In re Rep. Mario Biaggi, H. Rep. No. 100-506, 100th 
     Cong., 2d Sess. (1988).
       Following a criminal conviction, the Committee unanimously 
     recommended expulsion in connection with charges that the 
     Member: accepted illegal gratuities in violation of 18 U.S.C. 
     Sec. 201(g), House Rule XLIII, Clauses 1, 2, and 4, and 
     Paragraph 5 of the Code of Ethics for Government Service; and 
     failed to report gifts on Financial Disclosure Statements in 
     violation of House Rule XLIV.
       House deferred action on expulsion resolution while Member 
     defended against second prosecution. The Member resigned from 
     the House.
       2. In re Rep. Raymond F. Lederer, H. Rep. No. 97-110, 97th 
     Cong., 1st Sess. (1981).
       Following a criminal conviction for bribery arising out of 
     the ``ABSCAM'' case, the Committee held an inquiry and 
     disciplinary hearing, and subsequently recommended expulsion, 
     concerning allegations that the Member accepted money in 
     return for promising to use official influence, in violation 
     of House Rule XLIII, Clauses 1 through 3. The Member 
     resigned, and the House took no action.
       3. In re Rep. Michael J. Myers, H. Rep. No. 96-1387, 96th 
     Cong., 2d Sess. (1980).
       Following a criminal conviction for bribery arising out of 
     the ``ABSCAM'' case, the Committee held an inquiry and 
     disciplinary hearing, and subsequently recommended expulsion, 
     concerning allegations that the Member accepted money in 
     return for promising to use official influence. The House 
     expelled the Member.


        iii. cases concerning false statements to the committee

       In light of Speaker Gingrich's admission to the charges in 
     the Statement of Alleged Violation, the two 1978 cases 
     concerning Representatives Wilson and Roybal may be of 
     particular interest to Members of the House.
       In the Roybal case, the Committee considered allegations 
     that Representative Roybal received $1,000.00 in cash from 
     Tungsun Park. The Committee found by ``clear and convincing 
     evidence'' that Representative Roybal knowingly gave false 
     testimony when he denied under oath that he received a gift 
     or campaign contribution from Mr. Park, and concluded that 
     Representative Roybal's false testimony constituted a 
     violation of House Rule 43, Clause 1. In re Rep. Edward J. 
     Roybal, H. Rep. No. 95-1743, 95th Cong., 2d Sess. 1, 3-4 
     (1978). The Committee recommended that the House censure 
     Representative Roybal, but the House voted to reprimand him 
     instead.
       In the Wilson case, the Committee found that Representative 
     Wilson knowingly made a false statement to the Committee in 
     writing when, in a response to a Committee questionnaire sent 
     to each Member of the House, Representative Wilson denied 
     receiving anything of value greater than $100.00 from Tongsun 
     Park. In re Rep. Charles H. Wilson, H. Rep. No. 95-1741, 95th 
     Cong., 2d Sess. 1-3 (1978). After a hearing, the Committee 
     adopted a Statement of Alleged Violation in which it found, 
     by clear and convincing evidence, that Representative Wilson 
     had violated House Rule 43, Clause 1. Id. at 4-5. The 
     Committee recommended to the House that Representative Wilson 
     be reprimanded, and the House adopted that recommendation.
  Mr. CARDIN. Mr. Speaker, I yield 30 seconds to the gentlewoman from 
California [Ms. Pelosi].
  Ms. PELOSI. Mr. Speaker, very quickly I want to make two points.
  Our colleagues have talked about this not being about financial gain 
to the Speaker. Indeed that was not our charge to the committee to find 
that, and we did indeed not find it. But this was about power, so when 
we talk about high ethical standard, it is not just about money; it is 
about what Members will do for power.
  The second point is, the gentleman from Texas [Mr. Smith] and the 
gentleman from Ohio [Mr. Hobson] alluded to other penalties for other 
violations of House rules. Those cases were brought to conclusion. Mr. 
Gingrich admitted to these charges, thereby freezing the record. We 
could possibly prove intent if we had the full process gone through. So 
I want to make that distinction.
  Mr. CARDIN. Mr. Speaker, I yield 7 minutes to the gentleman from Ohio 
[Mr. Sawyer], a very distinguished member of the Select Committee on 
Ethics, who has contributed greatly not only to this particular matter, 
to many matters before the Select Committee on Ethics.
  (Mr. SAWYER asked and was given permission to revise and extend his 
remarks.)
  Mr. SAWYER. Mr. Speaker, I thank my colleague from Maryland for his 
leadership in this matter and join in my colleagues in recognizing the 
work of the subcommittee and the staff of the subcommittee in this 
difficult matter.
  Earlier this year, a lifelong friend of mine was thrilled that his 
daughter on graduating law school was selected to speak on behalf of 
her classmates in terms of the kinds of things that they had learned in 
the course of their time together. She chose as her theme the nature of 
testimony.
  Now, that is something that is certainly familiar to law students and 
lawyers. It is certainly familiar to all of us who deal day in and day 
out with testimony. But she was talking about testimony of another 
kind. Her theme was centered on the idea that the lives we lead, the 
sum of our actions is testimony to the values that we hold. That it is 
testimony to the very definition of who we are as individual actors in 
our public and private lives and in our corporate life here together as 
an institution.
  It is just such a matter that brings us here today to judge that kind 
of testimony, a year's work, 150,000 pages of documents and testimony, 
that are themselves testimony to the work of the committee, to consider 
the seriousness of the conduct that was before us, the absence of care 
that was exercised in that conduct, the disruption that has been caused 
to this institution, and the cost in both monetary and ethical terms 
and the repetitive nature of the conduct that we speak of today.
  The subcommittee concluded that there were significant and 
substantial warning signals to Mr. Gingrich that he should have had 
prior to embarking on that activity. The subcommittee and the full 
committee and we today were faced with a disturbing choice.

[[Page H194]]

 That choice was that either Mr. Gingrich did not seek appropriate 
advice in the action that he took or that he was reckless in not taking 
care that as a Member of Congress he made sure that his action 
conformed with the law that he faced. We face another disturbing 
choice, that Mr. Gingrich either intentionally misrepresented the truth 
or, again, that he was reckless in his disregard for the nature of 
truth.
  This is at the heart of the charges that are before us. This is a 
serious offense. It is a serious sanction. But I hasten to add that it 
does not raise the hurdle that is before us. Twenty years ago in the 
consideration of the Korean Influence Investigation, the ethics 
committee produced a manual of offenses and procedures and concluded 
that, even where serious criminal sanctions are imposed, the law does 
not insist on proof of actual knowledge.
  The courts have often held that proof that the accused acted in 
reckless disregard of the facts or deliberately closed his eyes to 
avoid obtaining knowledge may suffice to support a conviction if the 
circumstances should have alerted a responsible Member concerned about 
both the letter and spirit of the law to hesitate to inquire before 
acting, the failure of a Member to learn the truth should not be an 
excuse, and then goes on to discuss that that failure to adhere to this 
higher standard is an appropriate basis for imposing the most severe 
sanctions available to this House.
  As we consider all of this, I hope that we recognize that, although 
we have heard often that this is a sad day, I want to add to that, as 
the gentleman from Florida [Mr. Goss] suggested, that this can be a 
sound day if we can draw lessons from this case, not just 
Representative Gingrich but all of us can draw lessons that ethical 
behavior, as Ms. Pelosi suggested, is not something that we do when we 
are too busy. It represents the way we live our lives together, that 
ethics is not a matter of cutting corners or pressing for an unfair 
advantage or that seeks to blur the truth or that seeks to find an 
entrepreneurial expression in the way we conduct our business here but, 
rather, ethical behavior may be even more important to us all when the 
lines are blurred than when they are clear.
  This is not a matter of personal gain to the Speaker. It is a matter 
of ethical loss to us all if we do not recognize the importance of what 
is before us here today. We are all diminished by a violation of 
ethical standards, and we are all elevated by their careful and caring 
observation.
  In that sense, in conclusion, Mr. Speaker, this can be a unique day. 
It will be in one sense the worst thing that we have ever done to a 
Speaker of the House of Representatives. But it can also be one of the 
very best things that ever happened in his life and in fact in all of 
our lives if he and we take the lessons of this day to heart, recognize 
them as personal obligations for us all, to act on them in our lives, 
to have the decency to face up to the personal responsibility and to 
let all of our lives, not just the Speaker from this point forward 
become testimony to the high standards we set for ourselves in the 
public arena.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1\3/4\ minutes to 
the gentleman from Maryland [Mr. Gilchrest].
  Mr. GILCHREST. Mr. Speaker, I thank the gentlewoman for yielding me 
the time.
  I would like to embark on a slightly different dimension here, and I 
would hope that all the Members would listen as to my observation of 
the Speaker, what has Newt Gingrich done in my mind over the years, 
especially the last 2 years as Speaker of the House of Representatives. 
The Speaker has created a situation on the House floor where each 
Member of Congress can become a responsible advocate for his or her 
position.
  My first 4 years here, I saw money and seniority as the influencing 
factor in developing legislation. The Speaker, in my observation, 
changed that. Those with credibility have information, and those with 
information generated as a result of that information influence. That 
is how a democracy is supposed to work. Those with the information have 
the influence, the course, the direction of the legislation.
  As a result of that, the sophistication of the debate in my judgment 
has risen very, very high, a more open and honest exchange of ideas, 
not pummeled by political punishment by seniority or power; but an 
exchange of ideas is what democracy is all about.
  The debate has often been clearly misunderstood as partisan politics 
or gridlock. This is democracy. It is difficult. That exchange of ideas 
does not take place in North Korea, Cuba, Iraq, or someplace else. Newt 
Gingrich has not aspired to power in this House or this country like 
many others in this place have done, buttressed by arrogance, dogma, 
and ignorance. In my judgment, in my observation, Newt Gingrich has 
sought to reveal his vision for America. This is what democracy is 
about.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, might I inquire as to the 
time remaining on both sides?
  The SPEAKER pro tempore (Mr. Bereuter). The gentlewoman from 
Connecticut [Mrs. Johnson] has 9\3/4\ minutes remaining, and the 
gentleman from Maryland [Mr. Cardin] has 8 minutes remaining.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 3 minutes to the 
gentleman from Texas [Mr. Smith].
  Mr. SMITH of Texas. Mr. Speaker, I thank the Chair again for yielding 
me the time.
  There has been much discussion this afternoon about the tax issues in 
this case. There has been an assertion made that the Speaker supposedly 
intended to violate tax laws or that he was reckless in his activities. 
I want to address that head on.

                              {time}  1330

  I spoke yesterday with the chairman of the American Bar Association 
tax committee. He is the successor to the individual who served as the 
tax consultant to the Ethics Committee. He told me about a recent 
meeting that had been held by this tax committee, which was attended by 
75 to 80 attorneys. And this meeting occurred on January the 10th of 
this year. He said there was much discussion about the facts of the 
case that are before us today, but he said, ``there was no 
conclusion.''
  In fact, he said, ``in regard to the discussion of the facts, it was 
not conclusive.'' There were many different conclusions. He himself 
went on to say that it was, ``a stretch to conclude that the Speaker 
was guilty of violating any tax laws.''
  My point here is that the tax laws are so unclear that, in regard to 
what the Speaker was allegedly doing, how in the world could anyone 
have intended to violate such laws or been reckless in regard to such 
laws.
  Last, I want to say that in the conclusion of the report of the 
special counsel, several explanations are mentioned to justify the 
severity of the penalty that is being discussed today. One of those 
explanations given for justification is that ``Politics and tax 
deductible contributions are an explosive mix.'' Well, of course, there 
is nothing new about that.
  Another explanation is that the Speaker had taken an aggressive 
approach to the tax laws. Well, since when have Members been penalized 
for taking an aggressive approach to anything?
  And last, it is said that Mr. Gingrich's own tax lawyer would have 
advised him not to use a tax exempt organization. But lawyers are risk-
averse. They are paid to be cautious. They are worried about 
malpractice suits. If they think there is 1 chance out of 100 that 
their client might get in trouble, they are going to recommend against 
that supposed action.
  The point here is that, just because the Speaker did not consult an 
attorney, is that reckless? Is that reason enough to give him the 
severe penalty of a reprimand?
  And, furthermore, let me end on a question that I would pose to other 
Members of the House, and that is, Do we want to be judged by the same 
standards that we are judging the Speaker by today?
  Mr. CARDIN. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from New York [Mr. Rangel].
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. Mr. Speaker, I gather that most of the Members, Democrat 
and Republican, are very anxious to put the heat and passion of our 
partisanship behind us and to get on and

[[Page H195]]

legislate as the American people would want us to do. God knows I have 
contributed my share toward that heat and passion, and make no 
apologies for my partisanship. But we cannot have it both ways. We 
cannot say that he pled guilty but he did not do anything.
  For those people who want to pursue outside issues, I beg them not to 
think about doing it. If we want to investigate who was coercing 
members of the committee, then maybe we will investigate who asked them 
how they were going to vote on the question of the Speaker.
  Who is talking about taxes? The Select Committee on Ethics had no 
right to go into tax issues. That is for the Internal Revenue Service; 
that is for the Federal Bureau of Investigation, and they have the 
responsibility to do that.
  The Speaker is intelligent. He is an intellectual. He read the 
charges. He said he brought discredit upon this House. For God's sake, 
let us get on with it.
  Mr. CARDIN. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Ohio [Mr. Traficant].
  Mr. TRAFICANT. Mr. Speaker, I salute the Republicans for their 
loyalty to their Speaker and their unity. The facts are clear, 
Democrats: 7 years ago the Democrats abandoned Jim Wright; today the 
Republicans rescue Newt Gingrich. I commend them.
  Let me say this. The bottom line, folks, is this is not Rotary; this 
is politics. If Democrats are going to win back the majority, I think 
we should not only do that but maybe expend a little bit of time on 
creating jobs in the country. It might serve a better purpose.
  I want to close today by commending all of the leaders and all of the 
members of the committee. They are to be commended. I will support 
their decision. But let me say this: I hope that today's events serve 
to bring some form of historical fairness and perspective to our fine 
former Democrat Speaker, Jim Wright.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, how much time is remaining?
  The SPEAKER pro tempore [Mr. Bereuter]. The gentlewoman from 
Connecticut [Mrs. Johnson] has 7 minutes remaining, and the gentleman 
from Maryland [Mr. Cardin] has 6 minutes remaining.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 4\1/2\ minutes to 
the gentleman from Texas [Mr. DeLay].
  Mr. DeLAY. Mr. Speaker, I thank the chairman for giving me this time.
  Last week, Mr. Speaker, I was prepared to vote for a reprimand, but 
then I found out that it is more than a reprimand; it is now a 
reimbursement plus a reprimand. And I cannot take what I was going to 
take, a political decision, when I feel strongly, feel very strongly, 
that it is not right.
  Now, I have the greatest respect for the chairwoman of the Committee 
on Standards of Official Conduct, Nancy Johnson, and I appreciate all 
the hard work that the committee has put into this recommendation. But 
I must agree with my colleague from Texas, Mr. Smith, the only member 
of the committee who voted against that recommendation. I believe that 
this punishment is too harsh given the history of the ethics process 
and the precedence of earlier punishments.
  Such a punishment is not only unprecedented and can be levied on 
every one of us, it is unwarranted. I will not vote to reprimand Newt 
Gingrich for transgressions that in the past have only warranted either 
warnings or letters of reproval from the Committee on Standards of 
Official Conduct.
  Now, I understand the Speaker's noble motivation in working out a 
settlement in this case, and I understand why and how the committee 
came to this end and the Speaker came to this end; but we have to put 
it in perspective. The gentleman from Missouri, the minority leader, 
Mr. Gephardt, received a letter from the Committee on Standards of 
Official Conduct for giving false information to the committee not 
intentionally. The chairman of the DCCC received a letter from this 
Committee on Standards of Official Conduct because he did not 
intentionally use a Federal employee for campaign purposes.
  Those are letters of reproval, and I submit that both of those 
actions are worse than what Newt Gingrich has owned up to.
  Now, for what kind of violations has this House put reprimands on 
Members? Hiring the wrong lawyer? Submitting or being sloppy about 
submissions to the committee? No. Reprimands have been used for things 
such as using political influence to fix parking tickets for personal 
friends; reprimands or recommendations of reprimand by the committee 
for improper sexual relationships with pages; reprimand for 
intentionally lying to the committee.
  This committee has not found this Speaker has intentionally lied or 
intentionally misled the committee.
  This is, I say to the gentlewoman from California, Mr. Speaker, this 
is about power. This is about some on this side have lost power and 
they are trying to regain it by abusing the ethics process and this 
institution. That is what this is all about.
  So, I do not agree that the Speaker should be held to a higher 
standard. All of us, all of us, every Member, should be held to the 
highest of standards. This Speaker and any other Member should not be 
held to a double standard. This is a double standard that we are 
imposing on this Speaker.
  In fact, we know it because this Speaker has been prodded and probed 
from every direction. Since 1989 he has had over 500 ethics charges 
brought against him. In the last 2 years he has had 74 ethics charges 
brought against him. You know what? Nothing has been brought to this 
floor to bring a sanction against anything that he has been charged 
with.
  What he is being charged with today is during the process he happened 
to screw up. That is what is going on here. I just find that really sad 
that we have abused the process like this.
  This Speaker has had every detail of his life examined under a 
microscope, and that microscope has exposed some flaws, some 
sloppiness, some things that should have been done better; but it has 
not exposed corruption or lawlessness or personal profit. And that is 
what reprimands and censures are all about. The highest possible 
standard does not mean an impossible standard that no American could 
reach.
  Let us stop using the ethics process for political vendettas. Let us 
not create precedence that will only serve to undermine the service of 
this country. Let us stop this madness. Let us stop the cannibalism.
  Let us not fall victim to unrealistic expectations that do not 
forgive the common flaws of normal Americans.
  With all due respect to the great work of the Ethics Committee, I 
cannot vote to reprimand the Speaker of the House for the stated 
transgressions.
  Mr. CARDIN. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I agree with the chairwoman of our committee. These are 
very tough penalties, and the violation of the rules justify these 
tough sanctions.
  The sanctions are being recommended not because Mr. Gingrich is the 
Speaker of the House. They are being recommended because Mr. Gingrich 
is a Member of this House. These sanctions would be appropriate for any 
Member of this House who committed the violations that have now been 
established by the Committee on Standards of Official Conduct and have 
now been admitted to by Mr. Gingrich.
  Mr. Gingrich made a decision that any Member has the right to make. 
He has admitted to the charges. He has done that in order to avoid the 
necessity of a trial. That is his decision, and one which I think we 
all must respect, but the underlying facts as to why this sanction is 
so severe, I think, will become obvious to any one of us if we will 
read the report of the special counsel which now has been approved not 
only by the bipartisan investigative committee but by the full 
Committee on Standards of Official Conduct.
  It points to the fact that this was not a college course. It was a 
course conceived within a political movement. Read pages 38 and 39. It 
was conceived in a political movement. It was conceived as the only 
way, according to Mr. Gingrich, to get the message out, to get the 
political message out.
  I appreciate the comments of my colleague from Maryland, Mr. 
Gilchrest, but we do not use tax exempt organizations to get a 
political message out. I appreciate the comments of the gentleman from 
Texas, Mr. Smith, about the meeting of tax lawyers. In all due respect, 
this report was just released 4

[[Page H196]]

days ago. The facts and circumstances are just now known to the 
American people. The political motivation and the action on that 
political motivation is now just known by the American people.
  Mr. Gingrich commingled tax exempt organizations with his political 
agenda. He did it because he could not raise enough money in the 
political PAC's. That is part of our record. This was a new way to 
raise money, a new avenue in which he could promise his contributors a 
tax exemption to boot. That is wrong. He did it because he needed the 
money in order to get his political message out. And that is wrong.
  There is ample evidence here that tax laws were violated, and it is 
not a close case, but we do not need to reach that conclusion. As the 
special counsel's report concludes, this is a bipartisan conclusion, 
Mr. Gingrich should have sought tax advice. The reason he did not seek 
that tax advice was either that he knew it would be wrong and he did 
not want to get that advice or he was reckless in his conduct.
  Make no mistake about this. This is reckless conduct, at least 
reckless conduct, over a long period of time dating back 5 years, 
involving four tax exempt organizations costing taxpayers hundreds of 
thousands of dollars of legitimate tax needs.
  But there is more to this case than just the tax issues. We have 
letters that misled the Committee on Standards of Official Conduct. As 
the special counsel has pointed out, there is ample evidence, there is 
significant evidence here that he intentionally did this. No, we do not 
reach that conclusion. The record was frozen by his admission. But we 
do reach the conclusion that this was either intentional conduct to 
mislead this House and the ethics process or it was reckless conduct.
  Now, that is more than innocent mistakes. We have reached conclusions 
that these are not just innocent mistakes. Mr. Gingrich's explanation 
that he is sensitive to the ethics process, he was embarrassed, and he 
came forward as soon as he knew they were in error, just does not wash 
with the record that has been presented to you today. There is more to 
it than that, and the special counsel's record reflects that, and we 
need to take cognizance of that.
  So we have a series of conduct that was either reckless or 
intentional and it cost this House and our reputation dearly. That is 
why the sanction is before us.

                              {time}  1345

  Not because he is Speaker of the House but because a Member of the 
House has brought disgrace to this Chamber.
  I am proud of the fact that we have a bipartisan recommendation here 
today. That is very important. The process has worked. Democrats and 
Republicans have come together and have performed one of their most 
important constitutional responsibilities, to judge the conduct of our 
own Members, and we have done that, and we have reached an agreement, 
and the agreement is right, and Mr. Gingrich has agreed on that 
assessment. Now it is time for us to do right as a full House. It is 
time for us to support the recommendations of the Ethics Committee to 
send a very clear message that every Member of this House must adhere 
to the highest standards when it comes to their personal conduct that 
can bring discredit to this House and to their conduct with the Ethics 
Committee and the information that they make available to our 
committee.
  I urge my colleagues to support this recommendation. Let us approve 
it overwhelmingly and then, yes, let us get on with the business of 
this House, Democrats and Republicans working together to do the 
people's business.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1 minute to the 
gentleman from New Mexico [Mr. Schiff].
  Mr. SCHIFF. Mr. Speaker, I have to say that I do not think it is an 
accurate portrayal of the matters that bring us to the House floor 
today and that are about to bring us to a vote to selectively choose 
facts in a long investigative process. I cannot say that anything the 
gentleman from Maryland [Mr. Cardin] just rendered was inaccurate if 
taken by itself. But these things are not taken by themselves. Also in 
the special counsel's report is the quotation of another tax expert who 
said he did not think that there was a violation of 501(c)3 laws in any 
way. There was no abuse of the tax laws. It was his opinion that as 
long as the content of the Speaker's course as a college course was 
pure of political involvement, then anyone could use it anyway they 
wanted to, and not even the worst critic of the Speaker we heard from 
challenged the fact that the course itself contained no partisan 
directives to the class, that it was a legitimate college course.
  I urge the Members to adopt the recommendation of the committee.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield such time as she 
may consume to the gentlewoman from New Jersey [Mrs. Roukema].
  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. I thank the gentlewoman for yielding me this time.
  Mr. Speaker, I rise in strong support of the Ethics Committee report. 
It is a serious and appropriate sanction. I urge that it have the same 
bipartisan support on the vote of this House.
  Mr. Speaker, I support the report of the Committee on Standards of 
Official Conduct, the Ethics Committee, and urge its adoption 
recognizing that it will close a sad chapter in the history of this 
House. This is a serious and an appropriate sanction, as stated by 
Representative Porter Goss, the chairman of the Investigative 
Subcommittee. However, left unstated in this report and unresolved by 
the committee is the means by which the fine or cost assessment, that 
is, the reimbursement of $300,000 should be paid.
  The reprimand for Congressman Gingrich and the $300,000 cost 
assessment represent a serious penalty and one in which I concur. 
However, while this resolution leaves repayment to the Speaker's 
discretion, I personally believe, and would advise, that payment be 
made from the Speaker's personal funds and not from any political 
action committee or other campaign account.
  I would advise the Speaker that payment of this cost assessment from 
his personal funds would at least begin to rehabilitate this House and 
the ethics process to which we are all accountable.
  This vote today is conclusion of a sad chapter in the ethical history 
of the U.S. House. With this vote, we should move beyond partisanship 
and attend with seriousness of purpose and probity to the people's 
business in the highest tradition of American democracy.
  This is now our ethical challenge--a challenge upon which the public 
will ultimately judge us.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself the balance 
of my time.
  Mr. Speaker, today we take final action on the Gingrich case. I 
believe passage of the tough, unprecedented penalty package is 
appropriate and I also believe it can be one important step toward 
restoring pride and confidence in the people's House of the U.S. 
Congress. But as important as this vote is today, no single vote can 
renew public confidence in this institution. Rather, each Member of 
this House must take personal responsibility to restore civility and 
mutual respect to our deliberations. The American people are bone tired 
of partisanship. They want us to work together, and I believe most 
Members of this House are yearning to return to the deliberative 
process that alone produces good public policy. We were elected 
Republicans and Democrats but the core of democracy is building 
bipartisan consensus by maturing the best ideas from both parties into 
responsible, effective solutions. Today we conclude this case by 
imposing a heavy penalty on the leader of this House. It is a tough 
penalty, unprecedented and appropriate. But if our action fails today 
to chasten this body and bring a halt to the crippling partisanship and 
animosity that has surrounded us, then we will have lost an opportunity 
to grow and learn from this solemn occasion, and that would be a 
tragedy.
  I ask for your support of the bipartisan recommendation of the Ethics 
Committee.
  Mr. CARDIN. Mr. Speaker, I ask unanimous consent that the report of 
the Select Committee on Ethics be made a part of the Record.
  The SPEAKER pro tempore (Mr. Bereuter). Is there objection to the 
request of the gentleman from Maryland?
  There was no objection.
  The report is as follows:

[[Page H197]]

             IN THE MATTER OF REPRESENTATIVE NEWT GINGRICH

                            I. Introduction

                        A. Procedural Background

        On September 7, 1994, a complaint was filed with the 
     Committee on Standards of Official Conduct (``Committee'') 
     against Representative Newt Gingrich by Ben Jones, Mr. 
     Gingrich's opponent in his 1994 campaign for re-election. The 
     complaint centered on a course taught by Mr. Gingrich called 
     ``Renewing American Civilization.'' Among other things, the 
     complaint alleged that Mr. Gingrich had used his 
     congressional staff to work on the course in violation of 
     House Rules. The complaint also alleged that Mr. Gingrich had 
     created a college course under the sponsorship of 501(c)(3) 
     organizations in order ``to meet certain political, not 
     educational, objectives'' and, therefore, caused a violation 
     of section 501(c)(3) of the Internal Revenue Code to occur. 
     In partial support of the allegation that the course was a 
     partisan, political project, the complaint alleged that the 
     course was under the control of GOPAC, a political action 
     committee of which Mr. Gingrich was the General Chairman.
        Mr. Gingrich responded to this complaint in letters dated 
     October 4, 1994, and December 8, 1994, but the matter was not 
     resolved before the end of the 103rd Congress. On January 26, 
     1995, Representative David Bonior filed an amended version of 
     the complaint originally filed by Mr. Jones. It restated the 
     allegations concerning the misuse of tax-exempt organizations 
     and contained additional allegations. Mr. Gingrich responded 
     to that complaint in a letter from his counsel dated March 
     27, 1995.
        On December 6, 1995, the Committee voted to initiate a 
     Preliminary Inquiry into the allegations concerning the 
     misuse of tax-exempt organizations. The Committee appointed 
     an Investigative Subcommittee (``Subcommittee'') and 
     instructed it 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 * * *.
       The Committee also resolved to appoint a Special Counsel to 
     assist in the Preliminary Inquiry. On December 22, 1995, the 
     Committee appointed James M. Cole, a partner in the law firm 
     of Bryan Cave LLP, as the Special Counsel. Mr. Cole's 
     contract was signed January 3, 1996, and he began his work.
       On September 26, 1996, the Subcommittee announced that, in 
     light of certain facts discovered during the Preliminary 
     Inquiry, the investigation was being expanded to include the 
     following additional areas:
       (1) Whether Representative Gingrich provided accurate, 
     reliable, and complete information concerning the course 
     entitled ``Renewing American Civilization,'' GOPAC's 
     relationship to the course entitled ``Renewing American 
     Civilization,'' or the Progress and Freedom Foundation in the 
     course of communicating with the Committee, directly or 
     through counsel (House Rule 43, Cl. 1);
       (2) Whether Representative Gingrich's relationship with the 
     Progress and Freedom Foundation, including but not limited to 
     his involvement with the course entitled ``Renewing American 
     Civilization,'' violated the foundation's status under 
     501(c)(3) of the Internal Revenue Code and related 
     regulations (House Rule 43, Cl. 1);
       (3) Whether Representative Gingrich's use of the personnel 
     and facilities of the Progress and Freedom Foundation 
     constituted a use of unofficial resources for official 
     purposes (House Rule 45); and
       (4) Whether Representative Gingrich's activities on behalf 
     of the Abraham Lincoln Opportunity Foundation violated its 
     status under 501(c)(3) of the Internal Revenue Code and 
     related regulations or whether the Abraham Lincoln 
     Opportunity Foundation violated its status with the knowledge 
     and approval of Representative Gingrich (House Rule 43, Cl. 
     1).
       As discussed below, the Subcommittee issued a Statement of 
     Alleged Violation with respect to the initial allegation 
     pertaining to Renewing American Civilization and also with 
     respect to items 1 and 4 above. The Subcommittee did not find 
     any violations of House Rules in regard to the issues set 
     forth in items 2 and 3 above. The Subcommittee, however, 
     decided to recommend that the full Committee make available 
     to the IRS documents produced during the Preliminary Inquiry 
     for use in its ongoing inquiries of 501(c)(3) organizations. 
     In regard to item 3 above, the Subcommittee decided to issue 
     some advice to Members concerning the proper use of outside 
     consultants for official purposes.
       On January 7, 1997, the House conveyed the matter of 
     Representative Newt Gingrich to the Select Committee on 
     Ethics by its adoption of clause 4(e)(3) of rule X, as 
     contained in House Resolution 5.
       On January 17, 1997, the Select Committee on Ethics held a 
     sanction hearing in the matter pursuant to committee rule 20. 
     Following the sanction hearing, the Select Committee ordered 
     a report to the House, by a roll call vote of 7-1, 
     recommending that Representative Gingrich be reprimanded and 
     ordered to reimburse the House for some of the costs of the 
     investigation in the amount of $300,000. The following 
     Members voted aye: Mrs. Johnson of Connecticut, Mr. Goss, Mr. 
     Schiff, Mr. Cardin, Ms. Pelosi, Mr. Borski, and Mr. Sawyer. 
     The following Member voted no: Mr. Smith of Texas.
       The adoption of this report by the House shall constitute 
     such a reprimand and order of reimbursement. Accordingly, the 
     Select Committee recommends that the House adopt a resolution 
     in the following form.


                          house resolution --

       Resolved, That the House adopt the report of the Select 
     Committee on Ethics dated January 17, 1997, In the Matter of 
     Representative Newt Gingrich.

           Statement Pursuant to Clause 2(l)(3)(A) of Rule XI

       No oversight findings are considered pertinent.

                        B. Investigative Process

       The investigation of this matter began on January 3, 1996, 
     and lasted through December 12, 1996. In the course of the 
     investigation, approximately 90 subpoenas or requests for 
     documents were issued, approximately 150,000 pages of 
     documents were reviewed, and approximately 70 people were 
     interviewed. Most of the interviews were conducted by Mr. 
     Cole outside the presence of the Subcommittee. A court 
     reporter transcribed the interviews and the transcripts were 
     made available to the Members of the Subcommittee. Some of 
     the interviews were conducted before the Members of the 
     Subcommittee primarily to explore the issue of whether Mr. 
     Gingrich had provided the Committee, directly or through 
     counsel, inaccurate, unreliable, or incomplete information.
       During the Preliminary Inquiry, Mr. Cole interviewed Mr. 
     Gingrich twice and Mr. Gingrich appeared before the 
     Subcommittee twice. Several draft discussion documents, with 
     notebooks of exhibits, were prepared for the Subcommittee in 
     order to brief the Members on the findings and status of the 
     Preliminary Inquiry. After receiving the discussion 
     documents, the Subcommittee met to discuss the legal and 
     factual questions at issue.
       In most investigations, people who were involved in the 
     events under investigation are interviewed and asked to 
     describe the events. This practice has some risk with respect 
     to the reliability of the evidence gathered because, for 
     example, memories fade and can change when a matter becomes 
     controversial and subject to an investigation. One advantage 
     the Subcommittee had in this investigation was the 
     availability of a vast body of documentation from multiple 
     sources that had been created contemporaneously with the 
     events under investigation. A number of documents central to 
     the analysis of the matter, in fact, had been written by Mr. 
     Gingrich. Thus, the documents provided a unique, 
     contemporaneous view of people's purposes, motivations, and 
     intentions with respect to the facts at issue. This Report 
     relies heavily, but not exclusively, on an analysis of those 
     documents to describe the acts, as well as Mr. Gingrich's 
     purpose, motivations, and intentions.
       As the Report proceeds through the facts, there is 
     discussion of conservative and Republican political 
     philosophy. The Committee and the Special Counsel, however, 
     do not take any positions with respect to the validity of 
     this or any other political philosophy, nor do they take any 
     positions with respect to the desirability of the 
     dissemination of this or any other political philosophy. Mr. 
     Gingrich's political philosophy and its dissemination is 
     discussed only insofar as it is necessary to examine the 
     issues in this matter.

           C. Summary of the Subcommittee's Factual Findings

       The Subcommittee found that in regard to two projects, Mr. 
     Gingrich engaged in activity involving 501(c)(3) 
     organizations that was substantially motivated by partisan, 
     political goals. The Subcommittee also found that Mr. 
     Gingrich provided the Committee with material information 
     about one of those projects that was inaccurate, incomplete, 
     and unreliable.


                              1. aow/actv

       The first project was a television program called the 
     American Opportunities Workshop (``AOW''). It took place in 
     May 1990. The idea for this project came from Mr. Gingrich 
     and he was principally responsible for developing its 
     message. AOW involved broadcasting a television program on 
     the subject of various governmental issues. Mr. Gingrich 
     hoped that this program would help create a ``citizens' 
     movement.'' Workshops were set up throughout the country 
     where people could gather to watch the program and be 
     recruited for the citizens' movement. While the program was 
     educational, the citizens' movement was also considered a 
     tool to recruit non-voters and people who were apolitical to 
     the Republican Party. The program was deliberately free of 
     any references to Republicans or partisan politics because 
     Mr. Gingrich believed such references would dissuade the 
     target audience of non-voters from becoming involved.
       AOW started out as a project of GOPAC, a political action 
     committee dedicated to, among other things, achieving 
     Republican control of the United States House of 
     Representatives. Its methods for accomplishing this goal 
     included the development and articulation of a political 
     message and the dissemination of that message as widely as 
     possible. One such avenue of dissemination was AOW. The 
     program, however, consumed a substantial portion of GOPAC's 
     revenues. Because of the expense, Mr. Gingrich and others at 
     GOPAC decided to transfer the

[[Page H198]]

     project to a 501(c)(3) organization in order to attract tax-
     deductible funding. The 501(c)(3) organization chosen was the 
     Abraham Lincoln Opportunity Foundation (``ALOF''). ALOF was 
     dormant at the time and was revived to sponsor AOW's 
     successor, American Citizens' Television (``ACTV''). ALOF 
     operated out of GOPAC's offices. Virtually all its officers 
     and employers were simultaneously GOPAC officers or 
     employees. ACTV had the same educational aspects and 
     partisan, political goals as AOW. The principal difference 
     between the two was that ACTV used approximately $260,000 in 
     tax-deductible contributions to fund its operations. ACTV 
     broadcast three television programs in 1990 and then ceased 
     operations. The last program was funded by a 501(c)(4) 
     organization because the show's content was deemed to be too 
     political for a 501(c)(3) organization.


                   2. renewing american civilization

       The second project utilizing 501(c)(3) organizations 
     involved a college course taught by Mr. Gingrich called 
     Renewing American Civilization. Mr. Gingrich developed the 
     course as a subset to and tool of a larger political and 
     cultural movement also called Renewing American Civilization. 
     The goal of this movement, as stated by Mr. Gingrich, was the 
     replacement of the ``welfare state'' with an ``opportunity 
     society.'' A primary means of achieving this goal was the 
     development of the movement's message and the dissemination 
     of that message as widely as possible. Mr. Gingrich intended 
     that a ``Republican majority'' would be the heart of the 
     movement and that the movement would ``professionalize'' 
     House Republicans. A method for achieving these goals was to 
     use the movement's message to ``attract voters, resources, 
     and candidates.'' According to Mr. Gingrich, the course was, 
     among other things, a primary and essential means to develop 
     and disseminate the message of the movement.
       The core message of the movement and the course was that 
     the welfare state had failed, that it could not be repaired 
     but had to be replaced, and that it had to be replaced with 
     an opportunity society based on what Mr. Gingrich called the 
     ``Five Pillars of American Civilization.'' These were: (1) 
     personal strength; (2) entrepreneurial free enterprise; (3) 
     the spirit of invention; (4) quality as defined by Edwards 
     Deming; and (5) the lessons of American history. The message 
     also concentrated on three substantive areas. These were: (1) 
     jobs and economic growth; (2) health; and (3) saving the 
     inner city.
       This message was also Mr. Gingrich's main campaign theme in 
     1993 and 1994 and Mr. Gingrich sought to have Republican 
     candidates adopt the Renewing American Civilization message 
     in their campaigns. In the context of political campaigns, 
     Mr. Gingrich used the term ``welfare state'' as a negative 
     label for Democrats and the term ``opportunity society'' as a 
     positive label for Republicans.
       As General Chairman of GOPAC, Mr. Gingrich decided that 
     GOPAC would use Renewing American Civilization as its 
     political message and theme during 1993-1994. GOPAC, however, 
     was having financial difficulties and could not afford to 
     disseminate its political messages as it had in past years. 
     GOPAC had a number of roles in regard to the course. For 
     example, GOPAC personnel helped develop, manage, promote, and 
     raise funds for the course. GOPAC Charter Members helped 
     develop the idea to teach the course as a means for 
     communicating GOPAC's message. GOPAC Charter Members at 
     Charter Meetings helped develop the content of the course. 
     GOPAC was ``better off'' as a result of the nationwide 
     dissemination of the Renewing American Civilization message 
     via the course in that the message GOPAC had adopted and 
     determined to be the one that would help it achieve its goals 
     was broadcast widely and at no cost to GOPAC.
        The course was taught at Kennesaw State College (``KSC'') 
     in 1993 and at Reinhardt College in 1994 and 1995. Each 
     course consisted of ten lectures and each lecture consisted 
     of approximately four hours of classroom instruction, for a 
     total of forty hours. Mr. Gingrich taught twenty hours of 
     each course and his co-teacher, or occasionally a guest 
     lecturer, taught twenty hours. Students from each of the 
     colleges as well as people who were not students attended the 
     lectures. Mr. Gingrich's 20-hour portion of the course was 
     taped and distributed to remote sites, referred to as ``site 
     hosts,'' via satellite, videotape and cable television. As 
     with AOW/ACTV, Renewing American Civilization involved 
     setting up workshops around the country where people could 
     gather to watch the course. While the course was educational, 
     Mr. Gingrich intended that the workshops would be, among 
     other things, a recruiting tool for GOPAC and the Republican 
     Party.
       The major costs for the Renewing American Civilization 
     course were for dissemination of the lectures. This expense 
     was primarily paid for by tax-deductible contributions made 
     to the 501(c)(3) organizations that sponsored the course. 
     Over the three years the course was broadcast, approximately 
     $1.2 million was spent on the project. The Kennesaw State 
     College Foundation (``KSCF'') sponsored the course the first 
     year. All funds raised were turned over to KSCF and dedicated 
     exclusively for the use of the Renewing American Civilization 
     course. \1\ KSCF did not, however, manage the course and its 
     role was limited to depositing donations into its bank 
     account and paying bills from that account that were 
     presented to it by the Dean of the KSC Business School. KSCF 
     contracted with the Washington Policy Group, Inc. (``WPG'') 
     to manage and raise funds for the course's development, 
     production and distribution. Jeffrey Eisenach, GOPAC's 
     Executive Director from June 1991 to June 1993 was the 
     president and sole owner of WPG. WPG and Mr. Eisenach played 
     similar roles with respect to AOW/ACTV.
---------------------------------------------------------------------------
     \1\ As general management and support fees, KSCF kept 2.5% of 
     any money raised and KSC's Business School kept 7.5% of any 
     money raised.
---------------------------------------------------------------------------
       When the contract between WPG and KSCF ended in the fall of 
     1993, the Progress and Freedom Foundation (``PFF'') assumed 
     the role WPG had with the course at the same rate of 
     compensation. Mr. Eisenach was PFF's founder and president. 
     Shortly after PFF took over the management of the course, the 
     Georgia Board of Regents passed a resolution prohibiting any 
     elected official from teaching at a Georgia state educational 
     institution. This was the culmination of a controversy that 
     had arisen around the course at KSC. A group of KSC faculty 
     had objected to the course being taught on the campus because 
     of a belief that it was an effort to use the college to 
     disseminate a political message. Because of the Board of 
     Regent's decision and the controversy, it was decided that 
     the course would be moved to a private college.
       The course was moved to Reinhardt for the 1994 and 1995 
     sessions. While there, PFF assumed full responsibility for 
     the course. PFF no longer received payments to run the course 
     but, instead, took in all contributions to the course and 
     paid all the bills, including paying Reinhardt for the use of 
     the college's video production facilities. All funds for the 
     course were raised by and expended by PFF under its tax-
     exempt status.


                    3. failure to seek legal advice

       Under the Internal Revenue Code, a 501(c)(3) organization 
     must be operated exclusively for exempt purposes. The 
     presence of a single non-exempt purpose, if more than 
     insubstantial in nature, will destroy the exemption 
     regardless of the number or importance of truly exempt 
     purposes. Conferring a benefit on private interests is a non-
     exempt purpose. Under the Internal Revenue Code, a 501(c)(3) 
     organization is also prohibited from intervening in a 
     political campaign or providing any support to a political 
     action committee. These prohibitions reflect congressional 
     concerns that taxpayer funds not be used to subsidize 
     political activity.
       During the Preliminary Inquiry, the Subcommittee consulted 
     with an expert in the law of tax-exempt organizations and 
     read materials on the subject. Mr. Gingrich's activities 
     on behalf of AOW/ACTV and Renewing American Civilization, 
     as well as the activities of others on behalf of those 
     projects done with Mr. Gingrich's knowledge and approval, 
     were reviewed by the expert. The expert concluded that 
     those activities violated the status of the organizations 
     under section 501(c)(3) in that, among other things, those 
     activities were intended to confer more than insubstantial 
     benefits on GOPAC, Mr. Gingrich, and Republican entities 
     and candidates, and provided support to GOPAC.
       At Mr. Gingrich's request, the Subcommittee also heard from 
     tax counsel retained by Mr. Gingrich for the purposes of the 
     Preliminary Inquiry. While that counsel is an experienced tax 
     attorney with a sterling reputation, he has less experience 
     in dealing with tax-exempt organizations law than does the 
     expert retained by the Subcommittee. According to Mr. 
     Gingrich's tax counsel, the type of activity involved in the 
     AOW/ACTV and Renewing American Civilization projects would 
     not violate the status of the relevant organizations under 
     section 501(c)(3). He opined that once it was determined that 
     an activity was ``educational,'' as defined by the IRS, and 
     did not have the effect of benefiting a private interest, it 
     did not violate the private benefit prohibition. In the view 
     of Mr. Gingrich's tax counsel, motivation on the part of an 
     organization's principals and agents is irrelevant. Further, 
     he opined that a 501(c)(3) organization does not violate the 
     private benefit prohibition or political campaign prohibition 
     through close association with or support of a political 
     action committee unless it specifically calls for the 
     election or defeat of an identifiable political candidate.
       Both the Subcommittee's tax expert and Mr. Gingrich's tax 
     counsel, however, agreed that had Mr. Gingrich sought their 
     advice before embarking on activities of the type involved in 
     AOW/ACTV and the Renewing American Civilization course, each 
     of them would have advised Mr. Gingrich not to use a 
     501(c)(3) organization as he had in regard to those 
     activities. The Subcommittee's tax expert said that doing so 
     would violate 501(c)(3). During his appearance before the 
     Subcommittee, Mr. Gingrich's tax counsel said that he would 
     not have recommended the use of 501(c)(3) organizations to 
     sponsor the course because the combination of politics and 
     501(c)(3) organizations is an ``explosive mix'' almost 
     certain to draw the attention of the IRS.
       Based on the evidence, it was clear that Mr. Gingrich 
     intended that the AOW/ACTV and Renewing American Civilization 
     projects have substantial partisan, political purposes. In 
     addition, he was aware that political activities in the 
     context of 501(c)(3) organizations were problematic. Prior to 
     embarking on these projects, Mr. Gingrich had been involved 
     with another organization that had

[[Page H199]]

     direct experience with the private benefit prohibition in a 
     political context, the American Campaign Academy. In a 1989 
     Tax Court opinion issued less than a year before Mr. Gingrich 
     set the AOW/ACTV project into motion, the Academy was denied 
     its exemption under 501(c)(3) because, although educational, 
     it conferred an impermissible private benefit on Republican 
     candidates and entities. Close associates of Mr. Gingrich 
     were principals in the American Campaign Academy, Mr. 
     Gingrich taught at the Academy, and Mr. Gingrich had been 
     briefed at the time on the tax controversy surrounding the 
     Academy. In addition, Mr. Gingrich stated publicly that he 
     was taking a very aggressive approach to the use of 501(c)(3) 
     organizations in regard to, at least, the Renewing American 
     Civilization course.
       Taking into account Mr. Gingrich's background, experience, 
     and sophistication with respect to tax-exempt organizations, 
     and his status as a Member of Congress obligated to maintain 
     high ethical standards, the Subcommittee concluded that Mr. 
     Gingrich should have known to seek appropriate legal advice 
     to ensure that his conduct in regard to the AOW/ACTV and 
     Renewing American Civilization projects was in compliance 
     with 501(c)(3). Had he sought and followed such advice--after 
     having set out all the relevant facts, circumstances, plans, 
     and goals described above--501(c)(3) organizations would not 
     have been used to sponsor Mr. Gingrich's ACTV and Renewing 
     American Civilization projects.


             4. mr. gingrich's statements to the committee

       In responding to the complaints filed against him 
     concerning the Renewing American Civilization course, Mr. 
     Gingrich submitted several letters to the Committee. His 
     first letter, dated October 4, 1994, did not address the tax 
     issues raised in Mr. Jones' complaint, but rather responded 
     to the part of the complaint concerning unofficial use of 
     official resources. In it Mr. Gingrich stated that GOPAC, 
     among other organizations, paid people to work on the course. 
     After this response, the Committee wrote Mr. Gingrich and 
     asked him specifically to address issues related to whether 
     the course had a partisan, political aspect to it and, if so, 
     whether it was appropriate for a 501(c)(3) organization to be 
     used to sponsor the course. The Committee also specifically 
     asked whether GOPAC had any relationship to the course. Mr. 
     Gingrich's letter in response, dated December 8, 1994, was 
     prepared by his attorney, but it was read, approved, and 
     signed by Mr. Gingrich. It stated that the course had no 
     partisan, political aspects to it, that his motivation for 
     teaching the course was not political, and that GOPAC neither 
     was involved in nor received any benefit from any aspect of 
     the course. In his testimony before the Subcommittee, Mr. 
     Gingrich admitted that these statements were not true.
       When the amended complaint was filed with the Committee in 
     January 1995, Mr. Gingrich's attorney responded to the 
     complaint on behalf of Mr. Gingrich in a letter dated March 
     27, 1995. His attorney addressed all the issues in the 
     amended complaint, including the issues related to the 
     Renewing American Civilization course. The letter was signed 
     by Mr. Gingrich's attorney, but Mr. Gingrich reviewed and 
     approved it prior to its being delivered to the Committee. In 
     an interview with Mr. Cole, Mr. Gingrich stated that if he 
     had seen anything inaccurate in the letter he would have 
     instructed his attorney to correct it. Similar to the 
     December 8, 1994 letter, the March 27, 1995 letter stated 
     that the course had no partisan, political aspects to it, 
     that Mr. Gingrich's motivation for teaching the course was 
     not political, and that GOPAC had no involvement in nor 
     received any benefit from any aspect of the course. In his 
     testimony before the Subcommittee Mr. Gingrich admitted that 
     these statements were not true.
       The goal of the letters was to have the complaints 
     dismissed. Of the people involved in drafting or editing the 
     letters, or reviewing them for accuracy, only Mr. Gingrich 
     had personal knowledge of the facts contained in the letters 
     regarding the course. The facts in the letters that were 
     inaccurate, incomplete, and unreliable were material to the 
     Committee's determination on how to proceed with the tax 
     questions contained in the complaints.

                   D. Statement of Alleged Violation

       On December 21, 1996, the Subcommittee issued a Statement 
     of Alleged Violation stating that Mr. Gingrich had engaged in 
     conduct that did not reflect creditably on the House of 
     Representatives in that by failing to seek and follow legal 
     advice, Mr. Gingrich failed to take appropriate steps to 
     ensure that activities with respect to the AOW/ACTV project 
     and the Renewing American Civilization project were in 
     accordance with section 501(c)(3); and that on or about 
     December 8, 1994, and on or about March 27, 1995, information 
     was transmitted to the Committee by and on behalf of Mr. 
     Gingrich that was material to matters under consideration by 
     the Committee, which information, as Mr. Gingrich should have 
     known, was inaccurate, incomplete, and unreliable.
       On December 21, 1996, Mr. Gingrich filed an answer with the 
     Subcommittee admitting to this violation of House Rules.
       The following is a summary of the findings of the 
     Preliminary Inquiry relevant to the facts as set forth in the 
     Statement of Alleged Violation.

    II. Summary of Facts Pertaining to American Citizens Television

                                A. GOPAC

        GOPAC was a political action committee organized under 
     Section 527 of the Internal Revenue Code. As such, 
     contributions to GOPAC were not tax-deductible.\2\ GOPAC's 
     goal was to attract people to the Republican party, develop a 
     ``farm team'' of Republican state and local public officials 
     who might one day run for Congress and, ultimately, create a 
     Republican majority in the United States House of 
     Representatives. (12/7/96 Callaway Tr. 9; 7/12/96 Eisenach 
     Tr. 21; 7/17/96 Gingrich Tr. 17-20).\3\ GOPAC did not 
     undertake any projects that were not directed toward 
     achieving that goal. (7/18/96 Gingrich Tr. 362; 12/7/96 
     Callaway Tr. 33).
---------------------------------------------------------------------------
     \2\ See September 6, 1996 letter from the tax counsel Mr. 
     Gingrich hired during the Preliminary Inquiry, James Holden, 
     at page 41: ``Contributions made to organizations described 
     in section 501(c)(3) qualify generally as charitable 
     deductions under section 170(c)(2). In contrast, 
     contributions made to section 501(c)(4) and section 527 
     organizations do not qualify as charitable deductions. For 
     this reason, exempt organizations that are described in 
     section 501(c)(3) enjoy the substantial advantage of being 
     able to attract donations that are deductible on the tax 
     returns of contributors.''
     \3\ Citations containing a ``Tr.'' indicate the page of the 
     transcript from a witness's interview. The date of the 
     interview is also provided in the citation.
---------------------------------------------------------------------------
       GOPAC's mission was defined as follows:

       GOPAC's mission for the 1990's is to create and disseminate 
     the doctrine which defines a caring, humanitarian reform 
     Republican Party in such a way as to elect candidates, 
     capture the United States House of Representatives and become 
     a governing majority at every level of Government.

     (Ex. 1, GOPAC3 137). This aspect of GOPAC's activities was 
     further explained in a draft document from November 1989:

       As important as the creation of new doctrine is its 
     dissemination. During the 1980s GOPAC and Newt Gingrich have 
     led the way in applying new technology, from C-SPAN to video 
     tapes, to disseminate information to Republican candidates 
     and political activists.

                           *   *   *   *   *

        But the Mission Statement demands that we do much more. To 
     create the level of change needed to become a majority, the 
     new Republican doctrine must be communicated to a broader 
     audience, with greater frequency, in a more usable form. 
     GOPAC needs a bigger ``microphone.'' (emphasis in the 
     original).

     (Ex. 2, 283). GOPAC continued to support this approach to 
     achieving its goals in subsequent years. For example, as 
     stated in its Report to Shareholders dated April 26, 1993:

       While both ``message'' and ``mechanism'' are important, 
     GOPAC's comparative advantage lies in developing new ideas--
     i.e. in the ``message'' part of the equation. GOPAC will thus 
     continue to focus its efforts on developing and communicating 
     our values in a way voters can understand and support.
     (Ex. 3, Eisenach 2539).
       From approximately 1986 through 1995, Mr. Gingrich served 
     as the General Chairman of GOPAC. (7/17/96 Gingrich Tr. 15). 
     In this role he came up with the ideas GOPAC used for its 
     political messages and themes, as well as its vision, 
     strategy, and direction. (7/17/96 Gingrich Tr. 20; 7/15/96 
     Gaylord Tr. 21-22; 6/26/96 Hanser Tr. 81; 7/12/96 Eisenach 
     Tr. 22-23; 7/3/96 Rogers Tr. 54-56; 6/27/96 Nelson Tr. 22-23; 
     12/7/96 Callaway Tr. 6, 9).

