[House Report 117-591]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 156
117th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      117-591
_______________________________________________________________________

                                     


                      IN THE MATTER OF ALLEGATIONS

                       RELATING TO REPRESENTATIVE

                            MADISON CAWTHORN

                               __________

                              R E P O R T

                                 of the

                          COMMITTEE ON ETHICS










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  December 6, 2022.--Referred to the House Calendar and ordered to be 
                                printed   
                                
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                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
39-006                   WASHINGTON : 2022
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                          COMMITTEE ON ETHICS

SUSAN WILD, Pennsylvania,            MICHAEL GUEST, Mississippi,
  Acting Chairwoman                    Acting Ranking Member
DEAN PHILLIPS, Minnesota             DAVE JOYCE, Ohio
VERONICA ESCOBAR, Texas              JOHN H. RUTHERFORD, Florida
MONDAIRE JONES, New York             KELLY ARMSTRONG, North Dakota

                              REPORT STAFF

              Thomas A. Rust, Chief Counsel/Staff Director
             Brittney Pescatore, Director of Investigations
              David Arrojo, Counsel to the Acting Chairman
         Kelle Strickland, Counsel to the Acting Ranking Member

                      Sydney R. Bellwoar, Counsel
                    Janet M. Foster, Senior Counsel
                     Caroline Taylor, Investigator
                   Peyton Wilmer, Investigative Clerk  
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                         LETTER OF TRANSMITTAL

                              ----------                              

                          House of Representatives,
                                       Committee on Ethics,
                                  Washington, DC, December 6, 2022.
Hon. Cheryl L. Johnson,
Clerk, House of Representatives,
Washington, DC.
    Dear Ms. Johnson: 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 Madison Cawthorn.''
            Sincerely,
                                   Susan Wild,
                                           Acting Chairwoman.
                                   Michael Guest,
                                           Acting Ranking Member. 
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                                           
                            C O N T E N T S

                              ----------                              
                                                                     Page
 I. INTRODUCTION......................................................  1
II. PROCEDURAL BACKGROUND.............................................  3
III.FINDINGS AND CONCLUSIONS..........................................  4

IV. STATEMENT UNDER HOUSE RULE XIII, CLAUSE 3(c)......................  6
APPENDIX A: REPORT OF THE INVESTIGATIVE SUBCOMMITTEE.............       7











                                                      Calendar No. 156
117th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      117-591

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



 
    IN THE MATTER OF ALLEGATIONS RELATING TO REPRESENTATIVE MADISON 
                                CAWTHORN

                                _______
                                

 December 26, 2022.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

                Ms. Wild, from the Committee on Ethics, 
                        submitted the following

                              R E P O R T

    In accordance with House rule XI, clauses 3(a)(2) and 3(b), 
the Committee on Ethics (Committee) hereby submits the 
following Report to the House of Representatives:

