[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
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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
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\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
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\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
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\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.
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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:
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\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
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\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
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\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
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\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\
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\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).
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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).
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\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).
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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.
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\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).
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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
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\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.
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\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.
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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:
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\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).
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[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.
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[[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:
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\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.''
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\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.''
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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:
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\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.
____________________