    B. American Opportunities Workshop/American Citizens Television


                             1. background

       In early 1990, GOPAC embarked on a project to produce a 
     television program called the American Opportunities Workshop 
     (``AOW''). The idea for this project came from Mr. Gingrich 
     and he was very involved in developing the message it used. 
     (12/7/96 Callaway Tr. 11, 12, 14; 7/12/96 Eisenach Tr. 16; 
     12/5/96 Eisenach Tr. 10; 12/9/96 Riddle Tr. 14; 12/9/96 
     Gingrich Tr. 12).\4\ AOW was broadcast on May 19, 1990, on 
     the Family Channel and was hosted by Mr. Gingrich. (Ex. 4, 
     GOPAC3 181).
---------------------------------------------------------------------------
     \4\ The Committee's Special Counsel, James Cole, interviewed 
     Mr. Gingrich on July 17, 1996; July 18, 1996; and December 9, 
     1996. Mr. Gingrich appeared before the Investigative 
     Subcommittee to give testimony on November 13, 1996, and 
     December 10, 1996.
---------------------------------------------------------------------------
       One of the purposes of the program was to build a citizens' 
     movement that would communicate the principles of 
     Entrepreneurial Free Enterprise, Basic American Values, and 
     Technological Progress. (Ex. 5, FAM 0011; 12/7/96 Callaway 
     Tr. 14). These principles were called the ``Triangle of 
     American Success.'' (Ex. 4, GOPAC3 181). AOW consisted of 
     workshops set up throughout the country where activists could 
     gather to watch the broadcast and, in the words of those 
     responsible for AOW, help build a citizens' movement and 
     increase citizen involvement. (12/7/96 Callaway Tr. 14, 15; 
     12/9/96 Riddle Tr. 12, 13). Approximately 600 workshop cites 
     were established where approximately 20,000 people watched 
     the program. (Ex. 6, Eisenach 0359). The target group for the 
     program was non-voters. (Ex. 7, WGC2-01025).
       As stated by GOPAC's then-Executive Director, Kay Riddle, 
     the purpose of creating the citizens' movement and attempting 
     to increase citizen involvement was to get people to solve 
     their own community problems and not look to the federal 
     government for help. (12/9/96 Riddle Tr. 13). Ms. Riddle went

[[Page H200]]

     on to say, ``Another product of that would be, of course, if 
     we got people interested * * *, we hoped and believed that 
     eventually they would vote Republican.'' (12/9/96 Riddle Tr. 
     13). ``[W]e [at GOPAC] truly believed that the more we could 
     involve people and educate people, the more likely we were to 
     have people vote Republican.'' (12/9/96 Riddle Tr. 14-15). 
     Similarly, Mr. Callaway characterized the message of AOW as 
     follows:

       But I think, fundamentally * * * it was a message that 
     Republican principles are sound principles, that everything 
     does not need to be done by government, that you can do 
     better by trusting individuals to act for themselves than you 
     can by having government tell individuals what they must do, 
     that a smaller government is frequently better than a larger 
     government, that it is better to reduce taxes than raise 
     taxes. I think it is Republican kinds of issues.
     (12/7/96 Callaway Tr. 12-13).
       Producing AOW was very expensive. (12/7/96 Callaway Tr. 16; 
     6/14/96 Callaway Tr. 21-22). It cost over $500,000 and 
     consumed approximately 62% of GOPAC's budget for the first 
     half of 1990. (Ex. 8, 1273). It was envisioned that the 
     project would continue beyond May 19, 1990 (12/5/96 Eisenach 
     Tr. 46; Ex. 4, GOPAC3 181) and prior to its airing, Mr. 
     Gingrich, Mr. Callaway and others decided to have the 
     project's follow-on activities transferred to a 501(c)(3) 
     organization. (Ex. 9, Eisenach 3909; 12/5/96 Eisenach Tr. 49; 
     12/7/96 Callaway Tr. 80). The organization chosen was the 
     Abraham Lincoln Opportunity Foundation (``ALOF''). The 
     project was transferred to ALOF so that it could be funded 
     with tax-deductible money. (12/9/96 Riddle Tr. 19).
       ALOF was established in 1984 in Colorado by Mr. Callaway to 
     fund programs for inner city youth. (6/14/96 Callaway Tr. 
     26). It had been inactive for some time prior to 1990 and 
     was revived for the purpose of taking over the successor 
     activities of AOW. (12/7/96 Callaway Tr. 84). Under ALOF 
     the project became know as American Citizens' Television 
     (``ACTV''). Mr. Callaway was the President of ALOF and Kay 
     Riddle was the Secretary. Mr. Callaway was also GOPAC's 
     Chairman and Ms. Riddle was also GOPAC's Executive 
     Director. ALOF hired some GOPAC employees on a full-time 
     basis, used other GOPAC employees and consultants on a 
     part-time basis, and used GOPAC offices and facilities. 
     (12/7/96 Callaway Tr. 7, 11, 13, 14, 73-75).
       ACTV was designed to continue AOW's work of building a 
     citizens' movement based on the ``Triangle of American 
     Success'' and had the same goals as AOW. (Ex. 5, FAM 0011; 
     12/7/96 Callaway Tr. 14; 12/9/96 Riddle Tr. 16; 12/9/96 
     Gingrich Tr. 8). In order to ensure a smooth transition, 
     materials concerning ACTV were given to all AOW participants 
     on May 19, 1990. (Ex. 6, Eisenach 0361).
       ACTV produced three television programs in 1990--one on 
     July 21 which discussed the use of local access cable 
     television for activist movements; one on September 29 which 
     discussed educational choice;\5\ and one on October 27 which 
     was about Taxpayers' Action Day. The last program was 
     primarily the responsibility of the Council for Citizens 
     Against Government Waste (``CCAGW''), a 501(c)(4) 
     organization. This was due to the fact that the content of 
     the program was deemed to be inappropriate for ALOF to 
     sponsor as a 501(c)(3) organization. (Ex. 10, FAM 0024). 
     While CCAGW paid for all of the out-of-pocket expenses (e.g., 
     production expense and broadcast time), ALOF still provided 
     support through its staff. (Ex. 11, Eisenach 4254; 12/5/96 
     Eisenach Tr. 5, 67). Each program was broadcast on the Family 
     Channel.
---------------------------------------------------------------------------
     \5\ A 1989 draft GOPAC document indicates that one of GOPAC's 
     projects designed to ``create and disseminate the new 
     Republican doctrine for the 1990's'' would be the Education 
     Choice Coalition. (Ex. 2, 284).
---------------------------------------------------------------------------
       In setting up ACTV it was understood that Mr. Gingrich 
     would maintain his involvement and control over the programs. 
     (Ex. 12, WGC2-01337). While some say that he was not very 
     involved when it became ACTV, (e.g., 12/7/96 Callaway Tr. 
     14), there is evidence that his involvement continued. Mr. 
     Gingrich hosted the first ACTV program. Mr. Gingrich also 
     introduced and closed the second program in September. The 
     host was Pete DuPont, but Mr. Gingrich was featured for a 
     significant portion of the program. While the last program in 
     October was paid for primarily by CCAGW, Mr. Gingrich 
     approved its use on ACTV. (Ex. 11, Eisenach 4254).
       Both AOW and ACTV were described to the public as non-
     partisan. (Ex. 6, Eisenach 0361). Much of the documentation 
     that was either internal to GOPAC or sent to its supporters, 
     however, indicates a partisan, political purpose. While 
     GOPAC, as a political action committee, could freely engage 
     in partisan, political activity, ALOF, as a 501(c)(3) 
     organization could not. Because ACTV was described as a 
     continuation of the activities of AOW (12/7/96 Callaway Tr. 
     13-15; 12/5/96 Eisenach Tr. 8; Ex. 5, FAM 0011), documents 
     were reviewed during the Preliminary Inquiry relating to both 
     projects to determine what the goals were for the two 
     projects.
       GOPAC contracted with an organization called the Washington 
     Policy Group (``WPG'') to manage AOW. (7/12/96 Eisenach Tr. 
     298). Jeffrey Eisenach was president and sole owner of WPG 
     and the project coordinator for AOW. (7/12/96 Eisenach Tr. 
     298). Mr. Eisenach was also responsible for managing ALOF's 
     ACTV programs. (12/7/96 Callaway Tr. 16). WPG was essentially 
     Mr. Eisenach's ``personal consulting firm'' and usually had 
     two or three employees. (7/12/96 Eisenach Tr. 9). WPG used 
     GOPAC office space and equipment as part of its compensation. 
     (11/14/96 Eisenach Tr. 60). In addition to its work on AOW 
     and ACTV, WPG had a consulting contract with GOPAC from 
     January 1989 through September 1993. (7/12/96 Eisenach Tr. 9, 
     10, 298). Through WPG's contract with GOPAC, Mr. Eisenach 
     ``provided research assistance and advice to Mr. Gingrich, 
     strategic advice to GOPAC and worked on some specific 
     projects, focus groups and so forth, for GOPAC.'' (7/12/96 
     Eisenach Tr. 9). Mr. Eisenach was also the Executive Director 
     of GOPAC from June 1991 to June 1993. (7/12/96 Eisenach Tr. 
     8).


                  2. Planning and Purpose for AOW/ACTV

       A document entitled ``Key Factors in a House GOP Majority'' 
     appears to be one of the earliest documents pertaining to the 
     purpose of AOW and ACTV. A typed version and a handwritten 
     version of the document were produced during the Preliminary 
     Inquiry. The handwritten version is in Mr. Gingrich's 
     handwriting. In it he wrote:

       1. The fact that 50% of all potential voters are currently 
     outside politics (non-voters) creates the possibility that a 
     new appeal might alter the current balance of political power 
     by bringing in a vast number of new voters.

                           *   *   *   *   *

       3. It is possible to articulate a vision of ``an America 
     that can be'' which is appealing to most Americans, reflects 
     the broad values of a governing conservatism (basic American 
     values, entrepreneurial Free Enterprise and Technological 
     progress), and is very difficult for the Democrats to co-opt 
     because of their ideology and their interest groups.
       4. It is more powerful and more effective to develop a 
     reform movement parallel to the official Republican Party 
     because:

                           *   *   *   *   *

       b. the non-voters who are non-political or anti-political 
     will accept a movement more rapidly than they will accept an 
     established party;

                           *   *   *   *   *

       5. As much as possible, the House Republican Party, the 
     Bush Administration, Senate Republicans, incumbent 
     Republicans across the country, the NRCC, RNC, SRCC and the 
     conservative movement should be briefed on movement 
     developments; conflict within this broad group should be 
     minimized and coordination maximized.
       6. The objective measurable goal is the maximum growth of 
     news coverage of our vision and ideas, the maximum 
     recruitment of new candidates, voters and resources, and the 
     maximum electoral success in winning seats from the most 
     local office to the White House and then using those 
     victories to implement the values of a governing conservatism 
     and to create the best America that can be.

     (Ex. 13, Eisenach 4838-4839 (typed version) and Eisenach 
     4832-4834 (handwritten version)).
       When asked about AOW and ACTV, Mr. Gingrich said he had 
     very little recollection of the projects. He said he was 
     distracted by other events at the time such as his re-
     election efforts, legislative issues, and becoming Republican 
     Whip. (12/9/96 Gingrich Tr. 19, 39, 43). He said he had no 
     recollection of the ``Key Factors in a House GOP Majority'' 
     document, did not know if it related to AOW or ACTV, and did 
     not know the purpose for which it was written. (12/9/96 
     Gingrich Tr. 31). An analysis of other documents, however, 
     shows its relationship to the AOW/ACTV projects. Mr. Callaway 
     said in his interview that the goals set forth in the ``Key 
     Factors in a House GOP Majority'' document were the same 
     as those for AOW and ACTV. (12/7/96 Callaway Tr. 37-38).
       As stated above, AOW was targeted to non-voters. (Ex. 7, 
     WGC2-01025). The ``Key Factors in a House GOP Majority'' 
     document notes that non-voters are the ones to appeal to in 
     order to change the balance of power. AOW/ACTV based the 
     citizens' movement on the ``Triangle of American Success'' 
     which was made up of basic American values, entrepreneurial 
     free enterprise, and technological progress. (Ex. 5, FAM 
     0011; 12/7/96 Callaway Tr. 14). The ``Key Factors in a House 
     GOP Majority'' document indicates that it will use those same 
     three principles to appeal to non-voters. AOW/ACTV was 
     focused on building a non-partisan citizens' movement. (Ex. 
     6, Eisenach 0358-0359; Ex. 5, FAM 0011). In the ``Key Factors 
     in a House GOP Majority'' document, Mr. Gingrich states that 
     ``[i]t is more powerful and more effective to develop a 
     reform movement parallel to the official Republican Party 
     because . . . the non-voters who are non-political or anti-
     political will accept a movement more rapidly than they will 
     accept an established party.'' (Ex. 13, Eisenach 4838 and 
     Eisenach 4832).
       In a congressional briefing Mr. Gingrich gave concerning 
     AOW on March 30, 1990, he described AOW/ACTV as follows:

       It is our goal to define our position as a caring 
     humanitarian reform party applying the triangle of American 
     success and applying common sense focused on success and 
     opportunities to explain in general terms for the whole fall 
     campaign, and again some Democrats will pick up the language 
     and this is open to everybody, this is a free country, we 
     think on balance it is vastly more

[[Page H201]]

     advantageous to us than it is to the left since they are the 
     party of big city machines, they are the party of the unions, 
     they're much more tied to the bureaucratic welfare state.

     (Ex. 15, WGC2 06081, pp. 17-18). The ``Key Factors in a House 
     GOP Majority'' document notes that the message of the 
     citizens' movement is designed not to be useful for Democrats 
     because it will be ``very difficult for [them] to co-opt [the 
     ideas] because of their ideology and their interest groups.'' 
     (Ex. 13, Eisenach 4838 and 4832-4833).
       At the congressional briefing, Mr. Gingrich spoke of a 
     focus group that was commissioned to assist in the AOW/ACTV 
     effort. He described it as ``the largest focus group project 
     ever undertaken by the Republican Party.'' (Ex. 14, WGC2 
     06081, p. 8). He said it concentrated on non-voters under 40 
     years of age (Ex. 14, WGC2 06081, p. 8) and tested negative 
     language like ``the bureaucratic welfare state'' and positive 
     language like the ``Triangle of American Success,'' 
     ``Entrepreneurial Free Enterprise,'' ``Technological Progress 
     and Innovation,'' and ``Basic American Values.'' (Ex. 14, 
     WGC2 06081, pp. 10-11).
       Near the end of the briefing Mr. Gingrich explained the 
     reasons for having the program labeled as non-partisan:

       Lastly I was going to make the point one of the reasons we 
     are reaching out and we really urge people to be nonpartisan 
     and be wide open. But we have two reasons. First, there are a 
     lot of former Democrats. Andy Ireland, Ronald Reagan, Phil 
     Gramm, Jean Kirkpatrick, Connie Mack, you go down the list, a 
     surprising list of people who looked at both sides and 
     decided we were right. That we were more open, we were moving 
     in the right direction.
       But second, most young people under 40 are not politicized. 
     The minute you politicize this and you make it narrow and you 
     make it partisan--you lose them.
     (Ex. 14, WGC2 06081, pp. 23-24).
       The focus group Mr. Gingrich referred to was commissioned 
     by GOPAC in early 1990. It was performed by Market 
     Strategies, Inc. The July 10, 1990 report on the results of 
     the focus group described the project as follows:

       This research project is part of an overall effort to build 
     a new governing majority in the United States formed around 
     conservative principles. Historically, building a new 
     majority has involved three essential tasks: activating a 
     group of non-participating citizens to support an existing 
     party (or form a new party), constructing a theory or 
     explanation of what is right and wrong in society with which 
     the non-participating citizens agree, and developing the 
     right language (political rhetoric) to communicate that 
     theory to the non-participating citizens. This project is the 
     first of several research projects to be sponsored by GOPAC 
     to help achieve these three tasks in this decade.

     (Ex. 15, MSI 0030). The report then describes the specific 
     language it tested as follows:

       The theory's explanation of what is wrong in society was 
     put in terms of ``the bureaucratic welfare state'' and the 
     ``values of the left.'' The theory's explanation of what is 
     good in society was put in terms of ``technological 
     progress,'' ``entrepreneurial free enterprise,'' and ``basic 
     American values'' which were summarized as ``the Triangle of 
     American Success.''

     (Ex. 15, MSI 0030).
       In describing the target group for building the new 
     governing majority, the report states:

       The potential for a new governing majority exists because 
     of the large and growing numbers of non-participating 
     citizens in our political system.

                           *   *   *   *   *

       Consequently, a major premise for the research project is 
     that younger citizens are the right target group for a new 
     majority strategy and that a political theory and language 
     needs to be effective with them if it is to be effective at 
     all. Supporting this premise is an additional opportunity (to 
     their not voting now) about younger voters--they are already 
     predisposed to vote Republican.

     (Ex. 15, MSI 0031-0032).


      3. Letters Describing Partisan, Political Nature of AOW/ACTV

       A number of GOPAC letters also indicate the purpose behind 
     AOW/ACTV. Some are signed, some are not, but the ones that 
     are not signed were apparently in GOPAC's files for some 
     years, indicating that they were probably sent out. For 
     example, in a signed letter dated February 21, 1990, to 
     members of GOPAC's Executive Finance Committee, Mr. Callaway 
     wrote that:

       The next two years are absolutely critical to all that we 
     hope to accomplish. Our May 19 project [AOW] will go a long 
     way toward helping Republicans set an agenda and persuading 
     Americans to realign with us.

     (Ex. 16, GOPAC3 484). A copy of this letter was sent to Mr. 
     Gingrich. Written across the top of his copy, in his 
     handwriting, is ``Newt 2/20/90.'' (Ex. 16, WGC2-03992). 
     According to Mr. Gingrich this probably meant he had seen the 
     letter (12/9/96 Gingrich Tr. 36-37); however, he did not 
     recall the content of this letter during an interview with 
     Mr. Cole. (12/9/96 Gingrich Tr. 35).
       An unsigned letter, apparently prepared for Mr. Callaway's 
     signature,6 dated March 7, 1990, states:
---------------------------------------------------------------------------
     \6\ According to Mr. Callaway this letter may have been sent 
     out, but he did not have a specific recollection of it. (12/
     7/96 Callaway Tr. 49).

       Our May 19th American Opportunities Workshop is the single 
     most exciting project I've ever undertaken. I consider this 
     program critical to our efforts to become a Republican 
     majority.

                           *   *   *   *   *

       In order to encourage Americans to vote--and vote 
     Republican--so that we may enact our policies of opportunity, 
     we must reach them with our vision of hope.
       It is time for our message and program, now proven among 
     those in the trenches, to be shared with the Americans who 
     are not motivated by our current government to go to the 
     polls or get involved.

                           *   *   *   *   *

       The American Opportunities Workshop is GOPAC's answer to 
     teaching and empowering the American people. We hope that the 
     citizen movement launched by this project will be the key to 
     a future of Republican governance.

     (Ex. 17, 425-426). A March 16, 1990 GOPAC letter over Mr. 
     Gingrich's name discusses the purpose behind AOW.

       Through the use of satellite hook-ups, not only can we 
     reach new groups of voters not traditionally associated with 
     our Party, but we'll be able to give them our message 
     straight, without it being filtered and misinterpreted by 
     liberal elements in the media.

                           *   *   *   *   *

       Because I believe it has such great potential for helping 
     President Bush, our candidates and our Party, I told Bo to 
     move ahead with planning the workshop.

                           *   *   *   *   *

       I truly believe that our Party and our President stand on 
     the verge of a tremendous success this year, and that this 
     workshop can be a great election year boost to us.

     (Ex. 18, 2782-2783). Mr. Gingrich did not recall this 
     document. When asked whether AOW was intended to be an 
     election year boost, he said that it may have been, but he 
     also thought it was idea oriented. (12/9/96 Gingrich Tr. 39-
     40).
       In an unsigned letter addressed to Mr. Thorton Stearns, 
     apparently written for Mr. Callaway's signature,7 the 
     AOW project and its purpose were described as follows:

     \7\ According to Mr. Callaway this letter may have been sent 
     out, but he again did not have a specific recollection of it. 
     (12/7/96 Callaway Tr. 58).

       With more than 600 workshop sites across the country, 
     30,000 participants, and extensive media coverage, AOW was a 
     significant success on its own terms. However, the real 
     reason GOPAC took on AOW was to explore an innovative new 
     mechanism for creating and motivating the new Republican 
---------------------------------------------------------------------------
     majority of the 1990s.

     (Ex. 19, GOPAC3 467). In a letter over Mr. Gingrich's name 
     dated June 21, 1990, AOW and ACTV are explicitly tied 
     together in an effort to achieve the same goal of building 
     the Republican Party and trying to have an impact on 
     political campaigns. The letter states:

       These are exciting times at GOPAC and we have been quite 
     busy lately. I am excited about [the] progress of the 
     ``American Citizens' Television'' project, which will carry 
     the torch of citizen activism begun by our American 
     Opportunities Workshop on May 19th. We mobilized thousands of 
     people across the nation at the grass roots level who as a 
     result of AOW, are now dedicated GOPAC activists. We are 
     making great strides in continuing to recruit activists all 
     across America to become involved with the Republican party. 
     Our efforts are literally snowballing into the activist 
     movement we need to win in '92.

     (Ex. 20, GOPAC3 224). Mr. Gingrich said that the signature on 
     the letter was not his. (12/9/96 Gingrich Tr. 40). Mr. 
     Gingrich said that the above statement did not reflect the 
     purpose of AOW or ACTV. (12/9/96 Gingrich Tr. 41).
       Finally, an August 27, 1990 memorandum from Mr. Callaway to 
     Mr. Gingrich and Jim Tilton 8 gives insight to the goals 
     of the AOW/ACTV projects. (Ex. 21, Eisenach 3950-3959). The 
     memorandum discusses a meeting the three men had five days 
     earlier. Based on the memorandum, the main topic focused on 
     how GOPAC should proceed in the future. The problems 
     addressed in the meeting concerned the fact that AOW/ACTV had 
     diverted too much money and attention from traditional GOPAC 
     efforts. This caused erosion in support from GOPAC members. 
     The three men decided to try one more ACTV program on 
     September 29, 1990. If additional funding was not available 
     beyond that point, the project would not be continued. They 
     decided that it needed to be ``a very strong program that is 
     controversial enough to stir up our Charter members and other 
     constituents.'' (Ex. 21, Eisenach 3951). The show that was 
     chosen was on educational choice, which was a specific GOPAC 
     project.
---------------------------------------------------------------------------
     \8\ Jim Tilton was an unpaid senior advisor to GOPAC. He was 
     an attorney and a close friend of Mr. Gingrich. (12/10/96 
     Gingrich Tr. 10, 11, 56, 57).
---------------------------------------------------------------------------
       The memorandum recounted that Mr. Gingrich had reviewed all 
     the options set forth and concluded the following:

       Newt then stated firmly that he feels we need to go back to 
     basics for now through 1992. That the only special projects 
     for 1992 should be 1992 election oriented projects. Newt has 
     now concluded that you can't really affect 1992 elections 
     indirectly--we must do it directly through political 
     programs.


[[Page H202]]


     (Ex. 21, Eisenach 3950).9 Mr. Callaway said that this 
     paragraph could have been referring to ACTV, but he did not 
     have a clear recollection. (12/5/96 Callaway Tr. 62).
---------------------------------------------------------------------------
     \9\ A GOPAC statement of ``Revenue and Expenses'' attached to 
     this memorandum shows a single line item for ``AOW/ACTV.'' 
     (Ex. 21, Eisenach 3957).
---------------------------------------------------------------------------


          4. AOW/ACTV in Mr. Gingrich's Congressional District

       While AOW/ACTV was supposed to be non-partisan, two 
     memoranda indicate that there was some effort to ensure that 
     workshops were set up in Mr. Gingrich's congressional 
     district. In a memorandum to Mr. Callaway, dated February 8, 
     1990, Mr. Eisenach wrote:

       An area for immediate attention is ``targets of 
     opportunity''--e.g. Georgia's 6th District, Colorado, and the 
     D.C. area. We need to identify resources to ensure that we 
     maximize our returns in these three areas, and other specific 
     target areas we might add later. In particular, we need to 
     put very high on our agenda the task of identifying a 6th 
     District Coordinator.

     (Ex. 22, Eisenach 3811). Similarly, in a March 30, 1990 
     memorandum from Mr. Gingrich to Joe Gaylord and Mary Brown, 
     the following is written:

       The GOPAC print-out shows only one very tentative (Clay 
     Davis) site in my district. Time is getting short for finding 
     sites and GOPAC needs to have the hosts identified as soon as 
     possible to get materials to them to make the workshops a 
     success.
       Please make this a high priority.

     (Ex. 23, GOPAC3 460). Mr. Gingrich did not recall this 
     memorandum and said that there was an effort to target the 
     6th District--his congressional district--``only in the sense 
     that we hosted [AOW] from there.'' (12/9/96 Gingrich Tr. 19).


                 5. GOPAC's Connection to ALOF and ACTV

       As has been previously discussed, ACTV was a continuation 
     of AOW and ALOF used GOPAC's offices and facilities. In his 
     interview, Mr. Callaway stated a number of times that GOPAC 
     was separate from ALOF. (12/7/96 Callaway Tr. 64, 65-66, 68-
     69, 73). A number of documents, however, from 1990 indicate 
     that ALOF and ACTV had significant connections to GOPAC.
       In a June 26, 1990 memorandum to Mr. Callaway, Mr. Eisenach 
     recounts a discussion the two men had that morning with Mr. 
     Gingrich. During that discussion, Mr. Gingrich gave them a 
     handout that ``identified three GOPAC/ALOF zones: 1. Local 
     Elections, 2. Planning/R&D, 3. Movement.'' (Ex. 24, Eisenach 
     4039). The memorandum goes on to discuss how GOPAC and ALOF 
     will relate to each other.
       During the Preliminary Inquiry GOPAC produced copies of its 
     ``Confidential Masterfile Reports'' that were used to keep 
     track of contributors. Under the section entitled ``Giving 
     History'' the 1990 reports list two entities: GOPAC and ALOF. 
     (Ex. 25, GOPAC3 0510). Attached to these reports are copies 
     of correspondence from both GOPAC and ALOF to contributors. 
     (Ex. 25, GOPAC3 0511-0515).
       An August 13, 1990 memorandum from Mr. Callaway to Mr. 
     Gingrich lists the three broad things GOPAC does. The third 
     one listed is ``Projects such as ACTV, AOW and focus 
     groups.'' (Ex. 26, Eisenach 4251).10
---------------------------------------------------------------------------
     \10\ According to Mr. Callaway, the listing of ACTV was a 
     ``bad choice of words.'' (12/7/96 Callaway Tr. 70).
---------------------------------------------------------------------------
       GOPAC's Report to Charter Members dated November 11, 1990, 
     includes a section on Community Activism. (Ex. 4, GOPAC3 180-
     188). In that section it discusses AOW and ACTV. While it 
     states that ACTV is ``legally no longer a GOPAC project,'' it 
     goes on to discuss ACTV in terms which indicate that it 
     continued to be treated as a GOPAC project. For example it 
     states that ``Our mission is to establish ACTV as a new, 
     interactive information network.'' (Ex. 4, GOPAC3 181). The 
     Charter Member Report is worded in a manner that indicates 
     ACTV was considered a GOPAC project. For example, it uses 
     phrases like ``Our goal'' with ACTV, ``Our next ACTV 
     program,'' and ``Our program was hosted by * * *.'' (Ex. 4, 
     GOPAC3 181-182). At the end of the report under the heading 
     ``Getting Out the Message,'' there is a chart showing the AOW 
     and ACTV programs. It then lists how many workshops were set 
     up for each program and what the estimated attendance was 
     for these workshops. (Ex. 4, GOPAC3 183).


               6. gopac funding of alof and actv 11
---------------------------------------------------------------------------

     \11\ There is no evidence that Mr. Gingrich had any 
     significant involvement with this level of the financial 
     aspects of the operations of ALOF. However, because these 
     facts form part of the basis for a recommendation by the 
     Subcommittee that the relevant materials gathered during the 
     preliminary inquiry be made available to the Internal Revenue 
     Service, the matter is set forth in some detail.
---------------------------------------------------------------------------
       When ALOF began to operate in June 1990 it had less than 
     $500 in its bank account. (Ex. 27, CNB 006). It obtained a 
     loan for $25,000 from the Central Bank of Denver in late June 
     and received some direct contributions. These came from a 
     foundation associated with Mr. Callaway, the Family Channel, 
     and at least one other GOPAC supporter. (Ex. 28, ALOF 0050). 
     In addition, GOPAC loaned ALOF $45,000 in 1990, and $29,500 
     in early 1991 to pay for production expenses. The total of 
     loans from GOPAC to ALOF was $74,500. (Ex. 35, ALOF 0030).
       ALOF's last program was broadcast in October 1990. In 1991 
     and 1992 it did not engage in any activities. In 1991, 
     Citizens Against Government Waste contributed $37,000 to ALOF 
     and Mr. Callaway's foundation contributed $10,000. (Ex. 28, 
     ALOF 0090). The total, $47,000, was given to GOPAC to be 
     applied to the debt. (Ex. 37, CNB 0426, CNB 0428, CNB 0430, 
     CNB 0432). After the $47,000 payment, ALOF owed GOPAC 
     $27,500. (Ex. 28, ALOF 0064).12
---------------------------------------------------------------------------
     \12\ The original debt from GOPAC listed on ALOF's tax 
     returns was for $45,247. This is not supported by the checks 
     from GOPAC to ALOF which only reflect $45,000. This 
     additional $247 continued to be listed for the remaining 
     years and was reflected in the ultimate forgiveness of a 
     portion of this debt in 1993. It is not clear what the $247 
     represents.
---------------------------------------------------------------------------
       In late 1991 and 1992, ALOF received contributions from a 
     number of GOPAC supporters totalling $80,000. (Ex. 28, ALOF 
     0078). $70,000 of that amount was given to GOPAC. GOPAC's 
     then-Executive Director, Mr. Eisenach, was involved in 
     soliciting a number of these donations.
       On February 27, 1992, Mr. Eisenach wrote to R. Randolph 
     Richardson to ask him to become a Charter Member of GOPAC. In 
     order to be a Charter Member, a person must contribute at 
     least $10,000. In the letter Mr. Eisenach states:

       With respect to foundation funds, it is of course not 
     appropriate for GOPAC to accept 501(c)(3) money. However, Bo 
     Callaway does have a foundation, the Abraham Lincoln 
     Opportunity Foundation (ALOF), which owes GOPAC a substantial 
     sum of money. You might consider a contribution to ALOF, 
     which would enable it to pay down its GOPAC debt, and thus be 
     of enormous help in our efforts to change the Congress in 
     1992.

     (Ex. 29, Eisenach 4652). Mr. Richardson's foundation, the 
     Grace Jones Richardson Trust, wrote a $25,000 check to ALOF 
     on April 14, 1992, and ALOF wrote a $25,000 check to GOPAC on 
     April 23, 1992. (Ex. 38, CNB 0449, CNB 0445).
       On March 16, 1992, Mr. Eisenach wrote a memorandum to June 
     Weiss, GOPAC's Finance Director, concerning Mr. Callaway's 
     Charter Member dues. The memorandum states:

       Bo has offered us a choice of (1) $10,000 from him or (2) 
     $20,000 from ALOF. I indicated to him on the phone today I 
     would tend to go for $20,000 over $10,000--in part, frankly, 
     because I think we ought to go ahead and get the ALOF loan 
     repaid and be done with it, as opposed to having it hanging 
     around for another year.

     (Ex. 30, Eisenach 3725). On March 23, 1992, Mr. Callaway's 
     foundation donated $20,000 to ALOF. (Ex. 39, CNB 0443). On 
     the same day, ALOF wrote a check to GOPAC for $20,000. (Ex. 
     39, CNB 0447). A letter was sent to Mr. Callaway on ALOF 
     stationery thanking him for the contribution. It was signed 
     by numerous members of GOPAC's staff. (Ex. 31, GOPAC2 0012).
       Two other GOPAC Charter Members made contributions to ALOF 
     which were immediately turned over to GOPAC. (Ex. 40, CNB 
     0217, CNB 0439, CNB 0441, CNB 0459). Handwritten notes 
     relating to one of them indicates that a tax-deductible 
     option for his contribution to GOPAC was discussed before the 
     contribution to ALOF was made. (Ex. 32, GOPAC2 2424-2426).
       As of 1993 ALOF had relocated its offices to Colorado. Its 
     Colorado accountant was preparing the tax return for 1992 and 
     saw the payments to GOPAC. In November she wrote to Kay 
     Riddle, ALOF's Secretary, and asked for invoices from GOPAC 
     to ALOF to support these payments. (Ex. 33, Newbill 0119). In 
     December, Ms. Riddle wrote to GOPAC's accountant asking for 
     those invoices. (Ex. 34, ALOF 0028). Several days later the 
     accountant provided Ms. Riddle with a summary memorandum and 
     a number of invoices. (Ex. 35, ALOF 0029-0030, ALOF 0027-
     0028, GOPAC3 0811). Some were undated. Some were dated in 
     1991. All concerned activities which were stated to have 
     taken place in 1990 and there is no evidence that the 
     invoices were written contemporaneously with the events for 
     which they billed.13
---------------------------------------------------------------------------
     \13\ Because of her assertion of a Constitutional privilege, 
     the Subcommittee was unable to interview the accountant for 
     GOPAC and ALOF.
---------------------------------------------------------------------------
       The invoices, along with the previously mentioned loans, 
     totaled $160,537.70. This consisted of rent ($12,718.08), 
     postage and office supplies ($8,455.08), services of staff 
     and consultants ($64,864.54), and the loans ($74,500).14 
     (Ex. 35, ALOF 0029, ALOF 0027, ALOF 0026, GOPAC3 0811). The 
     time for the staff was apportioned to reflect the percentage 
     of their work spent on ALOF business. Some of the consultants 
     listed, however, did not keep any records reflecting the 
     percentage of time they spent on specific projects and did 
     not recall doing any work for ALOF. (12/2/96 Hanser Tr. 25; 
     12/5/96 Mahe Tr. 31). Records of one consultant did record 
     the time he spent on ALOF business, but it was substantially 
     less than the time listed in the invoice. (Ex. 35, ALOF 0029; 
     Ex. 36, WGC2-

[[Page H203]]

     01378-01379, Eisenach 4276-4277, Eisenach 4302-4303). 
     According to Ms. Riddle, she did not attempt to apportion 
     time based on the actual hours spent by these people on ALOF 
     business. Instead, she said she determined the percentages 
     before any of the people had done any work based on her best 
     guess of the time they would spend. (12/9/96 Riddle Tr. 69-
     70).
---------------------------------------------------------------------------
     \14\ In the tax return for ALOF for 1990, Part VII asks, 
     among other things, whether ALOF had any transactions with a 
     political action committee involving loans, shared 
     facilities, equipment, or paid employees. Even though GOPAC 
     was a political action committee the return answers ``no'' to 
     all those questions. (Ex. 28, ALOF 0056). The accountant for 
     ALOF, who was also the accountant for GOPAC, said that she 
     had answered those questions in the negative based on her 
     belief that these questions specifically excluded any 
     transactions with political action committees. (10/31/96 
     Gilbert Tr. 18-20). She did not discuss this reading of the 
     tax return with anyone at ALOF, but she did fill the form out 
     in this way and they signed it without any questions. (10/31/
     96 Gilbert Tr. 21). This same error occurred in the tax 
     return for 1991. (Ex. 28, ALOF 0069).
---------------------------------------------------------------------------
       Of the total amount listed on the invoices of $160,537.70, 
     ALOF paid GOPAC $117,000 between 1991 and 1992. (Ex. 35, ALOF 
     0029). This left a balance of $43,537.70, which, according to 
     ALOF's 1993 tax return, was forgiven by GOPAC. (Ex. 28, ALOF 
     0089).15
---------------------------------------------------------------------------
     \15\ The amount listed on the Return was $43,785. As referred 
     to earlier, it is unclear what the $247 difference 
     represents.
---------------------------------------------------------------------------
       According to Kathleen Taylor, a current employee of the 
     Speaker's Office and the former Political Services Director 
     for GOPAC, the lessons learned from AOW and ACTV were used 
     for the Renewing American Civilization course discussed 
     below. (6/28/96 Taylor Tr. 45). Those lessons were ``[h]ow to 
     get workshops sites, how to disseminate information, [and] 
     mass-marketing the ideas.'' (6/28/96 Taylor Tr. 45). In the 
     same vein, a letter from Mr. Eisenach to Mr. Mescon 
     containing the terms and conditions under which WPG would 
     manage the Renewing American Civilization course states:

       Among our most significant project management undertakings 
     was the 1990 ``American Opportunities Workshop'' and its 
     successor, American Citizens' Television. Both of these 
     projects bear significant similarities to the project you 
     have asked us to get involved with, ``Renewing American 
     Civilization.'' Thus, we enter this undertaking with both 
     enthusiasm and a full understanding of the enormity and 
     complexity of the undertaking.
     (Ex. 41, Mescon 0651).

 III. Summary of Facts Pertaining to ``Renewing American Civilization''

  A. Genesis of the Renewing American Civilization Movement and Course

       In his interview with the Special Counsel, Mr. Gingrich 
     said the idea for the course was first developed while he was 
     meeting with Owen Roberts, a GOPAC Charter Member and 
     advisor, for two days in December 1992. (7/17/96 Gingrich Tr. 
     11-12, 23-24; 7/15/96 Gaylord Tr. 23-24; Ex. 42, GOPAC2 
     2492). Mr. Gingrich wrote out notes at this meeting and they 
     were distributed to some of his advisors. (Ex. 42, HAN 02103-
     02125; 6/26/96 Hanser Tr. 28; 7/15/96 Gaylord Tr. 24-25; 7/
     12/96 Eisenach Tr. 108-109).16 A review of those notes 
     indicates that the topic of discussion at this meeting 
     centered mostly on a political movement. The notes contain 
     limited references to a course and those are in the context 
     of a means to communicate the message of the movement.
---------------------------------------------------------------------------
     \16\ Among the people who received copies of the notes were 
     Mr. Hanser, Mr. Gaylord and Mr. Eisenach. In a subsequent 
     memorandum to Gay Gaines and Lisa Nelson, as Ms. Gaines and 
     Ms. Nelson were about to take over the management of GOPAC in 
     October 1993, Mr. Gingrich described the roles each of the 
     three men played in his life as follows:
     1. Joe Gaylord is empowered to supervise my activities, set 
     my schedule, advise me on all aspects of my life and career. 
     He is my chief counselor and one of my closest friends. * * *
     2. Steven Hanser is my chief ideas adviser, close personal 
     friend of twenty years, and chief language thinker. * * *
     3. Jeff Eisenach is our senior intellectual leader and an 
     entrepreneur with great talent and determination. * * *
     Ex. 43, GDC 11551, 11553).
---------------------------------------------------------------------------
       The movement was to develop a message and then disseminate 
     and teach that message. (Ex. 42, HAN 02109). One of the 
     important aspects of the movement was the creation of 
     ``disseminating groups and [a] system of communication and 
     education.'' (Ex. 42, HAN 02109). It also sought to 
     ``professionalize'' the House Republicans by using the 
     ``message to attract voters, resources and candidates'' and 
     develop a ``mechanism for winning seats.'' (Ex. 42, HAN 
     02110). The ultimate goal of the movement was to replace the 
     welfare state with an opportunity society, and all efforts 
     had to be exclusively directed to that goal. (Ex. 42, HAN 
     02119). Ultimately, it was envisioned that ``a Republican 
     majority [would be] the heart of the American Movement * * 
     *''. (Ex. 42, HAN 02117).17 Mr. Gingrich's role in this 
     movement was to be the ``advocate of civilization,'' the 
     ``definer of civilization,'' the ``teacher of the rules of 
     civilization,'' the ``arouser of those who form 
     civilization,'' the ``organizer of the pro-civilization 
     activists,'' and the ``leader (possibly) of the civilizing 
     forces.'' (Ex. 42, HAN 02104). In doing this, he intended to 
     ``retain a primary focus on elected political power as the 
     central arena and fulcrum by which a free people debate their 
     future and govern themselves.'' (Ex. 42, HAN 02104). The 
     support systems for this movement included GOPAC, some 
     Republican international organizations, and possibly a 
     foundation. (Ex. 42, HAN 02121). There was substantial 
     discussion of how to disseminate the message of the movement. 
     (Ex. 42, HAN 02109, 02110, 02111). Some of the methods 
     discussed for this dissemination included, ``Possibly a 
     series of courses with audio and videotape followons''/
     ``Possibly a text-book (plus audio, video, computer) 
     series''/``Campus (intellectual) appearances on `the 
     histories' Gingrich the Historian applying the lessons of 
     history to public life.'' (Ex. 2, HAN 02118). One of the 
     tasks listed for 1993 is ``Design vision and its 
     communication and communicate it with modification after 
     feedback.'' (Ex. 2, HAN 02120). According to Mr. Gingrich, 
     the course was to be a subset of the movement and was to be a 
     primary and essential means for developing and disseminating 
     the message of the movement. (7/17/96 Gingrich Tr. 42, 58; 
     11/13/96 Gingrich Tr. 126-127).
---------------------------------------------------------------------------
     \17\ Mr. Gingrich said that he intended the movement to be 
     international in scope. Until some point in 1995, however, 
     its scope was only national. (7/17/96 Gingrich Tr. 33).
---------------------------------------------------------------------------
       Another description of the Renewing American Civilization 
     movement is found in notes of a speech Mr. Gingrich gave on 
     January 23, 1993, to the National Review Institute. (Ex. 44, 
     PFF 14473-14477, PFF 38279-38288).18 In those notes, Mr. 
     Gingrich wrote that ``our generation's rendezvous with 
     history is to launch a movement to renew American 
     civilization.'' (Ex. 44, PFF 14474). He noted that a majority 
     of Americans favor renewing American civilization and that 
     ``[w]e are ready to launch a 21st century conservatism that 
     will renew American civilization, transform America from a 
     welfare state into an opportunity society and create a 
     conservative governing majority.'' (Ex. 44, PFF 14475). Mr. 
     Gingrich then goes on to describe the five pillars of 
     American civilization and the three areas where the movement 
     needs to offer solutions.19 He then wrote that if they 
     develop solutions for those three areas they ``will 
     decisively trump the left. At that point either Clinton will 
     adopt our solutions or the country will fire the president 
     who subsidizes decay and blocks progress.'' (Ex. 44, PFF 
     14476). The notes end with the following:

     \18\ This appears to be the earliest example of Mr. Gingrich 
     speaking about the Renewing American Civilization movement. A 
     draft of this document in Mr. Gingrich's handwriting is 
     attached to the typed version of the notes.
     \19\ Although not mentioned in this speech, those five 
     pillars and three areas are each separate lectures in what 
     became the course.
---------------------------------------------------------------------------
       We must renew American civilization by studying these 
     principles, networking success stories, applying these 
     success stories to develop programs that will lead to 
     dramatic progress, and then communicating these principles 
     and these opportunities so the American people have a clear 
     choice between progress, renewal, prosperity, safety and 
     freedom within America [sic] civilization versus decay, 
     decline, economic weakness, violent crime and bureaucratic 
     dominance led by a multicultural elite.

       Given that choice, our movement for renewing American 
     civilization will not just win the White House in 1996, we 
     will elect people at all levels dedicated to constructive 
     proposals.

     (Ex. 44, PFF 14477). (Emphasis in the original).20
---------------------------------------------------------------------------
     \20\ Two days later Mr. Gingrich delivered a Special Order on 
     the House floor concerning Renewing American Civilization. In 
     this speech he described a movement to renew American 
     civilization, but did not mention the course. He did discuss 
     the five pillars of American civilization and the three areas 
     where solutions needed to be developed. (Ex. 45, LIP 00036-
     00045).
---------------------------------------------------------------------------
       In a draft document entitled ``Renewing American 
     Civilization Vision Statement,'' written by Mr. Gingrich and 
     dated March 19, 1993, he again described the movement in 
     partisan terms and emphasized that it needed to communicate 
     the vision of renewing American civilization on very large 
     scale. (Ex. 46, WGC 00163-00171, WGC 00172-00191). He wrote 
     that renewing American civilization will require ``a new 
     party system so we can defeat the Democratic machine and 
     transform American society into a more productive, 
     responsible, safe country by replacing the welfare state with 
     an opportunity society.'' (Ex. 46, WGC 00163).

                 B. Role of the Course in the Movement

       Mr. Gingrich was asked about the role of the course in the 
     movement. He said that the course was ``the only way actually 
     to develop and send * * * out'' the message of the movement. 
     (7/17/96 Gingrich Tr. 42). In a later interview, he modified 
     this statement to say that the course was ``clearly the 
     primary and dominant method; it was not the only way one 
     could have done it. But I think it was essential to do it, to 
     have the course.'' (11/13/96 Gingrich Tr. 126-127).
       The earliest known documentary reference to the course in 
     the context of the movement is in an agenda for a meeting 
     held on February 15, 1993, at GOPAC's offices. The meeting 
     had two agenda items: ``I. General Planning/Renewing American 
     Civilization'' and ``II. Political/GOPAC Issues.'' (Ex. 47, 
     JR-0000645-0000647). Under the first category, one topic 
     listed is ``American Civilization Class/Uplink.'' (Ex. 47, 
     JR-0000645). Under the second category two of the items 
     listed are ``GOPAC Political Plan & Schedule'' and ``Charter 
     Meeting Agenda.'' (Ex. 47, JR-0000645). 21 Attached to 
     the agenda for this meeting is a ``Mission Statement'' 
     written by Mr. Gingrich which applied to the overall Renewing 
     American Civilization movement, including the course. (7/12/
     96 Eisenach Tr. 248-249; 7/17/96 Gingrich Tr. 145-146). It 
     states:

     \21\ It is not clear whether the meeting was exclusively a 
     GOPAC meeting, but at least part of the agenda explicitly 
     concerned GOPAC projects. As will be discussed later, GOPAC's 
     political plan for 1993 centered on Renewing American 
     Civilization. As also discussed below, GOPAC's April 1993 
     Charter Meeting was called ``Renewing American Civilization'' 
     and employed breakout sessions for Charter Members to 
     critique and improve individual components of the course on 
     Renewing American Civilization. (7/17/96 Gingrich Tr. 69-70; 
     7/12/96 Eisenach Tr. 144-146; 7/15/96 Gaylord Tr. 46).

       We will develop a movement to renew American civilization 
     using the 5 pillars of

[[Page H204]]

     21st Century Freedom so people understand freedom and 
     progress is possible and their practical, daily lives can be 
     far better.* As people become convinced American civilization 
     must and can be renewed and the 5 pillars will improve their 
     lives we will encourage them and help them to network 
     together and independently, autonomously initiate 
     improvements wherever they want. However, we will focus on 
     economic growth, health, and saving the inner city as the 
     first three key areas to improve. Our emphasis will be on 
     reshaping law and government to facilitate improvement in all 
     of [A]merican society. We will emphasize elections, 
     candidates and politics as vehicles for change and the news 
     media as a primary vehicle for communications. To the degree 
     Democrats agree with our goals we will work with them but our 
     emphasis is on the Republican Party as the primary vehicle 
     for renewing American civilization.

     *Renewing American Civilization must be communicated as an 
     intellectual-cultural message with governmental-political 
     consequences. (footnote in original)

     (Ex. 47, JR-0000646).
       In February 1993, Mr. Gingrich first approached Mr. Mescon 
     about teaching the course at KSC. (Ex. 48, Mescon 0278; 6/13/
     96 Mescon Tr. 26-27). Mr. Gingrich had talked to Dr. Mescon 
     in October or November 1992 about the general subject of 
     teaching, but there was no mention of the Renewing American 
     Civilization course at that time. (6/13/96 Mescon Tr. 12-14). 
     The early discussions with Mr. Mescon included the fact that 
     Mr. Gingrich intended to have the Renewing American 
     Civilization course disseminated through a satellite uplink 
     system. (Ex. 49, Mescon 0664; 6/13/96 Mescon Tr. 29-30).
       Shortly before this discussion with Mr. Mescon, in late 
     January 1993, Mr. Gingrich met with a group of GOPAC Charter 
     Members. In a letter written some months later to GOPAC 
     Charter Members, Mr. Gingrich described the meeting as 
     follows:

       During our meeting in January, a number of Charter Members 
     were kind enough to take part in a planning session on 
     ``Renewing American Civilization.'' That session not only 
     affected the substance of what the message was to be, but 
     also how best the new message of positive solutions could be 
     disseminated to this nation's decision makers--elected 
     officials, civic and business leaders, the media and 
     individual voters. In addition to my present avenues of 
     communication I decided to add an avenue close to my heart, 
     that being teaching. I have agreed with Kennesaw State 
     College, * * * to teach ``Renewing American Civilization'' as 
     a for-credit class four times during the next four years.
       Importantly, we made the decision to have the class 
     available as a ``teleseminar'' to students all across the 
     country, reaching college campuses, businesses, civic 
     organizations, and individuals through a live ``uplink,'' 
     video tapes and audio tapes. Our hope is to have at least 
     50,000 individuals taking the class this fall and to have 
     trained 200,000 knowledgeable citizen activists by 1996 who 
     will support the principles and goals we have set.

     (Ex. 50, Kohler 137-138). 22 During an interview with 
     the Special Counsel, Mr. Gingrich said he doubted that he had 
     written this letter and said that the remark in the letter 
     that the Charter Members' comments played a large role in 
     developing the course ``exaggerates the role of GOPAC.'' The 
     letter was written to ``flatter'' the Charter Members. (11/
     13/96 Gingrich Tr. 129-130).
---------------------------------------------------------------------------
     \22\ The letter goes on to state that: [L]et me emphasize 
     very strongly that the ``Renewing American Civilization'' 
     project is not being carried out under the auspices of GOPAC, 
     but rather by Kennesaw State College and the Kennesaw State 
     College Foundation. We will not be relying on GOPAC staff to 
     support the class, and I am not asking you for financial 
     support.
     (Ex. 50, Kohler 138) (emphasis in the original).
---------------------------------------------------------------------------
       In a March 29, 1993 memorandum, Mr. Gingrich specifically 
     connects the course with the political goals of the movement. 
     The memorandum is entitled ``Renewing American Civilization 
     as a defining concept'' and is directed to ``Various Gingrich 
     Staffs.'' 23 The original draft of the memorandum is in 
     Mr. Gingrich's handwriting. (Ex. 51, GDC 08891-08892, GDC 
     10236-10238). In the memorandum, Mr. Gingrich wrote:
---------------------------------------------------------------------------
     \23\ At the top of this memorandum is a handwritten notation 
     (not Mr. Gingrich's) stating: ``Tuesday 4 p.m. GOPAC Mtg.'' 
     (Ex. 51, GDC 08891).
---------------------------------------------------------------------------
       I believe the vision of renewing American civilization will 
     allow us to orient and focus our activities for a long time 
     to come.
       At every level from the national focus of the Whip office 
     to the 6th district of Georgia focus of the Congressional 
     office to the national political education efforts of GOPAC 
     and the re-election efforts of FONG 24 we should be able 
     to use the ideas, language and concepts of renewing American 
     civilization.
---------------------------------------------------------------------------
     \24\ ``FONG'' stands for Mr. Gingrich's campaign 
     organization, ``Friends of Newt Gingrich.''

     (Ex. 51, GDC 08891).
       In the memorandum, he describes a process for the 
     dissemination of the message of Renewing American 
     Civilization to virtually every person he talks to. This 
     dissemination includes a copy of the Special Order speech and 
     a one-page outline of the course. He then goes on to describe 
     the role of the course in this process:

       The course is only one in a series of strategies designed 
     to implement a strategy of renewing American civilization.

     (Ex. 51, GDC 08891). Another strategy involving the course 
     is:

       Getting Republican activists committed to renewing American 
     civilization, to setting up workshops built around the 
     course, and to opening the party up to every citizen who 
     wants to renew American civilization.

