[House Report 112-194]
[From the U.S. Government Publishing Office]


112th Congress 
 1st Session            HOUSE OF REPRESENTATIVES                 Report
                                                                112-194
_______________________________________________________________________

                                     

                                                  House Calendar No. 68


         IN THE MATTER OF ALLEGATIONS RELATING TO GREGORY HILL

                               __________

                              R E P O R T

                                 of the

                          COMMITTEE ON ETHICS




   August 5, 2011.--Referred to the House Calendar and ordered to be 
                                printed
                          COMMITTEE ON ETHICS

JO BONNER, Alabama                   LINDA T. SANCHEZ, California
  Chairman                             Ranking Member
MICHAEL T. McCAUL, Texas*            JOHN A. YARMUTH, Kentucky
K. MICHAEL CONAWAY, Texas            DONNA F. EDWARDS, Maryland
CHARLES W. DENT, Pennsylvania        PEDRO R. PIERLUISI, Puerto Rico
GREGG HARPER, Mississippi            JOE COURTNEY, Connecticut

                              Report Staff

            Daniel A. Schwager, Chief Counsel/Staff Director
             Deborah Sue Mayer, Director of Investigations
              Kelle A. Strickland, Counsel to the Chairman
            Daniel J. Taylor, Counsel to the Ranking Member
               Clifford C. Stoddard, Jr., Senior Counsel
                      Patrick M. McMullen, Counsel

----------
*Representative Michael McCaul requested that he not participate in the 
Committee's proceedings in this matter, as Gregory Hill is Chief of 
Staff to Representative McCaul.
                         LETTER OF TRANSMITTAL

                              ----------                              

                          House of Representatives,
                                      Committee on Ethics,
                                    Washington, DC, August 5, 2011.
Hon. Karen L. Haas,
Clerk, House of Representatives,
Washington, DC.
    Dear Ms. Haas: Pursuant to clauses 3(a)(2) and 3(b) of rule 
XI of the Rules of the House of Representatives, we herewith 
transmit the attached Report, ``In the Matter Regarding 
Allegations Related to Gregory Hill.''
            Sincerely,
                                   Jo Bonner,
                                           Chairman.
                                   Linda T. Sanchez,
                                           Ranking Member.
                            C O N T E N T S

                              ----------                              
                                                                   Page
I. Introduction..................................................     1
II. House Rules, Laws, Regulations, or Other Standards of Conduct     2
III. Background..................................................     3
IV. Findings and Conclusions.....................................     5
V. Statement Under Rule 13, Clause 3(c) of the Rules of the House 
  of Representatives.............................................     6
Appendix A: Report and Findings of the Office of Congressional 
  Ethics Regarding Gregory Hill (Review No. 11-7238).............     7
Appendix B: Gregory Hill's Response to the Report and Findings of 
  the Office of Congressional Ethics.............................    41
Appendix C: Tax Documents Provided to the Committee by Campaign 
  Financial Services.............................................    53


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-194

======================================================================



 
IN THE MATTER REGARDING ALLEGATIONS RELATING TO REPRESENTATIVE GREGORY 
                                  HILL

                                _______


                             August 5, 2011

                                _______
                                

               Mr. Bonner, from the Committee on Ethics, 
                        submitted the following

