[House Report 112-336]
[From the U.S. Government Publishing Office]
112th Congress } { Report
1st Session } HOUSE OF REPRESENTATIVES { 112-336
_______________________________________________________________________
House Calendar No. 103
IN THE MATTER OF ALLEGATIONS
RELATING TO
REPRESENTATIVE DON YOUNG
__________
R E P O R T
of the
COMMITTEE ON ETHICS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 20, 2011.--Referred to the House Calendar and ordered to
be printed
----------
U.S. GOVERNMENT PRINTING OFFICE
19-006 PDF WASHINGTON : 2011
COMMITTEE ON ETHICS
JO BONNER, Alabama, Chairman LINDA T. SANCHEZ, California,
MICHAEL T. McCAUL, Texas Ranking Member
K. MICHAEL CONAWAY, Texas JOHN A. YARMUTH, Kentucky
CHARLES W. DENT, Pennsylvania DONNA F. EDWARDS, Maryland
GREGG HARPER, Mississippi PEDRO R. PIERLUISI, Puerto Rico
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
Sheria A. Clarke, Counsel
Miguel Toruno, Senior Counsel
Brittany M. Bohren, Investigative Clerk
LETTER OF SUBMITTAL
----------
U.S. House of Representatives,
Committee on Ethics,
Washington, DC, December 20, 2011.
Hon. Karen L. Haas,
Clerk, U.S. 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 of Allegations
Relating to Representative Don Young.''
Sincerely,
Jo Bonner,
Chairman.
Linda T. Sanchez,
Ranking Member.
C O N T E N T S
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Page
I. Introduction......................................................1
II. House Rules, Laws, Regulations, and Other Standards of Conduct...3
III. Facts............................................................4
IV. Findings and Conclusions..........................................7
V. Statement Under Rule XIII, Clause 3(c) of the Rules of the House of
Representatives..................................................10
Appendix A: Report and Findings of the Office of Congressional
Ethics Regarding Representative Don Young (Review No. 11-3175). 11
Appendix B: Representative Don Young's Response to the Report and
Findings of the Office of Congressional Ethics................. 134
Appendix C: Revised Legal Expense Fund Regulations, Adopted by
the Committee on December 14, 2011............................. 138
House Calendar No. 103
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-336
======================================================================
IN THE MATTER REGARDING ALLEGATIONS RELATING TO REPRESENTATIVE DON
YOUNG
_______
December 20, 2011.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Bonner, from the Committee on Ethics,
submitted the following
R E P O R T
I. INTRODUCTION
The Committee on Ethics (the Committee) submits this Report
pursuant to Rule XI, clause 3(a)(2), of the Rules of the U.S.
House of Representatives (House Rules), which authorizes the
Committee to investigate any alleged violation by a Member,
officer, or employee of the House of Representatives, of the
Code of Official Conduct or any law, rule, regulation, or other
standard applicable to the conduct of such Member, officer, or
employee.
On December 31, 2007, Representative Don Young entered into
a trust agreement establishing the Congressman Don Young Legal
Expense Trust (the Trust). In a letter dated January 2, 2008,
Representative Young sought formal approval of the Trust from
the Committee in accordance with the Committee's Legal Expense
Fund Regulations. On January 9, 2008, the Committee approved
the Trust.
On April 20, 2011, Representative Young filed the Trust's
required quarterly report with the Committee for the reporting
period ending March 31, 2011. The quarterly report indicated
that, among other donations, twelve limited liability
corporations (LLCs) located in Louisiana each contributed
$5,000 to the Trust. The LLCs were owned by the same individual
or group of individuals.
On June 23, 2011, the Office of Congressional Ethics (OCE)
commenced a preliminary review of allegations that
Representative Young had accepted contributions to his Trust in
excess of the limits established by applicable rules. Pursuant
to its organizing resolution, OCE was required to notify both
Representative Young and the Committee that it had begun a
preliminary review. In a letter dated July 6, 2011,
Representative Young sought guidance from the Committee related
to the $5,000 contributions from the twelve LLCs located in
Louisiana. Representative Young indicated that, prior to
accepting the contributions, guidance was sought from Gail R.