     (Ex. 51, GDC 08892). 25 Jana Rogers, the Site Host 
     Coordinator for the course in 1993, was shown a copy of this 
     memorandum and said she had seen it in the course of her work 
     at GOPAC. (7/3/96 Rogers Tr. 64). She said that this 
     represented what she was doing in her job with the course. 
     (7/3/96 Rogers Tr. 67-69). Steve Hanser, a paid GOPAC 
     consultant and someone who worked on the course, also said 
     that the contents of the memorandum were consistent with the 
     strategy related to the movement. (6/28/96 Hanser Tr. 42-45).
---------------------------------------------------------------------------
     \25\ The ``party'' referred to in the quote is the Republican 
     Party. (11/13/96 Gingrich Tr. 80).
---------------------------------------------------------------------------
       The most direct description of the role of the course in 
     relation to the movement to renew American civilization is 
     set out in a document which Mr. Gingrich indicates he wrote. 
     (7/17/96 Gingrich Tr. 162-163). The document has a fax stamp 
     date of May 13, 1993 and indicates it is from the Republican 
     Whip's Office. (Ex. 52, GDC 10639-10649). The document has 
     three parts to it. The first is entitled ``Renewing America 
     Vision'' (Ex. 52, GDC 10639-10643); the second is entitled 
     ``Renewing America Strategies'' (Ex. 52, GDC 10644-10646); 
     and the third is entitled ``Renewing American Civilization 
     Our Goal.'' (Ex. 52, GDC 10647-10649). Mr. Gingrich said that 
     the third part was actually a separate document. (7/17/96 
     Gingrich Tr. 162-164). While all three parts are labeled 
     ``draft,'' the document was distributed to a number of Mr. 
     Gingrich's staff members and associates, including Mr. 
     Hanser, Ms. Prochnow, Ms. Rogers, Mr. Gaylord, Mr. Eisenach, 
     and Allan Lipsett (a press secretary). Each of the recipients 
     of the document have described it as an accurate description 
     of the Renewing American Civilization movement. (6/28/96 
     Hanser Tr. 48, 53; 7/10/96 Prochnow Tr. 70-71; 7/3/96 Rogers 
     Tr. 71-75; 7/15/96 Gaylord Tr. 66-67; 7/12/96 Eisenach Tr. 
     148-149, 272-275; Lipsett Tr. 30-31). 26 In the first 
     section, Mr. Gingrich wrote:
---------------------------------------------------------------------------
     \26\ Mr. Eisenach apparently sent a copy of this to a GOPAC 
     supporter in preparation for a meeting in May of 1993. (7/12/
     96 Eisenach Tr. 146-149). In the accompanying letter, Mr. 
     Eisenach said: ``The enclosed materials provide some 
     background for our discussions, which I expect will begin 
     with a review of the Vision, Strategies and Goals of our 
     efforts to Renew American Civilization. The class Newt is 
     teaching at Kennesaw State College this Fall is central to 
     that effort, and GOPAC and the newly created Progress & 
     Freedom Foundation both play important roles as well. (Ex. 
     13, GOPAC2 2337).''

       The challenge to us is to be positive, to be specific, to 
     be intellectually serious, and to be able to communicate in 
     clear language a clear vision of the American people and why 
     it is possible to create that America in our generation.
       Once the American people understand what they can have they 
     will insist that their politicians abolish the welfare state 
     which is crippling them, their children, and their country 
     and that they replace it with an opportunity society based on 
     historically proven principles that we see working all around 
     us.
     (Ex. 52, GDC 10643).
       In the second portion of the document, Mr. Gingrich 
     describes how the vision of renewing America will be 
     accomplished. He lists thirteen separate efforts that fall 
     into categories of communication of the ideas in clear 
     language, educating people in the principles of replacing the 
     welfare state with an opportunity society, and recruiting 
     public officials and activists to implement the doctrines of 
     renewing American civilization. (Ex. 52, GDC 10644-10646).
       In the third section, Mr. Gingrich explicitly connects the 
     course to the movement. First he starts out with three 
     propositions that form the core of the course: (1) a refrain 
     he refers to as the ``four can'ts;'' 27 (2) the welfare 
     state has failed; and (3) the welfare state must be replaced 
     because it cannot be repaired. (Ex. 52, GDC 10647; see also 
     Ex. 54, PFF 18361, 18365-18367). He then described the goal 
     of the movement:

     \27\ This refrain goes as follows: ``You cannot maintain a 
     civilization with twelve-year-olds having babies, fifteen-
     year-olds shooting each other, seventeen-year-olds dying of 
     AIDS, and eighteen-year-olds getting diplomas they can't 
     read.''

       Our overall goal is to develop a blueprint for renewing 
     America by replacing the welfare state, recruit, discover, 
     arouse and network together 200,000 activists including 
     candidates for elected office at all levels, and arouse 
     enough volunteers and contributors to win a sweeping victory 
     in 1996 and then actually implement our victory in the first 
     three months of 1997.
       Our specific goals are to:
       1. By April 1996 have a thorough, practical blueprint for 
     replacing the welfare state that can be understood and 
     supported by voters and activists.
       We will teach a course on Renewing American civilization on 
     ten Saturday mornings this fall and make it available by 
     satellite, by audio and video tape and by computer to 
     interested activists across the country. A month will then be 
     spent redesigning the course based on feedback and better 
     ideas. Then the course will be retaught in Winter Quarter 
     1994. It will then be rethought and redesigned for nine 
     months of critical re-evaluation based on active working 
     groups actually applying ideas across the country the course 
     will be taught for one final time in Winter Quarter 1996.
       2. Have created a movement and momentum which require the 
     national press corps

[[Page H205]]

     to actually study the material in order to report the 
     phenomenon thus infecting them with new ideas, new language 
     and new perspectives.
       3. Have a cadre of at least 200,000 people committed to the 
     general ideas so they are creating an echo effect on talk 
     radio and in letters to the editor and most of our candidates 
     and campaigns reflect the concepts of renewing America.
       Replacing the welfare state will require about 200,000 
     activists (willing to learn now [sic] to replace the welfare 
     state, to run for office and to actually replace the welfare 
     state once in office) and about six million supporters 
     (willing to write checks, put up yard signs, or do a half 
     day's volunteer work).

     (Ex. 52, GDC 10647-10649). The ``sweeping victory'' referred 
     to above is by Republicans. (11/13/96 Gingrich Tr. 86). The 
     reference to ``our candidates'' above is to Republican 
     candidates. (11/13/96 Gingrich Tr. 90). According to Mr. 
     Gingrich, Mr. Gaylord, and Mr. Eisenach, the three goals set 
     forth above were to be accomplished by the course. (7/17/96 
     Gingrich Tr. 174-179; 7/15/96 Gaylord Tr. 66-67; 7/12/96 
     Eisenach Tr. 225; Ex. 55, GOPAC2 2419; Ex. 56, GOPAC2 2172-
     2173; Ex. 57, Mescon 0626).
       In various descriptions of the course, Mr. Gingrich stated 
     that his intention was to teach it over a four-year period. 
     After each teaching of the course he intended to have it 
     reviewed and improved. The ultimate goal was to have a final 
     product developed by April of 1996. (7/17/96 Gingrich Tr. 
     109; Ex. 56, GOPAC2 2170). An explanation of this goal is 
     found in a three-page document, in Mr. Gingrich's 
     handwriting, entitled ``End State April 1996.'' (Ex. 58, PFF 
     20107-20109). Mr. Gingrich said he wrote this document early 
     in the process of developing the movement and described it as 
     a statement of where he hoped to be by April 1996 in regard 
     to the movement and the course. (7/17/96 Gingrich Tr. 108-
     115). On the first page he wrote that the 200,000 plus 
     activists will have a common language and general vision of 
     renewing America, and a commitment to replacing the welfare 
     state. In addition, ``[v]irtually all Republican incumbents 
     and candidates [will] have the common language and goals.'' 
     (Ex. 58, PFF 20107). On the second page he wrote that the 
     ``Republican platform will clearly be shaped by the vision, 
     language, goals and analysis of renewing America.'' (Ex. 58, 
     PFF 20108). In addition, virtually all Republican 
     Presidential candidates will broadly agree on that vision, 
     language, goals and analysis. (Ex. 58, PFF 20108). The 
     Clinton administration and the Democratic Party will be 
     measured by the vision, principles and goals of renewing 
     America and there will be virtual agreement that the welfare 
     state has failed. (Ex. 58, PFF 20108). On the last page Mr. 
     Gingrich wrote a timeline for the course running from 
     September of 1993 through March of 1996. At the point on the 
     timeline where November 1994 appears, he wrote the word 
     ``Election.'' (Ex. 58, PFF 20109). When Mr. Hanser was asked 
     about this document he said that the vision, language, and 
     concepts of the Renewing American Civilization movement 
     discussed in the document were being developed in the course. 
     (6/28/96 Hanser Tr. 53). He went on to say that ``End State'' 
     was ``an application of those ideas to a specific political 
     end, which is one of the purposes, remember, for the 
     course.'' (6/28/96 Hanser Tr. 54). There was an 
     appreciation that this would be primarily a Republican 
     endeavor. (6/28/96 Hanser Tr. 30).

              C. GOPAC and Renewing American Civilization

       As discussed above, GOPAC was a political action committee 
     dedicated to, among other things, achieving Republican 
     control of the United States House of Representatives. (11/
     13/96 Gingrich Tr. 169; 7/3/96 Rogers Tr. 38-40). One of the 
     methods it used was the creation of a political message and 
     the dissemination of that message. (7/12/96 Eisenach Tr. 18-
     19; 6/28/96 Hanser Tr. 13-14; 7/3/96 Rogers Tr. 36). The tool 
     principally used by GOPAC to disseminate its message was 
     audiotapes and videotapes. These were sent to Republican 
     activists, elected officials, potential candidates, and the 
     public. The ultimate purpose of this effort was to help 
     Republicans win elections. (6/27/96 Nelson Tr. 21-22; 7/15/96 
     Gaylord Tr. 37, 39; 7/3/96 Rogers Tr. 35-36).


    1. GOPAC's Adoption of the Renewing American Civilization Theme

       At least as of late January 1993, Mr. Gingrich and Mr. 
     Eisenach had decided that GOPAC's political message for 1993 
     and 1994 would be ``Renewing American Civilization.'' 28 
     (Ex. 59, PFF 37584-37590; 11/13/96 Gingrich Tr. 157; 7/17/96 
     Gingrich Tr. 61-62, 74; 7/15/96 Gaylord Tr. 35-36, 42-43; 7/
     3/96 Rogers Tr. 35, 54-56; 6/28/96 Taylor Tr. 26; 6/27/96 
     Nelson Tr. 34, 46). As described in a February 1993 
     memorandum over Mr. Gingrich's name to GOPAC Charter Members:
---------------------------------------------------------------------------
     \28\ As mentioned above, the earliest mention of the Renewing 
     American Civilization course was in February 1993. (Ex. 47, 
     JR-0000646).
---------------------------------------------------------------------------
       GOPAC's core mission--to provide the ideas and the message 
     for Republicans to win at the grass roots--is now more 
     important than ever, and we have important plans for 1993 and 
     for the 1993-1994 cycle. The final enclosure is a memorandum 
     from Jeff Eisenach outlining our 1993 program which I 
     encourage you to review carefully and, again, let me know 
     what you think.

     (Ex. 60, PFF 37569). The attached memorandum, dated February 
     1, 1993, is from Mr. Eisenach to Mr. Gingrich and references 
     their recent discussions concerning GOPAC's political program 
     for 1993. (Ex. 59, PFF 37584-37590). It then lists five 
     different programs. The fourth one states:

       (4) Message Development/''Renewing American 
     Civilization''--focus group project designed to test and 
     improve the ``Renewing American Civilization'' message in 
     preparation for its use in 1993 legislative campaigns and 
     1994 Congressional races.

     (Ex. 59, PFF 37584) (emphasis in original). Of the other four 
     programs listed, three relate directly to the use of the 
     Renewing American Civilization message. The fourth--the `` 
     `Tory (Franchise) Model' R & D''--was not done. (7/12/96 
     Eisenach Tr. 188). This same political program was also 
     listed in two separate GOPAC documents dated April 26, 1993. 
     One is entitled ``1993 GOPAC POLITICAL PROGRAM'' (Ex. 61, 
     PP001187-00193) and the other is the ``GOPAC Report to 
     Shareholders.'' (Ex. 62, Eisenach 2536-2545). The first page 
     of the Report to Shareholders states:

       The challenge facing Republicans, however, is an awesome 
     one: We must build a governing majority, founded on basic 
     principles, that is prepared to do what we failed to do 
     during the last 12 years: Replace the Welfare State with an 
     Opportunity Society and demonstrate that our ideas are the 
     key to progress, freedom and the Renewal of American 
     Civilization.
     (Ex. 62, Eisenach 2536).
       In describing the political programs, these documents 
     provide status reports that indicate that the Renewing 
     American Civilization message is at the center of each 
     project. Under ``Off-Year State Legislative Races (New 
     Jersey, Virginia)'' the project is described as ``Newt 
     speaking at and teaching training seminar for candidates at 
     [a June 5, 1993] Virginia Republican Convention.'' (Ex. 61, 
     PP001187; Ex. 62, Eisenach 2540). 29 As discussed below, 
     that speech and training session centered on the Renewing 
     American Civilization message. Under ``Ongoing Political 
     Activities'' the first aspect of the project is described as 
     sending tapes and establishing a training module on Renewing 
     American Civilization and health care. (Ex. 61, PP001187; Ex. 
     62, Eisenach 2540). Under ``Curriculum Update and Expansion'' 
     the project is described as the production of new training 
     tapes based on Mr. Gingrich's session at the Virginia 
     Republican Convention. (Ex. 61, PP01189; Ex. 62, Eisenach 
     2541). 30
---------------------------------------------------------------------------
     \29\ It is not clear whether any work was done in New Jersey 
     because that state had a Republican legislature and did not 
     need GOPAC's help. (7/15/96 Gaylord Tr. 42).
     \30\ GOPAC later produced two tapes from the session. One was 
     called ``Renewing American Civilization'' and was mailed to 
     8,742 people. (Ex. 63, JG 000001693). The other was called 
     ``Leading the Majority'' and became a major training tool for 
     GOPAC, used at least into 1996. (6/27/96 Nelson Tr. 18). Both 
     are based on the Renewing American Civilization message and 
     contain the core elements of the course. The ``Renewing 
     American Civilization'' tape contains more of the RAC 
     philosophy than the ``Leading the Majority'' tape, however, 
     both contain the basics of the course that Mr. Gingrich 
     describes as the ``central proposition'' or ``heart of the 
     course.'' (Ex. 56, GOPAC2 2146-2209; Ex. 64, PP000330-000337; 
     Ex. 54, PFF 18361, 18365-18367).
---------------------------------------------------------------------------


  2. GOPAC'S Inability to Fund Its Political Projects in 1992 and 1993

       At the end of 1992, GOPAC was at least $250,000 short of 
     its target income (Ex. 65, PFF 38054) and financial problems 
     lasted throughout 1993. (7/15/96 Gaylord Tr. 71-72). Because 
     of these financial shortfalls, GOPAC had to curtail its 
     political projects, particularly the tape program described 
     above. (Ex. 65, PFF 38054-38060; Ex. 66, WGC 07428; 7/15/96 
     Gaylord Tr. 71-72, 76). For example, according to Mr. 
     Gaylord, GOPAC usually sent out eight tapes a year; however, 
     in 1993, it only sent out two. (7/15/96 Gaylord Tr. 76). One 
     of these was the ``Renewing American Civilization'' tape made 
     from Mr. Gingrich's June 1993 training session at the 
     Virginia Republican Convention (Ex. 63, JG 000001693). 
     Accompanying the mailing of this tape was a letter from Joe 
     Gaylord in his role as Chairman of GOPAC. That letter states:

       Ideas matter, and replacing the welfare state with an 
     Opportunity society is so important that Newt is developing a 
     college course that he'll be teaching this fall on this 
     subject, Renewing American Civilization.
       I wanted you to hear his initial thoughts because it seems 
     to me that we can't answer the question ``What does the 
     Republican Party stand for?'' without considering the issues 
     Newt has raised in this speech.
     (Ex. 67, WGC 06215). In light of GOPAC's poor financial 
     condition, the dissemination of the Renewing American 
     Civilization message through the course was beneficial to its 
     political projects. In this regard, the following exchange 
     occurred with Mr. Gingrich:

       Mr. Cole: [I]s one of the things GOPAC wanted to have done 
     during 1993 and 1994 was the dissemination of its message; is 
     that correct?
       Mr. Gingrich: Yes.
       Mr. Cole: GOPAC also did not have much money in those 
     years; is that correct?
       Mr. Gingrich: That is correct. Particularly--it gets better 
     in '94, but '93 was very tight.
       Mr. Cole: That curtailed how much it could spend on 
     disseminating its message?
       Mr. Gingrich: Right.
       Mr. Cole: The message that it was trying to disseminate was 
     the Renewing American Civilization message; is that right?
       Mr. Gingrich: Was the theme, yes.


[[Page H206]]


     (11/13/96 Gingrich Tr. 157-158). With respect to whether the 
     dissemination of the course benefited GOPAC, the following 
     exchange occurred:

       Mr. Cole: Was GOPAC better off in a situation where the 
     message that it had chosen as its political message for those 
     years was being disseminated by the course? Was it better 
     off?
       Mr. Gingrich: The answer is yes.

     (11/13/96 Gingrich Tr. 167).


 3. GOPAC's Involvement in the Development, Funding, and Management of 
               the Renewing American Civilization Course

                           a. GOPAC personnel

       Starting at least as early as February 1993, Mr. Eisenach, 
     then GOPAC's Executive Director, was involved in developing 
     the Renewing American Civilization course. Although Mr. 
     Eisenach has stated that Mr. Gaylord was responsible for the 
     development of the course until mid-May 1993 (7/12/96 
     Eisenach Tr. 71-75; Ex. 68, Eisenach Testimony Before House 
     Ethics Committee at Tr. 142; Ex. 69, PFF 1167), Mr. Gaylord 
     stated that he never had such a responsibility. (7/15/96 
     Gaylord Tr. 15-18). Additionally, Mr. Gingrich and others 
     involved in the development of the course identified Mr. 
     Eisenach as the person primarily responsible for the 
     development of the course from early on. (7/17/96 Gingrich 
     Tr. 117, 121; 6/13/96 Mescon Tr. 30-31; 6/28/96 Hanser Tr. 
     74-75; 7/3/96 Rogers Tr. 17-18, 22). 31 Several 
     documents also establish Mr. Eisenach's role in the 
     development of the course starting at an early stage. One 
     document written by Mr. Eisenach is dated February 25, 1993, 
     and shows him, as well as others, tasked with course 
     development and marketing. (Ex. 70, PFF 16628). A memorandum 
     from Mr. Gingrich to Mr. Mescon, dated March 1, 1993, 
     describes how Mr. Eisenach is involved in contacting a number 
     of institutions in regard to funding for the course. (Ex. 71, 
     KSC 3491).
---------------------------------------------------------------------------
     \31\ The February 15, 1993, agenda for the meeting where the 
     RAC course and other GOPAC issues were discussed, lists Mr. 
     Eisenach as an attendee, but does not list Mr. Gaylord as 
     being present. (Ex. 47, JR-0000645).
---------------------------------------------------------------------------
       Aside from Mr. Eisenach, other people affiliated with GOPAC 
     were involved in the development of the course. Mr. Gingrich 
     was General Chairman of GOPAC and had a substantial role in 
     the course. Jana Rogers served as Mr. Eisenach's executive 
     assistant at GOPAC during the early part of 1993 and in that 
     role worked on the development of the course. (7/3/96 Rogers 
     Tr. 16-17). In June 1993, she temporarily left GOPAC at Mr. 
     Eisenach's request to become the course's Site Host 
     Coordinator. As a condition of her becoming the site host 
     coordinator, she received assurances from both Mr. Eisenach 
     and Mr. Gaylord that she could return to GOPAC when she had 
     finished her assignment with the course. (7/3/96 Rogers Tr. 
     12-16). After approximately five months as the course's Site 
     Host Coordinator, she returned to GOPAC for a brief time. (7/
     3/96 Rogers 24-25). Steve Hanser, a member of the GOPAC Board 
     and a paid GOPAC consultant, helped develop the course. (6/
     28/96 Hanser Tr. 10, 19-21). Mr. Gaylord was a paid 
     consultant for GOPAC and had a role in developing the course. 
     (7/15/96 Gaylord Tr. 15).
       Pamla Prochnow was hired as the Finance Director for GOPAC 
     in April 1993. 32 Ms. Prochnow spent a portion of her 
     early time at GOPAC raising funds for the course. (7/10/96 
     Prochnow Tr. 14-16; 6/13/96 Mescon Tr. 63-67, 82; Ex. 74, 
     Documents produced by Prochnow). 33 A number of the 
     people and entities she contacted were GOPAC supporters. In 
     fact, according to Mr. Eisenach, approximately half of the 
     first year's funding for the course came from GOPAC 
     supporters. (Ex. 69, PFF 1168-1169). Some of those people 
     also helped fund the course in 1994. (See attachments to Ex. 
     69, PFF 1252-1277) (the documents contain Mr. Eisenach's 
     marks of ``G'' next to the people, companies, and foundations 
     that were donors or related to donors to GOPAC.))
---------------------------------------------------------------------------
     \32\ During her interviewing process, Ms. Prochnow was 
     provided with materials to help her understand the goals of 
     GOPAC. (Ex. 72, GOPAC2 0529). Although she has no specific 
     recollection as to what these materials were, she believes 
     they were materials related to the Renewing American 
     Civilization movement. (7/10/96 Prochnow Tr. 18-19; Ex. 73, 
     PP000459-000463; PP00778).
     \33\ Mr. Eisenach has stated that he did not ask Ms. Prochnow 
     to do this fundraising work, but rather Mr. Gaylord did. (7/
     12/96 Eisenach Tr. 71, 75; Ex. 65, PFF 1168). However, both 
     Mr. Gaylord and Ms. Prochnow clearly state that it was Mr. 
     Eisenach, not Mr. Gaylord, who directed Ms. Prochnow to 
     perform the fundraising work. (7/15/96 Gaylord Tr. 16, 17; 7/
     10/96 Prochnow Tr. 14, 73-74; Ex. 71, Letter dated July 25, 
     1996, from Prochnow's attorney).
---------------------------------------------------------------------------
       When Mr. Eisenach resigned from GOPAC and assumed the title 
     of the course's project director, two GOPAC employees joined 
     him in his efforts. Kelly Goodsell had been Mr. Eisenach's 
     Administrative Assistant at GOPAC since March of 1993 (7/9/96 
     Goodsell Tr. 8, 11), and Michael DuGally had been an employee 
     at GOPAC since January 1992. (7/19/96 DuGally Tr. 9-10). Both 
     went to work on the course as employees of Mr. Eisenach's 
     Washington Policy Group (``WPG'').34 In the contract 
     between WPG and KSCF, it was understood that WPG would devote 
     one-half of the time of its employees to working on the 
     course. WPG had only one other client at this time--GOPAC. In 
     its contract with GOPAC, WPG was to receive the same monthly 
     fee as was being paid by KSCF in return for one-half of the 
     time of WPG's employees. (Ex. 76, PFF 37450-37451). The 
     contract also stated that to the extent that WPG did not 
     devote full time to KSCF and GOPAC projects, an adjustment in 
     the fee paid to WPG would be made. (Ex. 76, PFF 37450). 
     Neither Ms. Goodsell nor Mr. DuGally worked on any GOPAC 
     project after they started working on the course in June of 
     1993. (7/9/96 Goodsell Tr. 8, 10-11; 7/19/96 DuGally Tr. 14). 
     Mr. Eisenach said that he spent at the most one-third of his 
     time during this period on GOPAC projects. (7/12/96 Eisenach 
     Tr. 36-37). No adjustment to WPG's fee was made by GOPAC. (7/
     12/96 Eisenach Tr. 44).35
---------------------------------------------------------------------------
     \34\ As discussed earlier, WPG was a corporation formed by 
     Mr. Eisenach which had a contract with KSCF to run all 
     aspects of the course.
     \35\ The only other person who was involved in the early 
     development of the course was Nancy Desmond. She did not work 
     for GOPAC, but had been a volunteer at Mr. Gingrich's 
     campaign office for approximately a year before starting to 
     work on the course. (6/13/96 Desmond Tr. 15-16). She 
     continued to work as a volunteer for Mr. Gingrich's campaign 
     until July of 1993, when she was told to resign from the 
     campaign because of the perceived negative image her two 
     roles would project. (6/13/96 Desmond Tr. 37-38; Ex. 77, PFF 
     38289).
---------------------------------------------------------------------------
       The February 15, 1993, agenda discussed above also gives 
     some indication of GOPAC's role in the development of the 
     Renewing American Civilization course. (Ex. 47, JR-0000645-
     0000647). Of the eight attendees at that meeting, five worked 
     for or were closely associated with GOPAC (Mr. DuGally, Mr. 
     Eisenach and Ms. Rogers were employees, Mr. Hanser was a 
     member of the Board and a paid GOPAC consultant, and Mr. 
     Gingrich was the General Chairman). Furthermore, the agenda 
     for that meeting indicates that GOPAC political issues were 
     to be discussed as well as course planning issues. Two of the 
     GOPAC political issues apparently related to: (1) the 
     political program described in the February 1, 
     1993, memorandum which lists four of GOPAC's five 
     political projects as relating to Renewing American 
     Civilization (Ex. 60, PFF 37569-37576), and (2) GOPAC's 
     Charter Meeting agenda entitled ``Renewing American 
     Civilization.'' As discussed below, this Charter Meeting 
     included breakout sessions to help develop a number of the 
     lectures for the course, as well as GOPAC's message for 
     the 1993-1994 election cycle. (Ex. 78, PP00448-PP000452). 
     As Mr. Gingrich stated in his interview, his intention was 
     to have GOPAC use Renewing American Civilization as its 
     message during this time frame. (7/17/96 Gingrich Tr. 74; 
     7/3/96 Rogers Tr. 54-56).
       In 1993 Mr. Eisenach periodically produced a list of GOPAC 
     projects. The list is entitled ``Major Projects Underway'' 
     and was used for staff meetings. (7/12/96 Eisenach Tr. 213; 
     7/15/96 Gaylord Tr. 79-80; 6/28/96 Taylor Tr. 43-44). Items 
     related to the Renewing American Civilization course were 
     listed in several places on GOPAC's project sheets. For 
     example, from April 1993 through at least June 1993, 
     ``Renewing American Civilization Support'' is listed under 
     the ``Planning/Other'' section of GOPAC's projects sheets. 
     (Ex. 79, JG 000001139, JG 000001152, JG 000001173, JG 
     000001270). Another entry which appears a number of times 
     under ``Planning/Other'' is ``RAC Pert Chart, etc.'' (Ex. 79, 
     JG 000001152, JG 000001173, JG 000001270). It refers to a 
     time-line Mr. Eisenach wrote while he was the Executive 
     Director of GOPAC relating to the development of the various 
     components of the course, including marketing and site 
     coordination, funding, readings, and the course textbook. 
     (Ex. 80, PFF 7529-7533; 7/12/96 Eisenach Tr. 212-213). 
     Finally, under the heading ``Political'' on the May 7, 1993, 
     project sheet, is listed the phrase ``CR/RAC Letter.'' (Ex. 
     79, JG 000001152). This refers to a mailing about the course 
     sent over Mr. Gingrich's name by GOPAC to approximately 1,000 
     College Republicans. (Ex. 81, Mescon 0918, 0915, 0914 and 
     Meeks 0038-0040; 7/15/96 Gaylord Tr. 81-82).

        b. Involvement of GOPAC charter members in course design

       As discussed earlier, Mr. Gingrich had a meeting with GOPAC 
     Charter Members in January 1993 to discuss the ideas of 
     Renewing American Civilization. (11/13/96 Gingrich Tr. 132). 
     According to a letter written about that meeting, the idea to 
     teach arose from that meeting. In April 1993, GOPAC held its 
     semi-annual Charter Meeting. Its theme was ``Renewing 
     American Civilization.'' (Ex. 78, PP000448-PP000452). Mr. 
     Gingrich gave the keynote address, entitled ``Renewing 
     American Civilization,'' and there were five breakout 
     sessions entitled ``Advancing the Five Pillars of Twenty-
     first Century Democracy.'' (Ex. 78, PP000449). Each of the 
     breakout sessions was named for a lecture in the course, and 
     these sessions were used to help develop the content of the 
     course (11/13/96 Gingrich Tr. 164-165; 7/17/96 Gingrich Tr. 
     69-70; 7/12/96 Eisenach Tr. 144-146; 7/15/96 Gaylord Tr. 46) 
     as well as GOPAC's political message for the 1993 legislative 
     campaigns and the 1994 congressional races. (11/13/96 
     Gingrich Tr. 164-165; Ex. 62, Eisenach 2540). As stated in a 
     memorandum from Mr. Eisenach to GOPAC Charter Members, these 
     breakout sessions were intended to ``dramatically improve 
     both our understanding of the subject and our ability to 
     communicate it.'' (Ex. 82, Roberts 0045-0048).

                        c. Letters sent by GOPAC

       In June of 1993, GOPAC sent a letter over Mr. Gingrich's 
     signature stating that ``it is vital for Republicans to now 
     DEVELOP and put forward OUR agenda for America.'' (Ex. 83, 
     PP000534) (emphasis in original). In discussing an enclosed 
     survey the letter states:


[[Page H207]]


       It is the opening step in what I want to be an 
     unprecedented mobilization effort for Republicans to begin 
     the process of replacing America's failed welfare state.
       And the key political component of that effort will be an 
     all-out drive to end the Democrat's 40 year control of the 
     U.S. House or Representatives in 1994!

     (Ex. 83, PP000535).36 The letter then states that it is 
     important to develop the themes and ideas that will be needed 
     to accomplish the victory in 1994. (Ex. 83, PP000536). In 
     language that is very similar to the core of the course, but 
     with an overtly partisan aspect added to it, the letter 
     states:

     \36\ The copy of the letter produced is a draft. While Mr. 
     Gingrich was not able to specifically identify the letter, he 
     did state that the letter fit the message and represented the 
     major theme of GOPAC at that time. (7/17/96 Gingrich Tr. 60-
     61).
---------------------------------------------------------------------------
       Personally, I believe we can and should turn the 1994 
     midterm elections into not just a referendum on President 
     Clinton, but on whether we maintain or replace the welfare 
     state and the Democratic Party which supports it.
       I believe the welfare state which the Democrats have 
     created has failed.
       In fact, I challenge anyone to say that it has succeeded, 
     when today in America twelve year olds are having children, 
     fifteen year olds are killing each other, seventeen year olds 
     are dying of AIDS and eighteen year olds are being given high 
     school diplomas they cannot even read.

                           *   *   *   *   *

       And what I want to see our Party work to replace it with is 
     a plan to renew America based on what I call ``pillars'' of 
     freedom and progress:
       (1) Personal strength;
       (2) A commitment to quality in the workplace;
       (3) Spirit of American Inventiveness;
       (4) Entrepreneurial free enterprise applied to both the 
     private and public sectors;
       (5) Applying the lessons of American history as to what 
     works for Americans to proposed government solutions to our 
     problems.
       After being active in politics for thirty years, and being 
     in Congress for fourteen of them, I firmly believe these five 
     principles can develop a revolutionary change in government. 
     Properly applied, they can dramatically improve safety, 
     health, education, job creation, the environment, the family 
     and our national defense.

     (Ex. 83, PP000536). In other letters sent out by GOPAC, the 
     role of the Renewing American Civilization course in relation 
     to the Republican political goals of GOPAC were described in 
     explicit terms. A letter to Neil Gagnon, dated May 5, 1993, 
     over Mr. Gingrich's name, states:

       As we discussed, it is time to lay down a blue print--which 
     is why in part I am teaching the course on Renewing American 
     Civilization. Hopefully, it will provide the structure to 
     build an offense so that Republicans can break through 
     dramatically in 1996. We have a good chance to make 
     significant gains in 1994, but only if we can reach the point 
     where we are united behind a positive message, as well as a 
     critique of the Clinton program.37
---------------------------------------------------------------------------
     \37\ Jana Rogers had not seen this letter before her 
     interview, but after reading it she said that through her 
     work on the course, she believed the contents of the letter 
     set out one of the goals of the Renewing American 
     Civilization course. (7/3/96 Rogers Tr. 75-76).

     (Ex. 84, GOPAC2 0003). In a letter dated June 21, 1993, that 
     Pamla Prochnow, GOPAC's new finance director, sent to Charter 
     Members as a follow-up to an earlier letter from Mr. 
---------------------------------------------------------------------------
     Gingrich, she states:

       As the new finance director, I want to introduce myself and 
     to assure you of my commitment and enthusiasm to the 
     recruitment and training of grassroots Republican candidates. 
     In addition, with the course Newt will be teaching in the 
     fall--Renewing American Civilization--I see a very real 
     opportunity to educate the American voting population to 
     Republican ideals, increasing our opportunity to win local, 
     state and Congressional seats.38
---------------------------------------------------------------------------
     \38\ Both Dr. Mescon and Dr. Siegel of KSC were shown some of 
     these letters. They both said that had they known of this 
     intention in regard to the course, they would not have viewed 
     it as an appropriate project for KSC. (6/13/96 Mescon Tr. 84-
     87; 6/13/96 Siegel Tr. 60-62).

     (Ex. 85, PP000194). On January 3, 1994, Ms. Prochnow sent 
---------------------------------------------------------------------------
     another letter to the Charter Members. It states:

       As we begin the new year, we know our goals and have in 
     place the winning strategies. The primary mission is to elect 
     Republicans at the local, state and congressional level. 
     There, also, is the strong emphasis on broadcasting the 
     message of renewing American civilization to achieve peace 
     and prosperity in this country.

     (Ex. 86, PP000866). In another letter sent over Mr. 
     Gingrich's name, the course is again discussed. The letter, 
     dated May 12, 1994, is addressed to Marc Bergschneider and 
     states:

       I am encouraged by your understanding that the welfare 
     state cannot merely be repaired, but must be replaced and 
     have made a goal of activating at least 200,000 citizen 
     activists nationwide through my course, Renewing American 
     Civilization. We hope to educate people with the fact that we 
     are entering the information society. In order to make sense 
     of this society, we must rebuild an opportunistic country. In 
     essence, if we can reach Americans through my course, 
     independent expenditures, GOPAC and other strategies, we just 
     might unseat the Democratic majority in the House in 1994 and 
     make government accountable again.

     (Ex. 87, GDC 01137). Current and former GOPAC employees said 
     that before a letter would go out over Mr. Gingrich's 
     signature, it would be approved by him. (7/3/96 Rogers Tr. 
     88; 6/27/96 Nelson Tr. 56-60). According to Mr. Eisenach, Mr. 
     Gingrich ``typically'' reviewed letters that went out over 
     his signature, but did not sign all letters that were part of 
     a mass mailing. (7/12/96 Eisenach Tr. 35). With respect to 
     letters sent to individuals over Mr. Gingrich's name, Mr. 
     Eisenach said the following:

       Mr. Eisenach: [Mr. Gingrich] would either review those 
     personally or be generally aware of the content. In other 
     words, on rare, if any, occasions, did I or anybody else 
     invent the idea of sending a letter to somebody, write the 
     letter, send it under Newt's signature and never check with 
     him to see whether he wanted the letter to go.
       There were occasions--now, sometimes that would be--Newt 
     and I would discuss the generic need for a letter. I would 
     write the letter and send it and fax a copy to him and make 
     sure he knew that it had been sent.
       Mr. Cole: Would you generally review the contents of the 
     letter with him prior to it going out?
       Mr. Eisenach: Not necessarily word for word. It would 
     depend. But as a general matter, yes.

     (7/12/96 Eisenach Tr. 36). Mr. Gingrich's Administrative 
     Assistant, Rachel Robinson, stated that in 1993 and 1994 
     whenever she received a letter or other document for Mr. 
     Gingrich that was to be filed, she would sign Mr. Gingrich's 
     name on the document and place her initials on it. This 
     ``usually'' meant that Mr. Gingrich had seen the letter. (9/
     6/96 Robinson Tr. 4). The letter sent to Mr. Bergschneider on 
     May 12, 1994, was produced from the files of Mr. Gingrich's 
     Washington, D.C. office and has Ms. Robinson's initials on 
     it. (9/6/96 Robinson Tr. 4).
       The letters sent out over Mr. Gingrich's signature were 
     shown to Mr. Gingrich during an interview. He said that none 
     of them contained his signature, he did not recall seeing 
     them prior to the interview, and said he would not have 
     written them in the language used. (7/17/96 Gingrich Tr. 77-
     78, 140-141). Mr. Gaylord said that ``it seemed to [him] 
     there was a whole series of kind of usual correspondence that 
     was done by the staff'' that Mr. Gingrich would not see. (7/
     15/96 Gaylord Tr. 77). The content of the letters listed 
     above, however, are quite similar to statements made directly 
     by Mr. Gingrich about the movement and the role of the course 
     in the movement. (See, e.g., Ex. 47, JR-0000646 (``emphasis 
     is on the Republican Party as the primary vehicle for 
     renewing American civilization''); Ex. 52 GDC 10639-10649 
     (``sweeping victory'' will be accomplished through the 
     course); Ex. 88, GDC 10729-10733 (``Democrats are the party 
     of the welfare state.'' ``Only by voting Republican can the 
     welfare state be replaced and an opportunity society be 
     created.''))

  D. ``Replacing the Welfare State With an Opportunity Society'' as a 
                             Political Tool

       According to Mr. Gingrich, the main theme of both the 
     Renewing American Civilization movement and the course was 
     the replacement of the welfare state with an opportunity 
     society. (7/17/96 Gingrich Tr. 52, 61, 170; 11/13/96 Gingrich 
     Tr. 85). Mr. Gingrich also said, ``I believe that to replace 
     the welfare state you almost certainly had to have a 
     [R]epublican majority.'' (7/17/96 Gingrich Tr. 51). ``I think 
     it's hard to replace the welfare state with the [D]emocrats 
     in charge.'' (7/17/96 Gingrich Tr. 62). The course was 
     designed to communicate the vision and language of the 
     Renewing American Civilization movement and ``was seen as a 
     tool that could be used to replace the welfare state.'' (7/
     17/96 Gingrich Tr. 159-160; see also 11/13/96 Gingrich Tr. 
     47, 76).39
---------------------------------------------------------------------------
     \39\ During his interview, the following exchange occurred 
     regarding the movement:
     Mr. Cole: Yet there was an emphasis in the movement on the 
     Republican Party?
     Mr. Gingrich: There certainly was on my part, yes.
     Mr. Cole: You were at the head of the movement, were you not?
     Mr. Gingrich: Well, I was the guy trying to create it.
     Mr. Cole: The course was used as the tool to communicate the 
     message of the movement, was it not?
     Mr. Gingrich: Yes, it was a tool, yes.
     (11/13/96 Gingrich Tr. 76).
---------------------------------------------------------------------------
       In addition to being the title of a movement, the course, 
     and GOPAC's political message for 1993 and 1994, ``Renewing 
     American Civilization'' was also the main message of 
     virtually every political and campaign speech made by Mr. 
     Gingrich in 1993 and 1994. (7/17/96 Gingrich Tr. 69).40 
     According to Mr. Gingrich, there was an effort in 1994 to use 
     the ``welfare state'' label as a campaign tool against the 
     Democrats and to use the ``opportunity society'' label as an 
     identification for the Republicans. (7/17/96 Gingrich Tr. 
     113). Mr. Gingrich made similar comments in a subsequent 
     interview:

     \40\ According to Ms. Rogers, the course's Site Host 
     Coordinator, there was coordination between the message, the 
     movement, and activists. ``They were extensions of Newt and 
     each had to make--each group had to make sure--what I mean 
     specifically is GOPAC and the class had to make sure that 
     they were using the same message that Newt was trying to 
     disseminate, that it was identical.
     (7/3/96 Rogers Tr. 54).
---------------------------------------------------------------------------
       Mr. Cole: During [1993-1994] was there an effort to connect 
     the Democrats with the welfare state?

[[Page H208]]

       Mr. Gingrich: Absolutely; routinely and repetitively.
       Mr. Cole: And a campaign use of that?
       Mr. Gingrich: Absolutely.
       Mr. Cole: A partisan use, if you will?
       Mr. Gingrich: Absolutely.
       Mr. Cole: And was there an effort to connect the 
     Republicans with the opportunity society?
       Mr. Gingrich: Absolutely.
       Mr. Cole: A partisan use?
       Mr. Gingrich: Yes, sir.
       Mr. Cole: And that was the main theme of the course, was it 
     not, replacement of the welfare state with the opportunity 
     society?
       Mr. Gingrich: No. The main theme of the course is renewing 
     American civilization and the main subset is that you have--
     that you have to replace the welfare state with an 
     opportunity society for that to happen.

     (11/13/96 Gingrich Tr. 79-80). As referred to above, Mr. 
     Gingrich held a training seminar for candidates on behalf of 
     GOPAC at the Virginia Republican Convention in June 1993. (7/
     15/96 Gaylord Tr. 29-30). He gave a speech entitled 
     ``Renewing American Civilization'' which described the nature 
     of the movement and the course. (Ex. 56, GOPAC2 2146-2209). 
     Near the beginning of his speech, Mr. Gingrich said:

       What I first want to suggest to you [is] my personal belief 
     that we are engaged in a great moral and practical effort, 
     that we are committed to renewing American civilization, and 
     I believe that's our battle cry. That we want to be the party 
     and the movement that renews American civilization and that 
     renewing American civilization is both an idealistic cause 
     and a practical cause at the same time.

     (Ex. 56, GOPAC2 2146). He then told the audience that he has 
     four propositions with which 80% to 95% of Americans will 
     agree. These are: (1) there is an American civilization; (2) 
     the four can'ts; (3) the welfare state has failed; and (4) to 
     renew American civilization it is necessary to replace the 
     welfare state. (Ex. 56, GOPAC2 2149-2153). \41\ Mr. Gingrich 
     then went on to relate the principles of renewing American 
     civilization to the Republican party:

     \41\ These four propositions were used as the ``central 
     propositions'' or ``heart'' of the course to introduce each 
     session in 1993 and 1994. (Ex. 54, PFF 18361, 18365-18367).
---------------------------------------------------------------------------
       We can't do much about the Democrats. They went too far to 
     the left. They are still too far to the left. That's their 
     problem. But we have a huge burden of responsibility to 
     change our behavior so that every one who wants to replace 
     the welfare state and every one who wants to renew American 
     civilization has a home, and it's called being Republican. We 
     have to really learn how to bring them all in.
       And I think the first step of all that is to insist that at 
     the core of identification the only division that matters is 
     that question. You want to replace the welfare state and 
     renew American civilization. The answer is just fine, come 
     and join us. And not allow the news media, not allow the 
     Democrats, not allow interest groups to force us into fights 
     below that level in terms of defining who we are. That in any 
     general election or any effort to govern that we are every 
     one who is willing to try to replace the welfare state, and 
     we are every one who is willing to renew American 
     civilization.
       Now, that means there is a lot of ground in there to argue 
     about details. Exactly how do you replace the welfare state. 
     Exactly which idea is the best idea. But if we accept every 
     one coming in, we strongly change the dynamics of exactly how 
     this country is governed and we begin to create a majority 
     Republican party that will frankly just inexorably crow[d] 
     out the Democrats and turn them into minority status.

     (Ex. 56, GOPAC2 2155-2156). Mr. Gingrich told the audience 
     that he would discuss three areas in his remarks: (1) the 
     principles of renewing American civilization; (2) the 
     principles and skills necessary to be a ``renewing 
     candidate'' and then ultimately a ``renewing incumbent;'' and 
     (3) the concept and principles for creating a community among 
     those who are committed to replacing the welfare state and 
     renewing American civilization. (Ex. 56, GOPAC2 2168). In 
     speaking of the first area, Mr. Gingrich said that it is a 
     very complicated subject. Because of this he was only going 
     to give a ``smattering'' of an outline at the training 
     seminar. (Ex. 56, GOPAC2 2170). He said, however, that in the 
     fall he planned to teach a twenty-hour course on the subject, 
     and then refine it and teach it again over a four-year 
     period. (Ex. 56, GOPAC2 2170). He then described the three 
     goals he had for the course:

       First, we want to have by April of '96 a genuine 
     intellectual blueprint to replace the welfare state that you 
     could look at as a citizen and say, yeah, that has a pretty 
     good chance of working. That's dramatically better than what 
     we've been doing.
       Second, we want to find 200,000 activist citizens, and I 
     hope all of you will be part of this, committed at every 
     level of American life to replacing the welfare state. 
     Because America is a huge decentralized country. You've got 
     to have school boards, city councils, hospital boards, state 
     legislatures, county commissioners, mayors, and you've got to 
     have congressmen and senators and the President and 
     governors, who literally [sic] you take all the elected posts 
     in America and then you take all the people necessary to run 
     for those posts and to help the campaigns, etc., I think it 
     takes around 200,000 team players to truly change America.

     (Ex. 56, GOPAC2 2170-2171).

       Third, we create a process--and this is something you can 
     all help with in your own districts--we create a process 
     interesting enough that the national news media has to 
     actually look at the material in order to cover the 
     course.\42\
---------------------------------------------------------------------------
     \42\ These are the same three specific goals that were listed 
     in the document entitled ``Renewing American Civilization Our 
     Goal'' that referred to achieving a ``sweeping victory in 
     1996'' as the overall goal. (Ex. 52, GDC 10647-10648).

     (Ex. 56, GOPAC2 2173). The transcript of his speech goes on 
     for the next 30 pages to describe the five pillars of 
     American civilization that form the basis of the course, and 
     how to use them to get supporters for the candidates' 
---------------------------------------------------------------------------
     campaigns. In discussing this Mr. Gingrich said:

       Now, let me start just as [a] quick overview. First, as I 
     said earlier, American civilization is a civilization. Very 
     important. It is impossible for anyone on the left to debate 
     you on that topic.

                           *   *   *   *   *

       But the reason I say that is if you go out and you campaign 
     on behalf of American civilization and you want to renew 
     American civilization, it is linguistically impossible to 
     oppose you. And how is your opponent going to get up and say 
     I'm against American civilization?

     (Ex. 56, GOPAC2 2175-2176). Near the end of the speech he 
     said:

       I believe, if you take the five pillars I've described, if 
     you find the three areas that will really fit you, and are 
     really in a position to help you, that you are then going to 
     have a language to explain renewing American civilization, a 
     language to explain how to replace the welfare state, and 
     three topics that are going to arouse volunteers and arouse 
     contributions and help people say, Yes, I want this done.

     (Ex. 56, GOPAC2 2207).\43\
---------------------------------------------------------------------------
     \43\ As discussed above, this speech was used by GOPAC to 
     produce two training tapes. One was called ``Renewing 
     American Civilization'' and the other was called ``Leading 
     the Majority.'' (7/15/96 Gaylord Tr. 31).
---------------------------------------------------------------------------
       In a document that Mr. Gingrich apparently wrote during 
     this time (Ex. 89, Eisenach 2868-2869), the course is related 
     to the Renewing American Civilization movement in terms of 
     winning a Republican majority. The ``House Republican Focus 
     for 1994'' is directed at having Republicans communicate a 
     positive message so that a majority of Americans will 
     conclude that their only hope for real change is to vote 
     Republican. In describing that message, the document states:

       The Republican party can offer a better life for virtually 
     every one if it applies the principles of American 
     civilization to create a more flexible, decentralized market 
     oriented system that uses the Third Wave of change and 
     accepts the disciplines of the world market.
       These ideas are outlined in a 20 hour intellectual 
     framework ``Renewing American Civilization'' available on 
     National Empowerment Television every Wednesday from 1 pm to 
     3 pm and available on audio tape and video tape from 1-800-
     TO-RENEW.

     (Ex. 89, Eisenach 2869). In a document dated March 21, 1994, 
     and entitled ``RENEWING AMERICA: The Challenge for Our 
     Generation,'' \44\ Mr. Gingrich described a relationship 
     between the course and the movement. (Ex. 90, GDC 00132-
     00152). Near the beginning of the document, one of the ``key 
     propositions'' listed is that the welfare state has failed 
     and must be replaced with an opportunity society. (Ex. 90, 
     GDC 00136). The opportunity society must be based on, among 
     other things, the principles of American civilization. (Ex. 
     90, GDC 00136). The document states that the key ingredient 
     for success is a movement to renew American civilization by 
     replacing the welfare state with an opportunity society. (Ex. 
     90, GDC 00137). That movement will require at least 200,000 
     ``partners for progress'' committed to the goal of replacing 
     the welfare state with an opportunity society and willing to 
     study the principles of American civilization, work on 
     campaigns, run for office, and engage in other activities to 
     further the movement. (Ex. 90, GDC 00138).\45\ Under the 
     heading ``Learning the Principles of American Civilization'' 
     the document states, ``The course, `Renewing American 
     Civilization', is designed as a 20 hour introduction to the 
     principles necessary to replace the welfare state with an 
     opportunity society.'' (Ex. 90, GDC 00139). It then lists the 
     titles of each class and the book of readings associated with 
     the course. The next section is titled ``Connecting the 
     `Partners' to the `Principles'.'' (Ex. 90, GDC 00140). It 
     describes where the course is being taught, including that it 
     is being offered five times during 1994 on National 
     Empowerment Television, and states that, ``Our goal is to get 
     every potential partner for progress to take the course and 
     study the

[[Page H209]]

     principles.'' (Ex. 90, GDC 00140).\46\ The document then 
     lists a number of areas where Republicans can commit 
     themselves to ``real change,'' including the Contract with 
     America and a concerted effort to end the Democratic majority 
     in the House. (Ex. 90, GDC 00144-00150).
---------------------------------------------------------------------------
     \44\ Mr. Gingrich at least wrote the first draft of this 
     document and stated that it was compatible with what he was 
     doing at that time. It was probably a briefing paper for the 
     House Republican members. (Ex. 90, GDC 00132-00152; 7/17/96 
     Gingrich Tr. 203-204).
     \45\ In this section he defines the ``partners for progress'' 
     as ``citizens activists.''
     \46\ The course was broadcast twice each week on National 
     Empowerment Television. In light of it being a ten-week 
     course, and being offered five times during 1994 on NET, it 
     ran for 50 weeks during this election year. In addition to 
     being on NET, it was also on a local cable channel in Mr. 
     Gingrich's district in Georgia. (Ex. 91, DES 01048; 7/18/96 
     Gingrich Tr. 257-259).
---------------------------------------------------------------------------
       A May 10, 1994 document which Mr. Gingrich drafted (7/18/96 
     Gingrich Tr. 234-235; 7/15/96 Gaylord Tr. 70) entitled ``The 
     14 Steps[:] Renewing American Civilization by replacing the 
     welfare state with an opportunity society,'' he notes the 
     relationship between the course and the partisan aspects of 
     the movement. (Ex. 88, GDC 10729-10733). After stating that 
     the welfare state has failed and needs to be replaced (Ex. 
     88, GDC 10729), the document states that, ``Replacing the 
     welfare state will require a disciplined approach to both 
     public policy and politics.'' (Ex. 88, GDC 10730). ``We must 
     methodically focus on communicating and implementing our 
     vision of replacing the welfare state.'' (Ex. 88, GDC 10730). 
     In describing the replacement that will be needed, Mr. 
     Gingrich says that it:

     must be an opportunity society based on the principles of 
     American civilization * * *.
       These principles each receive two hours of introduction in 
     `Renewing American Civilization', a course taught at 
     Reinhardt College. The course is available on National 
     Empowerment Television from 1-3 P.M. every Wednesday and by 
     videotape or audiotape by calling 1-800-TO-RENEW.

     (Ex. 88, GDC 10730). This document goes on to describe the 
     200,000 ``partners for progress'' as being necessary for the 
     replacement of the welfare state and how the Contract with 
     America will be a first step toward replacing the welfare 
     state with an opportunity society. (Ex. 88, GDC 10731). The 
     document then states:

       The Democrats are the party of the welfare state. Too many 
     years in office have led to arrogance of power and to 
     continuing violations of the basic values of self-government.
       Only by voting Republican can the welfare state be replaced 
     and an opportunity society be created.

     (Ex. 88, GDC 10731). On November 1, 1994, Mr. Gingrich 
     attended a meeting with Ms. Minnix, his co-teacher at 
     Reinhardt, to discuss the teaching of the course in 1995. 
     (Ex. 92, Reinhardt 0063-0065). Also at that meeting were Mr. 
     Hanser, Ms. Desmond, Mr. Eisenach, and John McDowell. One of 
     the topics discussed at the meeting was Mr. Gingrich's desire 
     to teach the course on a second day in Washington, D.C. 
     According to notes of the meeting prepared by Ms. Minnix, Mr. 
     Gingrich wanted to teach the course in D.C. in an effort:

       To attract freshman congresspeople, the press--who will be 
     trying to figure out the Republican agenda--and congressional 
     staff looking for the basis of Republican doctrine. `Take the 
     course' will be suggested to those who wonder what a 
     Republican government is going to stand for.