                              R E P O R T

                            I. INTRODUCTION

    On May 18, 2011, the Office of Congressional Ethics (OCE) 
forwarded to the Committee on Ethics (Committee) a Report and 
Findings related to the receipt of outside income in 2009 by 
Gregory Hill, in excess of the outside earned income limit 
applicable to senior staff, and Mr. Hill's failure to properly 
report the actual amount of outside income received on his 2009 
Financial Disclosure Statement.\1\ OCE recommended that the 
Committee further review the matter.\2\
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    \1\OCE's Report and Findings regarding Gregory Hill, Review 11-
7238, can be found at Appendix A.
    \2\Representative Michael McCaul requested that he not participate 
in the Committee's proceedings in this matter, as Gregory Hill is Chief 
of Staff to Representative McCaul.
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    On May 23, 2011, the Committee provided Mr. Hill, through 
his attorney, a copy of OCE's Report and Findings and offered 
him the opportunity to respond to OCE's allegations. Mr. Hill 
submitted a response through his attorney on June 6, 2011.\3\
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    \3\Gregory Hill's response to OCE's allegations against him in 
OCE's Report and Findings can be found at Appendix B.
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    The Committee initiated an inquiry into the matter referred 
by OCE pursuant to Committee Rule 18(a). On July 1, 2011, the 
Chairman and Ranking Member of the Committee issued a statement 
announcing they had jointly decided to extend the Committee's 
consideration of OCE's transmittal regarding Mr. Hill for an 
additional 45-day period.\4\
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    \4\House Rule XI, clause 3(b)(8)(A), and Committee Rule 17A(c)(1).
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    However, the Committee finds that Mr. Hill's receipt of the 
$32,000 and his failure to report the actual amount on his 2009 
Financial Disclosure Statement was not intentional and was more 
likely based on confusing information provided to him by 
Campaign Financial Services (CFS), the entity that manages the 
account for the campaign. The Committee concludes that since 
Mr. Hill repaid the excess amount, no further action is 
necessary. Accordingly, the Committee hereby closes its inquiry 
and the OCE referral in the above-captioned matter.
    This Report resolves the matter forwarded by OCE. The 
Committee has unanimously determined that the evidence 
presently before the Committee supports a determination that 
Mr. Hill received outside income in 2009 that exceeded the 
outside earned income limit. Thus, the Committee has decided 
that it will not dismiss the OCE referral. Moreover, Mr. Hill 
repaid the excess amount upon learning that the payment in 
question was not a clerical error and that he had, in fact, 
received income above the outside earned income limit. Since 
Mr. Hill has already repaid the excess amount, making the total 
received for 2009 below the limit, the Committee has determined 
that no further action is necessary. Additionally, while Mr. 
Hill did not report the actual income he received in 2009 on 
his Financial Disclosure Statement for 2009, the Committee 
finds that the information he relied upon to complete his 
Financial Disclosure Statement was incorrect without his 
knowledge. Since he subsequently repaid the excess amount, the 
outside earned income amount reported on his Financial 
Disclosure Statement for 2009 is accurate. Therefore, the 
Committee finds that no further action is necessary regarding 
Mr. Hill's Financial Disclosure Statement for 2009.

   II. HOUSE RULES, LAWS, REGULATIONS AND OTHER STANDARDS OF CONDUCT


House Rule 26, clause 2

    ``[T]he provisions of title I of the Ethics in Government 
Act of 1978 shall be considered Rules of the House as they 
pertain to Members, Delegates, the Resident Commissioner, 
officers, and employees of the House.''

Ethics in Government Act

    ``Any individual who is an officer or employee described in 
subsection (f) during any calendar year and performs the duties 
of his position or office for a period in excess of sixty days 
in that calendar year shall file on or before May 15 of the 
succeeding year a report containing the information described 
in section 102(a).''\5\
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    \5\5 U.S.C. app. 4 Sec. 101(d).
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    ``Each report filed pursuant to section 101 (d) and (e) 
shall include a full and complete statement with respect to . . 
. [t]he source, type, and amount or value of income (other than 
income referred to in subparagraph (B)) from any source (other 
than from current employment by the United States Government). 
. . .''\6\
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    \6\5 U.S.C. app. 4 Sec. 102(a).
---------------------------------------------------------------------------
    ``The head of each agency . . . each congressional ethics 
committee, or the Judicial Conference, as the case may be, 
shall refer to the Attorney General the name of any individual 
which such official or committee has reasonable cause to 
believe has willfully failed to file a report or has willfully 
falsified or willfully failed to file information required to 
be reported. . . .''\7\
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    \7\5 U.S.C. app. 4 Sec. 104.
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    ``[A] Member or an officer or employee who is a noncareer 
officer or employee and who occupies a position . . . for which 
the rate of basic pay is equal to or greater than 120 percent 
of the minimum rate of basic pay payable for GS-15 of the 
General Schedule, may not in any calendar year have outside 
earned income attributable to such calendar year which exceeds 
15 percent of the annual rate of basic pay for level II of the 
Executive Schedule under section 5313 of title 5, United States 
Code, as of January 1 of such calendar year.''\8\
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    \8\5 U.S.C. app. 4 Sec. 501(a)(1).
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    ``[T]he outside earned income limit for Members and senior 
staff for calendar year 2009 is $26,550.''\9\
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    \9\Memorandum from Committee on Standards of Official Conduct for 
All Members, Officers, and Employees, dated February 12, 2009 (emphasis 
in original).
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House Rule 25, clause 1(a)(1)

    ``Except as provided by paragraph (b), a Member, Delegate, 
Resident Commissioner, officer, or employee of the House may 
not--

        (1) have outside earned income attributable to a 
        calendar year that exceeds 15 percent of the annual 
        rate of basic pay for level II of the Executive 
        Schedule under section 5313 of title 5, United States 
        Code, as of January 1 of that calendar year.''