Schubert, the trustee of his Trust, regarding whether
contributions from companies that are separate legal entities
and operate under separate financial records were subject to
the same contribution limit. The trustee's opinion was that
such contributions are permissible and not subject to the same
contribution limit if the companies are separate legal entities
and operate under separate financial records.
On October 13, 2011, the Committee received a referral from
OCE recommending further review of allegations that
Representative Young ``may have accepted contributions to his
legal expense trust in excess of the limitations of $5,000 per
calendar year from any individual or organization.''\1\ Upon
receipt of OCE's Report and Findings (Report and Findings), the
Committee sent a copy of the Report and Findings to
Representative Young and offered him an opportunity to respond.
Representative Young submitted a response to OCE's Report and
Findings on November 4, 2011.\2
\\---------------------------------------------------------------------------
\1\Report and Findings in the Matter of Representative Don Young,
OCE Review No. 11-3175, October 13, 2011. A copy of OCE's Report and
Findings is attached as Appendix A to this Report.
\2\Letter from Representative Young to the Committee, November 4,
2011. A copy of Representative Young's response to OCE's Report and
Findings is attached as Appendix B to this Report.
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On November 17, 2011, the Chairman and Ranking Member
authorized an investigation pursuant to Committee Rule 18(a) to
gather additional information related to the allegations in
OCE's Report and Findings. The Committee also conducted a
review of the advice generally given to individuals with legal
expense trust funds in interpreting the Legal Expense Fund
Regulations issued by the Committee on June 10, 1996 (1996 LEF
Regulations). Based on the information gathered during the
18(a) investigation, as well as the Committee's review of the
advice generally given, the Committee voted unanimously to
resolve the issues surrounding Representative Young's
outstanding request for guidance from the Committee and the
allegations regarding Representative Young by OCE, by issuing a
letter to Representative Young and releasing this report.\3
\\---------------------------------------------------------------------------
\3\Pursuant to Committee Rule 3(j), the Committee will not release
any of its letters to Representative Young at this time.
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With respect to Representative Young's request for guidance
from the Committee, the Committee, in guidance issued
contemporaneously with this Report, determined that the
contributions by the twelve Louisiana LLCs to Representative
Young were permissible under the 1996 LEF Regulations issued by
the Committee, and that the Trust's acceptance of the
contributions did not violate House rules. The Committee also
adopted revised LEF Regulations, issued contemporaneously with
this Report, that provide clarity on several matters related to
legal expense funds, including restrictions on contributions
from multiple entities owned by the same individual or
individuals.\4
\\---------------------------------------------------------------------------
\4\The Committee adopted revised Legal Expense Fund Regulations in
order to provide greater guidance and clarity on several issues related
to legal expense funds, including the issue addressed in this Report.
The Committee also elected to define contributions from multiple
entities owned by the same individual or individuals in a manner
consistent with the Federal Election Commission's definition used for
campaign donations from multiple entities owned by the same individual
or individuals. See 11 C.F.R. Sec. 110.1(e)(1). The Committee
recognized that adopting this definition would help to prevent the
formation of shell companies for the purpose of evading the
contribution limits. A copy of the Legal Expense Fund Regulations
adopted by the Committee on December 14, 2011, is attached as Appendix
C to this Report.
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With respect to the referral from OCE, the Committee
determined that, based on the 1996 LEF Regulations and long-
standing Committee advice, multiple entities owned by the same
individual or individuals were permitted to make contributions
up to $5,000 per entity if they were separate legal entities.
The twelve Louisiana LLCs are separate legal entities and are
separately registered with the Louisiana Secretary of State.
Further, the entities provide separate and distinct products or
services and were formed at different times.
Because the contributions by the twelve LLCs were
permissible under the Committee's 1996 LEF Regulations, the
Committee dismissed the allegations in the OCE referral.