     (Ex. 92, Reinhardt 0064).\47\ Later in the meeting Mr. 
     Gingrich said that his chances of becoming Speaker were 
     greater than 50 percent and he was making plans for a 
     transition from Democratic to Republican rule. Ms. Minnix 
     wrote that Mr. Gingrich ``sees the course as vital to this--
     so vital that no one could convince him to teach it only one 
     time per week and conserve his energy.'' (Ex. 92, Reinhardt 
     0065).\48\
---------------------------------------------------------------------------
     \47\ Ms. Minnix stated that the word ``Republican'' may not 
     have been specifically used by Mr. Gingrich, but that it was 
     the context of his remark. (6/12/96 Minnix Tr. 54-56).
     \48\ The other participants at this meeting were asked about 
     this conversation. To the extent they recalled the 
     discussion, they confirmed that it was as related in Ms. 
     Minnix's memorandum. No one had a recollection that was 
     contrary to Ms. Minnix's memorandum. (6/12/96 Minnix Tr. 54-
     56; 6/28/96 Hanser Tr. 71-72; 6/13/96 Desmond Tr. 76-78; 7/
     12/96 Eisenach Tr. 270-271; 7/17/96 Gingrich Tr. 211-215).
---------------------------------------------------------------------------
       A number of other documents reflect a similar partisan, 
     political use of the message and theme of Renewing American 
     Civilization. (Ex. 93, LIP 00602-00610, (``Renewing American 
     Civilization: Our Duty in 1994,'' a speech given to the 
     Republican National Committee January 21, 1994 Winter 
     Breakfast); Ex. 94, GDC 11010-11012, (``Whip Office Plan for 
     1994'' with the ``vision'' of ``Renew American civilization 
     by replacing the welfare state which requires the election of 
     a Republican majority and passage of our agenda''); Ex. 95, 
     GDC 10667-10670, (``Planning Assumptions for 1994''); Ex. 96, 
     Eisenach 2758-2777, (untitled); Ex. 97, PFF 2479-2489, 
     (seminar on Renewing American Civilization given to the 
     American Legislative Exchange Council); Ex. 98, PFF 37179-
     37188, (``House GOP Freshman Orientation: Leadership for 
     America's 21st Century.''))

         E. Renewing American Civilization House Working Group

       As stated in Mr. Gingrich's easel notes from December 1992, 
     one goal of the Renewing American Civilization movement was 
     to ``professionalize'' the House Republicans. (Ex. 42, HAN 
     02110). His intention was to use the message of Renewing 
     American Civilization to ``attract voters, resources and 
     candidates'' and to develop a ``mechanism for winning 
     seats.'' (Ex. 42, HAN 02110). In this vein, a group of 
     Republican House Members and others formed a working group to 
     promote the message of Renewing American Civilization. 
     Starting in approximately June 1993, Mr. Gingrich sponsored 
     Representative Pete Hoekstra as the leader of this group and 
     worked with him. (7/18/96 Gingrich Tr. 279).49 According 
     to a number of documents associated with this group, a goal 
     was to use the theme of renewing American civilization to 
     elect a Republican majority in the House. (Ex. 99, Hoekstra 
     0259; Ex. 101, Hoekstra 0264; Ex. 102, Gregorsky 0025). 
     According to notes from a July 23, 1993 meeting, Mr. Gingrich 
     addressed the group and made several points:

     \49\ Mr. Gingrich provided Mr. Hoekstra with some materials 
     to explain the movement. (See Ex. 99, Hoekstra 0259). 
     Apparently, this material included the May 13, 1993, three 
     part document entitled ``Renewing America Vision,'' 
     ``Renewing America Strategies,'' and ``Renewing American 
     Civilization Our Goal.'' (Ex. 52, GDC 10639-10649). In a 
     memorandum from one of Mr. Hoekstra's staffers analyzing the 
     material, he lists the thirteen items that were to be done to 
     further the movement. (Ex. 100, Hoekstra 0140b). They are the 
     same thirteen items that are listed in the ``Renewing America 
     Strategies'' portion of the May 13, 1993 document.
---------------------------------------------------------------------------
       1. Renewing American Civilization (RAC) is the basic theme;
       2. RAC begins with replacing the welfare state, not 
     improving it;
       3. RAC will occur by promoting the use of the five pillars 
     of American civilization;
       4. Use of the three key policy areas of saving the inner 
     city, health, and economic growth and jobs.

     (Ex. 101, Hoekstra 0264). The meeting then turned to a 
     discussion of possible ways to improve these points. (Ex. 
     101, Hoekstra 0264).
       On July 30, 1993, another meeting of this group was held. 
     According to notes of that meeting, the group restated its 
     objectives as follows:

       a. restate our objective: Renewing American Civilization by 
     replacing the paternalistic welfare state
       --GOP majority in the House ASAP
       --nationwide GOP majority ASAP

                           *   *   *   *   *

       --objective: create ``echo chamber'' for RAC

                           *   *   *   *   *

       i. develop RAC with an eye toward marketability

                           *   *   *   *   *

       ii. promote message so that this defines many 1994 
     electoral contests at the congressional level and below, and 
     defines the 1996 national election.

     (Ex. 102, Gregorsky 0025).\50\
---------------------------------------------------------------------------
     \50\ Mr. Gingrich reviewed notes similar to these and though 
     he did not specifically recall them, he said they were 
     compatible with the activities of that time. (7/18/96 
     Gingrich Tr. 283-284).
---------------------------------------------------------------------------
       The goal of the group was further defined in a memorandum 
     written by one of Mr. Hoekstra's staffers in September of 
     1993. (Ex. 103, Hoekstra 0266-0267). In that memorandum, the 
     staff member said the group's goal had changed ``from one of 
     promoting the Renewing American Civilization course to one of 
     proposing a `political platform' around which House 
     Republican incumbents and candidates can rally.'' (Ex. 103, 
     Hoekstra 0266). The group's ``underlying perspective'' was 
     described as follows:

       To expand our party, it is important that Republicans 
     develop, agree on and learn to explain a positive philosophy 
     of government.
       At the core of that philosophy is the observation that the 
     paternalistic welfare state has failed, and must be replaced 
     by alternative mechanisms within and outside of government if 
     social objectives are to be achieved.
       Fundamental to developing a new philosophy is the idea that 
     traditions in American civilization have proven themselves to 
     be powerful mechanisms for organizing human behavior. There 
     are working principles in the lessons of American history 
     that can be observed, and should be preserved and 
     strengthened.
       These working principles distinguish the Republican party 
     and its beliefs from the Democratic party, which remains 
     committed to the welfare state even though these policies are 
     essentially alien to the American experience.

     (Ex. 103, Hoekstra 0266-0267). This group began to develop a 
     program to incorporate Renewing American Civilization into 
     the House Republican party. The program's goals included a 
     House Republican majority, Mr. Gingrich as Speaker, and 
     Republican Committee Chairs. (Ex. 104, Hoekstra 0147-0151). 
     To accomplish this goal, there were efforts to have 
     candidates, staffers and members use Renewing American 
     Civilization as their theme. (Ex. 104, Hoekstra 0148). One 
     proposal in this area was a training program for staffers in 
     the principles of Renewing American Civilization for use in 
     their work in the House. (Ex. 104, Hoekstra 0148). A 
     memorandum from Mr. Gingrich to various members of his staffs 
     51 asked them to review a plan for this training program 
     and give him their comments. (Ex. 105, WGC 03732-03745).
---------------------------------------------------------------------------
     \51\ This included his congressional office, his WHIP office, 
     RAC, and GOPAC.
---------------------------------------------------------------------------
       During his interview, Mr. Hoekstra stated that Renewing 
     American Civilization and the concept of replacing the 
     welfare state was intended as a means of defining who 
     Republicans were; however, the group never finalized this as 
     a project. (7/29/96 Hoekstra Tr. 47-48). In talking about 
     this group, Mr. Gingrich said that he wanted the Republican

[[Page H210]]

     party to move toward Renewing American Civilization as a 
     theme and that he would have asked the group to study the 
     course, understand the ideas, and use those ideas in their 
     work. (7/18/96 Gingrich Tr. 284-286). It is not known what 
     became of this group. Mr. Hoekstra said that the project 
     ended without any closure, but he does not recall how that 
     happened. (7/29/96 Hoekstra Tr. 46).

                       F. Marketing of the Course

       As discussed above, Mr. Gingrich wrote in his March 29, 
     1993 memorandum that he wanted ``Republican activists 
     committed * * * to setting up workshops built around the 
     course, and to opening the party up to every citizen who 
     wants to renew American civilization.'' (Ex. 51, GDC 08892). 
     There is evidence of efforts being made to recruit Republican 
     and conservative organizations into becoming sponsors for the 
     course. These sponsors were known as ``site hosts.'' One 
     of the responsibilities of a site host was to recruit 
     participants. (Ex. 106, PFF 8033). Jana Rogers was the 
     Site Host Coordinator for the course when it was at 
     Kennesaw State College. She stated that part of her work 
     in regard to the course involved getting Republican 
     activists to set up workshops around the course to bring 
     people into the Republican party. (7/3/96 Rogers Tr. 67-
     68). She said there was an emphasis on getting Republicans 
     to be site hosts. (7/3/96 Rogers Tr. 69).
       In an undated document entitled ``VISION: To Obtain Site 
     Hosts for Winter 1994 Quarter,'' three ``projects'' are 
     listed: (1) ``To obtain site hosts from conservative 
     organizations;'' (2) ``To secure site hosts from companies;'' 
     (3) ``To get cable companies to broadcast course.'' (Ex. 107, 
     PFF 7526). The ``strategies'' listed to accomplish the 
     ``project'' of obtaining site hosts from conservative 
     organizations are listed as:

       Mailing to State and local leaders through lists from 
     National Republican Committee, Christian Coalition, American 
     Association of Christian Schools, U.S. Chamber of Commerce, 
     National Right to Life, Heritage Foundation, Empower America, 
     National Empowerment Television, Free Congress, etc.

     (Ex. 107, PFF 7526). One of the tactics listed to accomplish 
     the goal of obtaining more site hosts is to:

       Contact National College Republican office to obtain names 
     and addresses of all presidents country-wide. Develop letter 
     to ask college republicans to try to obtain the class for 
     credit on their campus or to become a site host with a 
     sponsor group. Also, ask them to contact RAC office for a 
     site host guide and additional information.

     (Ex. 107, PFF 7527). In a memorandum written by Nancy Desmond 
     concerning the course, among the areas where she suggested 
     site host recruiting should be directed were to ``NAS 
     members,'' 52 ``schools recognized as conservative'' and 
     ``national headquarters of conservative groups.'' (Ex. 108, 
     PFF 37328-37330). In a number of the project reports written 
     by employees of the course in 1993, there are notations about 
     contacts with various Republicans in an effort to have them 
     host a site for the course. There are no similar notations of 
     efforts to contact Democrats. (Ex. 109, Multiple Documents). 
     53
---------------------------------------------------------------------------
     \52\ According to Mr. Gingrich, the NAS (National Association 
     of Scholars) is a conservative organization. (7/18/96 
     Gingrich Tr. 345-346).
     \53\ Mr. DuGally said that he made an effort to contact the 
     Young Democrats, but they did not show any interest. (7/19/96 
     DuGally Tr. 31-32).
---------------------------------------------------------------------------
       In several instances mailings were made to Republican or 
     conservative activists or organizations in an effort to 
     recruit them as site hosts. In May of 1993 a letter was sent 
     over Mr. Gingrich's signature to approximately 1,000 College 
     Republicans regarding the course. 54 That letter states 
     that:

     \54\ Mr. Gingrich was shown this letter and he said that 
     while he was not familiar with it, nothing in it was 
     particularly new. (7/17/96 Gingrich Tr. 87). Jeff Eisenach, 
     GOPAC's Executive Director and then the coordinator of the 
     course, either wrote the letter or edited it from a draft 
     written by another GOPAC employee. (7/12/96 Eisenach Tr. 200-
     201).

       [C]onservatives today face a challenge larger than stopping 
     President Clinton. We must ask ourselves what the future 
     would be like if we were allowed to define it, and learn to 
     explain that future to the American people in a way that 
     captures first their imagination and then their votes.
       In that context, I am going to devote much of the next four 
     years, starting this Fall, to teaching a course entitled 
     ``Renewing American Civilization.'' I am writing to you today 
     to ask you to enroll for the class, and to organize a seminar 
     so that your friends can enroll as well.

                           *   *   *   *   *

       Let me be clear: This is not about politics as such. But I 
     believe the ground we will cover is essential for anyone who 
     hopes to be involved in politics over the next several 
     decades to understand. American civilization is, after all, 
     the cultural glue that holds us all together. Unless we can 
     understand it, renew it and extend it into the next century, 
     we will never succeed in replacing the Welfare State with an 
     Opportunity Society.

                           *   *   *   *   *


     (Ex. 81, Mescon 0915; Meeks 0039). The letter ends by 
     stating:

       I have devoted my life to teaching and acting out a set of 
     values and principles. As a fellow Republican, I know you 
     share those values. This class will help us all remember what 
     we're about and why it is so essential that we prevail. 
     Please join me this Fall for ``Renewing American 
     Civilization.''

     (Ex. 81, Mescon 0914; Meeks 0040). GOPAC paid for this 
     mailing (7/12/96 Eisenach Tr. 200; 7/15/96 Gaylord Tr. 82) 
     and it was listed as a ``political'' project on GOPAC's 
     description of its ``Major Projects Underway'' for May 7, 
     1993. (Ex. 79, JG 000001152). At the top of a copy of the 
     letter to the College Republicans is a handwritten notation 
     to Mr. Gingrich from Mr. Eisenach: ``Newt, Drops to 1000+ 
     C.R. Chapters on Wednesday. JE cc: Tim Mescon.'' (Ex. 81, 
     Mescon 0915, Meeks 0039).
       During an interview with Mr. Cole, Mr. Eisenach was asked 
     about this letter.

       Mr. Eisenach: Use of the course by political institutions 
     in a political context was something that occurred and was 
     part of Newt's intent and was part of the intent of other 
     partisan organizations, but the intent of the course and, 
     most importantly, the operation of the course and its use of 
     tax-exempt funds was always and explicitly done in a 
     nonpartisan way.
       Political organizations--in this case, GOPAC--found it to 
     their advantage to utilize the course for a political 
     purpose, and they did so.
       Mr. Cole: Were you involved in GOPAC?
       Mr. Eisenach: At this time I was involved in GOPAC, yes.
       Mr. Cole: And in making the decision that GOPAC would 
     utilize the course?
       Mr. Eisenach: Yes.

     (7/12/96 Eisenach Tr. 203). Mr. DuGally worked with Economics 
     America, Inc. to have them send a letter to the members of 
     the groups listed in The Right Guide as part of an effort to 
     recruit them as site hosts. The first paragraph of the letter 
     states:

       Newt Gingrich asked that I tell the organizations listed in 
     The Right Guide about his new nationally broadcast college 
     course, ``Renewing American Civilization.'' It promises to be 
     an important event for all conservatives, as well as many 
     young people who are not yet conservatives. You and your 
     organization can be part of this project.

     (Ex. 110, PFF 19821). The letter goes on to say, ``And 
     remember, since you are a team teacher you can use the course 
     to explain and discuss your views.'' (Ex. 110, PFF 19821).
       In the fall of 1993, Mr. DuGally arranged for a letter to 
     be sent by Lamar Alexander on behalf of the Republican 
     Satellite Exchange Network promoting the course and asking 
     its members to serve as site hosts. (Ex. 111, PFF 19795-
     19798). In addition, a letter was prepared for mailing to all 
     chairmen of the Christian Coalition asking them to serve as 
     site hosts. (Ex. 112, PFF 19815). In June of 1993, Mr. 
     DuGally worked with the Republican National Committee to have 
     a letter sent by Chairman Haley Barbour to RNC Members 
     informing them of the course. (Ex. 113, RNC 0094). This 
     letter did not solicit people to be site hosts.
       Jana Rogers, the Site Host Coordinator for the course, 
     attended the College Republican National Convention. Her 
     weekly report on the subject said the following:

       The response to Renewing American Civilization at the 
     College Republican National Convention was overwelming [sic]. 
     In addition to recruiting 22 sites and possibly another 30+ 
     during follow-up, I was interviewed by MTV about the class 
     and learned more about RESN [Republican Exchange Satellite 
     Network] from Stephanie Fitzgerald who does their site 
     coordination. I also handed out 400 Site Host Guides to 
     College Republicans and about 600 registration flyers. NCRNC 
     says it will work aggressively with their state chairmen to 
     help us set up sites know [sic] that the convention is over.

     (Ex. 114, PFF 7613). She made no effort to contact any 
     Democratic groups. (7/3/96 Rogers Tr. 78).
       In notes provided by Mr. Mescon from a meeting he attended 
     on the course, he lists a number of groups that would be 
     targeted for mailings on the course. They include mostly 
     elected or party officials and the notation ends with the 
     words ``25,000/total Republican mailing.'' (Ex. 115, Mescon 
     0263). According to Mr. Mescon, the course was being marketed 
     to Republicans as a target audience and he knew of no 
     comparable mailing to Democrats. (6/13/96 Mescon Tr. 112-
     113). 55
---------------------------------------------------------------------------
     \55\ Others who worked on the course also said it was 
     marketed to Republican and conservative groups. (7/3/96 
     Rogers Tr. 62-63; 6/13/96 Stechschulte Tr. 21-22, 57-58; 6/
     13/96 Desmond Tr. 66).
---------------------------------------------------------------------------
       In an August 11, 1993, memorandum from Mr. DuGally, a WPG 
     employee who worked on the course, he lists the entities 
     where mailings for the course had been sent or were intended 
     to be sent up to that point. They are as follows:

       1. GOPAC farm team--9,000
       2. Cong/FONG/Whip offices--4,000
       3. Sent to site hosts--5,500
       4. College Republicans--2,000
       5. American Pol Sci Assoc.--11,000
       6. Christian Coalition leadership--3,000
       7. The Right Guide list--3,000
     (Ex. 116, PFF 19794). In June of 1994, John McDowell wrote to 
     Jeff Eisenach with his suggestions about where to market the 
     course during that summer. The groups he listed were the 
     Eagle Forum Collegians; the National Review Institute's 
     Conservative Summit; Accuracy in Academia; Young Republicans 
     Leadership Conference (Mr. McDowell was on their Executive 
     Board); Young America's Foundation, National Conservative 
     Student Conference; College Republican National Conference; 
     the American

[[Page H211]]

     Political Science Association Annual Meeting; 56 and the 
     Christian Coalition, Road to Victory. (Ex. 117, PFF 3486-
     3489). At a number of these meetings, Mr. Gingrich was 
     scheduled to be a speaker. (Ex. 117, PFF 3486-3489).
---------------------------------------------------------------------------
     \56\ This is the only meeting where there is not a suggestion 
     to have a Renewing American Civilization or PFF employee 
     attend personally. Instead, Mr. McDowell apparently only 
     intended to find an attendee who would be willing to pass out 
     Renewing American Civilization materials.
---------------------------------------------------------------------------
       A site host listing dated August 18, 1994, identifies the 
     approximately 100 site hosts as of that date. (Ex. 118, PFF 
     7493-7496). These include businesses, community groups, cable 
     stations, and others. In addition, some colleges offered the 
     course either for credit, partial credit or no credit. (Ex. 
     119, Reinhardt 0160-0164). Based on their names, it was not 
     possible to determine whether all of the site hosts fell 
     within the goals set forth in the above-described documents. 
     Some of them, however, were identifiable. For example, of the 
     28 ``community groups'' listed on the August 18, 1994 ``Site 
     Host Listing,'' 11 are organizations whose names indicate 
     they are Republican or conservative organizations--Arizona 
     Republican Party; Athens Christian Coalition; Conservative 
     PAC; Henry County Republicans; Houston Young Republicans; 
     Huron County Republican Party; Las Rancheras Republican 
     Women; Louisiana Republican Legislative Delegation; Northern 
     Illinois Conservative Council; Republican Party Headquarters 
     (in Frankfort Kentucky); Suffolk Republican Party. The list 
     does not indicate whether the remaining groups--e.g., the 
     Alabama Family Alliance; the Family Foundation (Kentucky); 
     Leadership North Fulton (Georgia); the North Georgia Forum; 
     Northeast Georgia Forum; the River of Life Family Church 
     (Georgia)--are nonpartisan, Democratic, Republican, liberal 
     or conservative. The list does not contain any organizations 
     explicitly denominated as Democratic organizations. 
     Similarly, it is not clear whether there was a particular 
     political or ideological predominance in the businesses, 
     cable stations and individuals listed.57
---------------------------------------------------------------------------
     \57\ Patti Hallstrom, an activist in the Arizona Republican 
     Party, was instrumental in recruiting host sites in Arizona, 
     such as the Arizona Republican Party and various cable 
     television stations. (Ex. 120, PFF 7362). She prepared part 
     of a training manual on how to recruit cable companies as 
     host sites. (Ex. 120, DES 00999-01007). She also provided the 
     Renewing American Civilization project with information about 
     which radio and talk shows in Arizona were the most 
     conservative as possible shows where Mr. Gingrich could 
     appear. She said the more conservative shows would allow for 
     a ``more amenable discussion.'' (Ex. 120, DES 00262-00264; 6/
     20/96 Hallstrom Tr. 41-43).
---------------------------------------------------------------------------
       Mr. Gingrich said that the efforts to recruit colleges to 
     hold the course had been ``very broad.'' ``I talked, for 
     example, with the dean of the government school at Harvard. 
     Berkley [sic] actually was offering the course.'' (7/18/96 
     Gingrich Tr. 346). The course at Berkeley, however, did not 
     go through the regular faculty review process for new 
     courses, because it was initiated by a student. (7/12/96 
     Eisenach Tr. 316-317). Such courses were not conducted by a 
     professor, but could be offered on campus for credit if a 
     faculty member sponsored the course and the Dean approved it. 
     The student site host coordinator at Berkeley was named Greg 
     Sikorski. (Ex. 121, JR-0000117). In the June 20, 1994 
     memorandum from John McDowell to Mr. Eisenach, the following 
     is written under the heading ``College Republican National 
     Conference:'' ``RAC Atlanta representative to attend and 
     staff a vendor booth. These 1,000 college students represent 
     a good source of future `Greg Sikorskis' * * * in the sense 
     that they can promote RAC on their campus!'' (Ex. 117, PFF 
     3488). The faculty sponsor for the student-initiated Renewing 
     American Civilization course was William Muir, a former 
     speechwriter for George Bush. (Ex. 121, JR-0000117). Aside 
     from Mr. Sikorski and Mr. Muir, Mr. Eisenach did not know if 
     the RAC course at Berkeley had any additional university 
     review. (7/12/96 Eisenach Tr. 319).
       The site host for the Renewing American Civilization course 
     at Harvard was Marty Connors. (Ex. 122, LIP 00232). According 
     to Mr. Gingrich, Marty Connors is a conservative activist. 
     (7/18/96 Gingrich Tr. 266). In a memorandum dated October 13, 
     1993, from Marty Connors to Lamar Alexander, Newt Gingrich, 
     Ed Rogers, Jeff Eisenach, Paul Weyrich, Mike Baroody, and 
     Bill Harris, he wrote about a ``series of ideas (that 
     included the Renewing American Civilization course) that 
     could have significant consequences in building a new 
     `Interactive' communication system and message for the 
     Republican Party and the conservative movement.'' (Ex. 123, 
     WGC 06781). He goes on to write that he was working on a 
     project to take the concept of the Republican Exchange 
     Satellite Television, National Empowerment Television and 
     ``Newt Gingrich's `Renewing American Civilization' lectures 
     and make them ``more interactive and user friendly.'' (Ex. 
     123, WGC 06781). The purpose for this is to have a ``far 
     greater ability for `participatory' party building in the 
     immediate future.'' (Ex. 123, WGC 06781-06782). He goes on to 
     write, ``Friends, I truly believe the next major political 
     advantage will go to the group that figures out how to use 
     `interactive' communications in building a new Republican 
     coalition.'' (Ex. 123, WGC 06782).58
---------------------------------------------------------------------------
     \58\ This memorandum was faxed to Mr. Gingrich. The fax cover 
     sheet has Mr. Gingrich's name and the date ``10/15/93'' on it 
     in his handwriting. As Mr. Gingrich has said, this probably 
     indicates that he had seen this memorandum. (12/98/96 
     Gingrich Tr. 36-37).
---------------------------------------------------------------------------

             G. Kennesaw State College's Role in the Course

       Renewing American Civilization was taught at Kennesaw State 
     College (``KSC'') in 1993. The sponsoring organization for 
     the course was the Kennesaw State College Foundation 
     (``KSCF''), a 501(c)(3) organization dedicated to promoting 
     projects at KSC. The approximate expenditures for the course 
     at KSC was $300,000. This represented 29-33% of KSCF's 
     program expenditures for 1993. The funds raised for the 
     course and donated to KSCF were tax-deductible.
       KSCF had no role in raising funds for the course. (6/13/96 
     Fleming Tr. 33-36). Mr. Mescon, the course's co-teacher and 
     Dean of KSC's Business School, wrote some letters with the 
     help of Ms. Prochnow, GOPAC's Finance Director (6/13/96 
     Mescon Tr. 65-68, 71-74; 7/10/96 Prochnow Tr. 58-62, 66; 7/
     12/96 Eisenach Tr. 69), but most of the fundraising was 
     coordinated by Mr. Eisenach, Ms. Prochnow, and Mr. Gingrich. 
     (7/12/96 Eisenach Tr. 68-71, 84, 97, 99; 7/17/96 Gingrich Tr. 
     123, 136, 137).
       The course as offered at KSC was a forty-hour classroom 
     lecture. Twenty hours were taught by Mr. Gingrich and twenty 
     hours were taught by Mr. Mescon. While officials of KSC and 
     KSCF considered the course to include the full forty hours of 
     lecture (6/13/96 Mescon Tr. 38; 6/13/96 Fleming Tr. 23), only 
     the twenty hours taught by Mr. Gingrich were taped and 
     disseminated. (6/13/96 Siegel Tr. 25-26; 6/13/96 Mescon Tr. 
     35; 6/13/96 Fleming Tr. 23). The funds raised for the course 
     were primarily used for the dissemination of Mr. Gingrich's 
     portion of the course to the various site host locations. (6/
     13/96 Fleming Tr. 22, 24; 6/13/96 Mescon Tr. 55-56). No one 
     at KSC or KSCF had any role in deciding which portions of the 
     course would be taped and disseminated or even knew the 
     reasons for doing it. (6/13/96 Mescon Tr. 36, 44-45, 58-59; 
     6/13/96 Fleming Tr. 23; 6/13/96 Siegel Tr. 78-79).
       KSCF did not manage the course. It contracted with Mr. 
     Eisenach's Washington Policy Group, Inc. (``WPG'') to manage 
     and raise funds for the course's development, production and 
     distribution. In return, WPG was paid $8,750 per month.
       The contract between WPG and KSCF ran from June 1, 1993, 
     through September 30, 1993.59 All funds raised were 
     turned over to KSCF and dedicated exclusively for the use of 
     the Renewing American Civilization course. KSCF's only role 
     was to act as the banker for the funds for the course and 
     disburse them upon a request from Mr. Mescon. (6/13/96 
     Fleming Tr. 24-25; 6/13/96 Mescon Tr. 103; Ex. 124, KSF 
     001269, Mescon 0454, KSF 003804, PFF 16934, KSF 001246). Mr. 
     Mescon did not engage in a detailed review of the bills. He 
     merely reviewed the bills that were provided by Mr. Eisenach 
     or his staff and determined whether the general nature of the 
     bills fell within the parameters of the project of 
     dissemination of the course. (6/13/96 Mescon Tr. 61-63).
---------------------------------------------------------------------------
     \59\ The contract between WPG and KSCF was never signed by 
     KSCF. It was directed to Dr. Mescon, but he was not an 
     authorized agent of KSCF. According to Jeffery Eisenach, 
     President of WPG, even though the contract was not signed, it 
     memorialized the terms of the relationship between WPG and 
     KSCF. (Ex. 41, Mescon 0651-0652; 7/12/96 Eisenach Tr. 42; 11/
     14/96 Eisenach Tr. 11).
---------------------------------------------------------------------------
       When the contract between WPG and KSCF ended, the Progress 
     and Freedom Foundation (``PFF'') assumed the role WPG had 
     with the course at the same rate of compensation. 60 PFF 
     was also a 501(c)(3) tax exempt organization, but its status 
     as such was not used while the course was at KSC. Mr. 
     Eisenach was the founder and president of PFF.
---------------------------------------------------------------------------
     \60\ Prior to assuming control of the course PFF was tasked 
     with putting together the book of readings that were to be 
     used for the course. This entailed Mr. Eisenach and Mr. 
     Hanser editing the writings of others. Mr. Hanser was paid 
     $5,000 or $10,000 for this work, but Mr. Eisenach was not 
     separately compensated for his role in this. (7/12/96 
     Eisenach Tr. 68). Mr. Eisenach was president of PFF, WPG, 
     former Executive Director of GOPAC, and advisor to Mr. 
     Gingrich. Mr. Hanser was a close friend, confidant, and at 
     times a congressional employee of Mr. Gingrich. He was also a 
     board member and consultant to GOPAC and a board member and 
     consultant to the Progress and Freedom Foundation. (6/28/96 
     Hanser Tr. 6-10, 14). He had a substantial role in developing 
     the course. (6/28/96 Hanser Tr. 19-20).
---------------------------------------------------------------------------
       KSCF and KSC had little or no role in supervising the 
     course or its dissemination. Since the course was a ``Special 
     Topics'' course, it did not need to go through formal 
     approval by a curriculum committee at KSC--it only required 
     Mr. Mescon's approval. (6/13/96 Siegel Tr. 15-16, 30, 32, 76-
     77). While Mr. Mescon was given advance copies of Mr. 
     Gingrich's lectures, he had little input into their content. 
     (6/28/96 Hanser Tr. 22; 6/13/96 Desmond Tr. 63). Mr. Mescon 
     described his role more in terms of having his own 20 hours 
     to put forth any counterpoint or objection to any of the 
     material in Mr. Gingrich's lectures. (6/13/96 Mescon Tr. 40-
     41).61
---------------------------------------------------------------------------
     \61\ The December 8, 1994 letter from Mr. Gingrich to the 
     Committee states that, ``Respected scholars such as James Q. 
     Wilson, Everett Carl Ladd, and Larry Sabato continue to 
     contribute to and review course content.'' (Ex. 138, p. 3). 
     The same reference to Mr. Wilson's and Mr. Sabato's review of 
     the course is contained in a September 3, 1993 memorandum 
     sent out over Jana Rogers' name to site hosts. (Ex. 125, PFF 
     22963). However, in a letter from James Q. Wilson to Mr. 
     Eisenach dated September 28, 1993, Mr. Wilson wrote:
     Perhaps I don't understand the purpose of the course, but if 
     it is to be a course rather [than] a series of sermons, this 
     chapter won't do. It is bland, vague, hortatory, and lacking 
     in substance. (emphasis in original)
     * * *
     I could go on, but I dare not for fear I have misunderstood 
     what this enterprise is all about. I am a professor, and so I 
     bring the perspectives (and limitations) of a professor to 
     bear on this matter. If this is not to be a course but 
     instead a sermon, then you should get a preacher to comment 
     on it.
     (Ex. 126, PFF 5994-5995). Also, in a book co-written by Larry 
     Sabato, the following statements are made:
     In late 1992 and early 1993, Gingrich began conceiving a new 
     way to advance those political goals--a nationally broadcast 
     college course, ambitiously titled ``Renewing American 
     Civilization,'' in which he would inculcate students with his 
     Republican values. (p. 94).
     * * *
     Nominally an educational enterprise, internal course planning 
     documents revealed the true nature of the course as a 
     partisan organizing tool. (p. 95).
     Sabato, L. and Simpson, G., ``Dirty Little Secrets: The 
     Persistence of Corruption in American Politics,'' Times Books 
     (1996).

---------------------------------------------------------------------------

[[Page H212]]

       Shortly after PFF took over the management of the course, 
     the Georgia Board of Regents passed a resolution prohibiting 
     any elected official from teaching at a Georgia state 
     educational institution. This was the culmination of a 
     controversy that had arisen around the course at KSC. The 
     controversy pertained to objections voiced by KSC faculty to 
     the course on the grounds that it was essentially political. 
     (Ex. 127, KSC 3550-3551, 3541, 3460, 3462). Because of the 
     Board of Regent's decision and the controversy, it was 
     decided that the course would be moved to a private college. 
     (7/12/96 Eisenach Tr. 47-50).62
---------------------------------------------------------------------------
     \62\ Near the end of his interview, Mr. Mescon expressed 
     embarrassment in regard to his participation in the course. 
     He became involved in the course in order to raise the 
     profile of the school, but now believes that his efforts have 
     had severe repercussions. (6/13/96 Mescon Tr. 136-137).
---------------------------------------------------------------------------

               H. Reinhardt College's Role in the Course

       Reinhardt College was chosen as the new host for the course 
     in part because of its television production facilities. (6/
     12/96 Falany Tr. 14). The 1994 and 1995 courses took place at 
     Reinhardt. While there, PFF assumed full responsibility 
     for the course. It no longer received payments to run the 
     course. Rather, it paid Reinhardt to use the college's 
     video production facilities. All funds for the course were 
     raised by and expended by PFF under its tax-exempt status. 
     The approximate expenditures for the course were $450,000 
     in 1994 and in $450,000 in 1995. At PFF this represented 
     63% of its program expenditures for its first fiscal year 
     (which ended March 31, 1994) and 35% of its program 
     expenditures for its second fiscal year (which ended March 
     31, 1995). 63
---------------------------------------------------------------------------
     \63\ As of November 1996, PFF's tax return (Form 990) for its 
     third fiscal year (which ended March 31, 1996) had not been 
     filed.
---------------------------------------------------------------------------
       Reinhardt had a curriculum committee review the content of 
     the course before deciding to have it presented on its 
     campus. (6/12/96 Falany Tr. 15-16). The controversy over the 
     course at KSC, however, affected the level of involvement 
     Reinhardt was willing to assume in regard to the course. (6/
     12/96 Falany Tr. 44-48, 51-53, 59-66; 6/12/96 Minnix Tr. 26-
     27). In this regard, Reinhardt's administration saw a 
     distinction between the ``course'' and a broader political 
     ``project.'' As stated in a memorandum from Mr. Falany, 
     Reinhardt's President, to Mr. Eisenach dated November 11, 
     1993:
       First, there seems to be a ``project'', which is Renewing 
     American Civilization, of which the ``course'' is a part. 
     This distinction is blurred at times in the Project Overview. 
     When you refer to the ``project'' it seems to imply a broader 
     political objective (a non-welfare state). This is not to say 
     that this political objective should be perceived as being 
     negative, but it should, in fact, be seen as broader than and 
     distinct from the simpler objective of the ``course.''

     (Ex. 128, Reinhardt 0225).64 Because of this concern, 
     Reinhardt administrators agreed to be involved only in the 
     actual teaching of the course on its campus and would not 
     participate in any other aspects of the project. (6/12/96 
     Falany Tr. 51-53, 59-66; 6/12/96 Minnix Tr. 26-27).65 In 
     this regard, Mr. Falany made it clear to the faculty and 
     staff at the college that:
---------------------------------------------------------------------------
     \64\ Reinhardt saw the ``project'' as essentially dealing 
     with the dissemination of the course outside of Reinhardt's 
     campus. (6/12/96 Falany Tr. 48-50, 54-66, 84-85).
     \65\ All of the funds for the course while at Reinhardt were 
     raised by PFF under its tax exempt status.
---------------------------------------------------------------------------
       It is important to understand that, for the Winter Quarter 
     1994, the College will offer the course and teach it--that is 
     the extent of our commitment. At the present time, the 
     Progress and Freedom Foundation will handle all of the fund 
     raising associated with the course; the distribution of 
     tapes, text and materials; the broadcasting; and the handling 
     of all information including the coordination of off-campus 
     sites.

     (Ex. 129, Reinhardt 0265). 66
---------------------------------------------------------------------------
     \66\ Reinhardt College did rent its television production 
     facilities to PFF for its use in the dissemination in the 
     course, and was paid separately for this in the amount of 
     $40,000. All production beyond that was handled by PFF. (6/
     12/96 Falany Tr. 27-28).
---------------------------------------------------------------------------
       As was the case at KSC, Reinhardt administrators considered 
     the course to be the forty hours of lecture by both Mr. 
     Gingrich and Ms. Minnix. (6/12/96 Falany Tr. 74-76). Again, 
     only Mr. Gingrich's portion of the course was disseminated 
     outside of Reinhardt. (6/12/96 Falany Tr. 53-54; 6/12/96 
     Minnix Tr. 48-49). Ms. Minnix had little contact with Mr. 
     Gingrich, and no input into the content of the course in 
     1994. In 1995 she had only limited input into the content of 
     the course. (6/12/96 Minnix Tr. 20-22). Similarly, Mr. 
     Gingrich and his associates provided no input as to Ms. 
     Minnix's portion of the course. (6/12/96 Minnix Tr. 31-32).
       While Mr. Falany did not know the purpose for disseminating 
     the course, and made no inquiries in that regard (6/12/96 
     Falany Tr. 48-50; 54-66; 84-85), Ms. Minnix did have some 
     knowledge in this area. Based on her contacts with the people 
     associated with the course, she believed Mr. Gingrich had a 
     global vision of getting American civilization back ``on 
     track'' and that he wanted to shape the public perception 
     through the course. (6/12/96 Minnix Tr. 59-60). She felt 
     there was an ``evangelical side'' to the course, which she 
     described as an effort to have people get involved in 
     politics, run for office, and try to influence legislation. 
     (6/12/96 Minnix Tr. 70-71). Ms. Minnix felt uncomfortable 
     with this ``evangelical side.'' (6/12/96 Minnix Tr. 70). 
     Furthermore, as reflected in her memorandum of the November 
     1, 1994 meeting with Mr. Gingrich and others, she was aware 
     that the course was to be used to let people know what Mr. 
     Gingrich's political agenda would be as Speaker. (6/12/96 
     Minnix Tr. 53-59; Ex. 92, Reinhardt 0064). As with KSC, one 
     of the reasons Reinhardt administrators wanted to have the 
     course taught on its campus was to raise profile of the 
     school. (6/12/96 Falany Tr. 112-113).

            I. End of Renewing American Civilization Course

       Although Mr. Gingrich had intended to teach the course for 
     four years, through the 1996 Winter quarter, he stopped 
     teaching it after the 1995 Winter quarter. According to most 
     of the witnesses interviewed on this subject, the reason for 
     this was that he had run out of time in light of the fact 
     that he had become Speaker. (7/12/96 Eisenach Tr. 280; 6/28/
     96 Hanser Tr. 52-53). On the other hand, Mr. Gingrich says 
     that he had learned all he could from teaching the course and 
     had nothing new to say on the topics. (7/18/96 Gingrich Tr. 
     364). Mr. Gingrich refused to support the efforts of PFF in 
     regard to the course at that point, largely because he was 
     disappointed with Mr. Eisenach's financial management of the 
     course. (7/18/96 Gingrich Tr. 365-366). Mr. Eisenach had 
     indicated to Mr. Gingrich that the course was $250,000 in 
     debt and that PFF had used its own resources to cover this 
     shortfall. (Ex. 130, GDC 11325). Mr. Gingrich was skeptical 
     of this claim, offered to have the records reviewed, and 
     stated that he would help raise any amount that the review 
     disclosed was needed. According to Mr. Gingrich, this offer 
     was not pursued by Mr. Eisenach. (7/18/96 Gingrich Tr. 367-
     368).

                IV. Ethics Committee Approval of Course

       On May 12, 1993, Mr. Gingrich wrote the Committee asking 
     for ``guidance on the development of an intellectual approach 
     to new legislation that will be different from our normal 
     activities.'' (Ex. 131, p. 1). He said that he wanted ``to 
     make sure that [his] activities remain within a framework 
     that meets the legitimate ethics concerns of the House.'' 
     (Ex. 131, p. 1). He went on to describe a course he was 
     planning to teach in the fall of 1993 at Kennesaw State 
     College.
       The course would be based on his January 25, 1993 Special 
     Order entitled ``Renewing American Civilization.'' (Ex. 131, 
     p. 2). It would be ``completely non-partisan'' and, he hoped, 
     would include ideas from many people, including politicians 
     from both parties and academics. (Ex. 131, p. 2). He stated 
     that he believed the development of ideas in the course was a 
     ``crucial part'' of his job as a legislator. (Ex. 131, p. 3). 
     He ended his letter with a request to the Committee to meet 
     to discuss the project if the Committee had any concerns. 
     (Ex. 131, p. 3).
       In June 1993, counsel for the Committee, David McCarthy, 
     met with Mr. Gingrich, two people from his staff (Annette 
     Thompson Meeks and Linda Nave) and Mr. Eisenach to discuss 
     the course. (7/18/96 McCarthy Tr. 7; 7/10/96 Meeks Tr. 13). 
     Mr. McCarthy's initial concern was whether Mr. Gingrich could 
     qualify for a teaching waiver under the House ethics rules. 
     (7/18/96 McCarthy Tr. 16). When he learned Mr. Gingrich was 
     teaching without compensation, the issue of a teaching waiver 
     became, in his opinion, irrelevant. (7/18/96 McCarthy Tr. 
     16). Mr. McCarthy then asked questions regarding whether any 
     official resources would be used to support the course and 
     whether Mr. Gingrich planned to use any unofficial resources 
     to subsidize his official business. Mr. McCarthy did not see 
     any problems pertaining to these issues. Mr. Gingrich 
     indicated that he might repeat the lectures from the course 
     as Special Orders on the floor of the House. Mr. McCarthy 
     suggested that Mr. Gingrich consult with the House 
     Parliamentarian on that subject. (Ex. 132, p. 1).
       One issue raised with Mr. McCarthy was whether the House 
     Ethics Rules permitted Mr. Gingrich to raise funds for a tax-
     exempt organization. Mr. McCarthy's conclusion was that since 
     KSCF was a qualified tax-exempt organization, Mr. Gingrich 
     could raise funds for KSCF as long as he complied with the 
     relevant House rules on the subject. (7/18/96 McCarthy Tr. 
     17). Mr. Eisenach raised the issue concerning the propriety 
     of his being involved in fundraising for the course in light 
     of the fact that he also worked for GOPAC. According to Mr. 
     McCarthy, his response to the issue was as follows:

       [T]o my knowledge of tax law, the issue of whether the 
     contributions in support of the course would keep their tax-
     deductible status would turn not on who did the fundraising 
     but on how the funds were spent, and

[[Page H213]]

     that the educational nature of the course spoke for itself. I 
     told him that I was aware of no law or IRS regulation that 
     would prevent Eisenach from raising charitable contributions, 
     even at the same time that he was raising political 
     contributions. In any event, I advised him, I expected the 
     Committee to stick by its advisory opinion in the Ethics 
     Manual and not get into second-guessing the IRS on its 
     determinations of tax-exempt status.

     (Ex. 132, p. 2). Mr. McCarthy said in an interview that his 
     statement regarding the Committee's ``stick[ing]'' by its 
     advisory opinion pertained only to whether Mr. Gingrich could 
     raise funds for the course. (7/18/96 McCarthy Tr. 19). The 
     discussion did not relate to any other 501(c)(3) issues. (7/
     18/96 McCarthy Tr. 19). While Mr. McCarthy was aware that the 
     course lectures would be taped and broadcast (7/18/96 
     McCarthy Tr. 16), neither Mr. Gingrich nor his staff asked 
     for Mr. McCarthy's advice regarding what activities in that 
     regard were permissible under 501(c)(3) and Mr. McCarthy did 
     not discuss such issues. (7/18/96 McCarthy Tr. 19; 7/18/96 
     Gingrich Tr. 375-376; 7/10/96 Meeks Tr. 15). Mr. McCarthy did 
     not recall any discussion regarding a Renewing American 
     Civilization movement. (7/18/96 McCarthy Tr. 16). Mr. 
     McCarthy did not recall any discussion of GOPAC's use of the 
     Renewing American Civilization message. (7/18/96 McCarthy Tr. 
     12-13). The discussion pertaining to Mr. Eisenach and GOPAC 
     was brief. (Ex. 132, p. 2).
       During the meeting with Mr. McCarthy, there were no 
     questions posed about 501(c)(3) or what could be done in 
     regard to the course, aside from the fund-raising issue under 
     501(c)(3). (7/18/96 Gingrich Tr. 375-376). Mr. Gingrich did 
     not believe that it was necessary to explain to Mr. McCarthy 
     his intended use for the course.
       Mr. Cole: We are focusing, however, on your intended use of 
     the course. And your intended use of the course here was in a 
     partisan political fashion; is that correct?
       Mr. Gingrich: My intended use was, but I am not sure I had 
     any obligation to explain that to the [C]ommittee. As long as 
     the course itself was nonpartisan and the course itself was 
     legal and the course itself met both accreditation and tax 
     status, I don't believe I had an obligation to tell the 
     Ethics Committee what my political strategies were. I think 
     that's a retrospective comment. And maybe I am wrong.
       I don't think--the questions were: Was it legal? Did I use 
     official funds? Had we gotten approval? Was GOPAC's 
     involvement legitimate and legal? Was it an accredited 
     course? Was I getting paid for it?
       I mean, none of those questions require that I explain a 
     grand strategy, which would have seemed crazy in '94. If I 
     had wandered around and said to people, hi, we are going to 
     win control, reshape things, end the welfare entitlement, 
     form a grand alliance with Bill Clinton, who is also going to 
     join us in renewing America, how would I have written that?

     (11/13/96 Gingrich Tr. 89-90). On July 21, 1993, Mr. Gingrich 
     wrote the Committee to provide additional information about 
     the course he planned to teach at KSC. The letter did not 
     discuss how the course was to be funded or that there was a 
     plan to distribute the course nationally via satellite, 
     videotape, audiotape and cable, or that GOPAC's main theme 
     was to be ``Renewing American Civilization.'' The letter also 
     did not discuss GOPAC's role in the course. (Ex. 133).67
---------------------------------------------------------------------------
     \67\ The information Mr. Gingrich provided to the Committee 
     was that the Kennesaw State College Foundation, a 501(c)(3) 
     organization affiliated with Kennesaw State College, was 
     providing him with a ``Content Coordinator to coordinate the 
     videotape inserts and other materials that will be used in 
     the presentations.'' (Ex. 133, pp. 1-2). He also wrote that 
     none of his staff would perform tasks associated with the 
     course and that the course material would not be based on 
     previous work of his staff. (Ex. 133, p. 1). Finally, he 
     wrote that much of the material from the course would be 
     presented in Special Orders, although the presentations would 
     have some differences. (Ex. 133, p. 2).
---------------------------------------------------------------------------
       On August 3, 1993, the Committee, in a letter signed by Mr. 
     McDermott and Mr. Grandy, responded to Mr. Gingrich's letters 
     of May 12, 1993 and July 21, 1993, regarding his request to 
     the teach the course and his request to present the course 
     materials in Special Orders. (Ex. 134, p. 1). The Committee's 
     letter also notes that Mr. Gingrich had asked if he could 
     help KSC raise funds for the course. The Committee's guidance 
     was as follows:

       1. Since Mr. Gingrich was teaching the course without 
     compensation, he did not need the Committee's approval to do 
     so;
       2. It was within Mr. Gingrich's ``official prerogative'' to 
     present the course materials in Special Orders;
       3. Mr. Gingrich was permitted to raise funds for the course 
     on behalf of charitable organizations, ``provided that no 
     official resources are used, no official endorsement is 
     implied, and no direct personal benefit results.''

     (Ex. 134, p. 1). The Committee, however, advised Mr. Gingrich 
     to consult with the FEC regarding whether election laws and 
     regulations might pertain to his fundraising efforts. The 
     Committee's letter to Mr. Gingrich did not discuss any 
     matters relating to the implications of 501(c)(3) on the 
     teaching or dissemination of the course or GOPAC's 
     relationship to the course. (Ex. 134, p. 1).

                  V. Legal Advice Sought and Received

       As described in greater detail in the Appendix, section 
     501(c)(3) requires, among other things, that an organization 
     be organized and operated exclusively for one or more exempt 
     purposes. Treas. Reg. 1.501(c)(3)-1(d)(1)(ii) provides that 
     an organization does not meet this requirement: Unless it 
     serves a public rather than a private purpose. It is 
     necessary for an organization to establish that it is not 
     organized or operated for the benefit of private interests 
     such as designated individuals, the creator or his family, or 
     persons controlled, directly or indirectly, by such private 
     interests.
       The purpose of the ``private benefit'' prohibition is to 
     ensure that the public subsidies flowing from section 
     501(c)(3) status, including income tax exemption and the 
     ability to receive tax-deductible charitable contributions, 
     are reserved for organizations that are formed to serve 
     public, not private interests. Treas. Reg. 1.501(c)(3)-
     1(c)(1) defines the application of the private benefit 
     prohibition in the context of the operational test: An 
     organization will be regarded as ``operated exclusively'' for 
     one or more exempt purposes only if it engages primarily in 
     activities which accomplish one or more of such exempt 
     purposes specified in section 501(c)(3). An organization will 
     not be so regarded if more than an insubstantial part of its 
     activities is not in furtherance of an exempt purpose.
       Although cases on the private benefit doctrine date back to 
     1945, 68 a more recent, significant case on the subject 
     is the 1989 Tax Court opinion in American Campaign Academy v. 
     Commissioner, 92 T.C. 1053 (1989). That case discusses the 
     doctrine in terms of conferring an impermissible private 
     benefit on Republican candidates and entities.
---------------------------------------------------------------------------
     \68\ Better Business Bureau of Washington, D.C. v. United 
     States, 326 U.S. 279 (1945).
---------------------------------------------------------------------------
       Prior to his involvement in both AOW/ACTV and the Renewing 
     American Civilization course, Mr. Gingrich was aware of the 
     tax controversy pertaining to the American Campaign Academy 
     (``ACA'' or ``Academy''). In his interview with Mr. Cole he 
     said, ``I was aware of [ACA] because * * * the staff director 
     of the [ACA] had been totally involved. I was aware of his 
     briefings and what was involved. * * * I was aware of them at 
     the time and I was aware of them during the court case.'' (7/
     18/96 Gingrich Tr. 375-376). ``I lived through that case. I 
     mean, I was very well aware of what the [American Campaign 
     Academy] did and what the ruling was.'' (11/13/96 Gingrich 
     Tr. 61). 69
---------------------------------------------------------------------------
     \69\ His adviser, Mr. Gaylord, was a director of the Academy. 
     (12/9/96 Gingrich Tr. 57; American Campaign Academy v. 
     Commissioner, 92 T.C. 1053, 1056 (1989)). As referred to 
     above, Mr. Gaylord was one of the ``five key people'' Mr. 
     Gingrich relied on most. (Ex. 3, GDC 11551, GDC 11553).
---------------------------------------------------------------------------
       Responding to the question of whether he had any 
     involvement with the Academy, Mr. Gingrich said: ``I think I 
     actually taught that [sic], but that's the only direct 
     involvement I had.'' (12/9/96 Gingrich Tr. 58). In an undated 
     document on GOPAC stationery entitled ``Offices of 
     Congressman Newt Gingrich,'' three offices are listed: GOPAC, 
     FONG, and the American Campaign Academy. (Ex. 143, Kohler 
     285). Mr. Gingrich did not believe that he had an office at 
     the Academy, but thought it possible that his press 
     secretary, Rich Galen, had an office there. (12/9/96 Gingrich 
     Tr. 58-59).
       In speaking about the Renewing American Civilization 
     course, Mr. Gingrich told the New York Times that he acted 
     very aggressively in regard to 501(c)(3) law:
       ``Whoa,'' [Mr. Gingrich] said, when asked after class one 
     recent Saturday if the course nears the edge of what the law 
     allows. ``Goes right up to the edge. What's the beef? Doesn't 
     go over the edge, doesn't break any law, isn't wrong. It's 
     aggressive, it's entrepreneurial, it's risk taking.''

     New York Times, section A, page 12, column 1 (Feb. 20, 1995). 
     (Ex. 144). In addition, Mr. Gingrich has had involvement with 
     a number of tax-exempt organizations. As Mr. Gingrich's tax 
     lawyer stated, politics and 501(c)(3) organizations are an 
     ``explosive mix.'' (12/12/96 Holden Tr. 132-134, 146).
       Despite all of this, he did not seek specific legal advice 
     concerning the application of section 501(c)(3) with respect 
     to AOW/ACTV or the Renewing American Civilization course. 
     Furthermore, he did not know if any one did so on his behalf. 
     With respect to the course, the following exchange occurred:

       Mr. Cole: Were you involved in seeking any legal advice 
     concerning the operation of the course under 501(c)(3)?
       Mr. Gingrich: No. We sought legal advice about ethics.
       Mr. Cole: Did you seek any legal advice concerning the 
     501(c)(3) issues involving the course?
       Mr. Gingrich: No. I did not.
       Mr. Cole: Do you know if anybody did on your behalf?
       Mr. Gingrich: No.

     (7/17/96 Gingrich Tr. 140). With respect to AOW/ACTV, Mr. 
     Gingrich said that he did not get any legal advice regarding 
     the projects. (12/9/96 Gingrich Tr. 54). He said that he 
     assumed Mr. Callaway sought such legal advice. (12/9/96 
     Gingrich Tr. 54).
        Mr. Gingrich said two attorneys involved with GOPAC at the 
     time, Jim Tilton and Dan Swillinger, monitored all GOPAC 
     activities and would have told him if the projects violated 
     the law. (12/9/96 Gingrich Tr. 54-56).