                            I. INTRODUCTION

    On December 1, 2022, the Committee considered the Report of 
the Investigative Subcommittee (ISC) in this matter, which the 
ISC unanimously adopted on November 16, 2022. The ISC was 
impaneled to investigate allegations that Representative 
Madison Cawthorn may have improperly promoted a cryptocurrency 
in which he may have had an undisclosed financial interest and 
engaged in an improper relationship with an individual employed 
on his congressional staff. This Report memorializes the 
Committee's conclusions based on the ISC's Report.
    The Committee accepted the ISC's findings and 
recommendations, which were reached following a seven-month 
investigation.\1\ The ISC did not find evidence that 
Representative Cawthorn engaged in an improper relationship 
with a member of his congressional staff and recommended no 
further action with respect to that allegation. The ISC found 
substantial evidence that Representative Cawthorn promoted a 
cryptocurrency in which he had a financial interest in 
violation of rules protecting against conflicts of interest, 
and that he failed to file timely reports to the House 
disclosing his transactions relating to the cryptocurrency. 
However, the ISC did not find that Representative Cawthorn 
knowingly or willfully failed to file timely disclosures; 
nonetheless, the ISC found he is required by statute to pay the 
applicable late filing fees for his untimely disclosures. The 
ISC also found that Representative Cawthorn's purchase of the 
cryptocurrency was on more generous terms than were available 
to the general public, resulting in an improper gift. The ISC 
unanimously recommended that Representative Cawthorn be 
required to repay the value of the improper gift and pay all 
applicable fees for his late filing of disclosures for his 
cryptocurrency transactions.
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    \1\The Committee thanks the Members of the ISC for their efforts 
and attention to this matter.
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    While much of the promotional activity was shared on social 
media by individuals other than Representative Cawthorn, the 
ISC recognized that he was ``not a passive participant.''\2\ 
The ISC found Representative Cawthorn made direct and 
unambiguous comments about purchasing or supporting a 
cryptocurrency in which he had invested, that he did so in 
contexts that he reasonably should have known would be used for 
public promotion, and that he also used his own social media 
account to share and comment on promotional posts.\3\ The ISC 
did not reach a consensus on whether Representative Cawthorn 
intended to personally profit from his promotional activities. 
However, the ISC found that he should have been sensitive to 
the appearance of impropriety that his actions might create. 
The ISC Report explains that, as a Member of the House, 
Representative Cawthorn has a duty to protect the integrity of 
that institution, and his participation in promotional efforts 
for the cryptocurrency he owned was inconsistent with that 
duty.\4\
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    \2\ISC Report at 1.
    \3\Id.
    \4\Id. at 2.
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    As the ISC Report notes, Members are widely recognizable 
public servants, and their participation in commercial 
endorsements or promotions may create the perception that they 
are making use of their official position for commercial gain. 
While cryptocurrency promotion, particularly of a ``meme 
coin,'' may be a novel issue before the Committee, whether a 
Member may promote an asset in which that Member has a 
financial interest is not a novel question. The Committee's 
established guidance provides that Members should not be 
actively involved in promoting or endorsing any goods or 
services in which the Member or the Member's family has a 
financial interest.\5\ This guidance applies to digital assets. 
The Committee joins the ISC in its hope that this matter will 
serve to educate all Members about the laws and rules designed 
to protect the integrity of the House against conflicts of 
interest, including as they apply to digital assets.
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    \5\Comm. on Ethics, Guidance on Personal Endorsement or Promotion 
by Members of the House of Representatives (Aug. 24, 2018), https://
ethics.house.gov/financial-disclosure/financial-disclosure-pink-sheets/
guidance-personal-endorsement-or-promotion.
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    The ISC could not come to a consensus as to whether to 
recommend the Committee reprove Representative Cawthorn in this 
matter. However, the ISC intended that its Report serve as an 
admonishment of Representative Cawthorn's conduct.
    Accordingly, the Committee hereby unanimously adopts the 
ISC's Report, which shall serve as an admonishment of 
Representative Cawthorn, and directs Representative Cawthorn to 
repay $14,237.49 to an appropriate charitable organization not 
later than December 31, 2022, remit late fees of $1,000 to the 
U.S. Department of the Treasury within fourteen days of the 
release of this Report, and submit a periodic transaction 
report (PTR) disclosing his January 17, 2022 Let's Go Brandon 
Coin (LGB Coin) transaction within fourteen days of the release 
of this Report.\6\
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    \6\Although the ISC recommended Representative Cawthorn be directed 
to pay $800 in late filing fees, after the ISC Report was adopted, he 
advised Committee staff that he incorrectly copied down the amount of 
LGB Coin he sold on January 17, 2022, which he initially valued at $302 
and thus did not disclose in a PTR because it was below the $1,000 
reporting threshold. However, as noted in the ISC Report, the actual 
amount of LGB Coin sold on that date was valued well over $1,000 and 
should have been disclosed. Therefore, the Committee determined 
Representative Cawthorn must also submit a PTR disclosing the January 
17 transaction, along with an additional $200 in late fees.
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    Based on the totality of his conduct, including his 
repeated and knowing promotion of a cryptocurrency in which he 
held a financial interest, the Committee also determined that 
Representative Cawthorn acted in a manner that did not reflect 
creditably upon the House, in violation of clause 1 of the 
House Code of Official Conduct.
    The ISC's Report is transmitted as an appendix to this 
Report.\7\
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    \7\See Appendix A.
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                       II. PROCEDURAL BACKGROUND