However, the Committee is concerned that the identical
ownership of the twelve entities challenges the principles of
the contribution limits of the 1996 LEF Regulations. Because
the 1996 LEF Regulations did clearly permit contributions from
multiple entities owned by the same individual or individuals,
and because Representative Young did appear to inquire of the
nature of the entities and their permissibility, the Committee
does not believe a violation of House Rule XXIII, clause 2 may
be found as it does not appear Representative Young himself
intended to violate the spirit of the 1996 LEF Regulations.
However, to prevent this situation in the future the Committee
is amending the LEF Regulations to attribute contributions by
certain types of entities, such as LLCs, to the owners of those
entities. The revised LEF Regulations will take effect on
January 1, 2012, and will apply to all existing LEFs and all
LEFs approved by the Committee in the future.
II. HOUSE RULES, LAWS, REGULATIONS AND OTHER STANDARDS OF CONDUCT\5
\\
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\5\Beyond the rules and regulations cited in this section, OCE also
points to guidance issued in the 2008 House Ethics Manual as
controlling. The guidance states ``[a] gift received from an individual
affiliated with an organization counts against the annual gift
limitations of both the individual and the organization.'' 2008 House
Ethics Manual at 6. In a footnote, OCE's Report and Findings also
discusses guidance provided by the Senate Select Committee on Ethics.
The Senate guidance states that although the Senate Committee
``generally recognizes the separate legal status of related entities
(e.g. a parent and its subsidiary entity will be treated as distinct
sources for the purposes of the Gifts Rule), such entities will NOT be
accorded separate source status if the entities are acting in concert
or as agent for the other with respect to a particular gift.'' OCE
acknowledges that guidance provided by the Senate is not controlling.
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House Rule XXV, clause 5(a)(3)(E)
``The restrictions in subparagraph (1) [generally, the
House gift rule] do not apply to the following:
(E) Except as provided in paragraph (e)(3), a
contribution or other payment to a legal expense fund
established for the benefit of a Member, Delegate,
Resident Commissioner, officer or employee of the House
that is otherwise lawfully made in accordance with the
restrictions and disclosure requirements of the
Committee on Ethics.''
1996 Legal Expense Fund Regulations, para.8
``A Legal Expense Fund shall not accept more than $5,000 in
a calendar year from any individual or organization.''
House Rule XXIII, clause 1
``A Member, Delegate, Resident Commissioner, officer, or
employee of the House shall conduct himself at all times in a
manner that shall reflect creditably on the House.''
House Rule XXIII, clause 2
``A Member, Delegate, Resident Commissioner, officer, or
employee of the House shall adhere to the spirit and letter of
the Rules of the House and to the rules of duly constituted
committees thereof.''
III. FACTS
Based on OCE's referral, the Committee's review of
information gathered during the 18(a) investigation, and
relevant Committee guidance, the following is the background in
this matter.
A. ESTABLISHMENT OF LEGAL EXPENSE TRUST
Representative Young is the representative for Alaska At-
Large. On December 31, 2007, Representative Young established
the Congressman Don Young Legal Expense Trust (the Trust) to
pay legal expenses related to an ongoing investigation by the
Department of Justice concerning his conduct as a Member of the
House of Representatives. Representative Young signed a trust
agreement on December 31, 2007, naming Gail R. Schubert, an
attorney, as trustee.\6\ The Committee, by letter dated January
9, 2008, approved the Trust.
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\6\Letter from the Committee to Representative Young, January 9,
2008.
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According to quarterly reports of the Trust filed with the
Committee, the Trust began receiving contributions during the
reporting period ending July 30, 2008. Over the course of the
next two-and-a-half years, the Trust continued to receive
contributions from donors. However, there was no organized
fundraising plan in place.
During the reporting period ending March 31, 2011, the
Trust received contributions from twelve LLCs owned by the same
individual or group of individuals. Each LLC contributed $5,000
to the Trust--the maximum permissible contribution under the
1996 LEF Regulations for any year--via checks dated January 6
or 7, 2011.
On May 3, 2011, Roll Call published an article entitled ``A
Family Comes to Rep. Young's Defense.'' The article reported
that Gary Chouest, President of Edison Chouest Offshore, and
other members of the Chouest family, controlled twelve entities
that each made a $5,000 contribution to Representative Young's
legal expense trust. The article questioned whether the
contributions were permissible under the 1996 LEF regulations
or were a circumvention of House rules.