[[Page H214]]

     Mr. Callaway said neither Mr. Swillinger nor Mr. Tilton was 
     ever told that one of the purposes of ACTV was to recruit 
     people to the Republican party. (12/7/96 Callaway Tr. 41, 
     47). 70
---------------------------------------------------------------------------
     \70\ A document dated November 13, 1990, entitled Campaign 
     For A Successful America, was reviewed by the Subcommittee. 
     (Ex. 145, Eisenach 3086-3142). In a section drafted by Gordon 
     Strauss, an attorney in Ohio, for a consulting group called 
     the Eddie Mahe Company, the following is written:
     [S]ome educational organizations, tax exempt under Section 
     501(c)(3) of the Internal Revenue Code, have engaged in 
     activities which affect the outcome of elections, though that 
     is theoretically not supposed to occur.
     (Ex. 145, Eisenach 3132). The document also contains the 
     following:
     A very controversial program is being undertaken by a (c)(3), 
     indicating that it may have involvement in the electorial 
     process, notwithstanding the express prohibition on it. At 
     this time, a (c)(3) is not recommended because it would have 
     to be truly independent of the (c)(4) and its PAC.
     (Ex. 145, Eisenach 3134).
     There was substantial inquiry about this document during the 
     Preliminary Inquiry. No evidence was uncovered to indicate 
     that Mr. Gingrich had any exposure to this document. (12/5/96 
     Mahe Tr. 34-35; 12/9/96 Gingrich Tr. 52-54; 12/5/96 Eisenach 
     Tr. 59-61). Mr. Strauss was interviewed and stated that the 
     document had nothing to do with AOW/ACTV, the 501(c)(3) 
     organization referred to in the document was merely one he 
     had heard of in an IRS Revenue Ruling, and that he never gave 
     Mr. Gingrich any advice on the law pertaining section 
     501(c)(3) in regard to AOW/ACTV, the Renewing American 
     Civilization course, or any other projects. The only legal 
     advice he gave Mr. Gingrich pertained to need for care in the 
     use of official resources for travel expenses.
---------------------------------------------------------------------------
       Mr. Gingrich explained to the Subcommittee in November 1996 
     that, in his opinion, there were no ``parallels'' between the 
     American Campaign Academy and the Renewing American 
     Civilization course. (11/13/96 Gingrich Tr. 61). After this 
     explanation, Mr. Schiff and Mr. Gingrich had the following 
     exchange:
       Mr. Schiff: Did you go to a tax expert and say, here is 
     what I have in mind; do you agree that there are no parallels 
     and that there's no problem with the American Campaign 
     Academy case in terms of what I am doing here? I am just 
     asking if you did that?
       Mr. Gingrich: The answer is, no. I just want to assert the 
     reason I wouldn't have done it is as a college teacher who 
     had taught on a college campus I didn't think the two cases--
     I also didn't ask them if it related to spouse abuse. I mean, 
     I didn't think the two cases had any relationship.

     (11/13/96 Gingrich Tr. 61-62). During his testimony before 
     the Subcommittee in December, Mr. Schiff raised similar 
     questions with Mr. Gingrich.

       Mr. Schiff: What strikes me is without trying to resolve 
     that at this minute, the possibility is out there, the 
     possibility that a violation of 501(c)(3) is very much in 
     evidence to me. And it seems to me that is true all the way 
     along. You did have the American Campaign Academy case of 
     1989, which you have indicated you were aware of. It's true 
     the facts were different, but nevertheless something sprung 
     up that told somebody there was a 501(c)(3) problem here if 
     you get too close to political entities.
       What I am getting at is this, and again to answer any way 
     you wish, wasn't it, if not intentional, wasn't it reckless 
     to proceed with your involvement as a Member of the House of 
     Representatives into at least a couple of--involvements with 
     the 501(c)(3) organizations, whether it was Progress & 
     Freedom or Kennesaw State or Abraham Lincoln Opportunity 
     Foundation, without getting advice from a tax attorney to 
     whom you told everything? You said, this is the whole plan, 
     this is the whole movement of Renewing American Civilization. 
     * * *
       Shouldn't that have been presented to somebody who is a tax 
     attorney, and said, now, am I going to have any problems 
     here? Is this okay under the 501(c)(3) laws?

     (12/10/96 Gingrich Tr. 32-33). In response to Mr. Schiff's 
     question, Mr. Gingrich explained why he thought there was no 
     need to seek legal advice because the facts of American 
     Campaign Academy and Renewing American Civilization were 
     inapposite. (12/10/96 Gingrich Tr. 34-36).
       Mr. Gingrich: The facts are the key. I was teaching at an 
     accredited university; [ACA] was an institution being set up 
     as basically a politically training center. My course was 
     open to everybody; [ACA] was a Republican course. My course 
     says nothing about campaigns; [ACA] was a course specifically 
     about campaigns.
       There are four standards * * * none of which apply to 
     Renewing American Civilization. * * * Just at an objective 
     level you are going to put these [ACA and RAC] up on a board 
     and say that is not a relevant question.

     (12/10/96 Gingrich Tr. 35). After Mr. Gingrich's explanation, 
     Mr. Schiff said the following:

       Mr. Schiff: I understand how you distinguish the facts 
     between the American Campaign Academy case and your course. 
     There are those that would argue that the legal holding 
     applies equally to both. In other words, that which brings 
     you to the legal conclusion of not complying with the 
     501(c)(3) laws, for various reasons that I'd rather not get 
     into now--discuss with Mr. Holden, perhaps--that those are in 
     common even if certain peripheral facts are different.
       What I'm getting at is, excuse me for using your own words, 
     but you're not a lawyer. Knowing that there was an attempt to 
     set up a 501(c)(3) training and education academy which 
     floundered in the courts because of something, wouldn't that 
     motivate particularly a Member of the House to want to say, 
     before you start into another one, maybe I ought to sit down 
     with somebody who is a tax expert and tell them the whole 
     plan here, not just course content, but where the course fits 
     into all the strategies here and say, now, do you think I've 
     got a problem? And I don't think you did that. If you did, 
     tell me you did. * * *
     (12/10/96 Gingrich Tr. 36-37). Mr. Gingrich's response was 
     three-fold:
       Mr. Gingrich: [First,] [i]f you read the speech I gave in 
     January of 1993, which was the core document from which 
     everything else comes, I talk very specifically about a 
     movement in the speech. I talk very simply about 2 million, 
     not 200,000, volunteers, citizen activists, in the speech. I 
     describe it as a cultural movement that has a political 
     component in the speech.
       That's the core document I gave to everyone when I would 
     say, here's what I want to try to teach about. Here is what I 
     want to try to do. That document clearly says there is a 
     movement, and this course is designed to outline the 
     principles from which the movement comes. And so, if 
     everybody who was engaged in looking at the course, whether 
     it was Kennesaw Foundation's lawyers or it was Progress & 
     Freedom's lawyers or it was Reinhardt's lawyers, and the 
     president of the college in both cases, everybody had a 
     chance to read the core document which has movement very 
     specifically in it.
       Second, the reason I didn't seek unique legal counsel is as 
     a Ph.D. teaching in a State college in an accredited setting, 
     it never occurred--I mean, if I had thought--this is another 
     proof of my ignorance or proof of my innocence, I'll let you 
     decide--it never occurred to me that this is an issue. * * *
       [Third,] I think everybody who has actually seen my course 
     will tell you * * * I was very careful. Ironically, Max 
     Cleland, who won the Senate seat, is the only current 
     politician used in the course other than John Lewis.
       And so the course was clearly not Republican. It was 
     clearly not designed to send a partisan message. No one I 
     know of who has actually seen the course thinks that it was a 
     partisan vehicle. It has no relationship to the American 
     Campaign Academy.

     (12/10/96 Gingrich Tr. 37-39). Officials at KSC and Reinhardt 
     did not seek legal advice pertaining to the application of 
     501(c)(3) to the course. The only such advice ever sought was 
     by KSCF in connection with the agreement to transfer the 
     course to PFF in November 1993 and in asking its outside 
     lawyers to render a legal opinion concerning the course in 
     1995. Citing the attorney/client privilege, KSCF officials 
     have refused to disclose to the Subcommittee the advice KSCF 
     received in both instances. (6/13/96 Mescon Tr. 60; 6/13/96 
     Siegel Tr. 36-37; 6/12/96 Falany Tr. 50-51; 6/13/96 Fleming 
     Tr. 46-48).
       In his July 1996 interview, Mr. Eisenach said that he did 
     not seek legal advice pertaining to the application of 
     501(c)(3) to the course. (7/12/96 Eisenach Tr. 236). In his 
     November 1996 interview, Mr. Eisenach said that he had worked 
     with many attorneys who had experience in 501(c)(3) law. (11/
     14/96 Eisenach Tr. 84-88). But he was not able to point to 
     any specific consultation with a tax attorney where the 
     entire relationship between the course, the movement, and 
     political goals were fully set forth and found to be within 
     the bounds of 501(c)(3). (11/14/96 Eisenach Tr. 88-91).

         VI. Summary of the Report of the Subcommittee's Expert

                             A. Introduction

       Because of differences of opinion among the Members of the 
     Subcommittee regarding the tax issues raised in the 
     Preliminary Inquiry, the Subcommittee determined that it 
     would be helpful to obtain the views of a recognized expert 
     in tax-exempt organizations law, particularly with respect to 
     the ``private benefit'' prohibition. The expert, Celia Roady, 
     reviewed Mr. Gingrich's activities on behalf of ALOF and the 
     activities of others on behalf of ALOF with Mr. Gingrich's 
     knowledge and approval. She also reviewed Mr. Gingrich's 
     activities on behalf of KSCF, PFF, and Reinhardt College in 
     regard to the Renewing American Civilization course and the 
     activities of others on behalf of those organizations with 
     Mr. Gingrich's knowledge and approval. The purpose of this 
     review was to determine whether those activities violated the 
     status of any of these organizations under section 501(c)(3) 
     of the Internal Revenue Code.

             B. Qualifications of the Subcommittee's Expert

       Ms. Roady is a partner in the Washington, D.C. office of 
     the law firm Morgan, Lewis & Bockius LLP where she 
     specializes full-time in the representation of tax-exempt 
     organizations. Her practice involves the provision of advice 
     on all aspects of section 501(c)(3). Ms. Roady has written 
     many articles on tax-exempt organization issues for 
     publication in legal periodicals such as the ``Journal of 
     Taxation of Exempt Organizations'' and the ``Exempt 
     Organization Tax Review.'' She is a frequent speaker on 
     exempt organizations topics, regularly lecturing at national 
     tax conferences such as the ALI/ABA conference on charitable 
     organizations and the Georgetown University Law Center 
     conference on tax-exempt organizations, as well as at local 
     tax conferences and seminars on tax-exempt organization 
     issues. In 1996, she was named the Program Chair of the 
     Georgetown University Law Center's annual conference on

[[Page H215]]

     tax-exempt organizations. (11/15/96 Roady Tr. 2-7).
       Ms. Roady is the immediate past Chair of the Exempt 
     Organizations Committee of the Section of Taxation of the 
     American Bar Association, having served as Chair from 1993 to 
     1995. She is currently serving a three-year term as a member 
     of the Council of the ABA Section of Taxation, and is the 
     Council Director for the Section's Exempt Organizations 
     Committee. She also serves on the Legal Section Council of 
     the American Society of Association Executives, and is a 
     Fellow of the American College of Tax Counsel. (11/15/96 
     Roady Tr. 2-7).
       Ms. Roady served a three-year term as the Co-Chair of the 
     Exempt Organizations Committee of the District of Columbia 
     Bar's Tax Section from 1989 to 1991. She also served on the 
     Steering Committee of the D.C. Bar's Tax Section from 1989 to 
     1995, and as Co-Chair of the Steering Committee from 1991 to 
     1993. (11/15/96 Roady Tr. 2-7).
       Each of the attorneys interviewed for the position of 
     expert for the Subcommittee highly recommended Ms. Roady. She 
     was described as being impartial and one of the leading 
     people in the field of exempt organizations law. (11/15/96 
     Roady Tr. 2).71
---------------------------------------------------------------------------
     \71\ The one known public comment on the matter by Ms. Roady 
     is found in the following paragraph from a New York Times 
     article: ``Clearly, it's an aggressive position,'' said Celia 
     Roady, a Washington lawyer and chairwoman of the American Bar 
     Association's committee on tax-exempt organizations, who 
     stressed that she was not talking for the association. 
     ``Whether it's too aggressive and crosses the line, I don't 
     know. Clearly, it's more aggressive than many exempt 
     organizations would go forward with.''
     New York Times, section A, page 12 (Feb. 20, 1995). (Ex. 
     144). In the same article, Mr. Gingrich is quoted as saying 
     that he acted aggressively in regard to 501(c)(3) law: 
     ``Whoa,'' [Mr. Gingrich] said, when asked after class one 
     recent Saturday if the course nears the edge of what the law 
     allows. ``Goes right up to the edge. What's the beef? Doesn't 
     go over the edge, doesn't break any law, isn't wrong. It's 
     aggressive, it's entrepreneurial, it's risk taking.''
     New York Times, section A, page 12, column 1 (Feb. 20, 1995).
---------------------------------------------------------------------------
       Ms. Roady is a 1973 magna cum laude graduate of Duke 
     University. She received her law degree from Duke Law School, 
     with distinction, in 1976. She received a masters degree in 
     taxation from the Georgetown University Law Center in 1979.

                 C. Summary of the Expert's Conclusions

       Ms. Roady considered the following issues in her review:
       1. whether the content of the television programs broadcast 
     by ALOF or the Renewing American Civilization course were 
     ``educational'' within the meaning of section 501(c)(3);
       2. whether one of the purposes of the activities with 
     respect to the television programs or the course was to 
     provide more than an incidental benefit to GOPAC, Mr. 
     Gingrich, or other Republican entities and candidates in 
     violation of the private benefit prohibition in section 
     501(c)(3);
       3. whether the activities with respect to the television 
     programs or the course provided support to GOPAC or a 
     candidate for public office in violation of the campaign 
     intervention prohibition in section 501(c)(3);
       4. whether the activities with respect to the television 
     programs or the course violated the private inurement 
     prohibition in section 501(c)(3); and
       5. whether the activities with respect to the television 
     programs or the course violated the lobbying limitations 
     applicable to section 501(c)(3) organizations.

     (11/15/96 Roady Tr. 7).\72\
---------------------------------------------------------------------------
     \72\ A detailed discussion of the law pertaining to 
     organizations exempt from federal income tax under section 
     501(c)(3) of the Internal Revenue Code is attached as an 
     Appendix to this Report.
---------------------------------------------------------------------------
       With respect to the last two issues, Ms. Roady did not 
     conclude that the activities with respect to the television 
     programs or the course resulted in impermissible private 
     inurement or violated the lobbying limitations applicable to 
     section 501(c)(3) organizations. Similarly, with respect to 
     the first issue, Ms. Roady concluded that the television 
     programs and the course met the requirements of the 
     methodology test described in Rev. Proc. 86-43 and were 
     ``educational'' within the meaning of section 501(c)(3) even 
     though they advocated particular viewpoints and positions. 
     Accordingly, Ms. Roady concluded that the activities with 
     respect to the television programs and the course served an 
     educational purpose and would be appropriate activities for 
     section 501(c)(3) organizations, as long as there was no 
     violation of the private benefit prohibition or the campaign 
     intervention prohibition. She found substantial evidence, 
     however, of violations of both such prohibitions and 
     therefore concluded that Mr. Gingrich's activities on behalf 
     of the organizations and the activities of others on behalf 
     of the organizations with Mr. Gingrich's knowledge and 
     approval violated the organizations' status under section 
     501(c)(3). (11/15/96 Roady Tr. 7). The basis for her 
     conclusions may be summarized briefly as follows:


        1. The American Citizens Television Program of ALOF \73\
---------------------------------------------------------------------------

     \73\ After Ms. Roady met with the Subcommittee to discuss the 
     tax-exempt organizations law and her conclusions regarding 
     Renewing American Civilization, she met with the Special 
     Counsel to discuss the ACTV project. Although she did not 
     formally present her conclusions to the Subcommittee, the 
     legal principles she explained during her meetings with the 
     Subcommittee with respect to Renewing American Civilization 
     were equally applicable to the facts surrounding the ACTV 
     project and support her conclusions set forth in this section 
     of the Report.
---------------------------------------------------------------------------

                     a. Private benefit prohibition

       Under section 501(c)(3) and the other legal authorities 
     discussed above, the analysis of whether there is a violation 
     of the private benefit prohibition does not depend on whether 
     the activities at issue--the television programs--served an 
     exempt purpose. Even though the television programs met the 
     definition of ``educational,'' there is a violation of 
     section 501(c)(3) if another purpose of the activities was to 
     provide more than an insubstantial or incidental benefit to 
     GOPAC or any other private party. As the Supreme Court stated 
     in Better Business Bureau v. United States, 326 U.S. 276, 283 
     (1945), ``the presence of a single noneducational purpose, if 
     substantial in nature, will destroy the exemption regardless 
     of the number or importance of truly educational purposes.'' 
     In making such a determination, the Tax Court has held that 
     the proper focus is ``the purpose towards which an 
     organization's activities are directed and not the nature of 
     the activities themselves.'' American Campaign Academy, 92 
     T.C. at 1078-79. The determination as to whether there is a 
     violation of the private benefit prohibition cannot, 
     therefore, be made solely by reference to the content of the 
     television programs or whether the activities in relation to 
     the programs served an educational purpose. Rather, the 
     determination requires a factual analysis to determine 
     whether the organization's activities also had another, 
     nonexempt purpose to provide more than an incidental benefit 
     to a private party such as GOPAC or Republican entities and 
     candidates. In this case, there is substantial evidence that 
     these parties were intended to and did receive more than an 
     incidental benefit from the activities conducted by ALOF.
       In summary, according to Ms. Roady, the evidence shows that 
     the ACTV project was a continuation of GOPAC's AOW project, 
     and had the same partisan, political goals as AOW. These 
     goals included, among other things, reaching ``new groups of 
     voters not traditionally associated with [the Republican] 
     party;'' ``mobiliz[ing] thousands of people across the nation 
     at the grass roots level [to become] dedicated GOPAC 
     activists;'' and ``making great strides in continuing to 
     recruit activists all across America to become involved with 
     the Republican party.'' The persons who conducted the ACTV 
     project on behalf of ALOF were GOPAC officers, employees, or 
     consultants. In essence, the transfer of the AOW project from 
     GOPAC to ALOF was more in name than substance, since the same 
     activities were conducted by the same persons in the same 
     manner with the same goals. Through the use of ALOF, however, 
     these persons were able to raise tax-deductible charitable 
     contributions to support the ACTV project, funding that would 
     not have been available to GOPAC on a tax-deductible basis.
       Taken together, according to Ms. Roady, the facts as 
     described above show that in addition to its educational 
     purpose, another purpose of the ACTV project was to benefit 
     GOPAC and, through it, Republican entities and candidates, by 
     continuing to conduct the AOW project under a new name and 
     through a section 501(c)(3) organization that could raise 
     funding for the project through tax-deductible charitable 
     contributions. This benefit was not merely incidental. To the 
     contrary, the evidence supports a finding that one of the 
     main purposes for transferring the project to ALOF was to 
     make possible the continuation of activities that 
     substantially benefited GOPAC and Republican entities and 
     candidates.
       For these reasons, Ms. Roady concluded that one of the 
     purposes of Mr. Gingrich's activities on behalf of ALOF and 
     the activities of others on behalf of ALOF with Mr. 
     Gingrich's knowledge and approval was to provide more than an 
     incidental benefit to GOPAC and Republican entities and 
     candidates in violation of the private benefit prohibition.

                  b. Campaign intervention prohibition

       As with respect to the private benefit prohibition, the 
     legal authorities discussed above make it clear, according to 
     Ms. Roady, that the analysis of whether there is a violation 
     of the campaign intervention prohibition does not turn on 
     whether the television programs had a legitimate educational 
     purpose. In the IRS CPE Manual, the IRS explained that 
     ``activities that meet the [educational] methodology test * * 
     * may nevertheless constitute participation or intervention 
     in a political campaign.'' IRS CPE Manual at 415. See also 
     New York Bar, 858 F.2d 876 (2d Cir. 1988); Rev. Proc. 86-43. 
     Nor does the analysis turn on the fact that the television 
     programs did not expressly urge viewers to ``support GOPAC,'' 
     ``vote Republican,'' or ``vote for Mr. Gingrich.'' The IRS 
     does not follow the express advocacy standard applied by the 
     FEC, and it is not necessary to advocate the election or 
     defeat of a clearly identified candidate to violate the 
     campaign intervention prohibition. IRS CPE Manual at 413. The 
     determination as to whether there is a violation of the 
     campaign intervention prohibition requires an overall ``facts 
     and circumstances'' analysis that cannot be made solely by 
     reference to the content of the television programs.
       The central issue is whether the television programs 
     provided support to GOPAC. When Congress enacted section 527 
     in 1974, the legislative history explained that the provision 
     was not intended to affect the prohibition against 
     electioneering activity contained in section 501(c)(3). The 
     IRS regulations under section 527 provide that section 
     501(c)(3) organizations are not permitted to establish or

[[Page H216]]

     support a PAC. Treas. Reg. Sec. 1.527-6(g). Under the 
     applicable legal standards, there is a violation of the 
     campaign intervention prohibition with respect to ALOF if the 
     evidence shows that the ACTV project provided support to 
     GOPAC, even though the television programs were educational 
     and were not used as a means to expressly advocate the 
     election or defeat of a particular candidate.
       According to Ms. Roady, there is substantial evidence of 
     such support in this case. As discussed above, the evidence 
     shows that the ACTV project conducted by ALOF was a 
     continuation of AOW, a partisan, political project undertaken 
     by GOPAC. Mr. Gingrich himself described ACTV as a 
     continuation of the AOW project. The activities conducted by 
     ALOF with respect to the ACTV project were the same as the 
     activities that had been conducted by GOPAC with respect to 
     the AOW project. The persons who conducted the ACTV project 
     on behalf of ALOF were GOPAC officers, employees, or 
     consultants. Shifting the project to ALOF allowed the parties 
     to raise some tax-deductible charitable contributions to 
     conduct what amounted to the continuation of a GOPAC project 
     for partisan, political purposes. For these reasons, Ms. 
     Roady concluded that Mr. Gingrich's activities on behalf of 
     ALOF and the activities of others on behalf of ALOF with Mr. 
     Gingrich's knowledge and approval provided support to GOPAC 
     in violation of the campaign intervention prohibition.


              2. The Renewing American Civilization Course

                     a. Private benefit prohibition

       The determination of whether there is a violation of the 
     private benefit prohibition does not depend on whether the 
     teaching and dissemination of the course served an 
     educational purpose, and cannot be made simply by analyzing 
     the content of Mr. Gingrich's lectures. The course met the 
     definition of ``educational'' under section 501(c)(3) and 
     served an educational purpose. (11/15/96 Roady Tr. 7). 
     Nevertheless, there is a violation of section 501(c)(3) if 
     another purpose of the course was to provide more than an 
     incidental private benefit. (11/15/96 Roady Tr. 17). Making 
     this determination requires an analysis of the facts to find 
     out whether Mr. Gingrich's activities on behalf of KSCF, PFF, 
     and Reinhardt and the activities of others with his knowledge 
     and approval had another nonexempt purpose to provide more 
     than an incidental benefit to private parties such as Mr. 
     Gingrich, GOPAC, and other Republican entities and 
     candidates. In this case, there is substantial evidence that 
     these parties were intended to and did receive more than an 
     incidental benefit from the activities conducted with respect 
     to the course. (11/15/96 Roady Tr. 78, 123, 124, 130, 131, 
     142-145, 173, 195).
       In summary, according to Ms. Roady, the evidence shows that 
     the course was developed by Mr. Gingrich in the context of a 
     broader movement. (11/15/96 Roady Tr. 127-130, 134-135, 196). 
     This movement was intended to have political consequences 
     that would benefit Mr. Gingrich in his re-election efforts, 
     GOPAC in its national political efforts, and Republican party 
     entities and candidates in seeking to attain a Republican 
     majority. The goals of the movement were expressed in various 
     ways, and included arousing 200,000 activists interested in 
     renewing American civilization by replacing the welfare state 
     with an opportunity society and having the Republican party 
     adopt the message of Renewing American Civilization so as to 
     attract those activists to the party. It was intended that a 
     Republican majority would be part of the movement, and that 
     the Republican party would be identified with the 
     ``opportunity society'' and the Democratic party with the 
     ``welfare state.'' (11/15/96 Roady Tr. 128, 130, 142, 145-
     148, 217-218; 11/19/96 Roady Tr. 35, 41).
       The movement, the message of the movement, and the course 
     were all called ``Renewing American Civilization.'' Mr. 
     Gingrich's lectures in the course were based on the same 
     principles as the message of the movement, and the course was 
     an important vehicle for disseminating the message of the 
     movement. Mr. Gingrich stated that the course was ``clearly 
     the primary and dominant method [of disseminating the message 
     of the movement.]'' Mr. Gingrich used the Renewing American 
     Civilization message in almost every political and campaign 
     speech he made in 1993 and 1994. He was instrumental in 
     determining that virtually the entire political program for 
     GOPAC for 1993 and 1994 would be centered on developing, 
     disseminating, and using the message of Renewing American 
     Civilization. (11/15/96 Roady Tr. 125-127, 144-145, 148-149, 
     153, 177, 218).
       Although GOPAC's financial resources were not sufficient to 
     enable it to carry out all of the political programs at its 
     usual level during this period, it had many roles in regard 
     to the course. These roles included development of the course 
     content which was coordinated in advance with GOPAC charter 
     members, fundraising for the course on behalf of the section 
     501(c)(3) organizations, and promotion of the course. GOPAC 
     envisioned a partisan, political role for the course. (11/15/
     96 Roady Tr. 197-202, 208-209).
       From 1993 to 1995, KSCF and PFF spent most of the money 
     they had raised for the course on the dissemination of the 20 
     hours taught by Mr. Gingrich. These funds were raised 
     primarily through tax-deductible charitable contributions to 
     KSCF and to PFF,74 funding that would not have been 
     available had the project been conducted by GOPAC or another 
     political or noncharitable organization.
---------------------------------------------------------------------------
     \74\ Some funding came from the sale of videotapes and 
     audiotapes of the course. (7/12/96 Eisenach Tr. 283).
---------------------------------------------------------------------------
       According to Ms. Roady, the facts as set forth above show 
     that, although the Renewing American Civilization course 
     served an educational purpose, it had another purpose as 
     well. (11/19/96 Roady Tr. 37, 40). The other purpose was to 
     provide a means for developing and disseminating the message 
     of Renewing American Civilization by replacing the welfare 
     state with an opportunity society. That was the main message 
     of GOPAC and the main message of virtually every political 
     and campaign speech made by Mr. Gingrich in 1993 and 1994. 
     Through the efforts of Mr. Gingrich and others acting with 
     his knowledge and approval, tax-deductible charitable 
     contributions were raised to support the dissemination of a 
     course in furtherance of Mr. Gingrich's political strategies. 
     (11/19/96 Roady Tr. 37, 38). Mr. Gingrich encouraged GOPAC, 
     House Republicans and other Republican entities and 
     candidates to use the course in their political strategies as 
     well. (11/15/96 Roady Tr. 145, 152, 173).
       The partisan, political benefit to these parties was 
     intended from the outset, and this benefit cannot be 
     considered merely incidental. To the contrary, the evidence 
     supports a finding that one of Mr. Gingrich's main purposes 
     for teaching the course was to develop and disseminate the 
     ideas, language, and concepts of Renewing American 
     Civilization as an integral part of a broad movement intended 
     to have political consequences that would benefit him in his 
     re-election efforts, GOPAC in its political efforts, and 
     other Republican entities and candidates in seeking to attain 
     a Republican majority. For these reasons, Ms. Roady concluded 
     that one of the purposes of Mr. Gingrich's activities on 
     behalf of KSCF, PFF and Reinhardt in regard to the course 
     entitled ``Renewing American Civilization'' and the 
     activities of others on behalf of those organizations with 
     Mr. Gingrich's knowledge and approval was to provide more 
     than an incidental benefit to Mr. Gingrich, GOPAC, and other 
     Republican entities and candidates in violation of the 
     private benefit prohibition. (11/15/96 Roady Tr. 122, 125, 
     127, 143-145, 148, 152, 153, 187-189, 213-217).

                  b. Campaign intervention prohibition

       As discussed above, neither the fact that the content of 
     the Renewing American Civilization course is educational 
     within the meaning of section 501(c)(3) nor the fact that the 
     course lectures do not contain expressions of support or 
     opposition for a particular candidate precludes a finding 
     that there is a violation of the campaign intervention 
     prohibition. Section 501(c)(3) organizations are prohibited 
     from establishing or supporting PACs, and from providing 
     support to candidates in their campaign activities. The 
     relevant issue is whether the course provided support to 
     GOPAC or to Mr. Gingrich in his capacity as a candidate.
       According to Ms. Roady, there is substantial evidence of 
     such support in this case. As discussed above, the evidence 
     shows that the course was developed by Mr. Gingrich as a part 
     of a broader political movement to renew American 
     civilization by replacing the welfare state with an 
     opportunity society. The course was an important vehicle for 
     disseminating the message of that movement. The message of 
     replacing the welfare state with the opportunity society was 
     also used in a partisan, political fashion. The ``welfare 
     state'' was associated with Democrats and the 
     ``opportunity society'' was associated with Republicans. 
     The message of the course was also the main message of 
     GOPAC during 1993 and 1994 and the main message of 
     virtually every political and campaign speech made by Mr. 
     Gingrich in 1993 and 1994. Through the use of section 
     501(c)(3) organizations, Mr. Gingrich and others acting 
     with his knowledge and approval raised tax-deductible 
     charitable contributions which were used to support a 
     course designed, developed and disseminated in a manner 
     that provided support to GOPAC in its political programs 
     and to Mr. Gingrich in his re-election campaign. For these 
     reasons, Ms. Roady concluded that Mr. Gingrich's 
     activities on behalf of KSCF, PFF and Reinhardt and the 
     activities of others on behalf of those organizations with 
     Mr. Gingrich's knowledge and approval provided support to 
     GOPAC and to Mr. Gingrich in violation of the campaign 
     intervention prohibition. (11/15/96 Roady Tr. 171-175, 
     194).

                  D. Advice Ms. Roady Would Have Given

       Had Mr. Gingrich or others associated with ACTV or Renewing 
     American Civilization consulted with Ms. Roady prior to 
     conducting these activities under the sponsorship of 
     501(c)(3) organizations, she would have advised that they not 
     do so for the reasons set forth above. During her testimony 
     before the Subcommittee, she was asked what her advice would 
     have been to Mr. Gingrich and others associated with ACTV and 
     Renewing American Civilization. She said that she would have 
     recommended the use of a 501(c)(4) organization to pay for 
     the dissemination of the course, as long as the dissemination 
     was not the primary activity of the 501(c)(4) organization. 
     If this had been done, contributions for ACTV and the course 
     would not have been tax-deductible. (11/15/96 Roady Tr. 207-
     208).

       VII. Summary of Conclusions of Mr. Gingrich's Tax Counsel

                            A. Introduction

       During the Preliminary Inquiry, Mr. Gingrich's lawyer 
     forwarded to the Subcommittee

[[Page H217]]

     a legal opinion letter and follow-on letter regarding the tax 
     questions at issue. The letters were prepared by attorney 
     James P. Holden. At Mr. Gingrich's request, Mr. Holden and 
     his partner who helped him prepare the letters, Susan 
     Serling, met with the Subcommittee on December 12, 1996, to 
     discuss his conclusions. The purpose of the letters was to 
     express Mr. Holden's conclusions regarding whether any 
     violation of section 501(c)(3) occurred with respect to the 
     Renewing American Civilization course.
       His understanding of the facts of the matter was based on a 
     review of the course book prepared for the course, videotapes 
     of the course, documents produced by KSC pursuant the Georgia 
     Opens Records Act, PFF's application to the IRS for 
     exemption, newspaper articles, discussions with Mr. Baran, 
     Mr. Eisenach, and counsel to PFF and KSCF.\75\
---------------------------------------------------------------------------
     \75\ Mr. Holden and his partner conferred with Mr. Eisenach 
     for about three hours. (12/12/96 Holden Tr. 38). The 
     conversation with KSCF counsel, via telephone, lasted about 
     30 minutes. (12/12/96 Holden Tr. 39). The conversation with 
     PFF's counsel lasted about two hours. (12/12/96 Holden Tr. 
     38-39). Mr. Holden did not talk to Mr. Gingrich prior to 
     writing the opinion. (12/12/96 Holden Tr. 43). He also did 
     not talk to anyone else involved in the course, such as Mr. 
     Hanser, Ms. Rogers, Ms. Nelson, Mr. Mescon, or Ms. Minnix. 
     (12/12/96 Holden Tr. 43-44).
---------------------------------------------------------------------------

            B. Qualifications of Mr. Gingrich's Tax Counsel

       Mr. Holden is a partner at the Washington, D.C. law firm of 
     Steptoe and Johnson. He was an adjunct professor at 
     Georgetown University Law Center from 1970 to 1983. He is co-
     author of ``Ethical Problems in Federal Tax Practice'' and 
     ``Standards of Tax Practice.'' He is the author of numerous 
     tax publications and a speaker at numerous tax institutes. He 
     was chair of the American Bar Association Section of Taxation 
     from 1989 to 1990; chair of the Advisory Group to the 
     Commissioner of Internal Revenue from 1992 to 1993; and chair 
     of the IRS Commissioner's Review Panel on Integrity Controls 
     from 1989 to 1990. He was a trustee and president of the 
     American Tax Policy Institute from 1993 to 1995 and a regent 
     of the American College of Tax Counsel. He is or was a member 
     of the following organizations: American Law Institute 
     (consultant, Federal Income Tax Project); Advisory Group to 
     Senate Finance Committee Staff regarding Subchapter C 
     revisions (1984-1985); Board of Advisors, New York 
     University/Internal Revenue Service Continuing Professional 
     Education Program (1987-1990); and BNA Tax Management 
     Advisory Board. He received a J.D. degree from Georgetown 
     University Law Center in 1960 and a B.S. degree from the 
     University of Colorado in 1953.
       His experience in 501(c)(3) law stems principally from one 
     client and one case that has been before the IRS for the past 
     six years. (12/12/96 Holden Tr. 21).\76\ He said during his 
     testimony, ``I don't pretend today to be a specialist in 
     exempt organizations. * * * I pretend to be an expert in the 
     political aspects of such organizations.'' (12/12/96 Holden 
     Tr. 21). The one case Mr. Holden worked on has not been 
     resolved and he has spent, on average, about 30 percent of 
     his time for the last six years on this case. (12/12/96 
     Holden Tr. 24). He has never been a member of any 
     organization or committee concerned principally with tax-
     exempt organizations law. (12/12/96 Holden Tr. 25). He does 
     not have any publications in the exempt organizations field. 
     (12/12/96 Holden Tr. 25). He has never given any speeches on 
     exempt organizations law nor has he been an expert witness 
     with respect to exempt organizations law. (12/12/96 Holden 
     Tr. 26).
---------------------------------------------------------------------------
     \76\ Although Mr. Holden declined to identify the client in 
     this case, he said that the case ``is perhaps the largest 
     case the Internal Revenue Service has before it on this whole 
     issue.'' (12/12/96 Holden Tr. 20-21).
---------------------------------------------------------------------------
       When Mr. Baran asked Mr. Holden to prepare his opinion 
     letter, Mr. Baran did not ask what qualifications Mr. Holden 
     had in the exempt organizations area. (12/12/96 Holden Tr. 
     32). Mr. Holden did not give Mr. Baran any information 
     regarding his background in exempt organizations law other 
     than the names of two references. (12/12/96 Holden Tr. 33).
       Mr. Holden's partner who helped prepared the opinion, Susan 
     Serling, does not have experience in the exempt organizations 
     field other than with respect to the one case referred to 
     above that is still before the IRS. (12/12/96 Holden Tr. 27). 
     She is not a member of the ABA Exempt Organizations Committee 
     and does not have any publications in the exempt 
     organizations field. She has never given any speeches 
     pertaining to exempt organizations law and has never 
     testified as an expert witness with respect to exempt 
     organizations law. (12/12/96 Holden Tr. 27).

        C. Summary of Conclusions of Mr. Gingrich's Tax Counsel

       As set forth in Mr. Holden's opinion letter, his follow-on 
     letter, and in his testimony, it was Mr. Holden's opinion, 
     based on his review of the facts available to him, that 
     ``there would be no violation of section 501(c)(3) if an 
     organization described in that section were to conduct 
     `Renewing American Civilization' as its primary activity.'' 
     (9/6/96 Holden Ltr. 4). In arriving at this opinion, Mr. 
     Holden evaluated the facts in light of the requirements:

       1. that a section 501(c)(3) organization be operated 
     exclusively for an exempt purpose;
       2. that the organization serve a public rather than a 
     private interest;
       3. that the earnings of an organization not inure to the 
     benefit of any person;
       4. that no substantial part of the activities of the 
     organization consist of attempting to influence legislation; 
     and
       5. that the organization not participate or intervene in 
     any political campaign in support of or in opposition to any 
     candidate for public office.

     (9/6/96 Holden Ltr. 4). A discussion of Mr. Holden's views on 
     the two principal tax questions at issue before the 
     Subcommittee--the private benefit prohibition and campaign 
     intervention prohibition--is set forth below.


                     1. Private Benefit Prohibition

       With respect to whether Renewing American Civilization 
     violated the private benefit prohibition described above, Mr. 
     Holden's opinion and follow-on letter focused exclusively on 
     the American Campaign Academy case. His letters did not refer 
     to other precedent or IRS statements pertaining to the 
     private benefit prohibition. In evaluating whether Renewing 
     American Civilization created any discernible secondary 
     benefit, in the terms used by the Court in American Campaign 
     Academy, Mr. Holden considered whether the course provided an 
     ``identifiable benefit'' to GOPAC or the Republican party. He 
     concluded that it did not.
       Following our review of the course materials, the course 
     syllabi, and video tapes of the course lectures, we have not 
     been able to identify any situation in which students of the 
     course were advised to vote Republican, join the Republican 
     party, join GOPAC, or support Republicans in general. Rather, 
     the course explored broad aspects of American civilization 
     through Mr. Gingrich's admittedly partisan viewpoint.

     (9/17/96 Holden Ltr. 5). Mr. Holden also wrote:
       From our review of the course materials * * * and their 
     presentation, it appears to us that the educational message 
     was not narrowly targeted to benefit particular organizations 
     or persons beyond the students themselves.

     (9/6/96 Holden Ltr. 58). During his testimony before the 
     Subcommittee, Mr. Holden said that because the course was 
     educational within the meaning of the ``methodology test'' 
     referred to above, he could not ``conceive'' of how the broad 
     dissemination of its message could violate 501(c)(3). (12/12/
     96 Holden Tr. 71).

       Now, when we get into the course--and I am saying I am 
     going to look at the activities, and if I have a clean 
     educational message, then my organization is entitled to 
     disseminate that message as broadly as we have the resources 
     to do [for any purpose as long as it is] serving the public 
     with that in the sense that this message has utility to the 
     public.

     (12/12/96 Holden Tr. 113-114). In coming to his conclusion 
     that the course did not violate the private benefit 
     prohibition, Mr. Holden made several findings of fact and 
     several assumptions. For example, he wrote that he considered 
     the facts that established a close connection between 
     individuals who were active in GOPAC and the development and 
     promotion of the course. As he characterized it, GOPAC's 
     former Executive Director and GOPAC employees became 
     employees or contractors to the organizations that conducted 
     the course. Individuals, foundations, and corporations that 
     provided financial support for the course were also 
     contributors to GOPAC or Mr. Gingrich's political campaigns. 
     GOPAC employees solicited contributions for the course. (9/6/
     96 Holden Ltr. 4). Furthermore, documents he reviewed:

     provide[d] evidence that the course was developed in a 
     political atmosphere and as part of a larger political 
     strategy. The documents indicate that Mr. Gingrich and GOPAC 
     evolved a political theme that they denominated ``Renewing 
     American Civilization'' and that, in their political campaign 
     capacities, they intended to press this theme to the 
     advantage of Republican candidates.

     (9/17/96 Holden Ltr. 2). Mr. Holden assumed a political 
     motivation behind the development of the course. As described 
     in his opinion letter:

       [T]he individuals who controlled GOPAC and who participated 
     in promoting the course viewed the course as desirable in a 
     political context, and many of their expressions and comments 
     evidence a political motive and interest. * * * Mr. Gingrich 
     is a skilled politician whose ideology finds expression in a 
     political message, and he is interested in maximum exposure 
     of that message and in generating interest in those who might 
     be expected to become advocates of the message. In sum, we 
     have not assumed that the development and promotion of the 
     course were free from political motivation.

     (9/6/96 Holden Ltr. 4-5). Furthermore, Mr. Holden said that 
     when preparing his opinion, he made the ``critical assumption 
     that the interests of the political persona surrounding GOPAC 
     were advanced by creating this course.'' (12/12/96 Holden Tr. 
     72). In this regard, Mr. Holden also said during his 
     testimony:

       We have taken as an assumption that the intent [of the 
     course] was to benefit the political message. If someone told 
     me that teaching the course actually resulted in the benefit, 
     I guess I wouldn't be surprised because that was our 
     understanding of the objective. * * * I accept[ed] for 
     purposes of our opinion that there was an intent to advance 
     the political message by utilizing a (c)(3).

     (12/12/96 Holden Tr. 83). In Mr. Holden's opinion, however, 
     the political motivation or strategy behind the creation of 
     the course is

[[Page H218]]

     irrelevant when determining whether a violation of the 
     private benefit prohibition occurred.

       It is not the presence of politicians or political ideas 
     that controls. The pertinent law does not turn on the 
     political affiliations or political motivations of the 
     principal participants.

     (9/6/96 Holden Ltr. 6). According to Mr. Holden, the issue of 
     whether a violation of 501(c)(3) occurred ``may not be 
     resolved by a determination that the individuals who designed 
     and promoted the course acted with political motivation.'' 
     (9/17/96 Holden Ltr. 4). In his opinion, when determining 
     whether an organization violated the private benefit 
     prohibition, it is necessary to determine whether an 
     organization's activities in fact served a private interest. 
     (12/12/96 Holden Tr. 80). What motivates the activities is 
     irrelevant.

       I'm saying it's irrelevant to look to what caused an 
     individual or group of individuals to form a (c)(3) or to 
     utilize a 501(c)(3) organization. The question instead is on 
     the activities--the focus instead is on the activities of the 
     organization and whether they violated the operational test. 
     I think that's a critical distinction.

     (12/12/96 Holden Tr. 61). He said that he was ``aware of no 
     authority that would hold that because one is motivated to 
     establish a 501(c)(3) organization by business, political, or 
     other motivation, that means that the organization cannot 
     operate in a manner that satisfies 501(c)(3), because we are 
     talking about an operational test.'' (12/12/96 Holden Tr. 17-
     18). Mr. Holden cited American Campaign Academy as an 
     authority for his conclusion that an organization's activity 
     must itself benefit a targeted group and that motivation of 
     an organization's agents in conducting that activity is 
     irrelevant. Mr. Holden said:

       [In American Campaign Academy] [t]he focus was, instead, on 
     the operational test and whether the activities of the 
     organization evidenced a purpose to serve a private interest. 
     But you have to find that in the activities of the 
     organization and not in some general notion of motivation or 
     background purpose.

     (12/12/96 Holden Tr. 61). In light of these and similar 
     comments made by Mr. Holden, the Special Counsel asked Mr. 
     Holden to comment on statements found in the American 
     Campaign Academy case at page 1064. The statements are in a 
     section of the case under the heading ``Operational Test'' 
     and are as follows:

       The operational test examines the actual purpose for the 
     organization's activities and not the nature of the 
     activities or the organization's statement of purpose. 
     (citations omitted). (emphasis supplied).
       In testing compliance with the operational test, we look 
     beyond the four corners of the organization's charter to 
     discover ``the actual objects motivating the organization and 
     the subsequent conduct of the organization.'' (citations 
     omitted). (emphasis supplied).
       What an organization's purposes are and what purposes its 
     activities support are questions of fact. (citations 
     omitted).

     (12/12/96 Holden Tr. 75-76). After the Special Counsel 
     brought these sections of the case to Mr. Holden's attention, 
     the following exchange occurred:
       Mr. Holden: May I refer you to the last sentence before the 
     next heading, ``Operating Primarily for Exempt Purposes.'' 
     The last sentence before that says: ``The sole issue for 
     declaration [sic] is whether respondent properly determined 
     that petitioner failed to satisfy the first condition of the 
     operational test by not primarily engaging in activities, 
     which is not for exempt purposes.''
       It's an activities test. And this is where the courts say 
     this is the sole issue. The stuff before, they're just kind 
     of reciting the law. When he gets to this, he said this is 
     what we have to determine.
       Mr. Cole: But in reciting the law, don't they say, in 
     testing compliance with the operational test, we look beyond 
     the four corners of the organization's charter to discover 
     the actual objects motivating the organization? Prior to 
     that, they say the operational test examines the actual 
     purpose for the organization's activities, not the nature of 
     the activities or the organization's statement of purpose.
       I grant you that is the statement of the law, but you are 
     saying that has no significance?
       Mr. Holden: That's not the case Judge Nims decided. * * *

     (12/12/96 Holden Tr. 77).


                  2. campaign intervention prohibition

       In his opinion letter, Mr. Holden wrote that it was 
     ``important to note that section 501(c)(3) does not, as is 
     often suggested, bar `political activity' [by 501(c)(3) 
     organization].'' (9/6/96 Holden Ltr. 68). The prohibition is 
     more limited and prohibits an organization from participating 
     in or intervening in any political campaign on behalf of or 
     in opposition to any candidate for public office. In order 
     for an organization to violate this prohibition, there must 
     exist a campaign, a candidate, a candidate seeking public 
     office, and an organization that participates or intervenes 
     on behalf of or in opposition to that candidate. (9/6/96 
     Holden Ltr. 68-69). Mr. Holden concluded that the course did 
     not violate this prohibition.
       The [course] materials contain no endorsement of or 
     opposition to the candidacy of any person, whether expressed 
     by name or through the use of a label that might be taken as 
     a stand-in for a candidate. While the materials are critical 
     of what is referred to as the ``welfare state'' and laudatory 
     of what is described as an ``opportunity society,'' none of 
     this is properly characterized as personalized to candidates, 
     directly or indirectly.

     (9/6/96 Holden Ltr. 72). During his testimony before the 
     Subcommittee, Mr. Holden said that the course contained issue 
     advocacy in the sense that it called for the replacement of 
     the welfare state with the opportunity society. (12/12/96 
     Holden Tr. 103-104). He also said that this issue--the 
     replacement of the welfare state with an opportunity 
     society--was closely identified with Mr. Gingrich and his 
     political campaigns. (12/12/96 Holden Tr. 104). He, however, 
     did not see this as a basis for concluding that the course 
     violated the prohibition on intervention in a political 
     campaign because ``Mr. Gingrich [had not] captured [this 
     issue] to the point where it is not a legitimate public 
     interest issue for discussion in a purely educational 
     setting, even where he is the instructor.'' (12/12/96 Holden 
     Tr. 104).77
---------------------------------------------------------------------------
     \77\ See also 12/12/96 Holden Tr. 103:
     Mr. Schiff: But if you are providing 501(c)(3) raised money 
     to pay for that candidate to give the same message, which is 
     his political message, I think, for all substantial purposes, 
     aren't you then, in effect, intervening or even endorsing the 
     candidate by using that type of money to allow him to get his 
     message further than it would get in the absence of that 
     money?
     Mr. Holden: I go back to the fact that we have a clean 
     curriculum that we were talking about in a hypothetical and 
     in the judgment that we reached about this case, and I don't 
     believe that merely because a political figure takes a 
     particular set of values and articulates them as a political 
     theme, that that so captures that set of values that a 
     501(c)(3) organization cannot legitimately educate people 
     about that same set of values.
     Mr. Schiff: With the same messenger?
     Mr. Holden: It doesn't seem to me that that compels a 
     conclusion that there's a violation of 501(c)(3).
---------------------------------------------------------------------------

                 D. Advice Mr. Holden Would Have Given

       During his appearance before the Subcommittee, Mr. Holden 
     was asked about what type of organization he would have 
     advised Mr. Gingrich and others to use in order to conduct 
     and disseminate Renewing American Civilization had he been 
     asked in advance. He said that he would not have advised the 
     use of a 501(c)(3) organization because the mix of politics 
     and tax-deductible funds is too ``explosive.''

       I would have advised them not to do the activity through a 
     (c)(3). I have already expressed that view to the Speaker. He 
     didn't consult me in advance, but I said, if I had been 
     advising you in advance. He said, why not. I said, because 
     the intersection of political activity and 501(c)(3) is such 
     an explosive mix in terms of the IRS view of things that I 
     would not advise you to move that close to the issue. You 
     should find a way of financing the course that doesn't 
     involve the use of 501(c)(3) funds. That would have been my 
     advice to him.
       I said, that doesn't mean I conclude that what you did is a 
     violation. In fact, I think we are kind of fairly far out 
     beyond the frontiers of what has been decided in the past in 
     this area. We are looking at the kind of case that I do not 
     think has ever been presented. I do not see how anyone can 
     conclude that this is an open and shut case. It just is not 
     of that character.

     (12/12/96 Holden Tr. 132-134). Mr. Holden said that an 
     appropriate vehicle for the course might have been a 
     501(c)(4) organization because such an organization can 
     engage in some political activity and the activity would not 
     have used tax-deductible funds. (12/12/96 Holden Tr. 132-
     134). Later, Mr. Holden reiterated that he would have not 
     recommended that Renewing American Civilization be sponsored 
     and funded by a 501(c)(3) organization and pointed out such 
     activities are highly likely to attract the attention of the 
     IRS.
       [T]hose funds are deductible and the conjunction of 
     politics and a (c)(3) organization is so explosive as a mix 
     that it is bound to attract the attention of the Internal 
     Revenue Service. I wouldn't have been thinking about this 
     committee. I would have been thinking about whether the 
     Internal Revenue Service would have been likely to challenge.

     (12/12/96 Holden Tr. 146). After Mr. Holden made this 
     comment, the following exchange occurred:
       Ms. Pelosi: So it would have raised questions[?]
       Mr. Holden: Yes.
       Mr. Goss: Isn't that a little bit akin to having a yacht 
     and an airplane on your tax return for business purposes[?]
        Mr. Holden: It is one of those things that stands out.

     (12/12/96 Holden Tr. 146-147).

 VIII. Summary of Facts Pertaining to Statements Made to the Committee

                             A. Background

       On or about September 7, 1994, Ben Jones, Mr. Gingrich's 
     Democratic opponent in 1994, filed with the Committee a 
     complaint against Mr. Gingrich. The complaint centered on the 
     course. Among other things, it alleged that Mr. Gingrich had 
     used his congressional staff to work on the course and that 
     he had misused organizations that were exempt from taxation 
     under section 501(c)(3) of the Internal Revenue Code because 
     the course was a partisan, political project, with 
     significant involvement by GOPAC, and was not a permissible 
     activity for a section 501(c)(3) organization. (Ex. 135).

[[Page H219]]

       On or about October 4, 1994, Mr. Gingrich wrote the 
     Committee in response to the complaint and primarily 
     addressed the issues concerning the use of congressional 
     staff for the course. In doing so he stated:
       I would like to make it abundantly clear that those who 
     were paid for course preparation were paid by either the 
     Kennesaw State Foundation, [sic] the Progress and Freedom 
     Foundation or GOPAC. * * * Those persons paid by one of the 
     aforementioned groups include: Dr. Jeffrey Eisenach, Mike 
     DuGally, Jana Rogers, Patty Stechschultez [sic], Pamela 
     Prochnow, Dr. Steve Hanser, Joe Gaylord and Nancy Desmond.

     (Ex. 136, p. 2). After the Committee received and reviewed 
     Mr. Gingrich's October 4, 1994 letter, it sent him a letter 
     dated October 31, 1994, asking for additional information 
     concerning the allegations of misuse of tax-exempt 
     organizations in regard to the course. The Committee also 
     asked for information relating to the involvement of GOPAC in 
     various aspects of the course. As set forth in the letter, 
     the Committee wrote:
       There is, however, an allegation which requires explanation 
     before the Committee can finalize its evaluation of the 
     complaint. This is the allegation that, in seeking and 
     obtaining funding for your course on Renewing American 
     Civilization, you improperly used tax-exempt foundations to 
     obtain taxpayer subsidization of political activity.

                           *   *   *   *   *

       Your answers to [questions set forth in the letter] would 
     be helpful to the Committee in deciding what formal action to 
     take with respect to the complaint.

                           *   *   *   *   *

       A number of documents submitted by Ben Jones, however, 
     raise questions as to whether the course was in fact 
     exclusively educational in nature, or instead constituted 
     partisan political activity intended to benefit Republican 
     candidates.

     (Ex. 137, pp. 1-2).