    On May 23, 2022, the Committee announced that it had 
impaneled an ISC to investigate allegations that Representative 
Cawthorn may have improperly promoted a cryptocurrency in which 
he may have had an undisclosed financial interest and engaged 
in an improper relationship with an individual employed on his 
congressional staff. The ISC conducted a thorough 
investigation, in which it interviewed seven witnesses, 
including Representative Cawthorn, and reviewed documents 
received from four individuals in response to requests for 
information from the ISC. These allegations had been the 
subject of public reporting, as well as a class action lawsuit 
filed in federal court relating to an alleged ``pump and dump'' 
scheme for the cryptocurrency LGB Coin.
    The ISC met six times in the 117th Congress. The ISC sent 
four requests for information. Committee staff received and 
reviewed documents and information produced in response to the 
ISC's requests. The ISC also conducted seven interviews, 
including an interview of Representative Cawthorn. 
Representative Cawthorn and his current staffers fully 
cooperated with the ISC's investigation. One individual 
affiliated with LGB Coin, Witness 1, provided only limited 
cooperation.\8\
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    \8\ISC Report at 2.
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    On November 16, 2022, the ISC unanimously voted to adopt 
its Report and transmit it to the Committee.\9\ The ISC could 
not come to a consensus as to whether to recommend the 
Committee reprove Representative Cawthorn. However, the ISC 
intended that its Report serve as an admonishment of 
Representative Cawthorn's conduct. The Committee considered the 
ISC's Report and on December 1, 2022, unanimously voted to 
release the ISC's findings and issue this Report.
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    \9\Id. at 3.
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                     III. FINDINGS AND CONCLUSIONS


  A. ALLEGATIONS THAT REPRESENTATIVE CAWTHORN MAY HAVE ENGAGED IN AN 
IMPROPER RELATIONSHIP WITH AN INDIVIDUAL EMPLOYED ON HIS CONGRESSIONAL 
                                 STAFF

    In the spring of 2022, there was public discussion in news 
articles and on social media relating to Representative 
Cawthorn's personal relationship with a member of his 
congressional staff, following the release of photographs and 
videos depicting the two of them engaging in explicit and 
sexually suggestive comments and conduct. Both denied having 
any romantic or sexual relationship. All witnesses interviewed 
by the ISC also stated there was no improper relationship 
between the two, and that the close relationship between 
Representative Cawthorn and this individual did not create an 
unfair work environment. Furthermore, the ISC established that 
any depictions of sexually-themed or otherwise inappropriate 
comments or conduct took place prior to Representative 
Cawthorn's service in the House and beyond the ISC's 
jurisdiction.
    The ISC reviewed Representative Cawthorn's conduct and 
found no evidence of an improper relationship between 
Representative Cawthorn and a member of his congressional 
staff. The ISC also found no evidence of an unprofessional 
office environment, and found that Representative Cawthorn did 
not violate House Rules or laws relating to nepotism, as the 
staffer was not a first cousin. The Committee accepts the ISC's 
findings and recommendation with respect to this allegation.