OCE's preliminary review began on June 23, 2011. On July 6,
2011, Representative Young requested an advisory opinion from
the Committee as to whether contributions by the twelve
Louisiana companies were permissible.
B. OCE AND COMMITTEE INVESTIGATIONS
OCE commenced its initial review of this matter on June 23,
2011.\7\ On July 22, 2011, OCE voted to initiate a second-phase
review. OCE voted to extend the second-phase review on August
13, 2011.\8\ OCE voted to refer the matter to the Committee on
September 27, 2011, and transmitted its Report and Findings to
the Committee on October 13, 2011.\9\ Upon receipt of OCE's
Report and Findings, the Committee sent a copy of the Report
and Findings to Representative Young and offered him an
opportunity to respond. Representative Young submitted a
response to OCE's Report and Findings on November 4, 2011.\10\
On November 17, 2011, the Chairman and Ranking Member
authorized an investigation pursuant to Committee Rule 18(a) to
gather additional information related to the allegations in
OCE's Report and Findings. On December 5, 2011, Representative
Young submitted an additional response to the Committee.
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\7\Report and Findings in the Matter of Representative Don Young,
OCE Review No. 11-3175, October 13, 2011.
\8\Id.
\9\Id.
\10\Representative Young Letter to Committee, November 4, 2011.
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OCE's investigation revealed that sometime around December
2010 and January 2011, Representative Young had a telephone
conversation with Gary Chouest. During the conversation, Mr.
Chouest offered to raise funds for Representative Young's legal
expense trust. The funds would be contributions from the
companies owned by the Chouest family. After the conversation,
Representative Young's Chief of Staff contacted the trustee of
the Trust to ask whether it was permissible to accept
contributions from the companies.\11\ According to the Chief of
Staff, the trustee advised that contributions up to $5,000
would be permissible from each company that filed separate tax
returns and held separate insurance policies.
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\11\OCE's Report and Findings para.para.39, 40. According to OCE's
Report and Findings, the trustee did not recall this conversation with
Representative Young's Chief of Staff. However, the trustee did
acknowledge a general discussion with the Chief of Staff about
contributions from affiliated entities.
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On or around January 14, 2011, Representative Young
attended a fundraising event in Texas hosted by Mr. Chouest. At
the event, Mr. Chouest gave Representative Young an envelope.
According to Representative Young, he never opened the
envelope. The envelope and its contents were forwarded to the
trustee for deposit into the Trust account. Checks from twelve
companies in the amount of $5,000 each were deposited into the
Trust account on March 31, 2011.\12\ Neither Mr. Chouest nor
any other Chouest family member contributed personal funds to
Representative Young's legal expense trust.
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\12\OCE's Report and Findings para.para.44-46. According to OCE's
Report and Findings, Representative Young recalled sending the envelope
directly to the trustee. However, Representative Young's Chief of Staff
recalls that Representative Young gave the checks to her and she sent
them to the trustee.
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According to information provided to the Committee during
its 18(a) inquiry, the owners of the twelve companies
authorized that checks be issued to Representative Young's
legal expense trust from each company. Each company issued a
check from an account owned by that company. No check was drawn
on the same account. The checks were all issued on January 6,
or 7, 2011, and were all signed by Dionne Chouest Austin, the
registered agent for each of the companies.\13
\\---------------------------------------------------------------------------
\13\Ms. Austin also serves in various capacities, such as manager,
of most of the companies.
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Based on the Committee's review of information gathered
during the 18(a) investigation, the twelve companies that
contributed to Representative Young's legal expense trust are a
part of the Edison Chouest Offshore (ECO) family of companies.