   B. Statements Made by Mr. Gingrich to the Committee, Directly or 
                            Through Counsel


       1. Mr. Gingrich's December 8, 1994 Letter to the Committee

       In a letter dated December 8, 1994, Mr. Gingrich responded 
     to the Committee's October 31, 1994 letter. (Ex. 138). In 
     that letter, Mr. Gingrich made the following statements, 
     which he has admitted were inaccurate, incomplete, and 
     unreliable.
       1. [The course] was, by design and application, completely 
     non-partisan. It was and remains about ideas, not politics. 
     (Ex. 138, p. 2).
       2. The idea to teach ``Renewing American Civilization'' 
     arose wholly independent of GOPAC, because the course, unlike 
     the committee, is non-partisan and apolitical. My motivation 
     for teaching these ideas arose not as a politician, but 
     rather as a former educator and concerned American citizen * 
     * *. (Ex. 138, p. 4).
       3. The fact is, ``Renewing American Civilization'' and 
     GOPAC have never had any official relationship. (Ex. 138, p. 
     4).
       4. GOPAC * * * is a political organization whose interests 
     are not directly advanced by this non-partisan educational 
     endeavor. (Ex. 138, p. 5).
       5. As a political action committee, GOPAC never 
     participated in the administration of ``Renewing American 
     Civilization.'' (Ex. 138, p. 4).
       6. 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. 
     (Ex. 138, p. 4).
       7. 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 association with GOPAC. Before we had 
     raised the first dollar or sent out the first brochure, 
     Course Project Director Jeff Eisenach resigned his position 
     at GOPAC. (Ex. 138, p. 4).

The goal of the letter was to have the complaint dismissed. (11/13/96 
Gingrich Tr. 36).


  2. March 27, 1995 Letter of Mr. Gingrich's Attorney to the Committee

       On January 26, 1995, Representative Bonior filed with the 
     Committee an amended version of the Ben Jones complaint 
     against Mr. Gingrich. (Ex. 139). Among other things, the 
     complaint re-alleged that the Renewing American Civilization 
     course had partisan, political purposes and was in violation 
     of section 501(c)(3). The complaint also alleged substantial 
     involvement of GOPAC in the course. (Ex. 139, pp. 1-7). In a 
     letter dated March 27, 1995, Mr. Baran, Mr. Gingrich's 
     attorney and a partner at the law firm of Wiley, Rein and 
     Fielding, filed a response on behalf of Mr. Gingrich to the 
     amended complaint. (Ex. 140, PFF 4347). Prior to the letter 
     being delivered, Mr. Gingrich reviewed it and approved its 
     submission to the Committee. (7/18/96 Gingrich Tr. 274-275).

       Mr. Cole: If there was anything inaccurate in the letter, 
     would you have told Mr. Baran to change it?
       Mr. Gingrich: Absolutely.

(7/18/96 Gingrich Tr. 275).
       The letter contains the following statements, which Mr. 
     Gingrich has admitted were inaccurate, incomplete, and 
     unreliable.

       1. As Ex. 13 demonstrates, the course solicitation * * * 
     materials are completely non-partisan. (Ex. 140, p. 19, fn. 
     7).
       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. (Ex. 140, p. 35).
       3. The Renewing American Civilization course and GOPAC have 
     never had any relationship, official or otherwise. (Ex. 140, 
     p. 35).
       4. As noted previously, GOPAC has had absolutely no role in 
     funding, promoting, or administering Renewing American 
     Civilization. (Ex. 140, pp. 34-35).
       5. GOPAC has not been involved in course fundraising and 
     has never contributed any money or services to the course. 
     (Ex. 140, p. 28).
       6. 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. (Ex. 140, p. 36).

     The purpose of Mr. Baran's letter was to have the Committee 
     dismiss the complaints against Mr. Gingrich. (11/13/96 
     Gingrich Tr. 35-36).

    C. Subcommittee's Inquiry Into Statements Made to the Committee

       On September 26, 1996, the Subcommittee expanded the scope 
     of the Preliminary Inquiry to determine:

     [w]hether Representative Gingrich provided accurate, 
     reliable, and complete information concerning the course 
     entitled ``Renewing American Civilization,'' GOPAC's 
     relationship to the course entitled ``Renewing American 
     Civilization,'' or the Progress and Freedom Foundation in the 
     course of communicating with the Committee, directly or 
     through counsel * * *.

     On October 1, 1996, the Subcommittee requested that Mr. 
     Gingrich produce to the Subcommittee all documents that were 
     used or relied upon to prepare the letters at issue--the 
     letters dated October 4, 1994, December 8, 1994 and March 27, 
     1995. Mr. Gingrich responded to the Committee's request on 
     October 31, 1996. (Ex. 141). In his response, Mr. Gingrich 
     described how extremely busy he was at the time the October 
     4, 1994, and December 8, 1994 letters were prepared. He said, 
     the October 4, 1994 letter was written ``in [the] context of 
     exhaustion and focused effort'' on finishing a congressional 
     session, traveling to over a hundred congressional districts, 
     tending to his duties as Whip, and running for re-election in 
     his district. (Ex. 141, p. 1). At the time of the December 8, 
     1994 letter, he said that he and his staff were ``making 
     literally hundreds of decisions'' as part of the transition 
     in the House from Democratic to Republican Control. (Ex. 141, 
     p. 2; 11/13/96 Gingrich Tr. 6, 10, 26). With respect to his 
     level of activity at the time the March 27, 1995 letter was 
     created Mr. Gingrich said the following:

       [W]e were going through passing the Contract with America 
     in a record 100 days in what many people believe was a forced 
     march. I was, in parallel, beginning to lay out the base for 
     the balanced budget by 2002, and I was, frankly, being too 
     noisy publicly and damaging myself in the process.
       I had three projects--four; I was writing a book. So those 
     four projects were ongoing as I was going home to report to 
     my district, and we were being battered as part of this 
     continuum by Bonior and others, and we wanted it handled in a 
     professional, calm manner. We wanted to honor the Ethics 
     process.

(11/13/96 Gingrich Tr. 33-34).
       Mr. Gingrich wrote in his October 31, 1996 response to the 
     Subcommittee that ``although [he] did not prepare any of the 
     letters in question, in each case [he] reviewed the documents 
     for accuracy.'' (Ex. 141, p. 3). Specifically, with respect 
     to the October 4, 1994 letter, his assistant, Annette 
     Thompson Meeks, showed him the draft she had created and he 
     ``read it, found it accurate to the best of [his] knowledge, 
     and signed it.'' (Ex. 141, p. 2). With respect to the 
     December 8, 1994 letter, he wrote, ``Again I would have read 
     the letter carefully and concluded that it was accurate to 
     the best of my knowledge and then signed it.'' (Ex. 141, p. 
     2). With respect to the March 27, 1995 letter, he wrote that 
     he ``read [it] to ensure that it was consistent with [his] 
     recollection of events at that time.'' (Ex. 141, p. 3).

     D. Creation of the December 8, 1994 and March 27, 1995 Letters

       Mr. Gingrich appeared before the Subcommittee on November 
     13, 1996 to testify about these letters.\78\ He began his 
     testimony by stating that the ``ethics process is very 
     important.'' (11/13/96 Gingrich Tr. 4). He then went on to 
     state:
---------------------------------------------------------------------------
     \78\ Mr. Gingrich appeared twice before the Subcommittee to 
     discuss these letters. The first time was on November 13, 
     1996, in response to a request from the Subcommittee that he 
     appear and testify about the matter under oath. The second 
     time was on December 10, 1996, as part of his opportunity to 
     address the Subcommittee pursuant to Rule 17(a)(3) of the 
     Committee's Rules. Pursuant to Committee Rules, that 
     appearance was also under oath.

       On Monday I reviewed the 380-page [July 1996] interview 
     with Mr. Cole, and I just want to begin by saying to the 
     [C]ommittee that I am very embarrassed to report that I have 
     concluded that reasonable people could conclude, looking at 
     all the data, that the letters are not fully responsive, and, 
     in fact, I think do fail to meet the standard of accurate, 
---------------------------------------------------------------------------
     reliable and complete.


[[Page H220]]


     (11/13/96 Gingrich Tr. 5). Mr. Gingrich said several times 
     that it was only on the Monday before his testimony--the day 
     when he reviewed the transcript of his July interview with 
     Mr. Cole--that he realized the letters were inaccurate, 
     incomplete, and unreliable. (11/13/96 Gingrich Tr. 5, 8, 10, 
     149, 150, 195; 12/10/96 Gingrich Tr. 75). In his testimony 
     before the Subcommittee the next month, Mr. Gingrich 
     ``apologized for what was clearly a failure to communicate 
     accurately and completely with this [C]ommittee.'' (12/10/96 
     Gingrich Tr. 5). Mr. Gingrich said the errors were a result 
     of ``a failure to communicate involving my legal counsel, my 
     staff and me.''
     (12/10/96 Gingrich Tr. 5). Mr. Gingrich went on to say:

       After reviewing my testimony, my counsel's testimony, and 
     the testimony of two of his associates, the ball appears to 
     have been dropped between my staff and my counsel regarding 
     the investigation and verification of the responses submitted 
     to the [C]ommittee.
       As I testified, I erroneously, it turns out, relied on 
     others to verify the accuracy of the statements and 
     responses. This did not happen. As my counsel's testimony 
     indicates, there was no detailed discussion with me regarding 
     the submissions before they were sent to the [C]ommittee. 
     Nonetheless, I bear responsibility for them, and I again 
     apologize to the [C]ommittee for what was an inadvertent and 
     embarrassing breakdown.

                           *   *   *   *   *

       At no time did I intend to mislead the [C]ommittee or in 
     any way be less than forthright.

     (12/10/96 Gingrich Tr. 5-7). Of all the people involved in 
     drafting, reviewing, or submitting the letters, the only 
     person who had first-hand knowledge of the facts contained 
     within them with respect to the Renewing American 
     Civilization course was Mr. Gingrich.


               1. Creation of the December 8, 1994 Letter

       According to Mr. Gingrich, after he received the 
     Committee's October 31, 1994 letter, he decided that the 
     issues in the letter were too complex to be handled by his 
     office and he sought the assistance of an attorney. (11/13/96 
     Gingrich Tr. 11). Mr. Gaylord, on behalf of Mr. Gingrich, 
     contacted Jan Baran and the Mr. Baran's firm began 
     representing Mr. Gingrich on November 15, 1994. (11/14/96 
     Gaylord Tr. 16; 79 11/13/96 Baran Tr. 4; 80 12/10/
     96 Gingrich Tr. 5). The response prepared by Mr. Baran's firm 
     became the letter from Mr. Gingrich to the Committee dated 
     December 8, 1994.
---------------------------------------------------------------------------
     \79\ Mr. Gaylord was the one to contact the firm because his 
     position was ``advisor to Congressman Gingrich'' and he 
     coordinated ``all of the activities that were outside the 
     official purview of [Mr. Gingrich's] congressional 
     responsibilities.'' (11/14/96 Gaylord Tr. 19; 11/13/96 Baran 
     Tr. 7).
     \80\ Mr. Gingrich waived his attorney/client privilege and 
     asked Mr. Baran to testify before the Committee. (11/13/96 
     Gingrich Tr. 5).
---------------------------------------------------------------------------
       According to Mr. Baran, he did not receive any indication 
     from Mr. Gaylord or Mr. Gingrich that Mr. Baran was to do any 
     kind of factual review in order to prepare the response. (11/
     13/96 Baran Tr. 47-48). 81 Mr. Baran and his staff did 
     not seek or review documents other than those attached to the 
     complaint of Mr. Jones and the Committee's October 31, 1994 
     letter to Mr. Gingrich 82 and did not contact GOPAC, 
     Kennesaw State College, or Reinhardt College. (11/13/96 Baran 
     Tr. 13, 15, 18). Mr. Baran did not recall speaking to Mr. 
     Gingrich about the letter other than possibly over dinner on 
     December 9, 1994--one day after the letter was signed by Mr. 
     Gingrich. (11/13/96 Baran Tr. 18, 33). Mr. Baran did contact 
     Mr. Eisenach, but did not recall the ``nature of the 
     contact.'' (11/13/96 Baran Tr. 16). Mr. Eisenach said he had 
     no record of ever having spoken to Mr. Baran about the letter 
     and does not believe that he did so. (11/14/96 Eisenach Tr. 
     18-19, 22). The conversation he had with Mr. Baran concerned 
     matters unrelated to the letter. (11/14/96 Eisenach Tr. 17-
     18). Mr. Eisenach also said that no one has ever given him a 
     copy of the December 8, 1994 letter and asked him to verify 
     its contents. (11/14/96 Eisenach Tr. 22).
---------------------------------------------------------------------------
     \81\ Mr. Gaylord said that he did not give any instructions 
     to Mr. Baran about how the response should be prepared. (11/
     14/96 Gaylord Tr. 16-17). Mr. Baran, however, recalled that 
     Mr. Gaylord said that the response should be completed 
     quickly ``because there was hope that the Ethics Committee 
     would meet before the end of the year to consider this 
     matter'' and that it should not be too expensive. (11/13/96 
     Baran Tr. 7, 46-48).
     \82\ The attachments to the October 31, 1994 letter were 
     selected from materials that were part of the complaint filed 
     by Mr. Jones.
---------------------------------------------------------------------------
       The other attorney at Wiley, Rein and Fielding involved in 
     preparing the response was Bruce Mehlman. (11/13/96 Baran Tr. 
     19; 11/19/96 Mehlman Tr. 17). He was a first-year associate 
     who had been at Wiley, Rein and Fielding since September 
     1994. (11/19/96 Mehlman Tr. 5). 83 Mr. Mehlman's role 
     was to create the first draft. (11/19/96 Mehlman Tr. 15). The 
     materials Mr. Mehlman had available to him to prepare the 
     draft were:

     \83\ Mr. Mehlman left Wiley, Rein & Fielding in February 1996 
     and is now an attorney with the National Republican 
     Congressional Committee. (11/19/96 Mehlman Tr. 5).
---------------------------------------------------------------------------
       1. correspondence between Mr. Gingrich and the Committee, 
     including the October 4, 1994 letter;
       2. course videotapes;
       3. the book used in the course called ``Renewing American 
     Civilization'';
       4. a course brochure;
       5. the complaint filed by Ben Jones against Mr. Gingrich; 
     and
       6. documents produced pursuant to a Georgia Open Records 
     Act request.

     (11/19/96 Mehlman Tr. 15-16, 20). Mr. Mehlman said that he 
     did not attempt to gather any other documents because he did 
     not see a need to go beyond these materials in order to 
     prepare a response. (11/19/96 Mehlman Tr. 19-20). With the 
     exception of contacting his brother, who had taken the 
     course,84 Mr. Mehlman did not make any inquiries of 
     people regarding the facts of the matter. (11/19/96 Mehlman 
     Tr. 18). He did not, for example, contact GOPAC or Mr. 
     Eisenach. (11/19/96 Mehlman Tr. 28). After he completed his 
     first draft, he gave it to Mr. Baran. (11/19/96 Mehlman Tr. 
     22). He assumed that Mr. Baran would make sure that any 
     factual questions would have been answered to his 
     satisfaction before the letter went out. (11/19/96 Mehlman 
     Tr. 51). However, Mr. Mehlman did not know what, if anything, 
     Mr. Baran did with the draft after he gave it to him. (11/19/
     96 Mehlman Tr. 22).
---------------------------------------------------------------------------
     \84\ The information obtained from his brother used as the 
     basis of the statement in Mr. Gingrich's response that the 
     course contained ``as many references to Franklin Roosevelt, 
     Jimmy Carter, and Martin Luther King, Jr. as there are to 
     Ronald Reagan or Margaret Thatcher.'' (11/19/96 Mehlman Tr. 
     20). Mr. Mehlman, however, personally reviewed only one 
     course videotape. (11/19/96 Mehlman Tr. 21).
---------------------------------------------------------------------------
       When Mr. Gaylord asked Mr. Baran to prepare the letter, it 
     was Mr. Baran's understanding that Annette Thompson Meeks, an 
     Administrative Assistant for Mr. Gingrich's office, would 
     help. (11/13/96 Baran Tr. 5, 7). According to Mr. Baran, Ms. 
     Meeks' role was:

     basically to take a draft product from us and review it for 
     accuracy [from] her personal knowledge and basically make 
     sure that it was acceptable. And in that regard, I believed 
     that she may have spoken with other people to confirm that, 
     but you will be talking to her, and you will have to confirm 
     it with her. I tried to not talk to her about that.

(11/13/96 Baran Tr. 10). Mr. Baran described the process for reviewing 
the letter as follows:

       Well, you know, as a counsel who was retained relatively 
     late in that process at that time and as someone who had no 
     firsthand knowledge about any of the underlying activities 
     and with a marching order of trying to prepare a draft that 
     was usable by the staff, we were pretty much focused on 
     getting something together and over to Annette Meeks so that 
     it could be used. Verification was something that would have 
     been available through those who had firsthand knowledge 
     about these facts, who had reviewed the draft.

     (11/13/96 Baran Tr. 15). Mr. Baran did not, however, know 
     whether the letter was reviewed by others to determine its 
     accuracy. (11/13/96 Baran Tr. 48).
       Ms. Meeks said that at the time the letter was being 
     prepared, she had no knowledge of whether:

       1. the course was a political or partisan activity by 
     design or application;
       2. GOPAC was involved in the course;
       3. GOPAC was benefited by the course;
       4. GOPAC created, funded, or administered the course;
       5. the idea to teach the course arose wholly independent of 
     GOPAC;
       6. Mr. Gingrich's motivation for teaching the course arose 
     not as a politician but rather as a historian;
       7. Mr. Eisenach resigned his position at GOPAC.

     (11/14/96 Meeks Tr. 45-47). Ms. Meeks also said she was 
     unaware that GOPAC's theme was Renewing American 
     Civilization. (11/14/96 Meeks Tr. 88).
       Ms. Meeks said she had no role in drafting the letter, did 
     not talk to anyone to verify that the facts in the letter 
     were accurate, and had no knowledge of how the facts in the 
     letter were checked for accuracy. (11/14/96 Meeks Tr. 39, 48, 
     51). She did not indicate to Mr. Baran that she had given the 
     letter to anyone for the purpose of checking its accuracy. 
     (11/14/96 Meeks Tr. 87). In this regard, Ms. Meeks said:

       I will be very frank and tell you I don't know how [Mr. 
     Baran] composed this information as far as who he spoke with. 
     I was not privy to any of that. The only thing I could add to 
     my answer is that once counsel is retained, we were kind of 
     out of the picture as far as the process, other than typing 
     and transmitting.

     (11/14/96 Meeks Tr. 92). She said her role was to provide Mr. 
     Baran with: background information about Mr. McCarthy (the 
     Committee's counsel who had conferred with Mr. Gingrich about 
     the course in 1993); a copy of the October 4, 1994 letter 
     from Mr. Gingrich to the Committee; copies of papers relating 
     to Mr. Hanser's employment with Mr. Gingrich's congressional 
     office; and copies of the course videotapes. (11/14/96 Meeks 
     Tr. 36-37).
       Mr. Gaylord had a similar expectation in that, by retaining 
     Wiley, Rein and Fielding, the firm was:

     both protecting us and had done the proper and correct 
     investigation in the preparation of the letters and that 
     they, in fact, did their job because that's what they were 
     paid to do. And I presumed that they had extracted the 
     information from Dr. Eisenach and others who were involved 
     specifically in the course.


[[Page H221]]


     (11/14/96 Gaylord Tr. 62). Mr. Gaylord, however, did not know 
     what inquiry Mr. Baran made in order to prepare the letter. 
     (11/14/96 Gaylord Tr. 17).
       After Mr. Baran sent Ms. Meeks a draft of the letter, Ms. 
     Meeks re-typed the letter and sent the new version to Mr. 
     Baran to verify that it was identical to what he had sent 
     her. She then recalled faxing a copy to Mr. Gaylord and to 
     Mr. Gingrich's executive assistant ``to get Newt to take a 
     look at it.'' (11/14/96 Meeks Tr. 43-44). Mr. Gingrich said 
     about his review of the letter:

       And I think in my head, I was presented a document--I am 
     not trying to blame anybody, or I am not trying to avoid 
     this, I am trying to explain how it happened. I was presented 
     a document and told, this is what we have collectively 
     decided is an accurate statement of fact. I read the 
     document, and it did not at any point leap out to me and say, 
     boy, you had better modify paragraph 3, or that this phrase 
     is too strong and too definitive. I think I read it one time, 
     so that seems right to me, and I signed it.

     (11/13/96 Gingrich Tr. 11). See also 11/13/96 Gingrich Tr. 10 
     (at the time he read the letter, ``nothing leaped out at 
     [him] and said, `this is wrong' '') and 11/13/96 Gingrich Tr. 
     16 (the letter ``seemed accurate'' to him).85
---------------------------------------------------------------------------
     \85\ In early July 1993, Mr. Gingrich was interviewed about 
     the course by a student reporter with the KSC newspaper. In 
     that interview the following exchange took place:
     Interviewer: And how is GOPAC involved in this?
     Mr. Gingrich: It's not involved in this at all.
     Interviewer: Are you going to bring a lot of your ideas to 
     GOPAC though?
     Mr. Gingrich: Absolutely. Every single one of them.
     (Ex. 142, p. 10).
     In other interviews over the past few years, Mr. Gingrich has 
     made other statements about GOPAC's involvement in the 
     course. They have included, for example, the following:
     1.``GOPAC had the most incidental involvement at the very 
     beginning of the process.'' (Atlanta Constitution, section A, 
     page 1 (Sept. 19, 1993)).
     2.``GOPAC provided some initial ideas on who might be 
     interested in financing the course; that's all they did.'' 
     (Associated Press, AM cycle, (Sept. 2, 1993)).
     3.``The initial work was done before we talked with Kennesaw 
     State College at GOPAC in organizing our thoughts.'' (The 
     Hotline, American Political Network, Inc. (Sept. 7, 1993)).
---------------------------------------------------------------------------
       Mr. Gaylord did not recall whether he reviewed the letter 
     prior to its being sent to the Committee. (11/14/96 Gaylord 
     Tr. 18). Mr. Gaylord said that the statement that GOPAC had 
     no role in the administration of the course was incorrect. 
     (11/14/96 Gaylord Tr. 30-31). Mr. Gaylord said that the 
     statement that GOPAC employees contributed time as private, 
     civic-minded people was incorrect. (11/14/96 Gaylord Tr. 31). 
     Mr. Gaylord was not asked to verify the facts in the letters. 
     (11/14/96 Gaylord Tr. 20, 33).


         2. Bases for Statements in the December 8, 1994 Letter

       During their testimony, those involved in the creation of 
     the letter were unable to explain the bases for many of the 
     statements in the letter. Explanations were, however, given 
     for the bases of some of the statements. A summary of those 
     bases is set forth below.

       1. [The course] was, by design and application, completely 
     non-partisan. It was and remains about ideas, not politics. 
     (Ex. 138, p. 2).

       Mr. Baran said that the basis for this statement was his 
     review of the course tapes and course materials. (11/13/96 
     Baran Tr. 19). Mr. Mehlman said the following about his 
     understanding of the basis of this statement:

       Well, I don't specifically recall. If I had to assume, it 
     would be some of the [Georgia Open Records Act] documents or 
     some of the course materials that purport to be nonpartisan, 
     or to have created a course that was nonpartisan, that 
     certainly would explain design.
       As far as in application, probably the reference made by my 
     brother who had seen the course, who had participated in it, 
     I suppose, and my general basic review of the initial 
     writings about the course and viewing the first videotape of 
     the course, suggested that the course was nonpartisan.

(11/19/96 Mehlman Tr. 24-25).
       According to Mr. Baran, the letter to the College 
     Republicans--which was one of the attachments to the 
     September 7, 1994 Jones complaint (Ex. 81)--did not raise a 
     question in his mind that the course was partisan or about 
     politics. (11/13/96 Baran Tr. 23).

       2. ``The idea to teach `Renewing American Civilization' 
     arose wholly independent of GOPAC, because the course, unlike 
     the committee, is non-partisan and apolitical. My motivation 
     for teaching these ideas arose not as a politician, but 
     rather as a former educator and concerned American citizen * 
     * *.'' (Ex. 138, p. 4).

       Mr. Baran said that the basis of this statement was a 
     review of the course tapes and the belief that the course had 
     originated from a January 25, 1993 speech Mr. Gingrich had 
     given on the House floor. (11/13/96 Baran Tr. 24-25). At the 
     time the letter was drafted, Mr. Baran was unaware of Mr. 
     Gingrich's December 1992 meeting with Owen Roberts where Mr. 
     Gingrich first laid out his ideas for the Renewing American 
     Civilization movement and course. (11/13/96 Baran Tr. 25). 
     Mr. Mehlman did not speak with Mr. Gingrich about his 
     motivations for the course and did not know if Mr. Baran had 
     spoken with Mr. Gingrich about his motivations for teaching 
     the course. (11/19/96 Mehlman Tr. 27).

       3. ``The fact is, `Renewing American Civilization' and 
     GOPAC have never had any official relationship.'' (Ex. 38, p. 
     4).

       Mr. Baran said about this statement:

       Well, I think the basis of [this] statement[] [was] 
     essentially the characterizations that had been placed on the 
     relationship between the course and GOPAC by people like Jeff 
     Eisenach 86 at that time, and it was consistent with my 
     limited knowledge of GOPAC's association with the course at 
     that time. . . .
---------------------------------------------------------------------------
     \86\ Earlier in his testimony and as described above, Mr. 
     Baran said that he had contacted Mr. Eisenach at the time the 
     letter was being prepared, but did not recall the ``nature of 
     the contact.'' (11/13/96 Baran Tr. 16). As also discussed 
     above, Mr. Eisenach recalled having a discussion with Mr. 
     Baran at the time the letter was being prepared, but about 
     topics unrelated to the letter. (11/14/96 Eisenach Tr. 17-
     18).
---------------------------------------------------------------------------
       You know, the various materials, some of which we went 
     through this morning, were items that came to my attention in 
     the course of the document production, which commenced, I 
     think, around April of this year and took quite a bit of 
     time, or that came up in the course of your interviews with 
     Mr. Gingrich.

                           *   *   *   *   *

       Well, I think the basis is that these statements were being 
     reviewed by people who would presumably be in a position to 
     correct me if there [sic] was wrong.

(11/13/96 Baran Tr. 36-37).
       When asked about the appearance of GOPAC fax cover sheets 
     on documents pertaining to the course, Mr. Baran said that 
     such faxes raised questions in his mind but that he ``had an 
     understanding at that time that those questions were 
     addressed by an explanation that there were either 
     incidental or inadvertent uses of GOPAC resources or there 
     were uses of GOPAC resources that were accounted for by 
     Mr. Eisenach.'' (11/13/96 Baran Tr. 21). Mr. Baran could 
     not recall how he came to this understanding. (11/13/96 
     Baran Tr. 21-22).
       With respect to whether Mr. Baran knew that GOPAC was 
     involved in raising funds for the course, Mr. Baran said:

       At that time my recollection of quote, GOPAC being involved 
     in fund-raising [unquote] was focused on Ms. Prochnow, the 
     finance director who I don't know and have never met, but 
     whose role was characterized, I believe, by Jeff Eisenach to 
     me at some point, as having helped raise a couple of 
     contributions, I think, Cracker Barrel was one of them, that 
     is a name that sticks in my mind. But it was characterized as 
     being sort of ancillary and just really not material.

(11/13/96 Baran Tr. 41).


                3. Creation of the March 27, 1995 Letter

       In addition to the associate, Mr. Mehlman, who had worked 
     with Mr. Baran in drafting Mr. Gingrich's December 8, 1994 
     letter to the Committee, another associate, Michael Toner, 
     helped Mr. Baran draft what became the March 27, 1995 
     letter.87 (11/19/96 Toner Tr. 10-11). As with the 
     December 8, 1994 letter, Mr. Baran did not receive any 
     indication from Mr. Gaylord or Mr. Gingrich that Mr. Baran 
     was to do any kind of factual review in order to prepare the 
     March 27, 1995 letter. (11/13/96 Baran Tr. 48). Mr. Baran did 
     not recall contacting anyone outside the law firm for facts 
     relevant to the preparation of the letter with respect to the 
     course. He said that ``the facts about the course, frankly, 
     didn't seem to have changed any from the December period to 
     the March period. And our focus seemed to be elsewhere.'' 
     (11/13/96 Baran Tr. 28). Both Mr. Mehlman and Mr. Toner said 
     that they did not contact anyone with knowledge of the facts 
     at issue in order to prepare the letter. (11/19/96 Toner Tr. 
     21-22, 38; 11/19/96 Mehlman Tr. 38).
---------------------------------------------------------------------------
     \87\ Mr. Toner has been an associate attorney with Wiley, 
     Rein and Fielding since September 1992, except for a period 
     during which we he worked with the Dole/Kemp campaign. (11/
     19/96 Toner Tr. 6).
---------------------------------------------------------------------------
       Ms. Meeks said that she had no role in the preparation of 
     the letter. (11/14/96 Meeks Tr. 50). She saw it for the first 
     time one day prior to her testimony before the Subcommittee 
     in November 1996. (11/14/96 Meeks Tr. 50). Mr. Eisenach said 
     that he did not have any role in the preparation of the 
     letter nor was he asked to review it prior to its submission 
     to the Committee. (11/14/96 Eisenach Tr. 24-25). Mr. Gaylord 
     said that he had no role in the preparation of the letter and 
     did not provide any information that is in the letter. (11/
     14/96 Gaylord Tr. 20). He also said that he did not discuss 
     the letter with Mr. Gingrich or Mr. Baran at the time of its 
     preparation. (11/14/96 Gaylord Tr. 21). Mr. Gaylord said that 
     he did not know where Baran obtained the facts for the 
     letter. He ``presumed'' that Mr. Baran and his associates had 
     gathered the facts. (11/14/96 Gaylord Tr. 21-22).
       Mr. Baran said that his role in creating the letter was to 
     meet with Mr. Mehlman and Mr. Toner, review the status of 
     their research and drafting and review their drafts. (11/13/
     96 Baran Tr. 28). Mr. Mehlman and Mr. Toner divided 
     responsibility for drafting portions of the letter. (11/19/96 
     Toner Tr. 12-14; 11/19/96 Mehlman Tr. 36, 37, 40). Mr. Baran 
     also made edits to the letter. (11/19/96 Mehlman Tr. 40). 
     During his interview, Mr. Toner stressed that there were many 
     edits to the letter by Mr. Baran, Mr. Mehlman, and himself 
     and he could, therefore, not explain who had drafted 
     particular sentences in the letter. (see, e.g, 11/19/96 Toner 
     Tr. 34).

[[Page H222]]

       After the letter was drafted, Mr. Baran said that Mr. Baran 
     and his associates then ``would have sent a draft that they 
     felt comfortable with over to the Speaker's office.'' (11/13/
     96 Baran Tr. 28). Mr. Baran, Mr. Toner, and Mr. Mehlman each 
     said during their testimony that they assumed that Mr. 
     Gingrich or someone in his office reviewed the letter for 
     accuracy before it was submitted to the Committee. (11/19/96 
     Toner Tr. 16, 40, 44; 11/13/96 Baran Tr. 32-33, 37-38; 
     Mehlman Tr. 41). They, however, did not know whether Mr. 
     Gingrich or anyone in his office with knowledge of the facts 
     at issue ever actually reviewed the letter prior to its 
     submission to the Committee. (11/19/96 Toner Tr. 17, 40, 44; 
     11/13/96 Baran Tr. 37-38; Mehlman Tr. 41).
       With respect to Mr. Baran's understanding of whether Mr. 
     Gingrich reviewed the letter, the following exchange 
     occurred:

       Mr. Cole: Did you have any discussions with Mr. Gingrich 
     concerning this letter prior to it going to the committee?
       Mr. Baran: I don't recall any. I just wanted to make sure 
     that he did review it before it was submitted.
       Mr. Cole: How did you determine that he had reviewed it?
       Mr. Baran: I don't recall today, but I would not file 
     anything until I had been assured by somebody that he had 
     read it.
       Mr. Cole: Would that assurance also have involved him 
     reading it and not objecting to any of the facts that are 
     asserted in the letter?
       Mr. Baran: I don't know what his review process was 
     regarding this letter.

                           *   *   *   *   *

       Mr. Cole: If he just read it, you may still be awaiting 
     comments from him. Would you have made sure that he had read 
     it and approved it, or just the fact that he read it is all 
     you would have been interested in, trying to make sure that 
     we don't blur that distinction?
       Mr. Baran: No, I would have wanted him to be comfortable 
     with this on many levels.
       Mr. Cole: And were you satisfied that he was comfortable 
     with it prior to filing it with the committee?
       Mr. Baran: Yes.
       Mr. Cole: Do you know how you were satisfied?
       Mr. Baran: I can't recall the basis upon which that 
     happened.

(11/13/96 Baran Tr. 32-33).


          4. Bases for Statements in the March 27, 1995 Letter

       With respect to the bases for the statements in the letter 
     in general, Mr. Baran said that it was largely based on the 
     December 8, 1994 letter and any information he and his 
     associates relied on to prepare it. (11/13/96 Baran Tr. 37-
     38).

                      IX. Analysis and Conclusion

                             A. Tax Issues

       In reviewing the evidence concerning both the AOW/ACTV 
     project and the Renewing American Civilization project, 
     certain patterns became apparent. In both instances, GOPAC 
     had initiated the use of the messages as part of its 
     political program to build a Republican majority in Congress. 
     In both instances there was an effort to have the material 
     appear to be non-partisan on its face, yet serve as a 
     partisan, political message for the purpose of building the 
     Republican Party.
       Under the ``methodology test'' set out by the Internal 
     Revenue Service, both projects qualified as educational. 
     However, they both had substantial partisan, political 
     aspects. Both were initiated as political projects and both 
     were motivated, at least in part, by political goals.
       The other striking similarity is that, in both situations, 
     GOPAC was in need of a new source of funding for the projects 
     and turned to a 501(c)(3) organization for that purpose. Once 
     the projects had been established at the 501(c)(3) 
     organizations, however, the same people continued to manage 
     it as had done so at GOPAC, the same message was used as when 
     it was at GOPAC, and the dissemination of the message was 
     directed toward the same goal as when the project was at 
     GOPAC--building the Republican Party. The only significant 
     difference was that the activity was funded by a 501(c)(3) 
     organization.
       This was not a situation where one entity develops a 
     message through a course or a television program for purely 
     educational purposes and then an entirely separate entity 
     independently decides to adopt that message for partisan, 
     political purposes. Rather, this was a coordinated effort to 
     have the 501(c)(3) organization help in achieving a partisan, 
     political goal. In both instances the idea to develop the 
     message and disseminate it for partisan, political use came 
     first. The use of the 501(c)(3) came second as a source of 
     funding.
       This factual analysis was accepted by all Members of the 
     Subcommittee and the Special Counsel. However, there was a 
     difference of opinion as to the result under 501(c)(3) when 
     applying the law to these facts. Ms. Roady, the 
     Subcommittee's tax expert, was of the opinion that the facts 
     presented a clear violation of 501(c)(3) because the evidence 
     showed that the activities were intended to benefit Mr. 
     Gingrich, GOPAC, and other Republican candidates and 
     entities. Mr. Holden, Mr. Gingrich's tax attorney, disagreed. 
     He found that the course was non-partisan in its content, and 
     even though he assumed that the motivation for disseminating 
     it involved partisan, political goals, he did not find a 
     sufficiently narrow targeting of the dissemination to 
     conclude that it was a private benefit to anyone.
       Some Members of the Subcommittee and the Special Counsel 
     agreed with Ms. Roady and concluded that there was a clear 
     violation of 501(c)(3) with respect to AOW/ACTV and Renewing 
     American Civilization. Other Members of the Subcommittee were 
     troubled by reaching this conclusion and believed that the 
     facts of this case presented a unique situation that had not 
     previously been addressed by the legal authorities. As such, 
     they did not feel comfortable supplanting the functions of 
     the Internal Revenue Service or the Tax Court in rendering a 
     ruling on what they believed to be an unsettled area of the 
     law.

                  B. Statements Made to the Committee

       The letters Mr. Gingrich submitted to the Committee 
     concerning the Renewing American Civilization complaint were 
     very troubling to the Subcommittee. They contained definitive 
     statements about facts that went to the heart of the issues 
     placed before the Committee. In the case of the December 8, 
     1994 letter, it was in response to a direct request from the 
     Committee for specific information relating to the partisan, 
     political nature of the course and GOPAC's involvement in it.
       Both letters were efforts by Mr. Gingrich to have the 
     Committee dismiss the complaints without further inquiry. In 
     such situations, the Committee does and should place great 
     reliance on the statements of Members.
       The letters were prepared by Mr. Gingrich's lawyers. After 
     the Subcommittee deposed the lawyers, the reasons for the 
     statements being in the letters was not made any clearer. The 
     lawyers did not conduct any independent factual research. 
     Looking at the information the lawyers used to write the 
     letters, the Subcommittee was unable to find any factual 
     basis for the inaccurate statements contained therein. A 
     number of exhibits attached to the complaint were fax 
     transmittal sheets from GOPAC. While this did not on its face 
     establish anything more than GOPAC's fax machine having been 
     used for the project, it certainly should have put the 
     attorneys on notice that there was some relationship between 
     the course and GOPAC that should have been examined before 
     saying that GOPAC had absolutely no involvement in the 
     course.
       The lawyers said they relied on Mr. Gingrich and his staff 
     to ensure that the letters were accurate; however, none of 
     Mr. Gingrich's staff had sufficient knowledge to be able to 
     verify the accuracy of the facts. While Mr. Gaylord and Mr. 
     Eisenach did have sufficient knowledge to verify many of the 
     facts, they were not asked to do so. The only person who 
     reviewed the letters for accuracy, with sufficient knowledge 
     to verify those facts, was Mr. Gingrich.
       The Subcommittee considered the relevance of the reference 
     to GOPAC in Mr. Gingrich's first letter to the Committee 
     dated October 4, 1994. In that letter he stated that GOPAC 
     was one of the entities that paid people to work on the 
     course. Some Members of the Subcommittee believed that this 
     was evidence of lack of intent to deceive the Committee on 
     Mr. Gingrich's part because if he had planned to hide GOPAC's 
     involvement, he would not have made such an inconsistent 
     statement in the subsequent letters. Other Members of the 
     Subcommittee and the Special Counsel appreciated this point, 
     but believed the first letter was of little value. The 
     statement in that letter was only directed to establishing 
     that Mr. Gingrich had not used congressional resources in 
     developing the course. The first letter made no attempt to 
     address the tax issues, even though it was a prominent 
     feature of the complaint. When the Committee specifically 
     focused Mr. Gingrich's attention on that issue and questions 
     concerning GOPAC's involvement in the course, his response 
     was not accurate.
       During his testimony before the Subcommittee, Mr. Gingrich 
     stated that he did not intend to mislead the Committee and 
     apologized for his conduct. This statement was a relevant 
     consideration for some Members of the Subcommittee, but not 
     for others.
       The Subcommittee concluded that because these inaccurate 
     statements were provided to the Committee, this matter was 
     not resolved as expeditiously as it could have been. This 
     caused a controversy over the matter to arise and last for a 
     substantial period of time, it disrupted the operations of 
     the House, and it cost the House a substantial amount of 
     money in order to determine the facts.

                   C. Statement of Alleged Violation

       Based on the information described above, the Special 
     Counsel proposed a Statement of Alleged Violations (``SAV'') 
     to the Subcommittee on December 12, 1996. The SAV contained 
     three counts: (1) Mr. Gingrich's activities on behalf of ALOF 
     in regard to AOW/ACTV, and the activities of others in that 
     regard with his knowledge and approval, constituted a 
     violation of ALOF's status under section 501(c)(3); (2) Mr. 
     Gingrich's activities on behalf of Kennesaw State College 
     Foundation, the Progress and Freedom Foundation, and 
     Reinhardt College in regard to the Renewing American 
     Civilization course, and the activities of others in that 
     regard with his knowledge and approval, constituted a 
     violation of those organizations' status under section 
     501(c)(3); and (3) Mr. Gingrich had provided information to 
     the Committee,

[[Page H223]]

     directly or through counsel, that was material to matters 
     under consideration by the Committee, which Mr. Gingrich knew 
     or should have known was inaccurate, incomplete, and 
     unreliable.


                   1. Deliberations on the Tax Counts

       There was a difference of opinion regarding whether to 
     issue the SAV as drafted on the tax counts. Concern was 
     expressed about deciding this tax issue in the context of an 
     ethics proceeding. This led the discussion to the question of 
     the appropriate focus for the Subcommittee. A consensus began 
     to build around the view that the proper focus was on the 
     conduct of the Member, rather than a resolution of issues of 
     tax law. From the beginning of the Preliminary Inquiry, there 
     was a desire on the part of each of the Members to find a way 
     to reach a unanimous conclusion in this matter. The Members 
     felt it was important to confirm the bipartisan nature of the 
     ethics process.
       The discussion turned to what steps Mr. Gingrich had taken 
     in regard to these two projects to ensure they were done in 
     accord with the provisions of 501(c)(3). In particular, the 
     Subcommittee was concerned with the fact that: (1) Mr. 
     Gingrich had been ``very well aware'' of the American 
     Campaign Academy case prior to embarking on these projects; 
     (2) he had been involved with 501(c)(3) organizations to a 
     sufficient degree to know that politics and tax-deductible 
     contributions are, as his tax counsel said, an ``explosive 
     mix;'' (3) he was clearly involved in a project that had 
     significant partisan, political goals, and he had taken an 
     aggressive approach to the tax laws in regard to both AOW/
     ACTV; and (4) Renewing American Civilization projects. Even 
     Mr. Gingrich's own tax lawyer told the Subcommittee that if 
     Mr. Gingrich had come to him before embarking on these 
     projects, he would have advised him to not use a 501(c)(3) 
     organization for the dissemination of AOW/ACTV or Renewing 
     American Civilization. Had Mr. Gingrich sought and followed 
     this advice, he would not have used the 501(c)(3) 
     organizations, would not have had his projects subsidized by 
     taxpayer funds, and would not have created this controversy 
     that has caused significant disruption to the House. The 
     Subcommittee concluded that there were significant and 
     substantial warning signals to Mr. Gingrich that he should 
     have heeded prior to embarking on these projects. Despite 
     these warnings, Mr. Gingrich did not seek any legal advice to 
     ensure his conduct conformed with the provisions of 
     501(c)(3).
       In looking at this conduct in light of all the facts and 
     circumstances, the Subcommittee was faced with a disturbing 
     choice. Either Mr. Gingrich did not seek legal advice because 
     he was aware that it would not have permitted him to use a 
     501(c)(3) organization for his projects, or he was reckless 
     in not taking care that, as a Member of Congress, he made 
     sure that his conduct conformed with the law in an area where 
     he had ample warning that his intended course of action was 
     fraught with legal peril. The Subcommittee decided that 
     regardless of the resolution of the 501(c)(3) tax question, 
     Mr. Gingrich's conduct in this regard was improper, did not 
     reflect creditably on the House, and was deserving of 
     sanction.


                2. Deliberations Concerning the Letters

       The Subcommittee's deliberation concerning the letters 
     provided to the Committee centered on the question of whether 
     Mr. Gingrich intentionally submitted inaccurate information. 
     There was a belief that the record developed before the 
     Subcommittee was not conclusive on this point. The Special 
     Counsel suggested that a good argument could be made, based 
     on the record, that Mr. Gingrich did act intentionally, 
     however it would be difficult to establish that with a high 
     degree of certainty.
       The culmination of the evidence on this topic again left 
     the Subcommittee with a disturbing choice. Either Mr. 
     Gingrich intentionally made misrepresentations to the 
     Committee, or he was again reckless in the way he provided 
     information to the Committee concerning a very important 
     matter.
       The standard applicable to the Subcommittee's deliberations 
     was whether there is reason to believe that Mr. Gingrich had 
     acted as charged in this count of the SAV. All felt that this 
     standard had been met in regard to the allegation that Mr. 
     Gingrich ``knew'' that the information he provided to the 
     Committee was inaccurate. However, there was considerable 
     discussion to the effect that if Mr. Gingrich wanted to admit 
     to submitting information to the Committee that he ``should 
     have known'' was inaccurate, the Subcommittee would consider 
     deleting the allegation that he knew the information was 
     inaccurate. The Members were of the opinion that if there 
     were to be a final adjudication of the matter, taking into 
     account the higher standard of proof that is involved at that 
     level, ``should have known'' was an appropriate framing of 
     the charge in light of all the facts and circumstances.


  3. Discussions with Mr. Gingrich's Counsel and Recommended Sanction

       On December 13, 1996, the Subcommittee issued an SAV 
     charging Mr. Gingrich with three counts of violations of 
     House Rules. Two counts concerned the failure to seek legal 
     advice in regard to the 501(c)(3) projects, and one count 
     concerned providing the Committee with information which he 
     knew or should have known was inaccurate.
       At the time the Subcommittee voted this SAV, the Members 
     discussed the matter among themselves and reached a consensus 
     that it would be in the best interests of the House for the 
     matter to be resolved without going through a disciplinary 
     hearing. It was estimated that such a hearing could take up 
     to three months to complete and would not begin for several 
     months. Because of this, it was anticipated that the House 
     would have to deal with this matter for another six months. 
     Even though the Subcommittee Members felt that it would be 
     advantageous to the House to avoid a disciplinary hearing, 
     they all were committed to the proposition that any 
     resolution of the matter had to reflect adequately the 
     seriousness of the offenses. To this end, the Subcommittee 
     Members discussed and agreed upon a recommended sanction that 
     was fair in light of the conduct reflected in this matter, 
     but explicitly recognized that the full Committee would make 
     the ultimate decision as to the recommendation to the 
     full House as to the appropriate sanction. In determining 
     what the appropriate sanction should be in this matter, 
     the Subcommittee and Special Counsel considered the 
     seriousness of the conduct, the level of care exercised by 
     Mr. Gingrich, the disruption caused to the House by the 
     conduct, the cost to the House in having to pay for an 
     extensive investigation, and the repetitive nature of the 
     conduct.
       As is noted above, the Subcommittee was faced with 
     troubling choices in each of the areas covered by the 
     Statement of Alleged Violation. Either Mr. Gingrich's conduct 
     in regard to the 501(c)(3) organizations and the letters he 
     submitted to the Committee was intentional or it was 
     reckless. Neither choice reflects creditably on the House. 
     While the Subcommittee was not able to reach a comfortable 
     conclusion on these issues, the fact that the choice was 
     presented is a factor in determining the appropriate 
     sanction. In addition, the violation does not represent only 
     a single instance of reckless conduct. Rather, over a number 
     of years and in a number of situations, Mr. Gingrich showed a 
     disregard and lack of respect for the standards of conduct 
     that applied to his activities.
       Under the Rules of the Committee, a reprimand is the 
     appropriate sanction for a serious violation of House Rules 
     and a censure is appropriate for a more serious violation of 
     House Rules. Rule 20(g), Rules of the Committee on Standards 
     of Official Conduct. It was the opinion of the Subcommittee 
     that this matter fell somewhere in between. Accordingly, the 
     Subcommittee and the Special Counsel recommend that the 
     appropriate sanction should be a reprimand and a payment 
     reimbursing the House for some of the costs of the 
     investigation in the amount of $300,000. Mr. Gingrich has 
     agreed that this is the appropriate sanction in this matter.
       Beginning on December 15, 1996, Mr. Gingrich's counsel and 
     the Special Counsel began discussions directed toward 
     resolving the matter without a disciplinary hearing. The 
     discussions lasted through December 20, 1996. At that time an 
     understanding was reached by both Mr. Gingrich and the 
     Subcommittee concerning this matter. That understanding was 
     put on the record on December 21, 1996 by Mr. Cole follows:

       Mr. Cole: The subcommittee has had an opportunity to review 
     the facts in this case, and has had extensive discussion 
     about the appropriate resolution of this matter.
       Mr. Cardin: If I might just add here to your next 
     understanding, the Members of the subcommittee, prior to the 
     adoption of the Statement of Alleged Violation, were 
     concerned that the nonpartisan deliberations of the 
     subcommittee continue beyond the findings of the 
     subcommittee. Considering the record of the full Ethics 
     Committee in the 104th Congress and the partisan environment 
     in the full House, the Members of the subcommittee felt that 
     it was important to exercise bipartisan leadership beyond the 
     workings of the subcommittee. * * *
       Mr. Cole: It was the opinion of the Members of the 
     subcommittee and the Special Counsel, that based on the facts 
     of this case as they are currently known, the appropriate 
     sanction for the conduct described in the original Statement 
     of Alleged Violations is a reprimand and the payment of 
     $300,000 toward the cost of the preliminary inquiry.
       In light of this opinion, the subcommittee Members and the 
     Special Counsel intend to recommend to the full committee 
     that this be the sanction recommended by the full committee 
     to the House. The Members also intend to support this as the 
     sanction in the committee and on the Floor of the House.
       However, if new facts are developed or brought to the 
     attention of the Members of the subcommittee, they are free 
     to change their opinions.
       The Subcommittee, through its counsel, has communicated 
     this to Mr. Gingrich, through his counsel. Mr. Gingrich has 
     agreed that if the subcommittee will amend the Statement of 
     Alleged Violations to be one count, instead of three counts, 
     however, still including all of the conduct described in the 
     original Statement of Alleged Violations, and will allow the 
     addition of some language which reflects aspects of the 
     record in this matter concerning the involvement of Mr. 
     Gingrich's counsel in the preparation of the letters 
     described in the original Count 3 of the Statement of Alleged 
     Violations,88 he will admit to the entire Statement of 
     Alleged Violation and agree to the view of the

[[Page H224]]

     subcommittee Members and the Special Counsel as to the 
     appropriate sanction.
---------------------------------------------------------------------------
     \88\ These changes included the removal of the word ``knew'' 
     from the original Count 3, making the charge read that Mr. 
     Gingrich ``should have known'' the information was 
     inaccurate.
---------------------------------------------------------------------------
       In light of Mr. Gingrich's admission to the Statement of 
     Alleged Violation, the subcommittee is of the view that the 
     rules of the committee will not require that an adjudicatory 
     hearing take place; however, a sanction hearing will need to 
     be held under the rules.
       The subcommittee and Mr. Gingrich desire to have the 
     sanction hearing concluded as expeditiously as possible, but 
     it is understood that this will not take place at the expense 
     of orderly procedure and a full and fair opportunity for the 
     full committee to be informed of any information necessary 
     for each Member of the full committee to be able to make a 
     decision at the sanction hearing.
       After the subcommittee has voted a new Statement of Alleged 
     Violation, Mr. Gingrich will file his answer admitting to it. 
     The subcommittee will seek the permission of the full 
     committee to release the Statement of Alleged Violation, Mr. 
     Gingrich's answer, and a brief press release which has been 
     approved by Mr. Gingrich's counsel. At the same time, Mr. 
     Gingrich will release a brief press release that has been 
     approved by the subcommittee's Special Counsel.
       Both the subcommittee and Mr. Gingrich agree that no public 
     comment should be made about this matter while it is still 
     pending. This includes having surrogates sent out to comment 
     on the matter and attempt to mischaracterize it.
       Accordingly, beyond the press statements described above, 
     neither Mr. Gingrich nor any Member of the subcommittee may 
     make any further public comment. Mr. Gingrich understands 
     that if he violates this provision, the subcommittee will 
     have the option of reinstating the original Statement of 
     Alleged Violations and allowing Mr. Gingrich an opportunity 
     to withdraw his answer.
       And I should note that it is the intention of the 
     subcommittee that ``public comments'' refers to press 
     statements; that, obviously, we are free and Mr. Gingrich is 
     free to have private conversations with Members of Congress 
     about these matters.89

     \89\ It was also agreed that in the private conversations Mr. 
     Gingrich was not to disclose the terms of the agreement with 
     the Subcommittee.
---------------------------------------------------------------------------
       After the Subcommittee voted to issue the substitute SAV, 
     the Special Counsel called Mr. Gingrich's counsel and read to 
     him what was put on the record concerning this matter. Mr. 
     Gingrich's counsel then delivered to the Subcommittee Mr. 
     Gingrich's answer admitting to the Statement of Alleged 
     Violation.

                   D. Post-December 21, 1996 Activity

       Following the release of this Statement of Alleged 
     Violation, numerous press accounts appeared concerning this 
     matter. In the opinion of the Subcommittee Members and the 
     Special Counsel, a number of the press accounts indicated 
     that Mr. Gingrich had violated the agreement concerning 
     statements about the matter. Mr. Gingrich's counsel was 
     notified of the Subcommittee's concerns and the Subcommittee 
     met to consider what action to take in light of this apparent 
     violation. The Subcommittee determined that it would not 
     nullify the agreement. While there was serious concern about 
     whether Mr. Gingrich had complied with the agreement, the 
     Subcommittee was of the opinion that the best interests of 
     the House still lay in resolving the matter without a 
     disciplinary hearing and with the recommended sanction that 
     its Members had previously determined was appropriate. 
     However, Mr. Gingrich's counsel was informed that the 
     Subcommittee believed a violation of the agreement had 
     occurred and retained the right to withdraw from the 
     agreement with appropriate notice to Mr. Gingrich. To date no 
     such notice has been given.