                            III. BACKGROUND

    On May 18, 2011, OCE referred to the Committee a matter 
involving Mr. Gregory Hill, Chief of Staff to Representative 
Michael McCaul. In its referral, OCE determined that there was 
``substantial reason to believe that in 2009, Greg Hill 
received more than $26,550 of earned outside income from McCaul 
for Congress. . . .''\10\ OCE further determined that Mr. Hill 
was considered ``senior staff'' in 2009 and was therefore 
subject to the outside earned income limit of $26,550.\11\ 
According to OCE's Report and Findings, Mr. Hill received 
compensation in 2009 from McCaul for Congress, Representative 
McCaul's campaign committee, totaling $32,000, and thereby 
exceeded the outside earned income limit by $5,450.\12\ OCE 
also determined that Mr. Hill reported $26,500 of outside 
earned income on his calendar year 2009 Financial Disclosure 
Statement.\13\ OCE reported that Mr. Hill paid back $4,831.45 
to the campaign in February 2011, which equaled the $5,450 less 
the taxes that were withheld by CFS, the entity that manages 
the account for the campaign.\14\ Those withholdings were 
separately recouped by CFS from the IRS, and so did not accrue 
to the benefit of Mr. Hill.
---------------------------------------------------------------------------
    \10\See Appendix A at 1.
    \11\Id.
    \12\Id.
    \13\Id.
    \14\Id.
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    Consistent with OCE's Findings, Committee staff determined 
that during 2009 Mr. Hill was paid at or above the senior staff 
rate\15\ and was therefore subject to the $26,500 limit on 
outside earned income.\16\ Mr. Hill received outside income for 
his work on the McCaul for Congress campaign, which was paid on 
a monthly basis and included a bonus. The total actually 
received by Mr. Hill during 2009 amounted to $35,000 ($3,000 of 
which was reported as paid by the campaign in December 2008). 
According to OCE's Findings,\17\ the response provided by Mr. 
Hill to the Committee,\18\ and an interview of Mr. Hill by 
Committee counsel, the Committee has determined that while he 
actually received $35,000 from the campaign during 2009, he was 
provided with conflicting information from the campaign as to 
the total amount received. This caused Mr. Hill to believe that 
the $32,000 amount reported on the first W-2 he received for 
2009 was a clerical error and that he actually only received 
$26,500. This conclusion was based upon his receipt of an email 
from CFS, which indicated they were issuing a corrected W-2 for 
2009 that showed his income for 2009 was actually $26,500 and 
not $32,000, which had been previously reported. In additional 
communications with CFS, Mr. Hill sought verification of the 
amount paid in 2009. CFS confirmed that Mr. Hill was only paid 
$26,500 in 2009. Furthermore, CFS told Mr. Hill that they 
thought the excess amount had already been debited from Mr. 
Hill's account.
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    \15\The ``senior staff'' rate for 2009 was $117,787. See House Rule 
25, clause 1(a)(1), 5 U.S.C. app. 4 Sec. 501(a)(1).
    \16\Memorandum from Committee on Standards of Official Conduct for 
All Members, Officers, and Employees, dated February 12, 2009, which 
can be found at Appendix A, Exhibit 1.
    \17\See Appendix A.
    \18\See Appendix B.
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    CFS provided documentation to the Committee including a 
letter and accompanying IRS forms sent by PayChex, the company 
that handled the payments for Mr. Hill, among others, for the 
campaign. The letter was a request to the IRS to correct the 
income and withholding paid on behalf of Mr. Hill for 2009. The 
letter was sent on May 4, 2010, which is consistent with the 
information provided to the Committee by Mr. Hill. The campaign 
received a refund from the IRS on September 28, 2010, for the 
excess withholding for income taxes, Social Security and 
Medicare. Counsel from CFS also indicated that CFS believed 
that Mr. Hill's account was debited for the excess payment 
around the same time it requested a refund from IRS.\19\
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    \19\See Appendix C.
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    Mr. Hill told Committee counsel that in 2010 he was not 
aware of the dollar amount of the outside earned income limit 
for 2009. He stated that he had previously instructed the 
campaign not to exceed the outside earned income limit. When he 
received the W-2 indicating he had been paid $32,000 in 2009, 
he believed that was the limit based on his earlier 
instructions. He filed his tax return for 2009 using the 
$32,000 amount.
    In the spring of 2010, Mr. Hill received a letter from the 
IRS indicating there was a conflict between his tax return for 
2008 and a W-2 the IRS received from the campaign. Mr. Hill 
contacted CFS and learned they had sent a corrected W-2 for 
2008 indicating his income from the campaign was $25,830 for 
2008 and not the $22,830 he reported on his return. This caused 
Mr. Hill to question CFS about what he had received in 2009. He 
also contacted the Committee to find out what the outside 
earned income limit was for 2009. He learned that the limit was 
$26,550 and provided that information to CFS. CFS advised him 
they were sending a corrected W-2 indicating the total income 
from the campaign for 2009 was $26,500. Mr. Hill believed, 
based on the corrected W-2, that he had only received $26,500 
for 2009. Mr. Hill told Committee counsel that he had several 
communications with CFS seeking verification that his income 
for 2009 was only $26,500 and each time CFS verified the 
amount.
    In January 2011, after Mr. Hill was notified by OCE that 
they were examining his 2009 income from the campaign, he 
contacted CFS to again verify his income. At that time, CFS 
told him that he had actually received $32,000 but CFS believed 
that the overpayment was debited from his account in 2010, and 
then realized in 2011 that they were also mistaken. Mr. Hill 
asked CFS to provide him the amount he needed to repay to 
ensure that his 2009 income was below the $26,550 limit.\20\ 
CFS told Mr. Hill that he had to repay $4,831.45, which was the 
total overpayment minus the taxes that were withheld. Mr. Hill 
sent CFS a cashier's check for the $4,831.45 amount in February 
2011.\21\
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    \20\OCE interviewed a financial manager from CFS who had a 
different recollection than Mr. Hill. The financial manager recalled 
that Mr. Hill asked for the repayment amount in the spring of 2010 
instead of the winter of 2011. However, the financial manager believed 
that CFS had debited the overpayment from Mr. Hill and therefore issued 
him a corrected W-2. The effect, however, is the same as Mr. Hill's 
somewhat contrary recollection; i.e., that Mr. Hill believed, based on 
a corrected W-2, that he had only actually received $26,500 at the time 
of his financial disclosure filing.
    \21\See Appendix A, Exhibit 6.
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                      IV. FINDINGS AND CONCLUSIONS