The twelve ECO companies that each contributed $5,000 to
Representative Young's Trust are:
Alpha Marine Services, LLC
C-Innovation, LLC
C-Port, LLC
C-Port 2, LLC
Galliano Marine Services, LLC
Marine Technologies, LLC
Martin Holdings, LLC
Nautical Solutions, LLC
Nautical Ventures, LLC
Offshore Support Services, LLC
North American Fabricators, LLC
North American Shipbuilding LLC
Each of the companies listed above, as well as ECO, are
registered with the Louisiana Secretary of State as separate
entities. Each company has a unique tax identification number
and, for the companies that file income tax returns, they file
separately. The companies provide different services or
products related to the maritime industry. Several of the
companies maintain separate Web sites that are directly
accessible or accessible through links from the ECO Web site.
Based on public records, Edison Chouest Offshore, LLC was
registered in 1970.\14\ North American Fabricators, LLC was
registered on October 17, 1996. Galliano Marine Service, LLC
was registered on December 24, 1996. Alpha Marine Services, LLC
was registered on December 24, 1996. North American
Shipbuilding, LLC was registered on December 24, 1996. C-Port
2, LLC was registered on December 12, 1997. Offshore Support
Services, LLC was registered on November 4, 1998. Martin
Holdings, LLC was registered on October 4, 2000. Nautical
Ventures, LLC was registered on September 20, 2001. Marine
Technologies, LLC was registered on July 3, 2002. C-Port, LLC
was registered on January 10, 2006. C-Innovation, LLC was
registered on April 9, 2007. Nautical Solutions, LLC was
registered on August 16, 2007.
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\14\The corporation was initially registered on May 27, 1970, as
Chouest Boat Rental, Inc., Edison. After several mergers and name
changes, the corporation is currently registered as Offshore Service
Vessels, LLC.
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According to the information obtained by the Committee,
eleven of the contributing companies are owned by Gary Chouest,
his wife, and their five children (though the interests of two
children are held in trust) or some combination of those seven
individuals. One separate company which partly or wholly owns
four of the contributing companies is itself owned by the
Chouest family as well. One of the contributing companies is
wholly owned by another separate company that is wholly owned
by Gary Chouest alone. Each of the owners has the authority to
sign checks on behalf of the companies. Gary Chouest and other
members of the Chouest family are listed as registered agents
or officers of each ECO company. The corporate registrations
list Gary Chouest as a registered agent and a member of the
North American Fabricators, LLC; North American Shipbuilding,
LLC; and C-Innovation, LLC. Mr. Chouest is listed as a
registered agent and manager of Nautical Solutions, LLC;
Galliano Marine Services, LLC; and Alpha Marine Services, LLC.
Mr. Chouest is also listed as a manager of Nautical Ventures,
LLC. Dionne Chouest Austin is listed as a registered agent for
each of the twelve companies and also serves as a manager or
member of five of the corporations. Several other Chouest
family members serve in various capacities for the
corporations.
The companies appear to provide separate and distinct
products or services. Several of the companies have offices,
including principal offices, in foreign countries and on
different continents. Several of the companies have presidents
from, and serving in the foreign countries.
During its 18(a) investigation, the Committee received
information from Gary Chouest, Director of Edison Chouest
Offshore, via a telephone interview and through documents
submitted by Mr. Chouest. The information provided by Mr.
Chouest demonstrated that each company is a separate legal
entity. Each company has a board of directors. The companies
are owned by Mr. Chouest, his wife, and their five children, or
some combination of those seven individuals. Each of the owners
has the authority to sign checks on behalf of the companies. In
addition, the companies each have separate tax identification
numbers and file separate tax returns, although three of the
companies did not file tax returns because they are
``disregarded entities of a parent company.''\15
\\---------------------------------------------------------------------------
\15\Mr. Chouest first told the Committee that each company filed
separate tax returns, but later clarified that three companies do not
file returns.
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IV. FINDINGS AND CONCLUSIONS
A. COMMITTEE'S RESPONSE TO REQUEST FOR GUIDANCE
1. Restrictions on Contributions to Legal Expense Funds
a. Legal Background
Under the gift rule, ``a contribution or other payment to a
legal expense fund established for the benefit of [the
official] that is otherwise lawfully made in accordance with
the restrictions and disclosure requirements of the Committee
on Ethics'' is a permissible gift.\16\ Under the 1996 LEF
Regulations, a Member may not receive or solicit donations to
such a fund without prior approval of the trust agreement by
the Committee.\17
\\---------------------------------------------------------------------------
\16\House Rule XXV, clause 5(a)(3)(E). See generally 2008 House
Ethics Manual at 63-65.