     X. Summary of Facts Pertaining To Use of Unofficial Resources

       The Subcommittee investigated allegations that Mr. Gingrich 
     had improperly utilized the services of Jane Fortson, an 
     employee of the Progress in Freedom Foundation (``PFF''), in 
     violation of House Rule 45, which prohibits the use of 
     unofficial resources for official purposes.
       Ms. Fortson was an investment banker and chair of the 
     Atlanta Housing Project who had experience in urban and 
     housing issues. In January 1995 she moved to Washington, 
     D.C., from Atlanta to work on urban and housing issues as a 
     part-time PFF Senior Fellow and subsequently became a full-
     time PFF Senior Fellow in April, 1995.
       The Subcommittee determined that Mr. Gingrich sought Ms. 
     Fortson's advice on urban and housing issues on an ongoing 
     and meaningful basis. During an interview with Mr. Cole, Mr. 
     Gingrich stated that although he believed he lacked the 
     authority to give Ms. Fortson assignments, he often requested 
     her assistance in connection with urban issues in general and 
     issues pertaining to the District of Columbia in particular. 
     The investigation further revealed that Ms. Fortson appeared 
     to have had unusual access to Mr. Gingrich's official 
     schedule and may have occasionally influenced his official 
     staff in establishing his official schedule.
       In her capacity as an unofficial policy advisor to Mr. 
     Gingrich, Ms. Fortson provided ongoing advice to Mr. Gingrich 
     and members of Mr. Gingrich's staff to assist Mr. Gingrich in 
     conducting official duties related to urban issues. Ms. 
     Fortson frequently attended meetings with respect to the D.C. 
     Task Force during which she met with Members of Congress, 
     officials of the District of Columbia, and members of their 
     staffs. Although Mr. Gingrich and principal members of his 
     staff advised the Subcommittee that they perceived Ms. 
     Fortson's assistance as limited to providing information on 
     an informal basis, the Subcommittee discovered other 
     occurrences which suggested that Mr. Gingrich and members of 
     his staff specifically solicited Ms. Fortson's views and 
     assistance with respect to official matters.
       The Subcommittee acknowledges that Members may properly 
     solicit information from outside individuals and 
     organizations, including nonprofit and for-profit 
     organizations. Regardless of whether auxiliary services are 
     accepted from a nonprofit or for-profit organization, Members 
     must exercise caution to limit the use of outside resources 
     to ensure that the duties of official staff are not 
     improperly supplanted or supplemented. The Subcommittee notes 
     that although Mr. Gingrich received two letters of reproval 
     from the Committee on Standards regarding the use of outside 
     resources, Ms. Fortson's activities ceased prior to the date 
     the Committee issued those letters to Mr. Gingrich. While the 
     Subcommittee did not find that Ms. Fortson's individual 
     activities violated House Rules, the Subcommittee determined 
     that the regular, routine, and ongoing assistance she 
     provided Mr. Gingrich and his staff over a ten-month period 
     could create the appearance of improper commingling of 
     unofficial and official resources. The Subcommittee 
     determined, however, that these activities did not warrant 
     inclusion as a Count in the Statement of Alleged Violation.

       XI. Availability of Documents to Internal Revenue Service

       In light of the possibility that documents which were 
     produced to the Subcommittee during the Preliminary Inquiry 
     might be useful to the IRS as part of its reported ongoing 
     investigations of various 501(c)(3) organizations, the 
     Subcommittee decided to recommend that the full Committee 
     make available to the IRS all relevant documents produced 
     during the Preliminary Inquiry. It is the Committee's 
     recommendation that the House Committee on Standards of 
     Official Conduct in the 105th Congress establish a liaison 
     with the IRS to fulfill its recommendation and that this 
     liaison be established in consultation with Mr. Cole.

                            A P P E N D I X

                               __________
                               

 Summary of Law Pertaining to Organizations Exempt from Federal Income 
        Tax Under Section 501(c)(3) of the Internal Revenue Code

                            A. Introduction

       Section 501(a) of the Internal Revenue Code generally 
     exempts from federal income taxation numerous types of 
     organizations. Among these are section 501(c)(3) 
     organizations which include corporations: Organized and 
     operated exclusively for religious, charitable, scientific * 
     * * or educational purposes * * * no part of the net earnings 
     of which inures to the benefit of any private shareholder or 
     individual, no substantial part of the activities of which is 
     carrying on propaganda, or otherwise attempting, to influence 
     legislation, * * * and which does not participate in, or 
     intervene in * * * any political campaign on behalf of (or in 
     opposition to) any candidate for public office.

     I.R.C. Sec. 501(c)(3). Organizations described in section 
     501(c)(3) are generally referred to as ``charitable'' 
     organizations and contributions to such organizations are 
     generally deductible to the donors. I.R.C. Sec. 170(a)(1), 
     (c)(2).

          B. The Organizational Test and the Operational Test

       The requirement that a 501(c)(3) organization be 
     ``organized and operated exclusively'' for an exempt purpose 
     has given rise to an ``organizational test'' and an 
     ``operational test.'' Failure to meet either test will 
     prevent an organization from qualifying for exemption under 
     section 501(c)(3). Treas. Reg. Sec. 1.501(c)(3)-1(a); Levy 
     Family Tribe Foundation v. Commissioner, 69 T.C. 615, 618 
     (1978).


                         1. Organizational Test

       To satisfy the organizational test, an organization must 
     meet three sets of requirements. First, its articles of 
     organization must: (a) limit its purposes to one or more 
     exempt purposes, and (b) not expressly permit substantial 
     activities that do not further those exempt purposes. Treas. 
     Reg. Sec. 1.501(c)(3)-1(b)(1). Second, the articles must not 
     permit: (a) devoting more than an insubstantial part of its 
     activities to lobbying, (b) any participation or intervention 
     in the campaign of a candidate for public office, and (c) 
     objectives and activities that would characterize it as an 
     ``action'' organization. Treas. Reg. Sec. 1.501(c)(3)-
     1(b)(3). Third, the organization's assets must be dedicated 
     to exempt purposes. Treas. Reg. Sec. 1.501(c)(3)-1(b)(4). The 
     IRS determines compliance with the organizational test solely 
     by reference to an organization's articles of organization.


                          2. Operational Test

       To satisfy the operational test, an organization must be 
     operated ``exclusively'' for an exempt purpose. Though 
     ``exclusively'' in this context does not mean ``solely,'' the 
     presence of a substantial nonexempt purpose will cause an 
     organization to fail the operational test. Treas. Reg. 
     Sec. 1.501(c)(3)-1(c)(1); The Nationalist Movement v. 
     Commissioner, 102 T.C. 558, 576 (1994). The presence of a 
     single non-exempt purpose, if substantial in nature, will 
     destroy the exemption regardless of the

[[Page H225]]

     number or importance of truly exempt purposes. Better 
     Business Bureau of Washington, D.C. v. United States, 326 
     U.S. 276, 283 (1945); Manning Association v. Commissioner, 93 
     T.C. 596, 611 (1989).
       To meet the operational test under section 501(c)(3) 
     organization, the organization must satisfy the following 
     requirements: 90
---------------------------------------------------------------------------
     \90\ 501(c)(3) organizations must also: (a) not be operated 
     primarily to conduct an unrelated trade or business (Treas. 
     Reg. Sec. 1.501(c)(3)-1(e)(1)), and (b) not violate ``public 
     policy.'' See Bob Jones University v. United States, 461 U.S. 
     574 (1983) (educational organization's tax-exempt status 
     denied because of its racially discriminatory policies).
---------------------------------------------------------------------------
       1. The organization must be operated for an exempt purpose, 
     and must serve a public benefit, not a private benefit. 
     Treas. Reg. Sec. 1.501(c)(3)-1(d)(1)(ii).
       2. It must not be an ``action'' organization. Treas. Reg. 
     Sec. 1.501(c)(3)-1(c)(3). An organization is an ``action'' 
     organization if:
       a. it participates or intervenes in any political campaign 
     (Treas. Reg. Sec. 1.501(c)(3)-1(c)(3)(iii));
       b. a substantial part of its activities consists of 
     attempting to influence legislation (Treas. Reg. 
     Sec. 1.501(c)(3)-1(c)(3)(ii)); or
       c. its primary objective may be attained: only by 
     legislation or defeat of proposed legislation, and it 
     advocates the attainment of such primary objective (Treas. 
     Reg. Sec. 1.501(c)(3)-1(c)(3)(iv)).
       3. Its net earnings must not inure to the benefit of any 
     person in a position to influence the organization's 
     activities. Treas. Reg. Sec. 1.501(c)(3)-1(c)(2).

     ``[F]ailure to satisfy any of the [above] requirements is 
     fatal to [an organization's] qualification under section 
     501(c)(3).'' American Campaign Academy v. Commissioner, 92 
     T.C. 1053, 1062 (1989).
       The application of these requirements, moreover, is a 
     factual exercise. Id. at 1064; Christian Manner International 
     v. Commissioner, 71 T.C. 661, 668 (1979). Thus, in testing 
     compliance with the operational test, courts look ``beyond 
     the four corners of the organization's charter to discover 
     `the actual objects motivating the organization and the 
     subsequent conduct of the organization.' '' American Campaign 
     Academy, 92 T.C. at 1064 (citing Taxation with Representation 
     v. United States, 585 F.2d 1219, 1222 (4th Cir. 1978)); see 
     also Sound Health Association v. Commissioner, 71 T.C. 158, 
     184 (1978) (``It is the purpose toward which an 
     organization's activities are directed that is ultimately 
     dispositive of the organization's right to be classified as a 
     section 501(c)(3) organization.'')
       ``What an organization's purposes are and what purposes its 
     activities support are questions of fact.'' American Campaign 
     Academy, 92 T.C. at 1064 (citing Christian Manner 
     International v. Commissioner, 71 T.C. 661, 668 (1979)). 
     Courts may ``draw factual inferences'' from the record when 
     determining whether organizations meet the requirements of 
     the tax-exempt organization laws and regulations. Id. (citing 
     National Association of American Churches v. Commissioner, 82 
     T.C. 18, 20 (1984)).

   a. ``Educational'' Organizations May Qualify for Exemption Under 
                           Section 501(c)(3)

       As discussed above, an organization may qualify for 
     exemption under section 501(c)(3) if it is ``educational.'' 
     91 The Regulations define the term ``educational'' as 
     relating to:
---------------------------------------------------------------------------
     \91\ An organization may also qualify for section 501(c)(3) 
     exemption if it is organized and operated for, e.g., 
     ``religious,'' ``charitable,'' or ``scientific'' purposes. 
     The other methods by which an organization can qualify for 
     exemption are not discussed in this summary.

       (a) [t]he instruction or training of the individual for the 
     purpose of improving or developing his capabilities; or
       (b) [t]he instruction of the public on subjects useful to 
     the individual and beneficial to the community.

Treas. Reg. Sec. 1.501(c)(3)-1(d)(3)(i). The Regulations continue:
       An organization may be educational even though it advocates 
     a particular position or viewpoint so long as it presents a 
     sufficiently full and fair exposition of the pertinent facts 
     as to permit an individual or the public to form an 
     independent opinion or conclusion. On the other hand, an 
     organization is not educational if its principal function is 
     the mere presentation of unsupported opinion.

     Id. Guidance on the phrase ``advocates a particular position 
     or viewpoint'' can be found in the preceding section in the 
     Regulations pertaining to the definition of ``charitable.''
       The fact that an organization, in carrying out its primary 
     purpose, advocates social or civil changes or presents 
     opinion on controversial issues with the intention of molding 
     public opinion or creating public sentiment to an acceptance 
     of its views does not preclude such organization from 
     qualifying under section 501(c)(3) so long as it is not an 
     ``action'' organization.* * *

Treas. Reg. Sec. 1.501(c)(3)-1(d)(2).
       In applying the Regulations under section 501(c)(3) 
     pertaining to educational organizations, the IRS has stated 
     that its goal is to eliminate or minimize the potential for 
     any public official to impose his or her preconceptions or 
     beliefs in determining whether the particular viewpoint or 
     position is educational. Rev. Proc. 86-43, 1986-2 C.B. 729. 
     IRS policy is to ``maintain a position of disinterested 
     neutrality with respect to the beliefs advocated by an 
     organization.'' Id. The focus of the Regulations pertaining 
     to educational organizations and of the IRS's application of 
     these Regulations ``is not upon the viewpoint or position, 
     but instead upon the method used by the organization to 
     communicate its viewpoint or positions to others.'' Id. 
       Two court decisions considered challenges to the 
     constitutionality of the definition of ``educational,'' in 
     the Regulations cited above. One decision held that the 
     definition was unconstitutionally vague. Big Mama Rag, Inc. 
     v. United States, 631 F.2d 1030 (D.C. Cir. 1980). In National 
     Alliance v. United States, 710 F.2d 868 (D.C. Dir. 1983), the 
     court upheld the IRS's position that the organization in 
     question was not educational. Without ruling on the 
     constitutionality of the ``methodology test'' used by the 
     IRS in that case to determine whether the organization was 
     educational, the court found that the application of that 
     test reduced the vagueness found in Big Mama Rag. The IRS 
     later published the methodology test in Rev. Proc. 86-43 
     in order to clarify its position on how to determine 
     whether an organization is educational when it advocates 
     particular viewpoints or positions. As set forth in the 
     Revenue Procedure:
       The presence of any of the following factors in the 
     presentations made by an organization is indicative that the 
     method used by the organization to advocate its viewpoints or 
     positions is not educational.
       (a) The presentation of viewpoints or positions unsupported 
     by facts is a significant portion of the organization's 
     communications.
       (b) The facts that purport to support the viewpoints or 
     positions are distorted.
       (c) The organization's presentations make substantial use 
     of inflammatory and disparaging terms and express conclusions 
     more on the basis of strong emotional feelings than of 
     objective evaluations.
       (d) The approach used in the organization's presentations 
     is not aimed at developing an understanding on the part of 
     the intended audience or readership because it does not 
     consider their background or training in the subject matter.
       According to Rev. Proc. 86-43, the IRS uses the methodology 
     test in all situations where the educational purpose of an 
     organization that advocates a viewpoint or position is in 
     question. However, ``[e]ven if the advocacy undertaken by an 
     organization is determined to be educational under [the 
     methodology test], the organization must still meet all other 
     requirements for exemption under section 501(c)(3) * * *'' 
     Rev. Proc. 86-43. That is, organizations deemed to be 
     ``educational'' must also abide by the section 501(c)(3) 
     prohibitions on: (a) private benefit, (b) participating or 
     intervening in a political campaign, (c) engaging in more 
     than insubstantial lobbying activities, and (d) private 
     inurement.

 b. To Satisfy the Operational Test, an Organization Must Not Violate 
                  the ``Private Benefit'' Prohibition

       Section 501(c)(3) requires, inter alia, that an 
     organization be organized and operated exclusively for one or 
     more exempt purposes. Treas. Reg. 1.501(c)(3)-1(d)(1)(ii) 
     provides that an organization does not meet this requirement:

     unless it serves a public rather than a private purpose. 
     Thus, * * * it is necessary for an organization to establish 
     that it is not organized or operated for the benefit of 
     private interests such as designated individuals, the creator 
     or his family, shareholders of the organization, or persons 
     controlled, directly or indirectly, by such private 
     interests.
       The ``private benefit'' prohibition serves to ensure that 
     the public subsidies flowing from section 501(c)(3) status, 
     including income tax exemption and the ability to receive 
     tax-deductible charitable contributions, are reserved for 
     organizations that are formed to serve public and not private 
     interests. Treas. Reg. 1.501(c)(3)-1(c)(1) defines the 
     application of the private benefit prohibition in the context 
     of the operational test:
       An organization will be regarded as ``operated 
     exclusively'' for one or more exempt purposes only if it 
     engages primarily in activities which accomplish one or more 
     of such exempt purposes specified in section 501(c)(3). An 
     organization will not be so regarded if more than an 
     insubstantial part of its activities is not in furtherance of 
     an exempt purpose.
       The Regulations and cases applying them make it clear that 
     the private benefit test focuses on the purpose or purposes 
     served by an organization's activities, and not on the nature 
     of the activities themselves. See, e.g., B.S.W. Group, Inc. 
     v. Commissioner, 70 T.C. 352 (1978). Where an organization's 
     activities serve more than one purpose, each purpose must be 
     separately examined to determine whether it is private in 
     nature and, if so, whether it is more than insubstantial. 
     Christian Manner International v. Commissioner, 71 T.C. 661 
     (1979).
       The leading case on the application of the private benefit 
     prohibition in the context of an organization whose 
     activities served both exempt and nonexempt purposes is 
     Better Business Bureau v. United States, 326 U.S. 279 (1945). 
     Better Business Bureau was a nonprofit organization formed to 
     educate the public about fraudulent business practices, to 
     elevate business standards, and to educate consumers to be 
     intelligent buyers. The Court did not question the exempt 
     purpose of these activities. The Court found, however, that 
     the organization was ``animated'' by the purpose of promoting 
     a profitable business community, and that such business 
     purpose

[[Page H226]]

     was both nonexempt and more than insubstantial. The Court 
     denied exemption, stating (in language that is cited in 
     virtually all later private benefit cases), that:
       [I]n order to fall within the claimed exemption, an 
     organization must be devoted to educational purposes 
     exclusively. This plainly means that the presence of a single 
     noneducational purpose, if substantial in nature, will 
     destroy the exemption regardless of the number or importance 
     of truly educational purposes.

Id. at 283.
       Many of the cases interpreting the private benefit 
     prohibition involve private benefits that are provided in a 
     commercial context--as in the Better Business Bureau case. 
     Impermissible private benefit, however, need not be financial 
     in nature. Callaway Family Association v. Commissioner, 71 
     T.C. 340 (1978), involved a family association formed as a 
     nonprofit corporation to study immigration to and migration 
     within the United States by focusing on its own family 
     history and genealogy. The organization's activities included 
     researching the genealogy of Callaway family members in order 
     to publish a family history. The organization argued that its 
     purposes were educational and intended to benefit the general 
     public, asserting that its use of a research methodology 
     focusing on one family's development was a way of educating 
     the public about the country's history.
       In Callaway, the court noted (and the IRS conceded) that 
     the organization's activities served an educational purpose. 
     The issue was not whether the organization had any exempt 
     purposes, but whether it also engaged in activities that 
     furthered a nonexempt purpose more than insubstantially. 
     Agreeing with the IRS that ``petitioner aimed its 
     organizational drive at Callaway family members, and appealed 
     to them on the basis of their private interests,'' the court 
     concluded that the organization ``engages in nonexempt 
     activities serving a private interest, and these activities 
     are not insubstantial.'' Id. at 343-44. Accordingly, the 
     court held that the organization did not qualify for 
     exemption under section 501(c)(3).
       Kentucky Bar Foundation v. Commissioner, 78 T.C. 921 
     (1982), is one of the relatively few cases in which a court 
     found private benefit to be insubstantial and therefore not 
     to preclude exemption under section 501(c)(3). The Kentucky 
     Bar Foundation was formed to conduct a variety of activities 
     recognized by the IRS to serve exclusively educational 
     purposes, including a continuing legal education program and 
     the operation of a public law library. The IRS, however, 
     asserted that the Foundation's operation of statewide lawyer 
     referral service also served private purposes. Through the 
     referral service, a person seeking a lawyer was referred to 
     an attorney selected on a rotating basis within a convenient 
     geographic area. The fee for an initial half-hour 
     consultation was $10; any charge for further consultation or 
     work had to be agreed upon by the attorney and the client. 
     The court found that the purposes of the referral service 
     were to assist the general public in locating an attorney 
     to provide a consultation for a reasonable fee, to 
     encourage lawyers to recognize the obligation to provide 
     legal services to the general public, and to acquaint 
     people in need of legal services with the value of 
     consultation with a lawyer to identify and solve legal 
     problems.
       The IRS asserted that a purpose of the referral service was 
     to benefit lawyers, particularly to help young law school 
     graduates establish a practice, and that this was a 
     substantial nonexempt purpose. Based on a careful examination 
     of the facts, however, the court found that:
     [t]he referral service is open to all responsible attorneys, 
     and there is no evidence a selected group of attorneys are 
     the primary beneficiaries of the service. The referral 
     service is intended to benefit the public and not to serve as 
     a source of referrals. We find any nonexempt purpose served 
     by the referral service and any occasional economic benefit 
     flowing to individual attorneys through a referral incidental 
     to the broad charitable purpose served.

Id. at 926.
       Reiterating the proposition that ``the proper focus is the 
     purpose or purposes toward which the activities are 
     directed,'' the court found that the purpose of the legal 
     referral service was to benefit the public, that any private 
     benefit was broadly distributed, not conferred on any select 
     group of attorneys and incidental to the public purpose, and 
     that the organization qualified for exemption under section 
     501(c)(3). Id. at 923, 925-26 (citing B.S.W. Group v. 
     Commissioner, 70 T.C. 352, 356-57 (1978)).
       As the cases described above show, the determination as to 
     whether private benefit is incidental (and therefore 
     permissible) or more than incidental (and therefore 
     prohibited) is inherently factual, and each case must be 
     decided on its own facts and circumstances. See also Manning 
     Association v. Commissioner, 93 T.C. 596 (1989). The IRS has 
     issued several published and private rulings and general 
     counsel memoranda 92 that further explain the private 
     benefit prohibition. For example, in Rev. Rul. 70-186, 1970-1 
     C.B. 128, an organization was formed to preserve a lake as a 
     public recreational facility and to improve the lake water's 
     condition. Although the organization's activities benefited 
     the public at large, there were necessarily significant 
     benefits to the individuals who owned lake-front property. 
     The IRS, however, determined that the private benefit to the 
     lake-front property owners was incidental because:

     \92\ Private letter rulings and general counsel memoranda are 
     made available to the public under section 6110 of the Code. 
     These documents are based on the facts of particular cases, 
     and may not be relied on as precedent. However, they provide 
     useful insights as to how the IRS interprets and applies the 
     law in particular factual situations.
---------------------------------------------------------------------------
     [t]he benefits to be derived from the organization's 
     activities flow principally to the general public through the 
     maintenance and improvement of public recreational 
     facilities. Any private benefits derived by the lakefront 
     property owners do not lessen the public benefits flowing 
     from the organization's operations. In fact, it would be 
     impossible for the organization to accomplish its purposes 
     without providing benefits to the lakefront property owners.
Id.
       In Rev. Rul. 75-196, 1975-1 C.B. 155, the IRS ruled that a 
     501(c)(3) organization operating a law library whose rules 
     essentially limited access and use to local bar association 
     members conferred only incidental benefits to the bar 
     association members. The library's availability only to a 
     designated class of persons was not a bar to recognition of 
     exemption because:

     [w]hat is of importance is that the class benefited be broad 
     enough to warrant a conclusion that the educational facility 
     or activity is serving a broad public interest rather than a 
     private interest, and is therefore exclusively educational in 
     nature.

Id. The library was available to a significant number of people, and 
the restrictions on the library's use were due to the limited size of 
its facilities. Although attorneys who used the library might derive 
personal benefit in their practice, the IRS ruled that this benefit was 
incidental to the library's exempt purpose and a ``logical by-product 
of an educational process.''

Id.
       Two other revenue rulings with similar fact patterns are 
     also helpful in understanding the application of the 
     ``incidental benefits'' concept. In one ruling, the IRS ruled 
     that an organization that limited membership to the residents 
     of one city block did not qualify as a 501(c)(3) organization 
     because the organization's members benefited directly, thus 
     not incidentally, from the organization's activities. Rev. 
     Rul. 75-286, 1975-2 C.B. 210. In another, the IRS ruled that 
     an organization dedicated to beautification of an entire city 
     qualified as a 501(c)(3) organization because benefits flowed 
     to the city's entire population and were not targeted to the 
     organization's members. Rev. Rul. 68-14, 1968-1 C. B. 243. 
     The benefits to the organization's members of living in a 
     cleaner city were considered incidental.
       The IRS issued a recent warning about the importance of the 
     private benefit prohibition in Rev. Proc. 96-32, 1996-20 
     I.R.B. 14, a Revenue Procedure issued for the purpose of 
     establishing standards as to whether organizations that own 
     and operate low income housing (an activity conducted by both 
     nonprofit and for-profit organizations) may qualify for 
     exemption under section 501(c)(3). After reviewing the 
     substantive criteria that must be present to establish that 
     the organization is formed for a charitable purpose, the IRS 
     added a final caution:
       If an organization furthers a charitable purpose such as 
     relieving the poor and distressed, it nevertheless may fail 
     to qualify for exemption because private interests of 
     individuals with a financial stake in the project are 
     furthered. For example, the role of a private developer or 
     management company in the organization's activities must be 
     carefully scrutinized to ensure the absence of inurement or 
     impermissible private benefit resulting from real property 
     sales, development fees, or management contracts.
Id.
       One of the most detailed explanations of the private 
     benefit prohibition is contained in G.C.M. 39862 (Nov. 22, 
     1991), involving the permissibility of a hospital's 
     transaction with physicians. In the G.C.M., the IRS explained 
     the prohibition as follows:
       Any private benefit arising from a particular activity must 
     be ``incidental'' in both a qualitative and quantitative 
     sense to the overall public benefit achieved by the activity 
     if the organization is to remain exempt. To be qualitatively 
     incidental, a private benefit must occur as a necessary 
     concomitant of the activity that benefits the public at 
     large; in other words, the benefit to the public cannot be 
     achieved without necessarily benefiting private individuals. 
     Such benefits might also be characterized as indirect or 
     unintentional. To be quantitatively incidental, a benefit 
     must be insubstantial when viewed in relation to the public 
     benefit conferred by the activity.

Id.
       The IRS also explained that the insubstantiality of the 
     private benefit is measured only in relationship to activity 
     in which the private benefit is present, and not in relation 
     to the organization's overall activities:

       It bears emphasis that, even though exemption of the entire 
     organization may be at stake, the private benefit conferred 
     by an activity or arrangement is balanced only against the 
     public benefit conferred by that activity or arrangement, not 
     the overall good accomplished by the organization.

Id.
       In G.C.M. 39862, the IRS balanced the private benefits to 
     the physicians from the

[[Page H227]]

     transaction at issue with the public purposes served by that 
     particular activity--and not the public purposes served by 
     the hospital as a whole. Finding the private purposes from 
     the activity at issue to be more than incidental in relation 
     to the public purposes, the IRS determined that the hospital 
     had jeopardized its exemption under section 501(c)(3).
       Although most of the cases and IRS rulings (both public and 
     private) follow the general analysis described above in 
     determining whether or not private benefit is insubstantial, 
     a fairly recent Tax Court case, American Campaign Academy v. 
     Commissioner, 92 T.C. 1053 (1989) adopts a slightly different 
     approach. In that case, the primary activity of American 
     Campaign Academy (``ACA'' or ``the Academy'') was the 
     operation of a school to train people to work in political 
     campaigns. The IRS denied ACA's application for exemption 
     under section 501(c)(3), and ACA appealed the denial to the 
     Tax Court. The Tax Court upheld the IRS's denial of ACA's 
     application for exemption because ACA's activities conferred 
     an impermissible private benefit on Republican candidates and 
     entities.
       The school operated by ACA was an ``outgrowth'' of programs 
     the National Republican Congressional Committee (``NRCC'') 
     once sponsored to train candidates and to train campaign 
     professionals for Republican campaigns. The Academy program, 
     however, differed from its NRCC predecessor in that it 
     limited its students to ``campaign professionals.'' Id. at 
     1056. Without discussion, the IRS stated that the Academy did 
     not train candidates, participate in any political campaign 
     or attempt to influence legislation. Id. at 1056-57. The 
     Academy did not use training materials developed by the NRCC, 
     generally did not use NRCC faculty, and developed its own 
     courses. Id. at 1057. Students were not explicitly required 
     to be affiliated with any particular party, nor were they 
     required to take positions with partisan organizations upon 
     graduation. Id. at 1058.
        The Academy had a number of direct and indirect 
     connections to Republican organizations. The NRCC contributed 
     furniture and computer hardware to the Academy. Id. at 1056. 
     One of the Academy's three directors, Joseph Gaylord, was the 
     Executive Director of the NRCC; another director, John 
     McDonald, was a member of the Republican National Committee. 
     Id. Jan Baran, General Counsel of the NRCC at the time of the 
     Academy's application to IRS, incorporated the Academy. Id. 
     at 1070. The National Republican Congressional Trust funded 
     the Academy. Id. The Academy curriculum included studies of 
     the ``Growth of NRCC, etc.'' and ``Why are people 
     Republicans,'' but did not contain comparable studies 
     pertaining to the Democratic or other political parties. Id. 
     at 1070-71. People on the admissions panel were affiliated 
     with the Republican Party. Id. at 1071. Furthermore, while 
     the applicants were not required to declare a party 
     affiliation on their application, the political references 
     students were required to submit ``often permit[ted] the 
     admission panel to deduce the applicant's political 
     affiliation.'' Id. Finally, the Court found that all but one 
     of the Academy graduates who could be identified as later 
     serving in political positions ended up serving Republican 
     candidates or Republican organizations. Id. at 1060, 1071, 
     1072.
       In light of these facts, the Tax Court upheld the IRS's 
     denial of the Academy's application for exemption under 
     section 501(c)(3) because the Academy ``conducted its 
     educational activities with the partisan objective of 
     benefiting Republican candidates and entities.'' Id. at 1070. 
     Any one of the facts listed in the previous paragraph did not 
     alone support the IRS's finding or the court's holding that 
     the Academy was organized for a non-exempt purpose. The IRS 
     did not argue, and the court did not hold, for example, that 
     individuals who are all members of the same political party 
     are prohibited from operating a 501(c)(3) organization, or 
     that an organization may not receive an exemption under 
     section 501(c)(3) if a partisan organization funds it. 
     Rather, the Tax Court focused on the purpose behind ACA's 
     activities. In determining this, it drew ``factual 
     inferences'' from the record to discern that purpose. Those 
     inferences led to the court's conclusion that the Academy 
     ``targeted Republican entities and candidates to receive the 
     secondary benefit through employing its alumni * * *.'' Id. 
     at 1075.
       The Tax Court's analysis distinguished between ``primary'' 
     private benefit and ``secondary'' private benefit, and made 
     clear that the latter can be a bar to section 501(c)(3) 
     qualification. In this case, the students received the 
     primary private benefit of the Academy, and this benefit was 
     permissible and consistent with the Academy's educational 
     purposes. The students' ultimate employers, Republican 
     candidates and entities, received the secondary benefits of 
     the Academy. ``[W]here the training of individuals is focused 
     on furthering a particular targeted private interest [e.g., 
     Republican candidates and entities], the conferred secondary 
     benefit ceases to be incidental to the providing 
     organization's exempt purposes.'' Id. at 1074.
       For the Academy to have prevailed, according to the Tax 
     Court, it needed to demonstrate: (1) that the candidates and 
     entities who received the benefit of trained campaigned 
     workers possessed the characteristics of a ``charitable 
     class,'' 93 and (2) that it did not distribute benefits 
     among that class in a select manner. Id. at 1076. The Academy 
     argued that Republican candidates and entities were 
     ``charitable'' because the Republican party consists of 
     millions of people with ``like `political sympathies' '' and 
     their activities benefited the community at large. Id. The 
     Court ruled, however, that size alone does not transform a 
     benefited class into a charitable class and that ACA had 
     failed to demonstrate that political entities and candidates 
     possessed the characteristics of a charitable class. Id. At 
     1077. Moreover, the Tax Court held that even if political 
     candidates and entities could be found to constitute a 
     ``charitable class,'' ACA's benefits were distributed in a 
     select manner to Republican candidates and entities. Id.
---------------------------------------------------------------------------
     \93\ This part of the Tax Court's analysis in American 
     Campaign Academy has been criticized by a few commentators, 
     who have disagreed with the court's application of the 
     ``charitable class'' doctrine in the context of an 
     educational organization. See, e.g., Bruce R. Hopkins, 
     Republican Campaign School Held Not Tax Exempt, The Nonprofit 
     Counsel, July 1989, at 3; Laura B. Chisolm, Politics and 
     Charity: A Proposal for Peaceful Coexistence, 58 Geo. Wash. 
     L. Rev. 308, 344 n.159 (1990).
     Typically an educational organization is expected to serve a 
     broad class representative of the public interest, but not a 
     ``charitable class'' per se. The court's consideration of the 
     question as to whether political candidates and entities 
     could constitute a charitable class might be misplaced, but 
     is not critical to its holding. As the court notes, ``even 
     were we to find political entities and candidates to 
     generally comprise a charitable class, petitioner would bear 
     the burden of proving that its activities benefited the 
     members of the class in a nonselect manner.'' The court's 
     finding that such benefits were conferred in a select 
     manner--to Republican candidates and entities--was the basis 
     for its holding that the organization served private purposes 
     more than incidentally and, therefore, failed to qualify for 
     exemption under section 501(c)(3).
---------------------------------------------------------------------------
        Finally, the Academy argued that although it hoped that 
     alumni would work in Republican organizations or for 
     Republican candidates, it had no control over whether they 
     would do so. Absent an ability to control the students' 
     employment, the Academy argued, it lacked the ability to 
     confer secondary benefits to Republican candidates and 
     entities. Id. at 1078. The Court found that there was no 
     authority for the proposition that the organization must be 
     able to control non-incidental benefits. Furthermore, the 
     Court reiterated that the record supported the IRS's 
     determination that the Academy was formed ``with a 
     substantial purpose to train campaign professionals for 
     service in Republican entities and campaigns, an activity 
     previously conducted by NRCC.'' Id. According to the Court, 
     accepting the Academy's argument regarding its inability to 
     control non-incidental benefits would ``cloud the focus of 
     the operational test, which probes to ascertain the purpose 
     towards which an organization's activities are directed and 
     not the nature of the activities themselves.'' Id. at 1078-79 
     (citing B.S.W. Group v. Commissioner, 70 T.C. 352, 356-57 
     (1978)). The Court noted that had the record demonstrated 
     that ``the Academy's activities were nonpartisan in nature 
     and that its graduates were not intended to primarily benefit 
     Republicans,'' the Court would have found for the Academy. 
     Id. at 1079.
       The American Campaign Academy case follows existing 
     precedent. In reaching its decision, the court relies on 
     Better Business Bureau and Kentucky Bar Foundation, among 
     other cases, for the legal standards governing the private 
     benefit prohibition. The court recognizes that the ACA's 
     activities were intended to serve multiple purposes, 
     including the education of students (the permissible primary 
     benefit) and the provision of trained campaign professionals 
     for candidates and entities (the secondary benefit). Finding 
     the secondary benefit to be targeted to a select group--
     Republican candidates and entities--the court concludes that 
     such benefit is more than incidental and therefore precludes 
     exemption under section 501(c)(3).

  c. To Satisfy The Operational Test, An Organization Must Not Be An 
                        ``Action'' Organization

       An organization is not operated exclusively for one or more 
     exempt purposes if it is an ``action'' organization. Treas. 
     Reg. Sec. 1.501(c)(3)-1(c)(3). Such an organization cannot 
     qualify for exemption under section 501(c)(3). Treas. Reg. 
     Sec. 1.501(c)(3)-1(c)(3)(v). An organization is an action 
     organization if:
       (i) It ``participates or intervenes, directly or 
     indirectly, in any political campaign on behalf of or in 
     opposition to any candidate for public office;''
       (ii) a ``substantial part'' of its activities consists of 
     ``attempting to influence legislation by propaganda, or 
     otherwise;'' or
       (iii) its primary objective may be attained ``only by 
     legislation or a defeat of proposed legislation,'' and ``it 
     advocates, or campaigns for, the attainment'' of such primary 
     objective.

Treas. Reg. Sec. 1.501(c)(3)-1(c)(3).
     (i) If an Organization Participates in a Political Campaign, 
         It is an Action Organization Not Entitled to Exemption 
         Under Section 501(c)(3)
        Section 501(c)(3) provides that an organization is not 
     entitled to exemption if it ``participate[s] in, or 
     intervene[s] in (including the publishing or distributing of 
     statements) any political campaign on behalf of (or in 
     opposition to) any candidate for public office.'' The reason 
     for this prohibition is clear. Contributions to section 
     501(c)(3) organizations are deductible for federal income tax 
     purposes, but contributions to candidates and political 
     action committees (``PACs'') are not. The use of section 
     501(c)(3) organizations to support or oppose candidates or 
     PACs would circumvent federal

[[Page H228]]

     tax law by enabling candidates or PACs to attract tax-
     deductible contributions to finance their election 
     activities. As the U.S. Court of Appeals for the Tenth 
     Circuit explained, ``[t]he limitations in Section 501(c)(3) 
     stem from the congressional policy that the United States 
     Treasury should be neutral in political affairs and that 
     substantial activities directed to attempts to * * * affect a 
     political campaign should not be subsidized.'' Christian 
     Echoes National Ministry, Inc. v. United States, 470 F.2d 
     849, 854 (1972), cert. denied, 419 U.S. 1107 (1975) (emphasis 
     in original).
       The prohibition on political campaign intervention was 
     added to the Internal Revenue Code as a floor amendment to 
     the 1954 Revenue Act offered by Senator Lyndon Johnson, who 
     believed that a section 501(c)(3) organization was being used 
     to help finance the campaign of an opponent. In introducing 
     the amendment, Senator Johnson said that it was to ``deny[] 
     tax-exempt status to not only those people who influence 
     legislation but also to those who intervene in any political 
     campaign on behalf of any candidate for any public office.'' 
     100 Cong. Rec. 9604 (1954) (discussed in Bruce R. Hopkins, 
     ``The Law of Tax-Exempt Organizations,'' 327 (6th ed. 1992)). 
     No congressional hearing was held on the subject and the 
     conference report did not contain any analysis of the 
     provision. Judith E. Kindell and John F. Reilly, ``Election 
     Year Issues,'' 1993 Exempt Organizations Continuing 
     Professional Education Technical Instruction Program 400, 401 
     (hereinafter ``IRS CPE Manual''). 94
---------------------------------------------------------------------------
     \94\ The 1993 Exempt Organizations Continuing Professional 
     Education (CPE) Technical Instruction Program text was 
     prepared by the IRS Exempt Organizations Division for 
     internal training purposes.
---------------------------------------------------------------------------
       Although the prohibition on political campaign intervention 
     was not formally added to section 501(c)(3) until 1954, the 
     concept that charities should not participate in political 
     campaigns was not new. As the Second Circuit noted, ``[t]his 
     provision merely expressly stated what had always been 
     understood to be the law. Political campaigns did not fit 
     within any of the specified purposes listed in [Section 
     501(c)(3)].'' The Association of the Bar of the City of New 
     York v. Commissioner, 858 F.2d 876, 879 (2d Cir. 1988) 
     (hereinafter ``New York Bar'') (quoting 9 Mertens, Law of 
     Federal Income Taxation Sec. 34.05 at 22 (1983)). 95 
     Furthermore, congressional concerns that the government not 
     subsidize political activity have existed since at least the 
     time when Judge Learned Hand wrote ``[p]olitical agitation * 
     * * however innocent the aim * * * must be conducted without 
     public subvention * * *.'' Slee v. Commissioner, 42 F.2d 184, 
     185 (2d Cir. 1930), quoted in New York Bar, 858 F.2d at 879.
---------------------------------------------------------------------------
     \95\ Indeed, under the common law of charitable trusts--the 
     genesis of modern day section 501(c)(3)--it was recognized 
     that ``a trust to promote the success of a particular 
     political party is not charitable,'' for the reason that 
     ``there is no social interest in the underwriting of one or 
     another of the political parties.'' Restatement (Second) of 
     Trusts Sec. 374 (1959). The continued importance of the 
     common law doctrine of ``charitability'' to the standards for 
     exemption under section 501(c)(3) is reflected in the Supreme 
     Court decision in Bob Jones University v. United States, 461 
     U.S. 574 (1983), in which the Supreme Court denied exemption 
     to a private university that practiced racial discrimination, 
     on the ground that racial discrimination was contrary to 
     public policy and therefore inconsistent with the common law 
     standards for charitability.
---------------------------------------------------------------------------
       In 1987, Congress amended section 501(c)(3) to clarify that 
     the prohibition on political campaign activity applied to 
     activities in opposition to, as well as on behalf of, any 
     candidate for public office. Omnibus Budget Reconciliation 
     Act, Pub. L. No. 100-203, Sec. 10711, 101 Stat. 1330, 1330-
     464 (1987). The House Report accompanying the bill stated 
     that ``[t]he prohibition on political campaign activities * * 
     * reflect[s] congressional policies that the U.S. Treasury 
     should be neutral in political affairs * * *.'' H.R. Rep. No. 
     100-391, at 1625 (1987); see also S. Rep. No. 91-552, at 46-
     49 (Tax Reform Act of 1969) (interpreting section 501(c)(3) 
     to mean that ``no degree of support for an individual's 
     candidacy for public office is permitted'').
       The scope of the prohibition on political campaign 
     intervention has been the subject of much discussion. While 
     certain acts are clearly proscribed, others may be 
     permissible or prohibited, depending on the purpose and 
     effect of the activity. The regulations interpreting the 
     prohibition add little to the statutory definition:
       Activities which constitute participation or intervention 
     in a political campaign on behalf of or in opposition to a 
     candidate include, but are not limited to, the publication or 
     distribution of written or printed statements or the making 
     of oral statements on behalf of or in opposition to such a 
     candidate.

     Treas. Reg. Sec. 1.501(c)(3)-1(c)(3)(iii). Under this 
     provision, a section 501(c)(3) organization is prohibited 
     from making a written or oral endorsement of a candidate and 
     from distributing partisan campaign literature. IRS CPE 
     Manual at 410. Following the enactment of section 527 of the 
     Code in 1974 (governing the federal tax treatment of PACs), 
     the prohibition also prevents section 501(c)(3) organizations 
     from establishing or supporting a PAC. IRS CPE Manual at 437. 
     (The application of the prohibition in this context is 
     discussed further below.)
       It is clear, however, that section 501(c)(3) organizations 
     also may violate the prohibition by engaging in activity that 
     falls short of a direct endorsement, and even may--on its 
     face--appear neutral, if the purpose or effect of the 
     activity is to support or oppose a candidate. The IRS CPE 
     Manual describes a variety of situations in which section 
     501(c)(3) organizations may violate the prohibition without 
     engaging in a direct candidate endorsement, including 
     inviting a particular candidate to make an appearance at an 
     organization event, holding candidate forums or distributing 
     voter guides which evidence a bias for or against a 
     candidate, and similar activities that may support or oppose 
     a particular candidate. IRS CPE Manual at 419-424, 430-432. 
     In a recent election year news release, the IRS reminded 
     501(c)(3) organizations of the breadth of the prohibition, 
     stating not only that they cannot endorse candidates or 
     distribute statements in support of or opposition to 
     candidates, but also that they cannot ``become involved in 
     any other activities that may be beneficial or detrimental to 
     any candidate.'' IRS News Release IR-96-23 (Apr. 24, 1996).
       While it is easy for the IRS to determine whether the 
     prohibition on political campaign intervention has been 
     violated when a section 501(c)(3) organization endorses a 
     candidate or distributes partisan campaign literature, it is 
     more difficult to determine whether there is a violation if 
     the activity at issue is not blatant or serves a nonpolitical 
     purpose as well. The IRS relies on a ``facts and 
     circumstances'' test in analyzing ambiguous behavior to 
     determine whether there has been a violation. According to 
     the IRS:

     [i]n situations where there is no explicit endorsement or 
     partisan activity, there is no bright-line test for 
     determining if the IRC 501(c)(3) organization participated or 
     intervened in a political campaign. Instead, all the facts 
     and circumstances must be considered.

IRS CPE Manual at 410.
       Despite the lack of bright-line standards concerning all 
     aspects of the prohibition, there is a substantial body of 
     authority concerning what section 501(c)(3) organizations can 
     and cannot do, and many section 501(c)(3) organizations have 
     little difficulty applying existing precedents to develop 
     internal guidelines for what activities are permissible and 
     prohibited. For example, the Office of General Counsel of the 
     United States Catholic Conference issued guidelines on 
     political activities to Catholic organizations on February 
     14, 1996, in anticipation of the 1996 election season.96 
     The guidelines outline the parameters of permissible 
     activity, including unbiased voter education, nonpartisan 
     get-out-the-vote drives, and nonpartisan public forums. They 
     also describe what activity is prohibited, including the 
     endorsement of candidates, the distribution of campaign 
     literature in support or opposition to candidates, and the 
     provision of financial and in-kind support to candidates or 
     PACs. With respect to the latter, the guidelines state flatly 
     that:
---------------------------------------------------------------------------
     \96\ Some churches assert that they have a First Amendment 
     right to participate in political campaign activities where 
     doing so furthers their religious beliefs. However, courts 
     have ruled that tax exemption is a privilege and not a right, 
     and that section 501(c)(3) does not prohibit churches from 
     participating in political campaigns but merely provides that 
     they will not be entitled to tax exemption if they do so. 
     See, e.g., Christian Echoes National Ministry, Inc. v. United 
     States, 470 F.2d 849 (10th Cir. 1972).
---------------------------------------------------------------------------
       [A] Catholic organization may not provide financial support 
     to any candidate, PAC, or political party. Likewise, it may 
     not provide or solicit in-kind support, such as free or 
     selective use of volunteers, paid staff, facilities, 
     equipment, mailing lists, etc.

     ``Political Activity Guidelines for Catholic Organizations'' 
     (United States Catholic Conference, Office of the General 
     Counsel, Washington, D.C.), Feb. 14, 1996, reprinted in Paul 
     Streckfus' EO Tax Journal, November 1996 at 35, 42.
       The generally accepted aspects of the campaign intervention 
     prohibition, as well as some areas of uncertainty, are 
     discussed below.
       (a) The Prohibition Is ``Absolute''
       The prohibition on political campaign intervention or 
     participation is ``absolute.'' IRS CPE Manual at 416. Unlike 
     the prohibition on lobbying, there is no requirement that 
     political campaign participation or intervention be 
     substantial. New York Bar, 858 F.2d at 881. It is, therefore, 
     irrelevant that the majority, or even all but a small 
     portion, of an organization's activities would, by 
     themselves, support exemption under section 501(c)(3). United 
     States v. Dykema, 666 F.2d 1096, 1101 (7th Cir. 1981); see 
     also G.C.M. 39694 (Jan. 22, 1988) (``An organization 
     described in section 501(c)(3) is precluded from engaging in 
     any political campaign activities'') and P.L.R. 9609007 (Dec. 
     6, 1995). (``For purposes of section 501(c)(3), intervention 
     in a political campaign may be subtle or blatant. It may seem 
     to be justified by the press of events. It may even be 
     inadvertent. The law prohibits all forms of participation or 
     intervention in `any' political campaign.'') \97\
---------------------------------------------------------------------------
     \97\ See also G.C.M. 38137 (Oct. 22, 1979): [T]he prohibition 
     on political activity makes no reference to the intent of the 
     organization. An organization can violate the proscription 
     even if it acts for reasons other than intervening in a 
     political campaign. For example, an organization that hires a 
     political candidate to do commercials for its charity drive 
     and runs the commercials frequently during the political 
     campaign may have no interest in supporting the candidate's 
     campaign. Nevertheless, its action would constitute, at 
     least, indirect intervention or support of the political 
     campaign.
     However, the same G.C.M. goes on to say:
     We do not mean to imply that every activity that has an 
     effect on a political campaign is prohibited political 
     activity. We recognize that organizations may inadvertently 
     support political candidates. In these instances the 
     organizations have not ``intervened'' or ``participated'' in 
     political campaigns. A hospital that provides emergency 
     health care for a candidate acts on behalf of the candidate 
     during the election, but only inadvertently supports his 
     campaign.

---------------------------------------------------------------------------

[[Page H229]]

       Although the prohibition on political campaign intervention 
     under section 501(c)(3) is absolute, Congress recognized that 
     the sanction of loss of tax exemption could, in some cases, 
     be disproportionate to the violation. In 1987, Congress added 
     section 4955 to the Code, which imposes excise tax penalties 
     on section 501(c)(3) organizations that make ``political 
     expenditures'' in violation of the prohibition, as well as 
     organization managers who knowingly approve such 
     expenditures. The legislative history provides that the 
     enactment of section 4955 was not intended to modify the 
     absolute prohibition of section 501(c)(3), but to provide an 
     alternative remedy that could be used by the IRS in cases 
     where the penalty of revocation seems disproportionate to the 
---------------------------------------------------------------------------
     violation:

     i.e., where the expenditure was unintentional and involved 
     only a small amount and where the organization subsequently 
     has adopted procedures to assure that similar expenditures 
     would not be made in the future.

H.R. Rep. No. 100-391, at 1623-24 (1987).
       The legislative history also provides that the excise tax 
     may be imposed in cases involving significant, uncorrected 
     violations of the prohibition, where revocation alone may be 
     ineffective because the organization has ceased operations 
     after diverting its assets to an improper purpose. In these 
     cases, the excise tax penalty on organization managers may be 
     the only effective way to penalize the violation. Id. at 
     1624-25.
       The IRS has shown an inclination to impose the excise tax 
     under section 4955 in lieu of revocation of exemption in 
     cases where the violation appears to be minor in relation to 
     the organization's other exempt purpose activities.\98\ For 
     example, P.L.R. 9609007 (Dec. 6, 1995) involved a section 
     501(c)(3) organization that sent out a fundraising letter 
     linking the organization to issues raised in the particular 
     campaigns. The IRS concluded that the letters evidenced a 
     bias for one candidate over the other. The organization 
     sought to defend itself by saying only a few of the letters 
     were sent to the states whose elections were mentioned in the 
     letters. The IRS rejected this defense, stating that:
---------------------------------------------------------------------------
     \98\ Prior to the enactment of section 4955 in 1987, the IRS 
     was reluctant to impose revocation in cases where the 
     violation was not blatant and the organization had a record 
     of otherwise charitable activities. For example, P.L.R. 
     8936002 (May 24, 1989) involved a section 501(c)(3) 
     organization that engaged in voter education and issue 
     advocacy relating to the 1984 Presidential election. 
     Describing the case as ``a very close call,'' the IRS 
     ``reluctantly'' concluded that the organization's voter 
     education activities did not constitute prohibited political 
     campaign intervention, despite the use of ``code words'' that 
     could be viewed as evidencing support for a particular 
     candidate.
     The IRS appeared unwilling to seek revocation with respect to 
     the organization, probably because of its history of 
     legitimate educational activities. Had section 4955 been in 
     effect when the activity took place, the IRS would have had 
     another enforcement alternative: it could have imposed excise 
     tax penalties on the organization's expenditures for the 
     activities it found so troublesome.

       [I]t is common knowledge that in recent times the primary 
     source of a candidate's support in such elections is often 
     derived from out-of-state sources. Although a particular 
     reader may not have been eligible to actually vote for the 
     described candidate, he or she could have been charged by 
     [the organization], in our view, to participate in the 
     candidate's campaign through direct monetary or in-kind 
     support, volunteerism, molding of public opinion, or the 
---------------------------------------------------------------------------
     like.

     Id. The IRS found that the organization violated the 
     political campaign intervention prohibition and imposed an 
     excise tax on the organization under section 4955; it did 
     not, however, propose revocation of the organization's 
     exemption under section 501(c)(3).
       (b) Section 501(c)(3) Organizations May Not Establish or 
           Support a PAC
       Although organizations exempt from tax under some 
     categories of section 501(c) are permitted to establish or 
     support PACs,\99\ those exempt under section 501(c)(3) are 
     not. When section 527 (governing the tax treatment of PACs) 
     was added to the Code in 1974, the legislative history 
     provided that ``this provision is not intended to affect in 
     any way the prohibition against certain exempt organizations 
     (e.g., sec. 501(c)(3)) engaging in `electioneering' * * *'' 
     S. Rep. No. 93-1357 (1974), reprinted in 1975-1 C.B. 517, 
     534. The regulations under section 527 reflect this 
     congressional intent:
---------------------------------------------------------------------------
     \99\ For example, section 501(c)(4) and (6) organizations are 
     permitted to establish and/or support PACs. If these exempt 
     organizations provide support for PACs, they are subject to 
     tax, under section 527, on the lesser of their net investment 
     income or their ``exempt function'' income.
---------------------------------------------------------------------------
       Section 527(f) and this section do not sanction the 
     intervention in any political campaign by an organization 
     described in section 501(c) if such activity is inconsistent 
     with its exempt status under section 501(c). For example, an 
     organization described in section 501(c)(3) is precluded from 
     engaging in any political campaign activities. The fact that 
     section 527 imposes a tax on the exempt function income (as 
     defined in section 1.527-2(c)) expenditures of section 501(c) 
     organizations and permits such organizations to establish 
     separate segregated funds to engage in campaign activities 
     does not sanction the participation in these activities by 
     section 501(c)(3) organizations.