B. ALLEGATIONS RELATING TO REPRESENTATIVE CAWTHORN'S FINANCIAL INTEREST 
                              IN LGB COIN

    Representative Cawthorn received 180 billion LGB Coin on 
December 21, 2021, for which he provided a $150,000 check to 
Witness 1, based on an over two-week-old valuation of LGB Coin. 
The transaction occurred just before LGB Coin announced that it 
would sponsor NASCAR driver Brandon Brown in the 2022 season. 
The sponsorship was made public on December 30, 2021; however, 
NASCAR withdrew its approval on January 4, 2022. Representative 
Cawthorn sold nearly all of his LGB Coin in three batches on 
December 31, 2021, January 4, 2022, and January 17, 2022.\10\
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    \10\Representative Cawthorn still owns 15,378,707,329 LGB Coin, 
which he believed was valued at approximately $357.52 as of November 
19, 2022. However, as noted in the ISC Report, the value of his 
remaining LGB Coin was substantially less at the time the Report was 
adopted, and it is unclear how Representative Cawthorn reached his 
estimation of the value.
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    Representative Cawthorn did not disclose either his 
purchase or sales of his LGB Coin until after the Committee 
established the ISC. Additionally, Representative Cawthorn was 
seen in multiple photographs and videos in which he appeared to 
support or specifically encouraged individuals to purchase LGB 
Coin, including after the value of the LGB Coin that he held 
plummeted.
    The ISC found that Representative Cawthorn improperly 
promoted a cryptocurrency in which he had a financial interest, 
in violation of conflicts of interest rules set forth in House 
rule XXIII, clause 3 and paragraph 5 of the Code of Ethics for 
Government Service. However, the ISC did not reach a consensus 
on whether Representative Cawthorn intended to personally 
profit from his promotional activities. The ISC found he also 
violated the Ethics in Government Act by failing to timely 
disclose his financial investment in LGB Coin pursuant to House 
disclosure requirements; however, the ISC did not find his 
failure to be knowing or willful. The ISC found Representative 
Cawthorn was misinformed regarding the requirements related to 
cryptocurrency disclosures, which are relatively new.\11\ 
Finally, the ISC found Representative Cawthorn received an 
improper gift under House rule XXV, clause 5, when he purchased 
LGB Coin on terms more favorable than those available to the 
general public. The ISC recommended that Representative 
Cawthorn be directed to pay the applicable late filing fees for 
his late disclosure, and to repay $14,237.49, reflecting the 
approximate value of the gift he received, to an appropriate 
charitable organization.
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    \11\ISC Report at 21-22 (noting that Representative Cawthorn 
reasonably relied on the advice of his accountant, who erroneously 
informed him cryptocurrency transactions did not need to be disclosed 
on Periodic Transaction Reports).
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    The ISC also considered allegations that Representative 
Cawthorn may have been involved in fraudulent activities 
relating to the cryptocurrency, including allegations of 
insider trading and/or a scheme to artificially inflate the 
value of LGB Coin. While the ISC questioned Representative 
Cawthorn's explanations for his trading activities, the ISC did 
not find sufficient evidence of fraudulent activity.
    The ISC could not come to a consensus as to whether to 
recommend the Committee reprove Representative Cawthorn, but 
intended for its Report to serve as an admonishment of 
Representative Cawthorn's conduct.
    The Committee accepts the ISC's findings relating to 
Representative Cawthorn's LGB Coin activity. The Committee, 
accordingly, voted unanimously to adopt the Report of the ISC 
and includes that Report as part of the Committee's Report to 
the House of Representatives on this matter. Representative 
Cawthorn is directed to pay $14,237.49 to an appropriate 
charitable organization by December 31, 2022, to pay $1,000 in 
late filing fees to the U.S. Department of the Treasury within 
14 days of the release of this Report, and to file a PTR 
disclosing his January 17, 2022 LGB Coin transaction within 
fourteen days of the release of this Report.
    The Committee also determined that Representative 
Cawthorn's conduct with respect to LGB Coin did not reflect 
creditably upon the House, in violation of clause 1 of the Code 
of Conduct. Clause 1 is a purposely subjective standard 
designed to ``have a deterrent effect against improper 
conduct,'' and provide ``the ability to deal with any given act 
or accumulation of acts which, in the judgment of the 
Committee, are severe enough to reflect discredit on the 
Congress.''\12\ The provision serves ``as a safeguard for the 
House as a whole.''\13\
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    \12\House Ethics Manual at 13 (2008) (citing 114 Cong. Rec. 8778 
(Apr. 3, 1968)).
    \13\House Comm. on Standards of Official Conduct, Inquiry into the 
Operation of the Bank of the Sergeant-At-Arms of the House of 
Representatives, H. Rept. 102-452, 102d Cong. 2d Sess. 22 (March 10, 
1992) (citing H. Rept. 90-1176, 90th Cong. 2d Sess. 17 (1968)).
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    Following the publication of this Report, repayment of the 
value of the improper gift, payment of all applicable late fees 
for untimely filings of House disclosures, and filing a 
disclosure regarding his January 17, 2022 LGB Coin transaction, 
the Committee will consider this matter closed.

            IV. STATEMENT UNDER HOUSE RULE XIII, CLAUSE 3(c)

    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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