\17\1996 LEF Regulations para.para.1, 11.
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The 1996 LEF Regulations also provide the following
restrictions on contributions made to a legal expense fund:
1. A Legal Expense Fund shall not accept more than
$5,000 in a calendar year from any individual or
organization;\18
\\---------------------------------------------------------------------------
\18\1996 LEF Regulations para.8.
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2. A Legal Expense Fund shall not accept any
contribution from a registered lobbyist or an agent of
a foreign principal;\19
\\---------------------------------------------------------------------------
\19\1996 LEF Regulations para.9.
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3. Other than as specifically barred by law or
regulation, a Legal Expense Fund may accept
contributions from any individual or organization,
including a corporation, labor union, or political
action committee (PAC).\20
\\---------------------------------------------------------------------------
\20\1996 LEF Regulations para.10.
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The 1996 LEF Regulations do not explicitly limit
contributions from business entities controlled by the same
individual or group of individuals.
b. Analysis
Representative Young's legal expense trust received $60,000
from twelve LLCs controlled by a businessman and his family
members. Each of these LLCs is a separate legal entity with
separate financial records. As a result, each LLC is a separate
organization under the 1996 LEF Regulations and Representative
Young's legal expense trust was permitted to receive, and
therefore is permitted to retain, these donations.
However, the Committee has adopted revised Legal Expense
Fund Regulations that will prohibit similar contributions in
the future.
B. COMMITTEE'S DISPOSITION OF THE OCE REFERRAL
According to the OCE referral, during the reporting period
ending March 31, 2011, twelve LLCs owned by members of the
Chouest family each made contributions of $5,000 to
Representative Young's legal expense trust. Based on the
Committee's review of information gathered during the 18(a)
investigation, the 1996 LEF Regulations, and long-standing
Committee advice, multiple, legally separate organizations
owned by the same individual or individuals were permitted to
make contributions up to $5,000 per organization. Therefore,
the Committee votes to dismiss the allegations, but is amending
its LEF Regulations to prohibit similar contributions in the
future.
1. Contributions in Excess of the Annual Limit
a. 1996 LEF Regulations
As noted above, contributions to a legal expense fund are
limited to $5,000 per year from an individual or organization,
and, except as barred by law or regulation, contributions may
be accepted from any individual or organization other than a
federally registered lobbyist or an agent of a foreign
principal. The 1996 LEF Regulations do not impose any
limitation on contributions from entities or organizations
controlled or owned by the same individual or individuals.
The gift rule includes a general rule on the acceptance of
gifts and 23 provisions that describe specific kinds of gifts
that may be accepted.\21\ The general rule prohibits the
acceptance of gifts from a registered lobbyist, an agent of a
foreign principal, or a private entity that retains or employs
such individuals, and limits the value of any gift from
acceptable donors to less than $50 per gift, and a total annual
limit of less than $100.\22\ In its guidance regarding the
general gift rule, the Committee has stated that a gift from an
individual affiliated with an organization is a gift from both
the individual and the organization.\23\ The Committee's
guidance states that this ruling specifically applies to the
general gift rule.\24\ However, the guidance also makes it
clear that provisions applicable to the general gift rule are
not necessarily applicable to specific gift rule exceptions,
such as contributions to a legal expense fund.\25
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\21\See 2008 House Ethics Manual at 30. House Rule XXV, cl. 5.
\22\House Rule XXV, cl. 5(a)(1)(A)(ii) and 5(a)(1)(B)(i).
\23\2008 House Ethics Manual at 36.
\24\Id.
\25\Id. at 38.
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In addition, the 2008 House Ethics Manual also provides
that a gift that meets one of the specific exceptions to the
gift rule may be accepted even if it does not meet the
requirements of the general gift rule exception.\26\ For
example, if a gift meets all the requirements of a specific
provision, the gift would be acceptable even when the donor is
a registered lobbyist, an agent of a foreign principal, or an
entity that retains or employs such individuals.\27\ Committee
guidance provides:
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\26\Id.