Treas. Reg. Sec. 1.527-6(g).
       Since the enactment of section 527 in 1974, it has been 
     clear that a section 501(c)(3) organization will violate the 
     prohibition on political campaign intervention by providing 
     financial or nonfinancial support for a PAC. IRS CPE Manual 
     at 438-40. While the use of a section 501(c)(3)'s facilities, 
     personnel, or other financial resources for the benefit of a 
     PAC is impermissible, the prohibition does not stop there. In 
     its CPE Manual, the IRS also noted that ``[a]n IRC 501(c)(3) 
     organization's resources include intangible assets, such as 
     its goodwill, that may not be used to support the political 
     campaign activities of another organization.'' Id. at 440. 
     Some leading practitioners have interpreted this provision to 
     prohibit a charity from allowing its name to be used by a 
     PAC, even if the charity provides no financial support or 
     assistance; by allowing a PAC to use its name, the charity 
     implies to its employees and to the public that it endorses 
     the activity of the PAC. See Gregory L. Colvin et al., 
     Commentary on Internal Revenue Service 1993 Exempt 
     Organizations Continuing Professional Education Technical 
     Instruction Program Article on ``Election Year Issues,'' 11 
     Exempt Org. Tax Rev. 854, 871 (1995) [hereinafter ``EO 
     Comments''].
       (c) ``Express Advocacy'' is Not Required, and Issue 
           Advocacy is Prohibited if Used to Convey Support for or 
           Opposition to a Candidate
       An organization does not need to violate the ``express 
     advocacy'' standard applied under federal election law for it 
     to violate the political campaign prohibition of section 
     501(c)(3).\100\ T.A.M. 8936002 (May 24, 1989). That is, it is 
     not necessary to advocate the election or defeat of a clearly 
     identified candidate to violate the prohibition. IRS CPE 
     Manual at 412-13.
---------------------------------------------------------------------------
     \100\ The FEC's ``express advocacy'' standard came into being 
     because the Supreme Court held a provision of the Federal 
     Elections Campaign act relating to contributions ``to reach 
     only funds used for communications that expressly advocate 
     the election or defeat of a clearly identified candidate.'' 
     See IRS CPE Manual at 412 (quoting Buckley v. Valeo, 424 U.S. 
     1, 77 (1976)). Examples of ``express advocacy'' include 
     ``vote for,'' ``elect,'' and ``Smith for Congress'' or ``vote 
     against,'' ``defeat,'' and ``reject.'' Id. at 413 (referring 
     to 11 C.F.R. Sec. 109.1(b)(2)).
---------------------------------------------------------------------------
       Moreover, an organization may violate the prohibition even 
     if it does not identify a candidate by name. The IRS has 
     stated that ``issue advocacy'' may serve as ``the opportunity 
     to intervene in a political campaign in a rather 
     surreptitious manner'' if a label or other coded language is 
     used as a substitute for a reference to identifiable 
     candidates. Id. at 411.

     The concern is that an IRC 501(c)(3) organization may support 
     or oppose a particular candidate in a political campaign 
     without specifically naming the candidate by using code words 
     to substitute for the candidate's name in its messages, such 
     as ``conservative,'' ``liberal,'' ``pro-life,'' ``pro-
     choice,'' ``anti-choice,'' ``Republican,'' ``Democrat,'' 
     etc., coupled with a discussion of the candidacy or the 
     election. When this occurs, it is quite evident what is 
     happening--an intervention is taking place.
Id. 411-412. Furthermore:
     [a] finding of political campaign intervention from the use 
     of coded words is consistent with the concept of 
     ``candidate''--the words are not tantamount to advocating 
     support for or opposition to an entire political party, such 
     as ``Republican,'' or a vague and unidentifiably large group 
     of candidates, such as ``conservative'' because the sender of 
     the message does not intend the recipient to interpret them 
     that way. Code words, in this context, are used with the 
     intent of conjuring favorable or unfavorable images--they 
     have pejorative or commendatory connotations.
Id. at 412 n. 6.
       (d) Educational Activities May Constitute Participation or 
           Intervention
       As discussed above, the IRS considers activities that 
     satisfy the ``methodology test'' to be ``educational.'' Just 
     as educational activities may result in impermissible private 
     benefit, however, so too may they violate the prohibition on 
     political campaign intervention. The IRS takes the position 
     that ``[a]ctivities that meet the methodology test * * * may 
     nevertheless constitute participation or intervention in a 
     political campaign.'' IRS CPE Manual at 415.
       New York Bar, 858 F.2d 876 (2d Cir. 1988), referred to 
     above, is the leading case on point. In that case, a bar 
     association published ratings of judicial candidates. The 
     ratings were distributed to bar members and law libraries. 
     The Association also issued press releases regarding its 
     ratings, but did not conduct publicity campaigns to announce 
     its ratings. Id. at 877. The Second Circuit held that 
     although the Association's publications were educational, the 
     distribution of the publications constituted prohibited 
     campaign intervention. By disseminating the educational 
     publications with the hope that they would `` `ensure' that 
     candidates whom [the Association] consider[ed] to be `legally 
     and professionally unqualified' '' would not be elected, the 
     court held that the Association ``indirectly'' participated 
     in a political campaign on behalf of or in opposition to a 
     candidate for public office. Id. at 881.
       An implication of the holding in New York Bar is that one 
     must consider not only whether the activity itself, e.g., 
     publishing

[[Page H230]]

     educational materials such as candidate ratings, violates the 
     political campaign prohibition, but also whether the intended 
     consequences of the activity violates the prohibition.\101\ 
     The need to consider the consequences of an otherwise 
     educational activity is clear from a review of several IRS 
     rulings finding that an organization violated the prohibition 
     by disseminating material that was deemed educational, but 
     nonetheless affected voter preferences in violation of the 
     prohibition.
---------------------------------------------------------------------------
     \101\ See also T.A.M. 9635003 (Apr. 19, 1996). T.A.M. 9635003 
     involved a section 501(c)(3) organization that conducted 
     ``citizens' juries,'' a form of voter education in which a 
     cross-section of citizens are selected to determine which 
     issues are most relevant in the context of a particular 
     campaign, to hear presentations by candidates on those 
     issues, and to rate the candidates' positions on the issues. 
     The section 501(c)(3) organization disseminated the citizen 
     jury's report, including the candidate ratings. In its 
     dissemination, the organization made it clear that it did not 
     support or oppose any candidate, and that the views expressed 
     were those of the citizen jurors and not the organization. 
     The IRS found that the dissemination of the report 
     constituted impermissible participation in a political 
     campaign, and that all expenditures in connection with the 
     conduct of the citizens' jury--and not just the expenditures 
     of the dissemination--constituted ``political expenditures'' 
     under section 4955: This culmination shows that all the 
     activity of the organization leading up to the final report 
     is intimately connected with and a part of the process to put 
     on the [citizens' jury], and thus publication of the final 
     report makes the entire process with respect to the 
     [citizens' jury] a proscribed political activity.
---------------------------------------------------------------------------
       For example, in Rev. Rul. 67-71, 1967-1 C.B. 125, the IRS 
     ruled that a 501(c)(3) organization created to improve the 
     public educational system by engaging in campaigns on behalf 
     of candidates for school board was not exempt. Every four 
     years, when the school board was to be elected, the 
     organization considered the qualification of the candidates 
     and selected those it thought most qualified. The 
     organization then ``engage[d] in a campaign on their behalf 
     by publicly announcing its slate of candidates and by 
     publishing and distributing a complete biography of each.'' 
     Id. Although the selection process ``may have been completely 
     objective and unbiased and was intended primarily to educate 
     and inform the public about the candidates,'' the IRS 
     nonetheless ruled it to be intervention or participation in a 
     political campaign. Id.
       In Rev. Rul. 76-456, 1976-2 C.B. 151, the IRS ruled that an 
     organization formed for the purpose of elevating the morals 
     and ethics of political campaigning was nevertheless 
     intervening in a political campaign when it solicited 
     candidates to sign a code of fair campaign practices and 
     released the names of those candidates who signed and those 
     candidates who refused to sign. The IRS stated that this was 
     done to educate citizens about the election process and so 
     that they could ``participate more effectively in their 
     selection of government officials.'' Id. at 152. Nonetheless, 
     such activity, although educational, ``may result * * * in 
     influencing voter opinion'' and thus constituted a prohibited 
     participation or intervention in a political campaign. Id.
       (e) Nonpartisan Activities May Constitute Prohibited 
           Political Campaign Participation
       The IRS takes the position that the nonpartisan motivation 
     for an organization's activities is ``irrelevant when 
     determining whether the political campaign prohibition'' has 
     been violated. IRS CPE Manual at 415. As support for this 
     position, the IRS cites Rev. Rul. 76-456 and New York Bar, 
     both of which are discussed above. In those cases, the court 
     or the IRS found that the activities in question were 
     nonpartisan, but nevertheless held that they constituted 
     participation in a political campaign. As noted by the IRS in 
     its CPE Manual, the court in New York Bar ``made the rather 
     wry observation [that] [a] candidate who receives a `not 
     qualified' rating will derive little comfort from the fact 
     that the rating may have been made in a nonpartisan manner.'' 
     IRS CPE Manual at 416. Similarly, in G.C.M. 35902 (July 15, 
     1974), the IRS stated:

     The provision in the Code prohibiting participation or 
     intervention in ``any political campaign'' might conceivably 
     be interpreted to refer only to participation or intervention 
     with a partisan motive; but the provision does not say this. 
     It seems more reasonable to construe it as referring to any 
     statements made in direct relation to a political campaign 
     which affect voter acceptance or rejection of a candidate * * 
     *
       (f) The IRS Has Found Violations of the Prohibition on 
           Political Campaign Participation When an Activity Could 
           Affect or Was Intended to Affect Voters' Preferences
       As discussed above, the courts and the IRS have found 
     prohibited political campaign intervention when the activity 
     in question, although educational, affected or could 
     reasonably be expected to affect voter preferences, even 
     where the organization's motives in undertaking the activity 
     were nonpartisan. G.C.M. 35902 is to similar effect. In that 
     case, the IRS held that a public broadcasting station's 
     nonpartisan educational motivation was irrelevant in 
     determining whether its provision of free air time to 
     candidates for elective office was permissible under section 
     501(c)(3). The IRS found that the station's procedures for 
     providing air time, including an equal time doctrine for all 
     candidates and an on-air disclaimer of support for any 
     particular candidate, were sufficient to ensure that the 
     activity would not constitute an impermissible political 
     campaign intervention. The fact that the station's motivation 
     was to educate the public and not to influence an election, 
     however, was deemed to be irrelevant.
       The cases and rulings cited above make it clear that simply 
     having an educational or nonpartisan motive for engaging in 
     prohibited political activity is not a defense to a finding 
     of violation. The relevance and irrelevance of motive is 
     sometimes misstated, however. While the absence of an 
     improper political motivation is irrelevant, evidence showing 
     the existence of a political motivation is relevant and one 
     of the facts and circumstances that the IRS will consider in 
     determining whether there is a violation. Indeed, the IRS has 
     found the existence of evidence showing an intent to 
     participate in a political campaign to be sufficient to 
     support a finding of violation, despite the lack of evidence 
     that the activity achieved the intended results.
       For example, in G.C.M. 39811 (Feb. 9, 1990), a religious 
     organization encouraged its members to seek election to 
     positions as precinct committee-persons in the Republican or 
     Democratic Party structures. Although none of the 
     organization's members actually ran for such positions, the 
     IRS found that urging its members to become involved in the 
     local party organizations was part of the organization's 
     larger plans to ``someday control the political parties.''

     The first step in the Foundation's long-term strategy was to 
     encourage members to be elected as precinct committeemen. 
     These individuals could then exert influence within the party 
     apparatus, beginning with the county central committee. 
     Precinct committeemen could sway the precinct caucuses, a 
     step in the selection of delegates to the party's 
     presidential nominating convention. * * * Intervention at 
     this early stage in the elective process in order to 
     influence political parties to nominate such candidates is, 
     we believe, sufficient to constitute intervention in a 
     political campaign.

Id. The IRS went on to say:

     In its discussion of the Tax Court opinion [in New York Bar], 
     the [Second Circuit] observed that the ratings of candidates 
     were ``published with the hope that they will have an impact 
     on the voter.'' The effort, and not the effect, constituted 
     intervention in a political campaign. Therefore, whether 
     anyone heeded the call to run for precinct committee, whether 
     that individual was elected, and if so, what he or she 
     subsequently did are all immaterial.
Id.
       In G.C.M. 39811, the IRS did not contend that the 
     organization's urging of members to run for office alone 
     constituted the violation. Rather, the organization's ``long-
     term strategy'' of seeking to influence the political 
     parties' nomination of candidates by having its members 
     elected to office, and its urging of members to run for 
     office so as to carry out that strategy, were sufficient to 
     support a finding of impermissible campaign participation, 
     despite the fact that the effort was not successful.
       Other cases and rulings have also looked to an 
     organization's intent as an important element of a finding of 
     prohibited participation or intervention. In 1972, a court 
     held that an organization violated the participation or 
     intervention prohibition when it ``used its publications and 
     broadcasts to attack candidates and incumbents who were 
     considered too liberal.'' Christian Echoes National Ministry, 
     Inc. v. United States, 470 F.2d 849, 856 (10th Cir. 1972). 
     The court did not discuss whether the activities actually 
     influenced voters or were reasonably likely to do so. Rather, 
     it concluded that the organization's ``attempts to elect or 
     defeat certain political leaders reflected [the 
     organization's] objective to change the composition of the 
     federal government.'' Id.
       The IRS also found an organization's intent relevant in 
     P.L.R. 9117001 (Sept. 5, 1990). As described in that ruling, 
     an organization mailed out material indicating that it was 
     intending to help educate conservatives on the importance of 
     voting in the 1984 general election. According to facts 
     stated in the ruling letter, the material contained language 
     ``intended'' to induce conservative voters to vote for 
     President Reagan, even though his name was not included in 
     the materials. The IRS thus concluded that ``the material was 
     targeted to influence a segment of voters to vote for 
     President Reagan.'' Id.
       Based on the above, the IRS position is that an 
     organization can violate the political campaign prohibition 
     by either: (a) conducting activities that could have the 
     effect of influencing voter acceptance or rejection of a 
     candidate or group of candidates (the ``effect'' standard), 
     or (b) engaging in activities that are intended to influence 
     voter acceptance or rejection of a candidate or group of 
     candidates, whether they do so or not (the ``effort'' 
     standard). Most of the uncertainty over the scope of the 
     prohibition on political campaign intervention relates to the 
     ``effect'' standard--the possibility that an organization 
     may, without intending to do so, engage in an activity that 
     could have the effect of influencing voter acceptance of a 
     candidate and, as a result, place its tax exemption in 
     jeopardy and/or risk incurring excise tax penalties under 
     section 4955. The legislative history of section 4955 makes 
     it clear that an inadvertent action may indeed violate 
     section 501(c)(3), and suggests that the IRS may 
     appropriately apply the excise tax penalty rather than 
     revocation as a sanction

[[Page H231]]

     in such situations. Nevertheless, some practitioners have 
     expressed the view that, in interpreting whether ambiguous 
     behavior is violative of the campaign intervention 
     prohibition, primary reliance should be placed on whether 
     there was a political purpose to the behavior at issue. See 
     EO Comments at 856-57. In other words, ``to violate the 
     501(c)(3) prohibition, the organization's actions have to 
     include an intentional 'tilt' for or against one or more 
     people running for public office.'' Id. at 857. In this 
     regard, it was noted that:

     In most cases, the presence of a political purpose will be 
     clear from the charity's paper trail, because organizational 
     activities in the political arena are usually accompanied by 
     assertive behavior, much internal discussion, and explicit 
     written communications. * * *

Id.
       To date, the IRS has shown no intention to abandon its 
     position that an organization may violate the prohibition 
     against political campaign intervention based on the 
     unintended or inadvertent effect of its actions, as well as 
     by an engaging in activities with ``an intentional tilt'' in 
     favor of a candidate or in support of a PAC. Indeed, its 
     recent election year warning to section 501(c)(3) 
     organizations not to ``become involved in any other 
     activities that may be beneficial or detrimental to any 
     candidate'' (discussed above) evidences an apparent intention 
     to adhere to a broad interpretation of the prohibition. IRS 
     News Release IR-96-23 (Apr. 24, 1996).
     (ii) If a Substantial Part of an Organization's Activities is 
         Attempting to Influence Legislation, or its Primary Goal 
         can only be Accomplished through Legislation, it is an 
         ``Action'' Organization
       Section 501(c)(3) provides that an organization cannot be 
     tax-exempt if a ``substantial part'' of its activities is 
     ``carrying on propaganda, or otherwise attempting, to 
     influence legislation.'' Although there is virtually no 
     legislative history on the prohibition, courts have declared 
     that the limitations in section 501(c)(3) ``stem from the 
     policy that the United States Treasury should be neutral in 
     political affairs and that substantial activities directed to 
     attempts to influence legislation should not be subsidized.'' 
     Haswell v. United States, 500 F.2d 1133, 1140 (Ct. Cl. 1974), 
     cert. denied, 419 U.S. 1107 (1975). (The court also noted 
     that ``[t]ax exemptions are matters of legislative grace and 
     taxpayers have the burden of establishing their entitlement 
     to exemptions.'' Id.)
       The Regulations provide that an organization is an 
     ``action'' organization if ``a substantial part of its 
     activities is attempting to influence legislation by 
     propaganda or otherwise.'' Treas. Reg. Sec. 1.501(c)(3)-
     1(c)(3)(ii). The Regulations also provide that an 
     organization is an ``action'' organization if it has the 
     following two characteristics:
       (a) Its main or primary objective or objectives (as 
     distinguished from its incidental or secondary objective) may 
     be attained only by legislation or a defeat of proposed 
     legislation; and
       (b) it advocates, or campaigns for, the attainment of such 
     main or primary objective or objectives as distinguished from 
     engaging in nonpartisan analysis, study, or research and 
     making the results thereof available to the public.

Treas. Reg. Sec. 1.501(c)(3)-1(c)(3)(iv).
       To determine whether a substantial part of an 
     organization's activities is attempting to influence 
     legislation, two alternative tests exist. Each test contains 
     its own definition of ``legislation'' and what constitutes an 
     attempt to influence legislation. The two tests also contain 
     different ways of determining substantiality. One test is 
     referred to as the ``substantial-part test.'' The other test, 
     referred to as the ``expenditure test,'' 102 was added 
     to tax law in 1976 at sections 501(h) and 4911 as a result of 
     uncertainty over the meaning of the word ``substantial.''
---------------------------------------------------------------------------
     \102\ As stated in the legislative history with respect to 
     I.R.C. Sec. 501(h): ``The language of the lobbying provision 
     was first enacted in 1934. Since that time neither Treasury 
     regulations nor court decisions gave enough detailed meaning 
     to the statutory language to permit most charitable 
     organizations to know approximately where the limits were 
     between what was permitted by the statute and what was 
     forbidden by it. This vagueness was, in large part, a 
     function of the uncertainty in the meaning of the terms 
     `substantial part' and `activities'. * * * Many believed that 
     the standards as to the permissible level of activities under 
     prior law was too vague and thereby tended to encourage 
     subjective and selective enforcement.''
---------------------------------------------------------------------------
       The ``expenditure test'' sets forth specific, dollar levels 
     of permissible lobbying expenditures. Section 501(h) did not 
     amend section 501(c)(3), but rather provided charitable 
     organizations an alternative to the vague ``substantial-
     part'' limitations of section 501(c)(3). A charitable 
     organization may elect the ``expenditure test'' as a 
     substitute for the substantial-part test. A public charity 
     that does not elect the expenditure test remains subject to 
     the substantial part test. Treas. Reg. Sec. 1.501(h)-1(a)(4). 
     Joint Committee in its General Explanation of the Tax Reform 
     Act of 1976, 1976-3 C.B. (Vol. 2) 419.
       The substantial-part test is applied without regard to the 
     provisions of section 501(h). The law, regulations and 
     rulings regarding the expenditure test may not be used to 
     interpret the law, regulations and rulings of the 
     substantial-part test. Section 501(h)(7) (``nothing [in 
     section 501(h)] shall be construed to affect the 
     interpretation of the phrase `no substantial part of the 
     activities of which is carrying on propaganda, or otherwise 
     attempting, to influence legislation,' under [section 
     501(c)(3)]'').
       Determining whether an organization violated the lobbying 
     limitation requires an understanding of what constitutes: i. 
     ``legislation;'' ii. an attempt to ``influence'' legislation; 
     and iii. a ``substantial'' part of an organization's 
     activities. It is also necessary to understand the 
     circumstances under which an organization's ``objectives can 
     be achieved only through the passage of legislation.''
       (a) Definition of ``Legislation''
       The Regulations define ``legislation'' to include ``action 
     by the Congress, by any State legislature, by any local 
     council or similar governing body, or by the public in a 
     referendum, initiative, constitutional amendment, or similar 
     procedure.'' Treas. Reg. Sec. 501(c)(3)-1(c)(3)(ii). ``Action 
     by the Congress'' includes the ``introduction, amendment, 
     enactment, defeat, or repeal of Acts, bills, resolutions, or 
     similar items.'' G.C.M. 39694 (Jan. 22, 1988). This 
     definition does not include Executive Branch actions, or 
     actions of independent agencies. P.L.R. 6205116290A (May 11, 
     1962). Requesting executive bodies to support or oppose 
     legislation, however, is prohibited. The IRS does not 
     recognize a distinction between ``good'' legislation and 
     ``bad'' legislation. For example, in Rev. Rul. 67-293, 1967-2 
     C.B. 185, the IRS ruled that an organization substantially 
     engaged in promoting legislation to protect animals was not 
     exempt even though the legislation would have benefited the 
     community.
       (b) Definition of ``attempting to influence legislation''
       Under the Regulations, an organization will be regarded as 
     ``attempting to influence legislation'' if it:
       (a) contacts members of a legislative body for the purpose 
     of proposing, supporting, or opposing legislation (Treas. 
     Reg. Sec. 1.501(c)(3)-1(c)(3)(ii)(a)) (referred to as 
     ``direct lobbying'');
       (b) urges the public to contact members of a legislative 
     body for the purpose of proposing, supporting, or opposing 
     legislation (id.) (referred to as ``grassroots lobbying''); 
     or
       (c) advocates the adoption or rejection of legislation 
     (Treas. Reg. Sec. 1.501(c)(3)-1(c)(3)(ii)(b)).

     Section 4945(e) of the Internal Revenue Code provides 
     additional guidance regarding the meaning of ``attempting to 
     influence legislation.'' 103 According to that 
     provision, a taxable expenditure includes any amount paid or 
     incurred for:
---------------------------------------------------------------------------
     \103\ I.R.C. Sec. Sec. 4945(d) and (e) contain definitions of 
     ``attempting to influence legislation'' with respect to 
     taxable expenditures by private foundations, not public 
     charities. However, ``[a]ctivities which constitute an 
     attempt to influence legislation under Code Sec. 4945 * * * 
     also constitute an attempt to influence legislation under 
     Code Sec. 501(c)(3).'' G.C.M. 36127 (Jan. 2, 1975). Congress 
     viewed section 4945(e) as a clarification of the phrase 
     ``attempting to influence legislation'' in tax-exempt law 
     generally, not just with respect to private foundations. Id.

       (a) any attempt to influence any legislation through an 
     attempt to affect the opinion of the general public or any 
     segment thereof, and
       (b) any attempt to influence legislation through 
     communication with any member or employee of a legislative 
     body, or with any other government official or employee who 
     may participate in the formulation of the legislation (except 
     technical advice or assistance provided to a government body 
     or to a committee or other subdivision thereof in response to 
     a written request by such body or subdivision . * * *) other 
     than through making available the results of nonpartisan 
     analysis, study, or research.
     Treas. Reg. Sec. 53.4945-2(d)(4), which is applicable to non-
     electing public charities,104 discusses ``nonpartisan 
     analysis, study, or research'' as follows:
---------------------------------------------------------------------------
     \104\ See G.C.M. 36127 (Jan. 2, 1975) and Haswell v. United 
     States, 500 F.2d 1133 (Ct. Cl. 1974).
---------------------------------------------------------------------------
       Examinations and discussions of broad social, economic, and 
     similar problems are [not lobbying communications] even if 
     the problems are of the type with which government would be 
     expected to deal ultimately * * * For example, [an 
     organization may discuss] problems such as environmental 
     pollution or population growth that are being considered by 
     Congress and various State legislatures, but only where the 
     discussions are not directly addressed to specific 
     legislation being considered, and only where the discussions 
     do not directly encourage recipients of the communication to 
     contact a legislator, an employee of a legislative body, or a 
     government official or employee who may participate in the 
     formulation of legislation.105
---------------------------------------------------------------------------
     \105\ See also G.C.M. 36127 (Jan. 2, 1975).
---------------------------------------------------------------------------
       Even if specific legislation is not mentioned, however, an 
     indirect campaign to ``mold public opinion'' may violate the 
     legislative lobbying prohibition. In Christian Echoes 
     National Ministry, Inc. v. United States, 470 F.2d 849 (10th 
     Cir. 1972), the organization in question produced religious 
     radio and television broadcasts, distributed publications, 
     and engaged ``in evangelistic campaigns and meetings for the 
     promotion of the social and spiritual welfare of the 
     community, state and nation.'' Id. at 852. The court found 
     the publications attempted to influence legislation ``by 
     appeals to the public to react to certain issues.'' Id. at 
     855.106
---------------------------------------------------------------------------
     \106\ For example, the publications urged its readers to: 
     ``write their Congressmen in order to influence the political 
     decisions in Washington;'' ``work in politics at the precinct 
     level;'' ``maintain the McCarran-Walter Immigration law;'' 
     ``reduce the federal payroll by discharging needless 
     jobholders, stop waste of public funds and balance the 
     budget;'' ``stop federal aid to education, socialized 
     medicine and public housing;'' ``abolish the federal income 
     tax;'' and ``withdraw from the United Nations.'' Christian 
     Echoes National Ministry, 470 F.2d at 855. In light of these 
     facts, the court upheld the IRS position that the 
     organization failed to qualify as a 501(c)(3) organization.

---------------------------------------------------------------------------

[[Page H232]]

       Under the expenditure test, ``grassroots lobbying'' is 
     ``any attempt to influence legislation through an attempt to 
     affect the opinions of the general public or any segment 
     thereof.'' Treas. Reg. Sec. 56.4911-2(b)(2)(i). Such a 
     communication will be considered grassroots lobbying if it: 
     (a) refers to specific legislation, (b) reflects a view on 
     such legislation, (c) [e]ncourages the recipient to take 
---------------------------------------------------------------------------
     action with respect to such legislation.

Treas Reg. Sec. 56.4911-2(b)(2)(ii).\107\
---------------------------------------------------------------------------
     \107\ The IRS has also concluded that an organization formed 
     to ``facilitate'' the inauguration of a state's governor-
     elect and the ``orderly transition of power from one 
     political party to another by legislative and personnel 
     studies'' violated the prohibition on attempting to influence 
     legislation. G.C.M. 35473 (Sept. 10, 1973). The IRS ``saw no 
     logical way to avoid concluding that [the organization's] 
     active advocacy of a proposed legislative program requires it 
     to be [classified as an action organization. * * *]'' See 
     also Rev. Rul. 74-117, 1974-1 C.B. 128.
---------------------------------------------------------------------------
       (c) Definition of ``Substantial''
       A bright-line test for determining when a ``substantial'' 
     part of an organization's activities are devoted to 
     influencing legislation does not exist. Neither the 
     regulations nor case law provide useful guidance as to 
     whether the determination must be based on activity or 
     expenditures or both. In Seasongood v. Commissioner, 227 F.2d 
     907 (6th Cir. 1955), the court held that attempts to 
     influence legislation that constituted less than five 
     percent of total activities were not substantial. The 
     percentage test of Seasongood was, however, explicitly 
     rejected in Christian Echoes National Ministry, Inc.
       The political [i.e. legislative] activities of an 
     organization must be balanced in the context of the objects 
     and circumstances of the organization to determine whether a 
     substantial part of its activities was to influence 
     legislation. (citations omitted.) A percentage test to 
     determine whether the activities were substantial obscures 
     the complexity of balancing the organization's activities in 
     relation to its objects and circumstances.

     Id. at 855. Yet in Haswell v. United States, 500 F.2d 1133, 
     1145 (Ct. Cl. 1974), the court determined that while a 
     percentage test is not the only measure of substantiality, it 
     was a strong indication that the organization's purposes were 
     no longer consistent with charity. In that case, the court 
     concluded that approximately 20 percent of the organization's 
     total expenditures were attributable to attempts to influence 
     legislation, and they were found to be substantial. Id. at 
     1146.
       The IRS has characterized the ambiguity over the meaning of 
     ``substantial'' as a ``problem [that] does not lend itself to 
     ready numerical boundaries.'' G.C.M. 36148 (January 28, 
     1975). In attempting to give some guidance on the subject, 
     however, the IRS said:

     [t]he percentage of the budget dedicated to a given activity 
     is only one type of evidence of substantiality. Others are 
     the amount of volunteer time devoted to the activity, the 
     amount of publicity the organization assigns to the activity, 
     and the continuous or intermittent nature of the 
     organization's attention to it.
       (d) Circumstances under which an organization's 
           ``objectives can be achieved only through the passage 
           of legislation''
       The Regulations require that when determining whether an 
     organization's objectives can be achieved only through the 
     passage of legislation that ``all the surrounding facts and 
     circumstances, including the articles and all activities of 
     the organization, are to be considered.'' Treas. Reg. 
     Sec. 1.501(c)(3)-1(c)(3)(iv). There is little additional IRS 
     or court guidance on the subject. In one of the few comments 
     on this section of the Regulations, the IRS said in G.C.M. 
     33617 (Sep. 12, 1967) that an organization that was ``an 
     active advocate of a political doctrine'' was an action 
     organization because its objectives could only be attained by 
     legislation. In its publications, the organization stated 
     that its objectives included:

     the mobilization of public opinion; resisting every attempt 
     by law or the administration of law which widens the breach 
     in the wall of [redacted by IRS] working for repeal of any 
     existing state law which sanctions the granting of public aid 
     to [redacted by IRS]; and uniting all `patriotic' citizens in 
     a concerted effort to prevent the passage of any federal law 
     [redacted by IRS]. * * *''
     By advocating its position to others, thereby attempting to 
     secure general acceptance of its beliefs; by engaging in 
     general legislative activities to implement its views; by 
     urging the enactment or defeat of proposed legislation which 
     was inimical to its principles: the organization ceased to 
     function exclusively in the educator's role of informant in 
     that its advocacy was not merely to increase the knowledge of 
     the organization's audience, but was to secure acceptance of, 
     and action on, the organization's views concerning 
     legislative proposals, thereby encroaching upon the 
     proscribed legislative area.

       In Rev. Rul. 62-71, 1962-1 C.B. 85, an organization was 
     formed ``for the purpose of supporting an educational program 
     for the stimulation of interest in the study of the science 
     of economics or political economy, particularly with 
     reference to a specified doctrine or theory.'' It conducted 
     research, made surveys on economic conditions available, 
     moderated discussion groups and published books and 
     pamphlets. The research activities were principally concerned 
     with determining the effect various real estate taxation 
     methods would have on land values with reference to the 
     ``single tax theory of taxation.'' ``It [was] the announced 
     policy of the organization to promote its philosophy by 
     educational methods as well as by the encouragement of 
     political action.'' Id. The tax theory advocated in the 
     publications, although educational within the meaning of 
     section 501(c)(3), could be put into effect only by 
     legislative action. Without further elaboration of the facts 
     involved or how the theory could only be put into effect 
     through legislative action, the IRS ruled the organization 
     was an action organization, and thus not operated exclusively 
     for an exempt purpose.
       In G.C.M. 37247 (Sept. 8, 1977), the IRS discussed whether 
     a organization whose guiding doctrine was to propagate a 
     ``nontheistic, ethical doctrine'' of volunteerism could be 
     considered a 501(c)(3) organization. The ``ultimate goal'' of 
     the guiding doctrine was ``freedom from governmental and 
     societal control.'' According to the IRS:

     [t]his objective can obviously only be attained legally 
     through legislation, including constitutional amendments, or 
     illegally through revolution. If [the organization] should 
     advocate illegal activities, then it is not charitable; if it 
     advocates legal attainment of its doctrine's goal through 
     legislation, then it is an action organization.

     The IRS did not conclude that organization was an action 
     organization, only that there was such a possibility and 
     further investigation was warranted. Research has not 
     uncovered further information about this case.

 d. To Satisfy the Operational Test, an Organization Must Not Violate 
                 the ``Private Inurement'' Prohibition

       To qualify for tax-exempt status, section 501(c)(3) 
     provides that an organization must be organized and operated 
     so that ``no part of [its] net earnings * * * inures to the 
     benefit of any private shareholder or individual.'' The 
     Regulations add little clarification to this provision other 
     than saying that ``[a]n organization is not operated 
     exclusively for one or more exempt purposes if its net 
     earnings inure in whole or in part to the benefit of private 
     shareholders or individuals.'' Treas. Reg. Sec. 1.501(c)(3)-
     1(c)(2).
       Although the private benefit and private inurement 
     prohibitions share common and often overlapping elements, the 
     two are distinct requirements which must be independently 
     satisfied. American Campaign Academy, 92 T.C. at 1068. The 
     private inurement prohibition may be ``subsumed'' within the 
     private benefit analysis, but the reverse is not true. 
     ``[W]hen the Court concludes that no prohibited inurement of 
     earnings exists, it cannot stop there but must inquire 
     further and determine whether a prohibited private benefit is 
     conferred.'' Id. at 1069. It should be noted that the private 
     inurement prohibition pertains to net earnings of an 
     organization, while the private benefit prohibition can apply 
     to benefits other than those that have monetary value. 
     Furthermore, unlike with the private benefit prohibition, the 
     prohibition on private inurement is absolute. ``There is no 
     de minimis exception to the inurement prohibition.'' G.C.M. 
     39862 (Nov. 22, 1991).
       The IRS has described ``private shareholders or 
     individuals'' as ``persons who, because of their particular 
     relationship with an organization, have an opportunity to 
     control or influence its activities.'' Id. ``[I]t is 
     generally accepted that persons other than employees or 
     directors may be in a position to exercise the control over 
     an organization to make that person an insider for inurement 
     purposes.'' Hill, F. and Kirschten, B., Federal and State 
     Taxation of Exempt Organizations 2-85 (1994). ``The inurement 
     prohibition serves to prevent anyone in a position to do so 
     from siphoning off any of a charity's income or assets for 
     personal use.'' G.C.M. 39862 (Nov. 22, 1991). Furthermore, 
     the IRS has stated that:

       [I]nurement is likely to arise where the financial benefit 
     represents a transfer of the organization's financial 
     resources to an individual solely by virtue of the 
     individual's relationship with the organization, and without 
     regard to accomplishing exempt purposes.

     G.C.M. 38459 (July 31, 1980). Also IRS Exempt Organizations 
     Handbook (IRM 7751) Sec. 381.1(4) (``The prohibition of 
     inurement in its simplest terms, means that a private 
     shareholder or individual cannot pocket the organization's 
     funds except as reasonable payment for goods or services''); 
     and Hopkins, supra, at 267 (Proscribed private inurement 
     ``involves a transaction or series of transactions, such as 
     unreasonable compensation, unreasonable rental charges, 
     unreasonable borrowing arrangements, or deferred or retained 
     interests in the organization's assets'').
  Mr. TAYLOR of Mississippi. Mr. Speaker, today I rise to discuss the 
ethics charges facing Newt Gingrich, Speaker of the House of 
Representatives.
  The House Ethics Committee voted 7-1 to reprimand and assess a 
penalty of $300,000 for Speaker Gingrich.
  In recommending a sanction and a $300,000 fine, the committee stated 
on page 94 of its report the following: ``* * * the violation does not 
represent only a single instance

[[Page H233]]

of reckless conduct. Rather, over a number of years and in a number of 
situations, Mr. Gingrich showed a disregard and lack of respect for the 
standards of conduct that applied to his activities.''
  Based on this, I find it inconceivable that the Ethics Committee 
would recommend a resolution to this body which would not specifically 
prohibit the Speaker from paying his fine from campaign funds. Mr. 
Gingrich's campaign organization can raise these funds in a matter of 
minutes. During the Speaker's most recent general election campaign, he 
spent $5.4 million to defeat his challenger. At the end of November, 
Federal Election Commission reports indicate that he has over $1 
million remaining in his campaign fund.
  The Speaker used funds from tax-exempt organizations to promote his 
political agenda. If a Member violates the rules of the House, the 
Member, not their campaign, should be held responsible for whatever 
fine is levied.
  Mr. Speaker, I therefore voted against approving the resolution 
recommended by the committee.
  Mr. CANADY of Florida. Mr. Speaker, today I cast my vote in support 
of the recommendation of the Committee on Standards of Official Conduct 
that Mr. Gingrich be reprimanded and subjected to a $300,000 cost 
assessment. I do so after reviewing the report of the committee and the 
report of counsel for Mr. Gingrich.
  In making a judgment regarding this matter, I have been guided by the 
dual goals of maintaining the integrity of the House, and ensuring that 
Mr. Gingrich be treated fairly. I have attempted to base my decision on 
this matter on all the relevant facts. In my view, the committee was 
well justified in concluding that Mr. Gingrich engaged in conduct which 
did not reflect creditably on the House.
  The most serious finding against Mr. Gingrich involves the submission 
of inaccurate information to the committee. The circumstances 
surrounding the submission of incorrect statements indicates that Mr. 
Gingrich was woefully remiss in meeting his obligation as a respondent 
in the ethics process. Although the committee did not conclude that Mr. 
Gingrich intentionally misled the committee, it is clear that at the 
least Mr. Gingrich was reckless in responding to a series of inquiries 
from the committee.
  The sequence of events is particularly disturbing because after the 
initial submission of inaccurate information in December 1994, Mr. 
Gingrich had multiple opportunities to correct the misstatements but 
failed to do so until his November 13, 1996, appearance before the 
investigative subcommittee. Most distressing is the fact that when the 
scope of the investigation was expanded on September 26, 1996, to 
include the issue of whether Mr. Gingrich provided accurate, reliable, 
and complete information to the committee, Mr. Gingrich failed to make 
an immediate diligent effort to determine if he had in fact submitted 
incorrect information to the committee, and to correct any errors that 
may have been made.
  Indeed, in response to the investigative subcommittee's letter of 
October 1, 1996, requesting that Mr. Gingrich produce all documents 
relied on to prepare the letters previously submitted to the committee, 
Mr. Gingrich wrote to the subcommittee stating how busy he was at the 
time the various letters were submitted, but also affirming that he had 
reviewed the submissions to verify their accuracy. Mr. Gingrich's 
failure to set the record straight at this point was under the most 
charitable view grossly reckless.
  The committee was also justified in concluding that Mr. Gingrich 
erred in failing to consult a tax attorney regarding certain of his 
activities involving organizations exempt from taxation under section 
501(c)(3) of the Internal Revenue Code. Although legal experts may 
disagree about the propriety of Mr. Gingrich's conduct, Mr. Gingrich's 
own expert witness acknowledged that the combination of politics and 
501(c)(3) organizations is an ``explosive mix,'' and stated that he 
would have advised Mr. Gingrich not to use 501(c)(3) entities for the 
purposes for which he used them. There was more than an adequate basis 
for the committee to conclude that ``there were significant and 
substantial warning signals to Mr. Gingrich that he should have heeded 
prior to embarking on ``the projects involving tax-exempt entities. In 
1995 Mr. Gingrich himself told the New York Times that his activity 
involving section 501(c)(3) entities ``[g]oes right up to the edge. * * 
* [I]t's risk taking.'' Such comments betray a disturbing lack of 
concern by Mr. Gingrich about the prospect that his conduct might bring 
discredit on the House.
  In light of all these circumstances, I believe that the penalty 
recommended by the committee represents the minimum appropriate 
sanction. Even if he did not intend to mislead the committee or abuse 
the tax laws, Mr. Gingrich's conduct was culpable because it was 
reckless. Such conduct undermines public confidence in the integrity of 
our system of Government. It is conduct that cannot be excused. The 
reprimand combined with the stiff cost assessment sends a strong signal 
that the House will deal firmly with such transgressions of the rules 
of the House.

  Mr. BLUMENAUER. Mr. Speaker, for me, the Gingrich episode represents 
much of what is wrong about the American political system today. It is 
unfortunately a failing which occurs on many levels.
  At its core is the behavior of the man twice removed from the 
Presidency. It is very difficult for anyone who has read the Cole 
report to reach any conclusion other than that Mr. Gingrich 
consistently did not tell the truth, in a desperate attempt to avoid 
responsibility for the misuse of taxpayer funds for partisan gain.
  In turn, Mr. Gingrich's transgressions engendered a series of 
behaviors from people in both parties and in the press that play to 
their worst instincts, and that undermine the confidence people have in 
their Government.
  Last but not least, the blame resides as well with the House ethics 
process, a process so open to perversion that it raises questions about 
its ability to protect individual rights. It has unfortunately become 
so susceptible to manipulation that the House leadership and committee 
chair can, and has, unilaterally distorted its most sensitive 
proceedings, denying the House and the American public the time to 
reflect.
  Over the weekend, I read the Cole report. I come away from it 
believing that Mr. Gingrich knew exactly what he was doing, based on 
his intimate familiarity with the 1989 case involving the American 
Campaign Academy. In that case, the IRS and a tax court found that the 
academy, which was run by Mr. Gingrich's closest personal advisor and 
which was represented by Mr. Gingrich's lawyer, was ineligible for tax-
exempt status because it served private, rather than public interests.
  But Mr. Gingrich was not deterred by the lessons of the American 
Campaign Academy ruling. Far from it. Instead, over a million dollars 
was diverted knowingly and improperly from charities for political 
purposes in violation of the law and of House ethical rules. As 
revealed with great clarity by Mr. Cole, Mr. Gingrich engaged in a 
deliberate strategy to use money contributed for charitable purposes to 
fund his own partisan agenda.
  And it is impossible to read the Cole report without also 
understanding Mr. Gingrich's use of the enhanced power and prestige of 
the Speakership for personal enrichment. The evidence goes far beyond 
the salary and perquisites of the Speakership. A telling example is Mr. 
Gingrich's acceptance of a $4.3 million book advance, which flowed 
directly from his new position and the materials from what we now know 
was a taxpayer sponsored college course. Although Mr. Gingrich was 
eventually forced to give up the advance, he has collected royalties 
far in excess of any money involved in the case of former Speaker Jim 
Wright.
  Ultimately, this episode is about the failure to be honest. Nothing 
speaks more eloquently to that point than Mr. Gingrich's final and 
belated admission, not to guilt, but only to being naive. Everyone who 
reads the Cole report, and, I submit, anyone who carefully observes Mr. 
Gingrich's personal behavior during these last few days, knows how 
hollow this rings. Mr. Gingrich is not naive. He has devoted a quarter 
of a century in pursuit of political power for himself and his party. 
It has been at times brilliant, calculating, and shrewd. But it has 
never been naive. Mr. Gingrich pushed the envelop, and got caught.
  Mr. PACKARD. Mr. Speaker, honesty, fairness, and dealing justly with 
others has been an overriding principle of my entire life. The Speaker 
admitted he made mistakes. I believe this body should admonish the 
Speaker's actions. However, the Ethics Committee's recommendations go 
much too far. The penalty far exceeds the infraction.
  First and foremost, the Ethics Committee serves to ensure fairness. 
With that in mind, the Committee must level equitable sanctions. This 
recommendation fails to do so.
  In the past, the Committee chose to dispense with similar matters 
with a letter against the offender. For violations, which I consider 
morally and ethically far worse, Members were given little more than a 
perfunctory slap on the hand.
  I consider this action against the Speaker excessive and unwarranted. 
For that reason, I intend to vote against the Ethics Committee's 
recommendation. A letter of reproval should be sufficient as it was for 
the Minority Leader, Richard Gephardt; Minority Whip, David Bonior and 
for violations far more serious than the Speaker's.
  Mr. CONYERS. Mr. Speaker, this is a sad day for the House of 
Representatives and for the American people. For the first time in 
history, our body will be voting to punish the Speaker of the House. 
How we as a body act to punish Mr. Gingrich will send a message to the 
American public. It will say whether we are able to monitor our own 
institution; it will say whether we prefer party loyalty to truth and 
integrity; it will say whether Mr. Gingrich is the Member best suited 
to represent our institution.

[[Page H234]]

  The punishment contained in House Resolution 31 is inadequate. The 
punishment neither reflects the seriousness of the misdeeds admitted to 
by Mr. Gingrich nor Mr. Gingrich's history of abuse of the rules of the 
House.
  Make no mistake about the gravity of the charges against Gingrich. 
Certain Members of the majority have attempted to portray Mr. 
Gingrich's misleading statements as oversight, and they have attempted 
to portray the tax law he violated as arcane. Do not let these 
statements mislead the entire body.
  Speaker Gingrich has admitted to all of the violations alleged by the 
subcommittee. He acknowledged that ``in my name and over my signature, 
inaccurate, incomplete, and unreliable statements were given to the 
committee'' and that ``he brought down on the people's House a 
controversy which could weaken the faith people have in their 
Government.'' The special prosecutor has make it clear that he believes 
that Mr. Gingrich intentionally misled the ethics counsel. The special 
prosecutor and the ethics committee also made it clear that Mr. 
Gingrich violated the agreement that forbid him to conduct a media 
strategy to minimize, or spin, the findings of the Ethics Committee. 
And after review of the committee's report, it seems very likely that 
Mr. Gingrich has violated tax law. And Gingrich did not violate arcane 
tax law, but rather the very basic premise that you cannot use tax-
exempt funds for political purposes. He used tax-exempt funds to help 
build a political machine.
  And it is clear that this is not the end of Mr. Gingrich's ethical 
and legal troubles. The committee will make available to the IRS all 
relevant documents produced during the subcommittee's inquiry and 
establish a liaison with the IRS. The Department of Justice may further 
investigate the actions of Mr. Gingrich. We have no idea what these, or 
other investigations, find. But, it does not matter. Because what we 
already know is enough for us to say, enough is enough, let us show the 
American public that will have the strength and integrity to punish our 
Members. And a slap on the wrist of Mr. Gingrich that allows him to 
retain the Speaker's gavel, does not show our strength or integrity.
  Further, this is not the first time that Mr. Gingrich has been found 
to have violated House rules. The Speaker has already been cited six 
times for his disregard of the House rules. It has become very clear 
that Mr. Gingrich has shown a willful disregard for our rules. In fact, 
Mr. James Cole has found that ``over a number of years and in a number 
of situations * * * Mr. Gingrich showed a disregard and lack of respect 
for the standards of conduct that applied to his activities.''
  This willful ``disregard and lack of respect for the standards of 
conduct'' make it clear that the punishment of reprimand does not 
reflect the seriousness of Mr. Gingrich's multiple offenses. Comparable 
offenses historically have met with more severe punishment. In 1979, 
the House voted to censure a representative for diverting staff 
salaries for personal use and in 1980, the House censured another 
representative of financial misconduct. Mr. Gingrich diverted tax 
exempt funds for political purposes and then attempted over several 
years to cover his tracks by misleading the committee. Certainly, these 
actions are deserving of at least a censure.

  Unfortunately Mr. Speaker, Mr. Gingrich's actions have weakened the 
American public's faith in their Government. I find it unconscionable 
that my colleagues in the majority, after hearing Mr. Gingrich's 
admission, would vote to reinstate him as Speaker of the House. Are 
they saying that Mr. Gingrich is the best person among their ranks to 
lead their party and to lead the House of Representatives? Mr. Gingrich 
himself has said that Ethics Committee investigations of a Speaker must 
``meet a higher standard of public accountability'' than those 
involving other Members of the House. By voting for this resolution, 
will we really be meeting that higher standard?
  I urge my colleagues on the other side of the aisle to reconsider 
keeping Mr. Gingrich as Speaker. Although the majority's rules may 
allow him to remain Speaker, the ethical lapses of Mr. Gingrich demand 
that he step aside. As the January 21, 1997, Atlanta Journal-
Constitution has stated, ``Mr. Gingrich will dishonor the House every 
time he picks up the Speaker's gavel.'' The New York Times also urges 
Mr. Gingrich to step aside: ``That finding [of James Cole], and the 
considerable evidence that backs it up, make it clear that Mr. Gingrich 
has no business serving as Speaker. His ego got him into this mess, and 
that same ego is now driving him to compound the damage.'' As William 
Carlos Williams noted, ``Leadership passes into empire; empire begets 
insolence; insolence brings ruin.'' It is time for the majority to do 
the right thing.
  Mr. STOKES. Mr. Speaker, I am reminded today of what occurred in the 
House of Representatives a few years ago when I chaired the Ethics 
Committee. We had undertaken an extensive investigation, led by Joseph 
Califano, a noted Washington lawyer whom I had hired as special 
counsel. Mr. Califano's position to our committee was the same as the 
position of Mr. James M. Cole, special counsel to this committee. This 
particular investigation surrounded allegations of sex and drugs 
involvement between Members of Congress and House pages.
  At the end of our investigation, the Ethics Committee brought charges 
against two Members of the House. These charges resulted in findings 
that these two Members had been involved in sex with House pages. Our 
recommendation to the House in both cases was a reprimand for both 
Members. As chairman of the Ethics Committee, I presented the 
committee's case on the floor of the House. Following my presentation, 
the leadership on both sides of the aisle joined together on a 
resolution to raise the recommendation of reprimand to a greater 
penalty, that of censure. The vote was taken and both Members were 
censured. That occurred, of course, in a Congress where the leadership 
on neither side was involved in breaking the rules of the House.
  Today, we are faced with the leader of the House who not only has 
broken the rules of the House, but has been described by Mr. James M. 
Cole, special counsel, as being involved in conduct where the violation 
did not represent only a single instance of reckless conduct, but 
rather over a number of years and in a number of situations, Mr. Cole 
states emphatically that the Speaker, Mr. Gingrich, showed a disregard 
and lack of respect for the standard of conduct that applied to his 
activities.
  Moreover, the committee found that Speaker Gingrich has admitted that 
he submitted information to the committee which was inaccurate, 
incomplete, and unreliable. In recommending a reprimand, Special 
Counsel Cole stated that the Ethics Committee, in recommending a 
reprimand, recognized that this matter fell somewhere in between a 
reprimand and censure. It would seem to me that this is an important 
fact, that the subcommittee which investigated this case did not feel 
comfortable with a finding of reprimand.
  Additionally, this investigation undertaken by the House has now been 
referred to the Internal Revenue Service for further investigation 
relative to Tax Code violations. And last, the imposition of a $300,000 
fine, unprecedented in the history of the institution, should convince 
every Member that this is not an offense which is made into a simple 
reprimand by levying such a harsh fine. Rather, the fine is indicative 
that this matter is more severe than a reprimand and should be taken up 
to censure.
  A censure would then solve the problem of removing a Speaker who 
lacks the decency to remove himself from office. The total lack of 
respect he shows for the House and thereby the American people warrants 
this House to reject the committee's recommendation and impose a 
sanction of censure.
  The imposition of a mere reprimand today will leave a stigma over 
this Speaker that will haunt every Member of the House for the rest of 
this Congress.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I move the previous 
question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore. The question is on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             recorded vote

  Mr. CARDIN. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 395, 
noes 28, answered ``present'' 5, not voting 6, as follows:

                              [Roll No. 8]

                               AYES--395

     Ackerman
     Aderholt
     Allen
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker
     Baldacci
     Ballenger
     Barcia
     Barrett (NE)
     Barrett (WI)
     Bass
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berman
     Berry
     Bilbray
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boswell
     Boucher
     Boyd
     Brady
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant
     Bunning
     Burr
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Capps
     Cardin
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Condit
     Cook
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crapo
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (FL)
     Davis (IL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Eshoo

[[Page H235]]


     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fawell
     Fazio
     Filner
     Flake
     Foglietta
     Foley
     Forbes
     Ford
     Fowler
     Fox
     Frank (MA)
     Franks (NJ)
     Frelinghuysen
     Frost
     Furse
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Hefner
     Hill
     Hilleary
     Hinchey
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (WI)
     Johnson, E. B.
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kilpatrick
     Kim
     Kind (WI)
     Kingston
     Kleczka
     Klink
     Klug
     Knollenberg
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Levin
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas
     Luther
     Maloney (CT)
     Maloney (NY)
     Manton
     Manzullo
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDade
     McGovern
     McHale
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Metcalf
     Millender-McDonald
     Miller (CA)
     Miller (FL)
     Minge
     Mink
     Moakley
     Molinari
     Mollohan
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Oxley
     Pallone
     Pappas
     Parker
     Pascrell
     Pastor
     Paul
     Paxon
     Payne
     Pease
     Pelosi
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pickett
     Pitts
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Price (NC)
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Regula
     Reyes
     Richardson
     Riggs
     Riley
     Rivers
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Roybal-Allard
     Royce
     Rush
     Ryun
     Sabo
     Salmon
     Sanchez
     Sanders
     Sandlin
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Schiff
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Snyder
     Souder
     Spence
     Spratt
     Stabenow
     Stark
     Stearns
     Stenholm
     Stokes
     Strickland
     Stupak
     Sununu
     Talent
     Tanner
     Tauscher
     Thomas
     Thompson
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tierney
     Torres
     Towns
     Traficant
     Turner
     Upton
     Velazquez
     Vento
     Visclosky
     Walsh
     Wamp
     Watkins
     Watt (NC)
     Waxman
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Weygand
     White
     Whitfield
     Wise
     Wolf
     Woolsey
     Wynn
     Yates
     Young (FL)

                                NOES--28

     Barr
     Bartlett
     Barton
     Burton
     Buyer
     Callahan
     Coburn
     DeLay
     Doolittle
     Herger
     Hilliard
     Hunter
     Johnson, Sam
     King (NY)
     Lewis (CA)
     Livingston
     McKeon
     Mica
     Myrick
     Packard
     Sessions
     Smith (TX)
     Solomon
     Stump
     Taylor (MS)
     Taylor (NC)
     Wicker
     Young (AK)

                        ANSWERED ``PRESENT''--5

     Abercrombie
     Conyers
     Hastings (FL)
     McDermott
     Waters

                             NOT VOTING--6

     Carson
     Granger
     Kolbe
     Tauzin
     Tejeda
     Watts (OK)

                              {time}  1407

  Mr. RAMSTAD changed his vote from ``no'' to ``aye.''
  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________