    As a result of its review of OCE's Report and Findings, and 
additional investigative activity by the Committee, the 
Committee has reached the following findings and conclusions.
    1. In 2009, Gregory Hill was paid at or above the ``senior 
staff'' rate for his work as Representative McCaul's Chief of 
Staff and was therefore subject to the outside earned income 
limit of $26,550.
    2. During 2009, Mr. Hill received payments from McCaul for 
Congress totaling $35,000, $3,000 of which was reported as paid 
by the campaign in December 2008, but not received until 2009.
    3. CFS, the campaign account manager for McCaul for 
Congress, advised Mr. Hill that the W-2 it had issued 
indicating that Mr. Hill's total income from McCaul for 
Congress in 2009 was $32,000, was in error, and they were 
issuing a corrected W-2 showing the total income as $26,500.
    4. Based on the information provided by CFS and the 
corrected W-2, Mr. Hill reported $26,500 in outside income on 
his Financial Disclosure Statement for 2009.
    5. In February 2011, after learning that he was actually 
paid $32,000, Mr. Hill instructed CFS to determine what amount 
he needed to repay the campaign to ensure his total income did 
not exceed the outside earned income limit. Upon being told the 
amount he needed to repay, Mr. Hill sent the campaign a check.
    Mr. Hill actually received $35,000 in outside earned income 
from McCaul for Congress in 2009 ($3,000 of which was reported 
as 2008 income and therefore not considered as income for 
2009). Upon being given a reason to double-check the limit, he 
was led to believe that the W-2 amount was in error for 2009, 
as it had been for 2008. Mr. Hill did not realize he had 
exceeded the outside earned income limit or actually received 
an amount over $26,500, based on assertions made by CFS. Upon 
learning of the amount actually received, he took steps to 
repay the excess amount. Based on the evidence and testimony, 
the Committee finds that Mr. Hill's receipt of the $32,000 and 
his failure to report the actual amount on his 2009 Financial 
Disclosure Statement was not intentional and was more likely 
based on confusing information provided to him by CFS.
    This Report resolves the matter forwarded by OCE. The 
Committee has unanimously determined that the evidence 
presently before the Committee supports a determination that 
Mr. Hill received outside earned income in 2009 that exceeded 
the outside earned income limit. Thus, the Committee has 
decided that it will not dismiss the OCE referral. However, the 
Committee concludes that since Mr. Hill repaid the excess 
amount, no further action is necessary. Therefore, the 
Committee determines that this matter is closed.
    The Chair is directed, upon providing the notices required 
pursuant to House Rule XI, clause 3(b)(8)(A), and Committee 
Rule 17A(b)(2), to file this Report with the House, together 
with copies of OCE's Report and Findings in this matter, along 
with any response filed, all of which are made a part of this 
Report and appended hereto.\22\ The filing of this Report, 
along with its publication on the Committee's Web site, shall 
serve as publication of OCE's Report and Findings in this 
matter, pursuant to House Rule XI, clause 3(b)(8)(A), and 
Committee Rule 17A(b)(3) and 17A(c)(2).
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    \22\See House Rule XI, clauses 3(a)(2) and 3(b).
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 V. STATEMENT UNDER RULE 13, CLAUSE 3(c) OF THE RULES OF THE HOUSE OF 
                            REPRESENTATIVES

    The Committee made no special oversight findings in this 
Report. No budget statement is submitted. No funding is 
authorized by any measure in this Report.




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