\27\Id.
When a gift satisfies each of the requirements of any
of the specific provisions of the gift rule on
acceptable gifts--for example, a book under the
``informational materials'' provision (House Rule 25,
clause 5(a)(3)(I))--the gift may be accepted even if
its value is $50 or more. Furthermore, in that
circumstance, the value of the gift does not count
against the donor's annual gift limitation of less than
$100.\28
\\---------------------------------------------------------------------------
\28\Id. (emphasis in original).
The universe of rules applicable to a legal expense fund is
contained within the legal expense fund regulations issued by
the Committee--currently the 1996 LEF Regulations.
Contributions to a legal expense fund are an exception to the
gift rule which prohibits Members, officers, and House
employees from receiving gifts. Whether a contribution to a
legal expense fund is an exception to the gift rule, and
therefore permissible, is solely governed by the 1996 LEF
Regulations issued by the Committee. This interpretation is
consistent with the Committee's guidance regarding other
exceptions to the gift rule. For example, the Committee's
advice regarding the Foreign Gifts and Decorations Act (FGDA),
and the Mutual Educational and Cultural Exchange Act (MEACA)
has been that the universe of rules applicable to a gift under
these provisions is contained within the relevant statute, and
guidance provided by the Committee on aspects of the general
gift rule does not apply to these types of gifts.
The contributions made by the twelve LLCs to Representative
Young's legal expense trust were from separate entities, did
not exceed $5,000, and were not from a lobbyist or an agent of
a foreign principal. As such, the contributions were
technically permissible under the 1996 LEF Regulations.
b. House Rule XXIII, clause 2
House Rule XXIII, clause 2 is applicable to conduct that
may technically comply with relevant House Rules, but
circumvents the spirit of the applicable Rule. Thus, even
though the contributions were technically permissible under the
1996 LEF Regulations, if the contributions circumvented the
spirit of the 1996 LEF Regulations governing contributions to a
legal expense fund with Representative Young's knowledge,
Representative Young's acceptance of the contributions may be
perceived as violative of clause 2 of House Rule XXIII.
The 1996 LEF Regulations establish a $5,000 contribution
limit per individual or organization.\29\ The Regulations also
specifically state that contributions may be accepted from
``any individual or organization, including a corporation . .
.'' other than as specifically barred by law or regulation.\30\
No law or regulation specifically prohibits contributions to a
legal expense fund from separate organizations that are owned
by the same individual or group of individuals--such as the
corporations in this matter. Because the 1996 LEF Regulations
permit contributions from any organization, including
corporations, and there is no law or regulation that prohibits
contributions from corporations that are owned by the same
individual or individuals, Representative Young's acceptance of
the contributions falls squarely within the language of the
1996 LEF Regulations.
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\29\An organization is defined by Black's Law Dictionary as, ``[a]
body of persons (such as a union or corporation) formed for a common
purpose.'' Black's Law Dictionary (9th ed. 2009), organization.
\30\1996 LEF Regulations para.10 (emphasis added).
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Furthermore, the evidence indicates that Representative
Young inquired of his trustee about the requirements for
related entities, and the advice he was given did appear to
apply to the relevant corporate entities. The companies are
separate legal entities, with separate functions, services, or
products. While they are all owned by members of the same
family, and the checks were all signed by the same family
member, none of these facts clearly violate the plain rules or
the advice of the trustee.
To be clear, the Committee is concerned that five people
and two trusts were in essence making twelve maximum
contributions. However, the evidence, as described above, did
not convince the Committee that Representative Young intended
to violate the spirit of the 1996 LEF Regulations. Therefore,
based on its findings, because the contributions did not
violate any rule and because Representative Young's conduct did
not clearly violate the spirit of the Rules, the Committee
determined that OCE's referral should be dismissed.
The Committee directed the Chairman, 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, and 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.\31\ 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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\31\See House Rule XI, clauses 3(a)(2) and 3(b).
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V. STATEMENT UNDER RULE XIII, 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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